The Price of Cheap Food

According to the USDA, in the month of May, the average retail price of pork increased to an all time high of $4.09 per lb.  That is up 54.6 cents from a year ago and up 14.9 cents from the old record set the month before. This is just the beginning of what will be a long stretch of sticker shock for consumers in the pork section of the meat case. For pork producers, this is hog heaven with some profit back in pork production at long last.  Iowa State University estimates the typical hog sold during May turned a profit of $74.13 per head. This was the third consecutive month above the pre-2014 record.  Eager to cash in on these profits, pork producers are trying to increase production, but two factors are standing in their way.

The first is disease. PEDv is a relatively new virus that is spreading unchecked across the US and is having an impact on pork production.  The cause and transmission of the disease are still unknown and, to date, no cure has been found. The industry and the government are committing millions of dollars into research to find the answers to PEDv, but this disease will be an issue producers will have to deal with for the foreseeable future. However, the losses from the disease, while devastating to individual producers, have not been a major factor in pork production. This could change if the spread and death loss increases in the coming months.

An issue that is also hampering an increase in pork production is the inability of producers to expand because of local permit and zoning issues. Ray Slach, of West Branch Iowa, has requested a permit to expand his existing 2,400 head of hog confinement feeding operation. If approved, the new facility would house up to 4,880 hogs. Consumers in the area, while complaining about the high price of pork, are trying to block the expansion. “If he keeps building more and more there will be a high concentration of factory farms near waterways,” said David Goodner, a farm and environment organizer for the Iowa Citizens for Community Improvement.  This scenario is common across the state of Iowa and across much of the Midwest. “We have over 10,000 hog farms in Iowa,” said Paul Petitti, permit engineer for the Department of Natural Resources. “It’s not uncommon for farmers to put up one barn and put up a second barn within a couple years.”

This raises the question: how can farmers continue to produce the low cost food that consumers want when their resources are continually being limited by those same consumers? Some consumers are uneasy with confined pork production facilities, yet are unwilling to pay the higher prices a different type of production process would involve.   The “not in my backyard” mindset is also at work here as producers are willing to expand production which would result in lower food prices, but local communities are opposed to expanding production in their area.

Grain producers are facing a similar situation. The recent Ag Census indicated a continued loss of farmland, yet demand for corn, soybeans, and other field crops continues to grow. To increase yield on an ever shrinking land base, farmers must use technology. This, however, is under fire by non-farmers. It is common for those who oppose biotechnology in grain production to be in full support of a new housing development, strip mall, or big box store that covers hundreds of acres of prime farmland with concrete.

At some point, these diametrically opposed forces are going to clash. Either farmers will be allowed to expand production or consumers — all consumers, both those who can and who cannot afford it — will see their food bills increase significantly.

By Gary Truitt