WPX 2024: Jim Long shares global swine economic outlook

Jim Long, president and CEO at Genesus Genetics, spoke last week to The Pig Site’s Sarah Mikesell at the 2024 World Pork Expo in Des Moines, Iowa, USA.

Let's talk about the economics of the US swine industry.

My perspective on it is that we are in an industry today that has lost a lot of money. That is the reality of it. You can look at it as if you look at any data, it will say the industry lost $30/head for about 18 months and today we have creeped over breakeven.

Nothing is really happening that is correcting the issue. We are in an industry that is not growing. It is still contracting, in my opinion. We have a situation where there is no optimism. It is like people who are in the swine business have a sense of being marooned. There are no exit strategy, and we are kind of going through the motions.

We have a degree of hope. By nature, pork producers are optimistic people, but this optimism is really being challenged today. It is the grim reality of where we are.

I am an optimistic person. I believe the market will get better but sometimes I wonder if I am delusionary. That is my perspective on the US swine industry today.

Do you see an opportunity in 2025 for more of a turnaround?

I believe the supply will decrease. We are going to see less pigs in China which will help exports. We are already starting to see that in China. I am optimistic. Looking at Lean Hog futures today, they are undervalued to where they will be. The profit will be better than it is reflected today.

Cost of production will stay similar. I traveled out here; the corn crop looks surprisingly good. So far, the weather conditions are conducive to producing good crops which will help the cost of production.

The one thing I look at, as an industry which is not going to be fixed by 2025 is we must change what we produce. We produce pork that the consumers are not ready to pay for. You look at the beef prices today. It is wholesale beef price of $3.10 per pound as compared to pork at $1.00 per pound.

Consumers are voting with their money that they want to eat beef. Why? It is probably because of taste. So as an industry, we must have a revolution to change what we are producing for the consumers. We can do that, and we need to do that because what we are doing is not working.

We must change and it is going to take time. It is a challenge but if we want to be a viable industry, we must produce what consumers want. We must be marketers, not farmers.

Let's talk about global markets.

China's lost money like the United States. They lost $30/head. There is always some give and take with the Chinese data of their sows. If you look at the public companies that put out financial statements, they have lost billions of dollars.

So, in my mind, that reflects the industry. They have lost money. The hog price in China was 14 rmb a kilogram. Last week it got up to 18 rmb. That is a significant increase. In my mind, this is just a reflection of less pigs, and it is part of the liquidation that was ongoing.

So, 18 rmb is like $1.15 US per pound. If producers were getting that here in the US, they would be walking around here on Cloud Nine. So, it’s all relative. If there is less pork in China, then pork will need to go there, which will be price supportive to export markets.

What other countries are making news from your perspective?

If you look at the other major block that produces pigs, it would be Europe, but they are just treading water.

There are a lot of rules, regulations and efforts to decrease pig production, and they are just going nowhere. Plus, their production costs are higher. That’s how I see it - there is still a huge production base. They have over 10 million sows, so they are still significantly bigger than the United States, but it is not growing.

What’s happening in Brazil?

I think Brazil will be the major competitor for North America long-term in exports. They have a competitive cost of production because they have grain. They also have the technology, and they have the mindset to do it.

They have some issues with logistics and transportation. There are other issues, but in my opinion, I would look at Brazil as the long-term competitor for North America.

I don’t know exactly what their cost of production is, but my sense is they are about breakeven. They have a little cheaper feed, but the price of pigs is lower so I would say give or take about breakeven.

China, the Philippines and Vietnam are still battling ASF. Are the vaccines helping? 

From what I understand about the vaccines, they really do not work. They cause more trouble, because the one advantage when you get African swine fever, you can test and pull sick pigs because it doesn’t move fast in the herd. We have seen customers that have been able to go in, test and pull out those infected pigs, and the rest of the herd stays negative. But if you vaccinate, you cannot distinguish, so there is a challenge.

The vaccine does not seem to work well. In the pig industry, there are good vaccines, and there are some that may be a little marginal. I would consider that one marginal.