Hormel takes pricing action to mitigate ASF

Anticipating significant changes in global pig and pork prices amid the African swine fever (ASF) outbreak in China, Hormel Foods is taking pricing action to mitigate the changing markets.

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(Tim Wall)
(Tim Wall)

Anticipating significant changes in global pig and pork prices amid the African swine fever (ASF) outbreak in China and other parts of the world, Hormel Foods is taking pricing action to mitigate the changing markets.

“The biggest issue from our point of view, is it’s not a matter of if this is going to impact the global market … it’s more a matter of when is it going to happen,” Hormel Foods CEO Jim Snee said during the dbAccess Global Consumer Conference on June 11.

Snee said there is a lot of uncertainty in the marketplace about what the supply situation in China truly is, because there has not been a lot of transparency concerning the toll the disease has taken.

But Snee added that eventually, China will be importing more pork, whether it comes from the United States or for other parts of the world. Regardless of where its new supply comes from, “that will have an impact from a supply perspective on driving up raw material markets,” he said.

Hormel Foods saw a “quick run-up in early May,” which led the company to take some pricing action. But the Minnesota-based company has also worked hard to project what the raw material markets will be. Snee expects upcoming changes to be substantial.

“These are significant increases that we’re projecting, so we’ve gone ahead and taken the pricing action to make sure that we’re well-positioned,” he said.

While the moves in prices in early May appeared to be a “false leading indicator,” Snee said the company maintained its pricing levels and is working with customers and retailers “to pull the right levers for trade and marketing activity so we don’t have to go back and have additional pricing discussions.

“I think we’re in a good place, but now it’s a matter of the markets cooperating,” he said.

During the conference, Snee also discussed the company’s ambitions related to the plant-based protein space, saying Hormel is active in developing alternative protein products.

View our continuing coverage of the African swine fever outbreak.

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