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Pork Powerhouses 1996: Expansion Despite $4 Corn

You might think big pig expansion would grind to a halt with $4 corn. Not so. The 43 operations owning 10,000 sows or more grew by 18% in the past year. With their 1.74 million sows producing over 30 million pigs, these farms now capture on-third of the U.S. market. Click here to see the Pork Powerhouses ranking.

(Photo: Peter Gadkowski (left) and Tom Lattimore, of Western Pork Production Corporation of Yuma, Colorado.)

These numbers tell as tory about the swine industry. Somebody – many people, in fact – are investing large amounts of money in its future. While the USDA shows breeding herd numbers down for the nation as a whole, these largest farms continue to expand.

There are important changes taking place in this growth, however.

North Carolina is no longer the place to watch. The state is maxed out in finishing and kill floor space, say producers there. Truckloads of nursery and growing pigs are streaming out of the state, headed for Illinois, Iowa and points closer to the packing plants and cheaper corn of the Midwest.

The political climate in North Carolina has swung against pork production, say the largest players, and this change, plus the lack of finishing and kill space, makes continued growth more difficult in the state.

Go west pig man

New growth in the swine industry is concentrating in the Plains. Seaboard Corporation continues its expansion of sow units in Kansas, Colorado and Oklahoma, as the company tries to bring its Guymon, Oklahoma, slaughter plant to full capacity. Several new pork production companies in the Plains are growing to meet the Seaboard demand.

The nation’s largest pork producer, Murphy Family Farms, is eyeing the Plains for future sow growth, as well as concentrating on expanding contract finishing in South Dakota. Here are a few pork producers that did not make our ranking this year, but could have 10,000 sows in production by next fall.

Texas Farm, Perryton Texas. 3,500 sows in production on Aug 15. Goal is 27,000 in four years.

Vall, Texhoma, Oklahoma. This company is managed by PIC, and plans to be at 10,000 sows by 1997.

Hitch Pork Producers, Guymon, Oklahoma. Hitch has 5,000 sows in production, and plans to complete its 15,000-sow farrow-to-finish complex by late 1997, reports general manager Mike Brandherm. A feed mill is being construbetd, and will be completed in 1997. The mother company, Hitch Enterprises, is one of the nation’s largest cattle feeders, with over 300,000 head on feed annually.

Eagle Edge, Albin, Wyoming. Eagle Edge manages three pork production companies involved in PIC multiplication: Alpine Pig Company, Pork Tech Industries, and Ponderosa Ridge. Together, these operations will have 11,000 sows in production early next year.

Kalmbach Feeds, Upper Sandusky, Ohio. Kalmbach has 5,000 sows in production, reports swine manager Gene Isler, with construction under way on another 2,400-sow unit.

Prema-Lean Pork, Greensburg, Indiana. Owners John Corya and Larry Rueff, DVM, have 6,000 sows in production, and are adding another 1,200 by the end of the year.

DeCoster Farms, Clarion, Iowa. If Jack DeCoster stocks all the sow barns he is building, he could have 25,000 sows in production in 1997. Firs, however, he has to get his company out from under fines, manure violations and politics. Right now, DeCoster owns about 4,000-sow units in northern Iowa. The rest of his facilities are leased to Iowa Select Farms, which owns the sows (DeCoster is responsible for manure management on the leased farms).

Big Plans

Expect to see continued growth in sow numbers from these operations:

Farmland Industries and Alliance Farms Cooperative Association. “Our five-year strategic plan is for steady growth, says Scott Webster, who manages both hog operations from Farmland’s headquarters in Kansas City. “We’ve never had an aggressive growth plan, just steady expansion,” says Webster. “If we get aggressive anywhere it will be in putting up grow-finish units in eastern Iowa and northern Illinois now that Farmland Foods purchased the Dubuque packing plant.”

Heartland Pork Enterprises. Owner Bruce Rastetter says to expect more growth, especially with the company’s Costwold breeding stock. “We figure we are the third larges breeding stock company in the U.S. now,” says Rastetter. “Our goal in the next year is to take over the number two spot from Dekalb.” Heartland Pork Enterprises doubled sow numbers to 36,400 since last fall.

