Pork producers could have tough row to hoe during the coming year

Friday, January 30, 2004

As tax time rapidly approaches, folks collectively take a look at yearly income and wish there was more of it. This is especially true of area hog producers as they consider the year's outlook for the pork industry.

The numbers this week are not that good. Ron Plain, University of Missouri Professor of Agriculture Economics, in his weekly livestock report reveals that hog slaughter numbers are up from 378.2 million pounds in January 2003 to 407.1 million pounds last week while prices continue to founder at moderate levels. Plain indicated that if trends continue there could be record numbers of hogs slaughtered.

Why are the slaughter numbers so high despite poor prices? Wayne Prewitt, West Central Region Farm management Specialist for the University of Missouri Outreach and Extension Office said that the biggest reason has to do with the structure of the pork industry.

In the world of hog production, those entities that drive the numbers are the integrators, large corporations which will own hogs through the entire cycle from genetics to the farm to the dinner table. "

If they don't make money on their pigs then they can make money on their meat," said Prewitt.

This means that an integrator can operate on a much larger scale and with a much smaller profit margin than an independent producer.

Recently, with the Democratic presidential nominees gallivanting around Iowa, the idea of a ban of packer-ownership on livestock has once again been circulating. While this is a popular political idea Prewitt does not see it as realistically feasible right now. "We don't have the people willing to grow pigs we used to. The society has deemed hog production 'smelly' and I think a lot of independent producers have thrown in the towel because they don't want to have to deal with environmental issues."

However, all is not gloom and doom for the independent hog producer or for the future of the industry. Prewitt said that when consumers go to the store they are looking for a product to have three things: price, quality and consistency.

Large corporations provide all of these things but they also leave room for smaller producers to fill niche markets.

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