My Thoughts on Technology and Jamaica: Jamaican Pig Farmers, Meat Processors and Why Possible Pork Price Profits this Christmas 2015


Monday, November 9, 2015

Jamaican Pig Farmers, Meat Processors and Why Possible Pork Price Profits this Christmas 2015

Pork isn't doing so well, it seems, coming on to the busy Christmas period in the next seven (7) weeks.

But there is a difference of opinion between Pig Farmers and large suppliers as it relates to the availability of the white meat that is a favourite at Christmas-time as reported in the article “Industry Players Can’t Agree On Pork As Peak Holiday Approaches”, published Friday October 30, 2015 by Tameka Gordon, The Jamaica Gleaner.

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The Pig Farmers claim that they have managed to produce enough Pork to effectively end the Pork shortage of April 2015 as I’d reported in my blog article entitled “Jamaican now experiencing Pork Shortage – How Ready to Eat Pork causes Jamaicans to Love Pork as Processors want imports”. 

In fact, the large Meat Processors can be guaranteed of increases in supply of Pork as they're producing enough Pork to satisfy the coming seasonal demand to quote President of the JPFA (Jamaica Pig Farmers' Association), Hanif Brown: “I can safely say, based on stakeholder meetings, it was agreed that we have adequate supplies for the Christmas season. Especially seeing that the processors indicated that they have seen increases in the supply of Pork”.

But the large Meat Processors are still pressing to have the meat imported to curtail what they say is a shortage. This is a move that the Ministry of Agriculture has been resisting, due to the possibility that H5N2 Virus may find it way into Jamaica via the imported meat.

This has caused Pioneer's General Manager Pauline Wilson to declare that the Ministry of Agriculture is out of touch, quote: “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”. 

So who's telling truth? Are Pork supplies adequate or are we facing shortages of Ham for Christmas?

Pig Farmers now recovering but Meat Processors worried – Possible Price increases in Pork this Christmas

Before we get deep into discussing Pigs, I’ll have to clear up a free Pig farming terms as there are different types of Pigs involved in Pig Farming:

1.      Barrow is a male Pig castrated before puberty
2.      Stag is male Pig castrated later in life (an older boar after castration)
3.      Gilt is a young female not yet mated, or not yet farrowed, or after only one litter (depending on local usage)
4.      Sow is breeding female, or female after first or second litter

Ok now on with it then!

According to the Farmers, they took eight weeks to produce themselves out of the Pork shortage since April 2015.

But the Meat Processors claim they're not able to meet the coming demand for Pork. They also claim that the Farmers are painting a far too rosy a picture of Pork supplies and that not only are they misunderstood by the Ministry of Agriculture, but at seven (7) weeks till Christmas, it may be already too late.

To quote Pioneer's General Manager Pauline Wilson: “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”.

Production is clearly down at Arosa as well, as they’d have already had hams prepared from September 2015. Instead they have no Pigs to make hams, claims Managing Director of Arosa Robert Hoehener, quote: “Normally, I start making hams from September, but up to now we have not got any Pigs”.

So expect price increases this Christmas 2015, despite the Ministry of Agriculture have some two meetings with Meat Processors in the past six (6) weeks. 

So how do the Pig Farmers account for the complaints from the Meat Processors?

Pig Farmers Glut to 2012 - How input price fluctuations caused Pork supply shortage of 2015

JPFA (Jamaica Pig Farmers' Association), Hanif Brown says while supplies are not back to normal, the Meat Processors are not aligned with the production cycles of the Pig Farmers, quote: “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”.

Many of the Pig Farmers are just recovering from the scaling back after the Pork Glut of 2012 severely affected their ability to produce Pork. This resulted in several eateries and restaurants experiencing a shortage of supply in Pork, referred to as the Pork shortage of April 2015 as described in my blog article entitled “Jamaican now experiencing Pork Shortage – How Ready to Eat Pork causes Jamaicans to Love Pork as Processors want imports”.  

They scaled back their operations and are now just recovering, some just seeing profit for the first time in three to four years. To quote Hanif Brown: “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”.

After some were forced to exit the market, the prices of Pork returned as the demand grew. But the cost of inputs rose, forcing those remaining Pork Farmers to scale back production. Pork production rose and fell as follows:

1.      11.1 million kg in 2012
2.      10.5 million kg in 2013
3.      8.2 million kg in 2014

The result was a Pork supply shortage in 2013, which lasted until 2014 and on into early 2015 as can be seen from the low Pork production, which was unusually low according to Director at the Agriculture Ministry, Michael Price.

This was accelerated by increased convenience created by Meat Processor CPJ (Caribbean Producers Jamaica) via the introduction of Ready to Cook Pork in July 2014 as reported in my blog article entitled “CPJ introduces Ready to Cook Pork – Why Jamaicans don’t like Pork solved by making Pork ready under 30 Minutes”.

So what are Pig Farmers making currently?

Pig Farmers making huge profits at the Farm Gate - Basic Analysis by the numbers

Currently as it stands, based on figures provided by Director at the Agriculture Ministry, Michael Price, the status of Pig Farmers, defined as earning five or more Pigs in Jamaica is looking fair:

1.      5,000 active Pig Farmers 
2.      90% of local supply is done by medium-sized Farmers

As mentioned before, they now just in a recovery phase and are making fairly handsome profits from their sale of live weight and dressed carcass of their Pigs at the farm gate:

1.      JA$135 to JA$145 per pound live weight during production
2.      JA$165 to JA$175 per pound for live weight during sale
3.      JA$240 to JA$250 per pound for dressed carcass

So all is well in the Pig farming world as albeit there is a shortage of supply, this has created fairly high prices that are helping them get back on their feet, to quote JPFA (Jamaica Pig Farmers' Association), Hanif Brown: “If I say that they are not making any money, I would be telling a lie. 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”.

Ok, so what are the Pig Farmers doing to alleviate the coming shortage? And will their measures be effective within the next seven (7) weeks?

JPFA Says 10000 sows to achieve equilibrium by 2016 - Why Pork Prices in the supermarkets will be higher than expected

According to JPFA (Jamaica Pig Farmers' Association), Hanif Brown, the Pig Farmers are increasing their stock of Gilts, which have matured into sows, quote: “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”.

Once mated with a suitable Stag, they'll produce more Piglets to continue replenishing the stock.
The mature sows and Barrows can then be culled for Pork production, thereby helping to level off supplies. According to JPFA (Jamaica Pig Farmers' Association), Hanif Brown:

1.      8,500 active sows in the field
2.      1,200 to 1,500 gilts have been put back into production

Once the Pig Farmers reach a target level of 10,000 sows, they'll be back to a point of equilibrium, being able to handle the increase supply as well as satisfy the Meat Processors.

That'll occur in the First Quarter of 2016, at which time they'll scale back on the production of sows. This  so as to avoid reaching glut levels of 18,000 sows that occurred back in 2012 to quote JPFA (Jamaica Pig Farmers' Association), Hanif Brown: “But that was when we had the glut and Farmers weren't as efficient as they are now”.

Summary of the Pork Industry – Expect high prices for Pork on the Dinner table come December 2015

The Director at the Agriculture Ministry, Michael Price seems to concur, quote: “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”.

The Pig Farming Industry is on target to exceed 2014 production levels. But that'll only be achieved by the First Quarter of 2016. Until then, with no imports to alleviate the shortage of supply and timelines indicating that the sows will not come on line to satisfy demand, expect high prices for Pork on the Dinner table come December 2015.
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