Pork Producers Will Profit Despite PED Virus

Pork Producers Will Profit Despite PED Virus

The USDA announced on Friday that reporting of PEDv is now required.  In addition to requiring reporting of the PED virus, today’s announcement will also require tracking movements of pigs, vehicles, and other equipment leaving affected premises; however, movements would still be allowed. Neil Dierks, with the National Pork Producer Council, says the USDA decision not to restrict movement of hogs is the correct decision, “NPPC agrees with USDA’s decision not to restrict the movement of pigs, and it urges the agency to take practical approaches – ones that are workable for pork producers – to other related requirements it may impose.” He added that NPPC will provide input to USDA as it further develops responses to these devastating diseases. Dr. Paul Sunberg with the National Pork Board told HAT PEDv is a production issue not a public health or food safety issue. One top pork economist suggests that pork producer profits will actually increase as a result of PEDv.

Steve Meyer, of Paragon Economics. says it is ironic that, while the disease is devastating pork production, pork profits are going up, “This is an inelastic demand. That means when you take cut pork production by 1% the price of pork goes up by more than 1%.  Since revenue is price times quantity, you can see that total revenue goes up when you cut production in this way.” He added that even for the individual producer, higher prices will offset losses caused by PEDv.

Meyer said the reduction of the hog supply due to PEDv may hurt consumers more than producers, “Pork producer revenues will hit record highs in 2014 while consumers will pay the price of PEDv with higher retail pork prices.” In addition, prices of beef and poultry will also be higher in 2014.  According to Meyer, this is an example of why animal health is such an important issue for the industry and for public policy in general.  While PEDv poses no threat to human health of food safety, it will have an impact on the price of meat for the rest of the year.