Do I Sell My Corn And Just Forget About The Animal?

The world's top pork producer cautioned this week that US pig farmers are incurring severe losses on their livestock and that they might start reducing herd sizes and selling animal feed as a move to recoup losses. 

Shane Smith, chief executive officer of Smithfield Foods, was quoted by Bloomberg on Wednesday while speaking at The Wall Street Journal's Global Food Forum in Chicago. Smith said:

"There's a concentration of people in the industry who grow their own corn, they grow their corn and they feed it to the animal.

"They're going to have to make a decision. Do I sell my corn and just forget about the animal?"

Smith explained producers are losing as much as $80 per head as China's pork demand wanes and feed costs skyrocket. A severe drought across the Midwest has sent corn prices soaring this month, squeezing producer profits. Also, the cost of farm equipment continues to rise, and inflation remains sticky -- all of this is an indication, as the CEO explained, might lead to producers shrinking herd sizes. 

"US growers usually only start shrinking herds when they face cash flow losses, and that is already happening," Smith said. He made no mention if Smithfield, owned by Hong Kong-listed WH Group, has made any adjustments to its pig herd size.

Smith said the US meat industry is facing a glut that might take until 2025 to normalize. He noted:

"This industry is in an incredibly difficult cycle." 

And still, consumers are paying near record high levels for pork at the supermarket, with prices hovering around $4.189 per pound. 

Meanwhile, the US beef industry is experiencing a shortage as the herd size plunges to levels not seen since the early 1960s. 

Which has sent beef prices at the grocery store to near-record highs. 

Some of the stickest inflation at the supermarket lingers in the meat department. But don't fret because US regulators just approved fake meat for consumers.