1996 has left many people scratching their heads and wondering, "Was '96 a good year for beef and pork prices? And what's going to happen in 1997?"
It really depends on if you're selling or buying and if it's beef or pork.
No matter which you are, "It was and it wasn't," said John McKissick, a livestock economist with the University of Georgia Extension Service.
It was good in that prices did rise for both beef and pork producers, but prices are still relatively low.
In 1996, retail beef prices dropped 5 to 6 cents per pound from a year earlier, he said. Pork prices for grocery shoppers, though, are up almost 40 cents per pound from this time last year.
McKissick said producer beef prices plunged to an 18-year low in the spring of 1996. "Midfall prices climbed some," he said. "But prices for the year will still average about $15 per hundredweight lower than 1995 prices."
Beef prices paid to farmers averaged about $55 per hundred pounds in 1996, compared to about $70 per hundred in '95.
Farmer reaction to lower prices has varied, McKissick said. Some farmers sold off their herds and got out of the beef business. Others tightened up on management and are toughing it out.
"But things are getting better," he said. As farmers cull their herds, beef supply will get tighter. Lower supplies help push prices up.
McKissick expects retail beef prices will rise 3 to 4 cents per pound in 1997. "That's still a good deal compared to the price levels we've had over the past seven years," he said.
The 1996 grain crop is helping farmers, too. "The feed grain crop was good enough this year to drop feed prices some," McKissick said. That increases feeder calf prices to farmers in Georgia.
"Farmers have to manage carefully and cut costs wherever they can," he said. "It looks like the lowest part of the beef price cycle is behind us. But it's going to take another two to three years before we see good prices again."
He said pork farmers fared a little better this year, but not much.
"1996 was an excellent year for prices," McKissick said. "In fact, we had the best prices to farmers this year since 1990."
Farmers got almost $20 per hog more in 1996 than they did in '95. Expanding world markets and tighter supplies helped nudge prices up.
The recent popularity of bacon products in fast food items drove bacon prices to record highs. And high bacon prices have propped up pork prices overall. McKissick said 1997 retail pork prices could drop as much as 10 cents per pound.
But you have to look at the whole picture, he said. "Farmer prices were high through 1996, but they just barely paid for the increase in feed costs," he said.
Dropping feed grain prices can help hog farmers, too.
With rising prices and falling feed costs, farmers often decide to raise more hogs. "We'll probably see a production increase due to better profitability," McKissick said.
But he adds that pork production in Georgia isn't as profitable as it could be with a processor in the state. Farmers now must pay to ship their hogs to an out-of-state processor. That decreases their profit margin.
"It's a generally up year," McKissick said. "But we're looking for the beef and pork situation for farmers to get better through 1997."