Pork producers urge, exercise caution in ongoing trade disputes
By Mike Lamb
GILFILLAN ESTATE — Greg Boerboom was at last sitting down at a table and was able to check his phone, while David Preisler just got off his phone after a long conversation.
The two Minnesota pork advocates officials spent all day Tuesday inside the Minnesota Pork Producers tent at the IDEAg Farmfest talking to concerned farmers who are fretting over the ongoing tariff war between the U.S., its allies and China.
“I haven’t been too far out of this tent. I haven’t been around the grounds at all. I have been in this little circle,” said Boerboom, the MPPA board president. He called the mood among those he has talked with as “guarded.”
“They are not panicking yet, because the Trump administration, Washington politicians are saying the tariffs have been placed, give us time. We are going to fix it. We as an industry have enough pigs sold ahead for awhile, so we can give them a little time to fix it. But as time goes on, as we get closer to when our market positions are ending, then we will start to worry. Guarded is the attitude we hear from all the producers here.”
Preisler, CEO of the Minnesota Pork Board, was hearing the same kind of comments.
“I think they (pork producers) are very concerned to what’s coming. The losses that could occur,” Preisler said. “Many say, if I just knew when these (tariffs) will end, that you could plan. ‘OK, this going to go on for three months, or six months.’ I think the unknown is bothering people.
“This is not a basic supply and demand. It’s something that could change now, literally, or it could drag on. I get that from a lot of people. How long will this go on? No one has the answer.”
But Preisler believes the “darkness is still yet to come.” He is concerned with the fourth quarter and next year’s first quarter and the real pain for pork producers is around the corner.
“We had issues with China and tariffs and so on,” he said. “But part of this is that we have a fair amount of product out there. So we know there are supply issues. But the other thing is the whole tariff thing and the uncertainty with that. It just has more psychology on the market place.”
That present market place psychology has forced Boerboom to change his tactics. He is now sending pigs sooner to market and save money on feed.
“The decision making right now to bring the weight down was the market price collapse driven probably by the tariffs. But there is a lot of pigs on the market too right now. You blame the tariffs, and they surely have enhanced it. But maybe we were starting to flood the market anyway.”
Meanwhile, Boerboom said previous discussions about expanding his operation have ended.
“Right now we are just looking to maintain,” he said.
Preisler said other pork producers will probably follow suit.
“If the futures market holds true – and once we get into that kind of November, December standpoint – farms could be losing $40, $45 a head. That’s a lot of money. That can tear into your equity like really fast. So what happens for farmers to work through that, you either start doing some hedging before hand, or you go back and refinance based on your equity to enable you to keep going.”
Preisler sees more positive news coming from Mexico.
“The most important one (trade negotiations), and it sounds like it may be closer, would be Mexico,” he said. “We actually ship more product to Mexico. Getting a resolution there, and it sounds like it could happen, at least is little bit more positive.”