Land O Lakes. Expect substantial growth in the coming year, says Pete Petersen. “We are committing significant resources to our aligned program. This allows our producers access to high-quality, single-source feeder pigs on a long-term contractual basis though their local cooperative.”

Circle Four Farms. This farm near Milford, Utah, is owned by four companies high on our ranking: Murphy Family Farms, Carroll’s Foods, Smithfield Foods and Prestage Farms. Doubling to 20,000 sows since last year, Circle Four may add another 10,000 sows by next summer. A new feed mill will be up and operating by December, says manager Rob Adams.

Murphy Family Farms. Murphy will finish stocking a few more sow units in North Carolina during the next year, then look toward the Plains states for future sow growth. The company also plans to start contract finishing in South Dakota (Tyson Foods has similar plans for the state). When Murphy Family Farms stops expanding, you can be sure major trends are shifting in the swine industry.

No expansion likely

Little growth is foreseen for states up and down the East Coast. Corn is too expensive, packers too few and regulations too many. “We are feeling the pinch from environmental regulations,” says Jimmy Neuhoff of Neuhoff Farms (#35). “We will think twice before expanding in North Carolina. It’s a hassle. The law interpretations are changing all the time and nobody can keep up. It puts producers in a tough situation.”

Adding to North Carolina’s frustrations this year was Hurricane Bertha. “Corn fields look like they were run over by a steam roller,” says Neuhoff.

The most aggressive expansion in North Carolina during the past year was at Smithfield’s Browns of Carolina operation. The expansion is nearly completed.

“There is slowing growth in North Carolina,” says Robert Manly, executive vice president of Smithfield Foods. “We rapidly reached a point of balance in pig production and processing capacity, and there is increased environmental pressure. The high price of corn gives us an advantage to companies with good feed conversion.”

Smithfield is excited about buying the Morrell packing plants in South Dakota and Iowa. “We are pleased with the acquisition because it spreads our distribution and increases our share of branded products,” says Manly.

Dropped off list

Three operations dropped off our ranking since last year: Louis Dreyfus Corporation (Illinois), Hastings Pork (Nebraska) and Midwest Farms (Wisconsin). Dreyfus sold a portion of its sows to Triple Edge Pork in Illinois (new to our ranking this year at #22) and is down to 7,000 sows.

Hastings Pork split off MPI farms as a separate operation in Amboy, Minnesota, and downsized its Nebraska operation to 7,500 sows.

Midwest Farms is down to 7,000 sows, but the company is breaking ground in Colorado this fall on a 20,000-sow farm, says manager Ron Houser. “We will populate it with 10,000 sows starting this year. We’ve got the land purchased and the water rights in line.”

Bankruptcy of PSF

No story on Pork Powerhouses in 1996 would be complete without a mention of the bankruptcy filed in July by Premium Standard Farms of Princeton, Missouri, the nation’s fifth-largest hog operation.

PSF is now restructuring $400 million of its debt and opening a new office in Kansas City where it will “focus on future growth opportunity,” says a company news release. “It’s time to look to the future,” says CEO Dennis Harms. “This is an important step in our growth plans.”
Whether the bankruptcy of Premium Standard will turn investors away from the pork industry is yet to be seen. For now, there is still plentiful money pouring in.

Farmer Feedback on large hog operations

Discussion of large hog operations is heating up on the Internet. Here is talk off the @griculture Online website.

  • “Farm publications tell us we can compete with the big boys. Instead of complaining about losing our markets to the corporate giants, we are told to become more efficient. When I read Premium Standard Farms was filling bankruptcy to reduce its debt by $400 million, that was more than I could take. If this is how we are supposed to compete, then I want no part of it! Give the family farmer credit for what we have accomplished.”
  • “Giant corporate farms should not be allowed to use bankruptcy to enable them to expand their operations. Their sows should all be turned into sausage and the corporation junked forever.”
  • “Small farmers cannot compete with large companies. Never have and never will. Magazines tell us to buy, buy, buy. If I bought all I’m told I must have, I wouldn’t have room for hogs. We have no debt. Bankruptcy on the level of PSF is immoral. The public should know that when the big boys take over, the price of meat is going higher.”

