Financial Strain Expected Due To H1N1 Influenza

Return to profitability likely to take longer than expected.

It could take weeks or longer before U.S. pork producers recover from export restrictions tied to a worldwide influenza outbreak. Still, Purdue Ag Economist Dr. Chris Hurt warns our nation's pork producers not to panic. He says the immediate reaction of humans and markets to situations like we have now is often more severe in the short term than the long term. However he does say this couldn't get much worse for the pork industry.

"Producers have been losing money since the fall of 2007," Hurt said. "With producers at near break-even right now, we had hoped that producers would return to profitability by May, but that isn't likely to happen now."

China, Russia and Ukraine are refusing to accept U.S. pork and other countries are increasing their screening of pork imports. Hurt says that could mean hundreds of millions of pounds of pork in the U.S. retail market at discounted prices.

"This is, in essence, the market anticipation of what this flu event means over the next few months," Hurt said. "The concerns are that 'swine' flu could reduce U.S. pork exports; that U.S. consumers could reduce pork consumption; and, more broadly, the flu could cause a slowing of world economic growth, which would reduce demand for food products in general."

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