Tue, 05 Jun 2018
This week is the World Pork Expo in Des Moines, Iowa. Held every year in the first full week of June at the Iowa State Fairgrounds. The Expo will have close to 20,000 people attend and visit the many Pork Industry Exhibitors, enjoy the multiple barbecues and participate in other industry related events.
This year the World Pork Expo will kick off Tuesday night with a reception announcing the 2018 Global Mega Producers (over 100,000 sows). In the U.S there has been a list for a number of years of large producers called the Pork Powerhouses. It lists large producers in the USA and Canada. Last year the National Hog Farmer (America’s premier swine magazine and commentator group) and Genesus collaborated to begin the Global Mega Producer program.
Why? This is a Global Pork Industry. Pork production globally produces over 40% of all the meat and poultry consumed. We believed the Global Mega Producer was a way to highlight the International nature of our business and recognises the companies that have persevered and prospered in scale. We believe that 100,000 plus sows is a threshold of size to recognise and profile.
It is also personal, Genesus and myself in particular has had the opportunity to travel and do business globally. We see the ongoing dynamics in the US, Canada, Mexico, Europe, Russia, China, Thailand, Japan, South Korea, Vietnam, South America. Genesus is one of the world’s few swine genetic companies. First hand we see the rise of Global Mega Producers. Two of Genesus customers and Global Mega Producers, grew over 100,000 sows last year, another 200,000. Its phenomenal to observe the industry and capital it takes to undertake such an increase in production.
Pork moves globally, the dynamics of market profitability is tied to global access and market prices. Today in the US there is over 25% pork exported. Currently we write China and Mexico have imposed tariffs on US pork. Two major US markets. The world situation affects us all.
There was 28 Global Mega Producers in 2017. The 2018 list will be announced at the Global Mega Producer reception Tuesday night. One thing to note the Global Mega Producer combined list from our calculation is 10% of the world’s sow herd. Yes, they are big themselves but to a very great extent, this is still a fragmented global industry with 10’s of 1,000’s of individual producers in the world.
Another observation re Global Mega Producers is the many different business models. Some Mega Producers own all assets and pigs, others own pigs but contract barns, some are packers, some are not, some are co-ops that producers own most assets, others are management companies with relatively little money invested. There is no one-business model. Certainly vast differences in deployed capital per sow depending on business structure.
Another observation, in our opinion there is no magic secret to these Mega Producers. There is no technological advantage. Most if not all producers no matter the size have access to Globally competitive tools of Genetics, Nutrition, Equipment, Vaccines, Veterinarian support etc. What we see is Global Mega Producers have harnessed capital and learned to execute the basics of day-to-day swine production while using the tools available of technology. There is no magic. Its sound business and execution of basics.
We invite you Tuesday night to the Global Mega Producer reception. We look forward to visiting many of you at the Genesus tent space EV530 (same as last year). If you get to Expo enjoy yourself, if you don’t we will give a report in next weeks commentary.