Iowa Public Television


Meat Faces Weak Markets, Labels

posted on August 30, 2002

Iowa's Governor Tom Vilsack, locked in a tight race for re-election, this week urged hog producers to market early to vent the pressure of growing meat supplies. Obviously single digit hog prices in the fall would not be a campaign boost.

While it's a small comfort to farm state candidates, the history of the current problem is attributable to geo rather than electoral politics.

But, the mountain of meat piling up since the Russian poultry ban in March may begin to dwindle. The ban was lifted in April, but uncertainty over trade rules has kept poultry exports to a minimum, causing a six million pound per day backlog of chicken. A new agreement outlining phyto-sanitary standards and procedures will allow export of chicken to resume with the largest customer of U-S poultry.


Meat Faces Weak Markets, Labels

The renewed trade is good news for producers of all animal flesh products. The build up of chicken stocks has depressed beef and pork markets. Additionally, rising costs for feed grain are causing vertically integrated pork operations to pause and reassess. Smithfield Foods, the nation's largest pork producer and processor, has seen a drop of nearly 80 percent in first quarter earnings. The world's largest meat processor Tyson Foods, has found growing and finishing hogs to be so unprofitable that most of the corporate-owned market hog production will be dumped to concentrate on farrowing pigs to sell to independent producers. Tyson hopes this restructuring of its live hog operations will cut losses long term.

Also affecting the meat market are import regulations. Final details are being hammered out for country of origin labels on beef, fish, pork and poultry products as required by the latest farm bill. Still to be decided is how products will be labeled, who will verify the accuracy of labels, and who will pay for the regulation.

Some groups, such as the American Farm Bureau Federation and the National Farmers Union, claim the labels will give U-S producers an advantage in the marketplace. The Farm Bureau Federation has proposed three different labels: Exclusive product of U-S, Processed in the U-S, and Product of the country exporting the meat.

U-S trading partners and domestic food processors are adamantly against any labeling. Canada and others see the move as protectionist while domestic processors are wondering who will foot the bill. The USDA has allocated no money for labeling, a prospect many processors view as a domestic food tax.

Causing concern for all entities is verification of label accuracy, a responsibility that currently rests entirely on the shoulders of retailers.


Tags: agriculture economy food markets meat news