Industry players can’t agree on pork as peak holiday approaches
With Christmas just eight weeks away, meat processors and pork producers are still on different sides on the supply of pork going into the traditionally high-demand period.
The farmers say they have managed to produce their way out of a pork shortage in just over eight months since news broke that they were struggling to supply fresh meat, as well the quantities needed for further processing.
"I can safely say, based on stakeholder meetings, it was agreed that we have adequate supplies for the Christmas season," said Hanif Brown, president of the Jamaica Pig Farmers' Association (JPFA), "especially seeing that the processors indicated that they have seen increases in the supply of pork."
But large processors like Arosa and Pioneer are signalling that supplies are still scanty and they expect it to impact their Yuletide business.
Christmas typically brings high demand for products such as hams, which processors start preparing in September, but Managing Director of Arosa Robert Hoehener and Pioneer's Pauline Wilson say their entities have not been able to get what they need to meet the expected demand, a sentiment that contradicts the pig farmers, who say all is well.
Over the period of the shortage, the Ministry of Agriculture has resisted pressure from meat-processing companies to adopt a more liberal pork import policy. The ministry always felt that the shortage was not evenly seen throughout the sector and, as such, it encouraged producers with sufficient volumes to act as backstop for the market.
Caribbean Broilers, the owners of Copperwood Pork, saw the opportunity to boost sales and took it.
But for Wilson, supply conditions remain "very, very bad".
"I just think the people at the ministry don't understand when it's okay to give us some relief so we can ease the shortage," she told the Financial Gleaner.
Hoehener echoed similar sentiments, saying his operation "will be short for Christmas".
"Normally, I start making hams from September, but up to now we have not got any pigs," Hoehener said.
Wilson adds that even if the Government were to relent and open up imports now, it would be too late for processors to meet the peak season.
"By the time you get in touch with your suppliers abroad - at this time of the year the wharf is congested - and by the time it's cleared, you are right down to the wire for Christmas. We wouldn't be able to process in time. It's not possible," she said.
She adds, however, that consumers may be spared price increases as processors are trying to contain costs.
The ministry has met with sector interests "almost every six weeks" since September, Brown said - which would amount to around two meetings - to measure the pork supply situation in the run-up to the peak shopping season.
The sector had a shortfall of supplies to processors up to March, with several restaurants also experiencing difficulties in sourcing the fresh pork and certain cuts for their businesses.
But now, even as the JPFA head concedes that market supply is "still not 100 per cent", he says processors "were comfortable to the point where nobody indicated that they would see a need for any importation".
"A lot of farmers, especially since they are now seeing a profit for the first time in three to four years, were capable of retooling and started increasing production," Brown said.
Asked about the processors continuing concerns, the JPFA head decried what he called their reluctance to properly align themselves with farmers.
"The consensus was that while the supply is not what they would like it to be for Christmas, they had sufficient, capable of meeting the demand," Brown said.
A glut of pork supplies in 2012 saw many farmers, especially large ones, significantly scaling back their production to stay afloat. Some exited the market.
Rising input costs also fed into the shortage. The effect was that supplies plummeted in 2013. With up to 10 months needed between breeding and getting pigs to market, that created a supply gap in 2014 and into 2015.
To shore up supplies, the JPFA encouraged farmers to increase their stock of gilts, which have now matured to sows, leading to the levelling off of supplies.
"Our strategy has been that the larger farmers would bring up back production. Not to say we only looked at the big farmers, but the persons who would have been better to bring up back production were the larger farmers. So, we went out there and encourage some of the larger farmers, who had scaled back, to start producing more," the JPFA head said.
"We anticipate that this year 1,200 to 1,500 gilts have been put back into production, and it improves on a monthly basis," he said.
Currently, there are roughly 8,500 active sows in the field. The sector will get to equilibrium when it gets back to 10,000 sows, he said.
"We expect by the first quarter of 2016, we will be back in equilibrium," the JPFA head said.
The sector has some 18,000 sows at one point, "But that was when we had the glut and farmers weren't as efficient as they are now," said Brown.
Pork production for 2014 stood at 8.2 million kilogrammes though "that production was on the low side," director at the agriculture ministry, Michael Price, said.
The market consumed 10.5 million kg in 2013 and 11.1 million kg in 2012. The latter was an outlier year in which consumption was unusually high because of a glut.
The ministry agrees with pig farmers that supplies are improving.
"Production is going up and we don't foresee where there will be any major disruptions for pork. We had tightness in the market and that continued into this year, (but) we are coming out of that situation," Price said.
Figures for production to date are not yet available, but the agriculture ministry's "prognosis is that we will exceed" performance in 2014, the ministry spokesman said.
At last count, the industry had some 5,000 active farmers - the definition of active being ownership and rearing of five or more pigs.
Roughly 90 per cent of local supply is done by medium-sized farmers, Brown said.
Meanwhile, farmers are now cashing in on increased prices at the farm gate - now averaging $165 to $175 per pound for live weight and $240 to $250 per pound for dressed carcase.
"If I say that they are not making any money, I would be telling a lie," Brown said. "Coming out of the glut, farmers were being paid $30 to $35 below the cost of production. We were being paid $90 a pound for live weight and, at the time, our cost of production was about $140. So farmers are definitely seeing a profit now."
The cost of production now, depending on the size and efficiency of farms, is around $135 to $145 per pound live weight, the JPFA president said.
"We are confident that, going forward, things are going to be better," he said, noting better stakeholder relations and the creation of the policies to guide the sector's sustainability.