NPPC asks USDA to Address Pork Industry Crisis

Combination of low hog prices and high input costs are hitting producers hard.

Published on: Apr 24, 2008

Rising feed costs and tightening credit markets are causing hog financial losses to mount. But current losses are miniscule compared to what U.S. livestock producers could face if this year's feed crops come up short.

Officers and top staff with the National Pork Producers Council met with Agriculture Secretary Ed Schafer to urge him to take immediate action to address what now is a hog industry economic crisis, which likely will affect the broader U.S. economy.

Feed costs double, losses mount

Over the past seven months, U.S. pork producers have lost more than $2.1 billion. Due almost solely to a doubling of feed costs, producers now are losing $30 to $50 on each hog marketed. Lenders are estimating that some producers could lose up to half or more of the equity in their operations by year-end.

Economists estimate the pork industry will need to reduce production by at least 10%t– meaning a reduction of 600,000 sows – to restore profitability. But that cutback could be costly:
* Less-efficient packing plants would close
* Less manure available for crop fertilizer would boost need for more man-made, foreign-produced fertilizer
* Smaller pork supplies would hike retail pork prices for consumers.

"Other industries that benefit from pork production, such as Main Street businesses, feed mills and trucking companies, also likely would see job losses," says NPPC President Bryan Black, a pork producer from Canal Winchester, Ohio. "Additionally, agricultural credit problems could arise as some producers default on loans."

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During discussions with Schafer – and in a letter presented to the secretary –Black asked USDA to buy an additional 50.5 million pounds of pork for various federal food programs. This would reduce the U.S. sow herd by nearly 163,600 animals.

Black also asked the secretary to:
* Implement emergency programs and loan guarantees to help producers purchase feed
* Consider allowing early release without penalty of non-environmentally sensitive Conservation Reserve Program acres back into crop production
* Support pork exports through USDA’s Market Access Program and Foreign Market Development Program.