WASHINGTON – A recent report by the National Pork Producer Council (NPPC) concluded that pork prices have risen due to strong demand for US pork along with challenging market factors, not from concentration in the meatpacking industry.
The analysis came from economists Dermot Hayes of Iowa State University, Barry Goodwin of North Carolina State University and Holly Cook of NPPC. Their conclusions found that pork prices in the United States remain lower than in many other countries.
“This report shows the concentration level in the pork-packing industry is not significantly higher than it was 15 years ago,” said Jen Sorenson, president of NPPC. “The recent increase in pork prices is driven by strong pork demand, rising input prices, higher wages and supply chain bottlenecks throughout the industry.”
According to the assessment, the concentration level in 2022 is about 7% lower than five years ago because several new pork processing plants opened between 2017 and 2020. NPPC added that it did not find evidence that significantly higher profits were captured at the wholesale level during higher retail prices.
Another issue addressed by the analysis was the farm-to-wholesale price spread, consisting of packers’ costs and profits. The economists said it has been shrinking while the wholesale-to-retail spread has increased over the past six months. Packers’ gross margins also are estimated to be within their 5-year average range.
“Although pork prices have risen rapidly in recent months,” Hayes said, “retail and carcass prices in the US are still relatively low when compared with prices in other countries.”
The entire NPPC report can be found here.