Economists’ predictions that 2008 would be a tough year for pork producers turned out to be an understatement.
The meltdown of the financial community and the resulting loss of investment funds in the commodity markets have made the situation even more dire for every American businessperson, including US. pork producers. To survive, we must all learn to live in a very volatile world, and that means doing a better job of managing risk. The most important mantra for pork producers to learn is — marketing is absolutely everything. Without a plan to assure your marketing
objectives, it doesn’t make sense to spend time and money on finishing a hog to 265 lb. With a good set of financial and performance figures, completing a plan is not that difficult, but a systematic approach is extremely important.
The plan must include three fundamental factors: Knowledge. Evaluate the risk present in your business. Know your
costs (variable and fixed). Have a sound knowledge of the tools available and packer/investment community
terminology. Structure. Develop and complete a well-designed and structurally sound, written plan. Anticipate hog and grain price changes as much as 18 to 24 months into the future. Design a strategy to counteract any adverse volatility.
Discipline. Have the professional discipline to execute the plan as designed. Review the results. Keep records that will help make management decisions in the future. It is concluded that nothing is forever, not even a rally
in the hog futures, and if a profit is available, it should be exercised. In turn, a “structured” plan allowed us to capture what we could of the 2008 summer rally. And, “discipline” gave us the confidence to position our clients for some much-needed profit in 2009.