In the fall of 1998 a shortage of slaughter capacity caused hog prices to drop to their lowest level since the early 1960s. December 1998 live hog prices averaged $24.50 per cwt. below breakeven.
"The biggest single slaughter day in the fourth quarter of 1998 was 394,887 head on December 16," says Ron Plain, University of Missouri economist. "At the time, that was a record for one-day hog slaughter. That date no longer ranks in the top 170 slaughter days. Thus far, slaughter has topped 400,000 on 75 different days.
"The biggest U.S. slaughter day ever was on December 16 of last year when 411,088 hogs were slaughtered," he says. "The second largest kill was the following day with 410,064. The third biggest kill day ever was September 19 of this year when 408,150 hogs were slaughtered."
Modernization boosts capacity
"The rise in U.S. slaughter capacity over the last seven years has been largely achieved without adding slaughter plants," says Plain. "Packers have expanded and modernized existing plants to boost their capacity.
Only one significant new facility, the Meadowbrook Farms plant at Rantoul, Illinois, has opened since 1998. Three other larger plants (Farmland at Dubuque, Excel at Marshall and Hormel at Rochelle) have closed.
"Barring something unexpected, it looks like hog slaughter capacity should be adequate for the foreseeable future," says Plain.
"Packers are planning to add 10% to U.S.-Canadian hog slaughter capacity before the end of this decade," he says. "Triumph Foods plans to begin slaughter at their 1,000 head per hour plant in St Joseph, Missouri early in 2006. Last week, they announced plans to build a sister plant in East Moline, Illinois. If both plants eventually operate double shifts, each will slaughter 16,000 hogs per day.
Canada is cranking up
Last month, Olywest announced they will build a 2.25 million head per year plant in Winnipeg. Olywest is also expanding its plant in Red Deer, Alberta to slaughter 4.5 million hogs per year.
"Another Canadian packer, Maple Leaf, is planning to construct a new hog packing plant in Saskatoon," says Plain. "Maple Leaf currently operates a large hog slaughter plant at Brandon, Manitoba which has the capacity to add a second shift should an adequate supply of hogs and labor become available."