PURCHASING SEMINAR REPORT: PEDv continues to impact meat industry
by Kimberlie Clyma
KANSAS CITY, Mo. – When discussing the supply of meat and poultry in the United States, many topics come to mind – rising meat prices, consumer demand and drought concerns — but according to Steve Meyer, Ph.D. and president of Paragon Economics Inc., the one topic everyone wants to talk about is the Porcine Epidemic Diarrhea virus (PEDv) that’s wreaking havoc on the US pork supply. Meyer discussed the topic and how it’s impacting the US meat industry with attendees of Monday’s protein-supply session at the 2014 Sosland Publishing Purchasing Seminar held this week in Kansas City.
The PEDv outbreak is rampant in the US where it is thought to have infected about half of all hog herds, but also has been detected in Canada, Mexico, Japan and South Korea. According to Meyer, the rule of thumb with this disease is that if a farm’s pigs get infected, it will lose 2.3-3.5 pigs per sow. So far, 8 million pigs have been lost since the onset in May 2013, Meyer said.
PEDv has been confirmed in 30 states and accelerated early in 2014, according to the US Dept. of Agriculture. With the lack of a vaccine, the pork industry is combating the disease through enhanced biosecurity measures, care of affected piglets and controlled exposure of not-afflicted hogs, the agency said. Processors are also increasing the weight of market hogs to offset supplies.
Meyer optimistically said he think PEDv will cause a 10 percent reduction in slaughter by this fall; Rabobank is predicting 20 percent lower slaughter by this September.
However, the economic burden of this disease is falling on the consumer not on the producer, Meyer said.
Meyer explained that producers are losing animals from the disease, but they are able to make up for the losses because of the increase in meat prices. “Consumers will pay the price for PEDv,” he said.
Consumers will continue to feel the impact as supplies are affected in the upcoming months. “I see the supply situation with pork getting very tight as we go through the summer,” he added.
The silver lining with PEDv is that it’s a virus that is not a threat to human health or other animal species, and it is not a food-safety issue. Because of this, demand has not suffered in the US, as is usually the case when there’s a disease outbreak, Meyer explained.
“Demand for meat has remained remarkably strong,” Meyer said. All four demand indices for all four species were up over the past year.
What’s driving meat demand? Meyer said, “In this case, I think it is consumer tastes and preferences. Preferences for meat over the past few years have been quite positive,” he explained. “Over the past few years, there has also been more interest in dietary protein.”
But retail prices across the board are on the rise. “They have set records on the beef side since last year, and set a record for pork prices and I think we’ll break that several more times in the summer,” he added.
The good news: High prices do not reduce demand, they reduce the quantity demanded, Meyer said.
“The fact that we’re consuming less doesn’t mean demand is less — it all depends on pricing,” he said.