Young people involved in management of big pig industry

There aren’t many businesses where a 22-year-old with a junior college degree has the opportunity to manage 14 employees and oversee millions of dollars worth of livestock and equipment. Shawn Loughren does this.

When Loughren was just 19, he was hired right out of Ellsworth Community College in Iowa Falls, Iowa, to work for the expanding Iowa Select Farms (#10 on Pork Powerhouses). Iowa Select was in a period of rapid growth, expanding from 11,000 sows in 1994 to 62,000 sows today.

Loughren proved he had a good work ethic and communication skills, so he moved up fast, explains Darwin Miller, director of human resources for Iowa Select. Miller also came to Iowa Select from Ellsworth, where he was an ag instructor.

There are four or five job offers from across the nation for every young graduate of Ellsworth’s swine production program, says Miller. “It’s a tight labor situation caused by growth in the industry,” he explains.

The average age of Iowa Select’s 520 employees is 28.

“People ask, ‘where are the young people in agriculture?’” says Iowa Select Farms counsel Mike Blaser. “They are working for us.”

The first big pig man of Texas

In 1961, T. Euel Liner founded Lubbock Swine Breeders with his son-in-law Toy Poage in Lubbock, Texas. Liner deemed the operation at the time, “a massive pig farm of 350 sows.” In 1972, LSB merged with DeKalb Swine Breeders (#9 on Pork Powerhouses ranking). Liner was an innovator of hog confinement, president of the National Pork Producers Council (1973), and a member of the Pork Industry Hall of Fame. He was known for his vision, positive attitude and storytelling. Liner died on July 25 at the age of 86.

Ohio producers took the challenge and reclaimed hog industry

Five years ago, the pork industry was leaving Ohio. Pig numbers were declining at a steady rate. “We saw the trends, and they didn’t look good,” says Dick Isler, executive president of the Ohio Pork Producers Council. “If we wanted a viable industry, we had to make changes.”

Isler and 70 others (farmers, veterinarians, lenders, feed dealers, Extension agents and more) joined together to form a strategic planning committee to address the future of the swine industry in Ohio. “It was a total industry effort,” says Isler.

First, the committee identified that the state had much to offer an expanding industry. There is no corporate farming law in Ohio; feed ingredients are plentiful; the climate is good; population bases are nearby. While there is no major packer in the state, pigs can be easily shipped to Indiana or further west.

The committee quickly determined that producers needed more help from Extension and Ohio State University. There was frustration among producers that Ohio State was not supporting their efforts. Bobby Moser, dean of the College of Food, Agricultural and Environmental Sciences, listened to the committee’s concerns and made changes. New faculty was added in the swine area, and the University created the Ohio Pork Industry Center to better meet the needs of the industry. The coordinator of the Center is David Meeker, formerly with the National Pork Producers Council.

Meeker has these goals for pork production in Ohio:

  1. Get new technology into the hands of producers
  2. Get more farms on record systems.
  3. Try to make sure Ohio is a state attractive to all sectors of pork business, including packing.
  4. Help producers network.

One of the advantages of the University, says Meeker, is that, “we can search and access information and get it to producers quickly.”

Because Ohio is a heavily populated state, it is vital that pork producers are good neighbors. “Our long-term vision is to have a vibrant, successful pork industry in Ohio that is both profitable and environmentally friends,” says Meeker. “It is not possible to save every producer, but they should have access to information and technology to help themselves.”

Ohio is holding tis own in pig numbers today. From June 1995 to June 1996, pigs kept for breeding were steady, compared with a 5% drop nationally. During this same time, neighboring states Michigan and Indiana dropped 7% and 13%, respectively, in breeding numbers.

Furthermore, Ohio is not relying on growth from large corporate farms. Not one of the 43 farms on the Pork Powerhouses ranking is based in Ohio. Independent producers like Irv Bell and Doug Dawson have made the difference in this state.

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