Pork Powerhouses 1997: Largest Farms Keep Expanding
Over 300,000 new sows have gone into production since last fall by the nation’s largest pork producers. Cheaper feed and better hog prices spurred these farms into aggressive expansion all over the U.S., especially in the Great Plains. How many pigs are the largest farms generating? That depends on whose production figures you want to believe. Disease has slowed production on some farms; labor turnover and environmental snafus continue to plague others. But most operations plan further expansion and hope exports gear up in 1998 to take the extra pork. Click here to see the Pork Powerhouses ranking.
(Photo: Minnesota is a major player in the new swine industry, thanks to producers like Christensen Farms, ranked 19th with 28,000 sows. Their feedmill went up last fall.)
When Bob Christensen was nine years old, a neighbor near Sleepy Eye, Minnesota, saw that he and his brothers had an interest in animals. He gave them two bred gilts with this advice, “When everybody is fighting over feeder pigs, let them have ‘em. When nobody wants pigs, but 300 instead of 200 and find a place to feed them.”
By the time Bob graduated from high school he and his two brothers had 140 sows. Today, Bob, 35, Glen, 34, and Lynn, 32, own Christensen Farms and Feedlots, ranked 19th on the Pork Powerhouses list with 28,000 sows. They continue to follow their mentor’s advice, and it has paid off.
Go against the flow
“When the industry is going hard, we go slower,” says Bob. “When the industry slows down, we go hard.” For example, Christensen built hard in late 1994 when hog prices went in the tank and many other large producers quit expanding their herds.
Good hog prices for several quarters in a row mean trouble for the industry, says Bob. “Other people start jumping in for the wrong reasons.”
If he is right, 1998 could be an interesting year. Sow numbers for the largest producers grew 19% since last fall.
And new farms continue to crowd the ranks of those with 10,000 sows or more. Last year, 43 farms had 10,000 sows. This year, there are 54.
The four operations with 10,000 sows that just missed the top 50 include: Agrivest of Waynetown, Indiana; Countrymark Co-op and GROWMARK of Indianapolis; Pork Technologies of Ames, Iowa; and Texas Farm of Perryton, Texas.
When you look at the top 50 farms, it is impossible to digest all the intricate networks, alliances, contracts and connections within each operation. More packers are getting involved in production, and investors are trying harder to stay in the background.
Split up numbers
We have split Circle Four Farms in Utah out separately to show the expansion there, but the farm is owned by Murphy, Smithfield, Carroll’s and Prestage. (Their numbers listed do not include Circle Four.) If you divide up the 30,000 sows at Circle Four, Murphy’s total is over 300,000. As one North Carolina competitor puts it, “Murphy sure is some kind of pig-producing machine.” Expect Murphy’s sow numbers to continue to grow, especially in the Great Plains.
Texas seems to be the next great frontier for pigs, now that Oklahoma has tightened environmental regulations and become more hog dense. Texas has land to spare, and the neighbors are used to feedlots. However, you’ve got to find water, labor and a market for the pigs.
“You can site the sow farms there, but you better send the pigs to Iowa for finishing,” says one producer. Why? There is only one packer in the Panhandle, and that’s Seaboard with 108,000 sows of its own, and contracts with other farms.
Another packer will build soon, predicts John McGlone at Texas Tech University. “By 1998 we will produce more pigs than Seaboard can kill. When we lock down another 40,000 sows in the region someone will build a plant.”
How many pigs produced?
Calculating pigs produced from these expanding herds, and its future effect on markets, is tricky. Some farms in the top 50 are riddled with disease and labor problems. One company complained that a group of sows had dropped below 18 pigs/sow/year, screwing up the firm’s marketing plan. What was their solution? “We are putting in another 10,000 sows.”
At least three farms in Colorado and a dozen in North Carolina suffered devastating PRRS (porcine reproductive and respiratory syndrome) in the past year. “We got hit hard in our unit with abortions storms in April,” says a Colorado producer. “We won’t be back to full production until later this fall.”
A producer in North Carolina says he has never seen so many veterinarians scurrying around hog farms, “PRRS and pseudorabies are hurting production down here. Everyone has been scratching their heads wondering where the pigs are. Well, disease is a whole lot more serious than we gave it credit for.”
Besides disease, poorer reproduction is hurting pig numbers. “We used to be embarrassed if farrowing rates dropped below 90%,” says one producer. “Now it’s not uncommon to average in the 70s. Females are leaner, and subject to more problems. Sow productivity has slipped the last few years. That’s been a limiting factor.
Moratorium in N.C.
While the largest North Carolina producers were expanding again in early 1997 after stalling out with $5 corn last year, the growth ended abruptly in late August when a moratorium on new construction or expansion of large hog farms was passed. It will be March 1999 before anything gets going again in North Carolina.
“This hog industry is so emotional right now, it’s life or death,” says one producer. “The industry is the victim of a witch hunt. We are not a tenth as bad as we are portrayed.”
On builder told of a call from the neighbor of a new hog unit. “She said, ‘These pigs have destroyed my life; I can’t hang clothes on the line because of the odor.’ I said, ‘First, we are just the construction company. Second it will be 90 days before a pig goes on that farm.’ There was a long silence.”
The latest controversy in North Carolina surrounds Smithfield Foods. In July, a manure spill at Brown’s of Carolina contract finishing farm stirred up press (Smithfield owns Brown’s). Then in August, Smithfield’s packing operation in Virginia was fined $12 million for violations of the Clean Water Act. The EPA charged that Smithfield violated environmental laws over 6,000 times since 1991. Smithfield has been appealing the rule.
Hormel, IBP integrate into pig production
It’s no secret that pork production is vertically integrated – Smithfield, Cargill, Seaboard, Premium Standard, Clougherty and Lundy all own packing plants and thousands of sows. Now tow other packers are following suit.
Public records in Colorado show that Minnesota-based Hormel Foods is partnering with Rich Bell of Bell Farms on a new confinement sow unit south of Las Animas. Over 4,000 acres of land have been bought since last December by Mountain Prairie LLC, a company owned by Bell and Hormel’s Raymond Bjornson and Gary Ray. A groundbreaking ceremony for the first 20,000-sow unit was held last winter. Hogs from the unit will be fed in Nebaska and Iowa, and killed at Hormel’s Fremont, Nebraska plant. “We have an investment in the Mountain Prairie sow operation,” says Gary Ray, “but only for the purpose of securing hogs out of the facility.”
Partnering with other companies is nothing new to Rich Bell. Public records show that the initial investor in his Bell West outdoor sow unit near Lamar, Colorado, was AGP in Omaha, Nebraska, a feed company with ties to ADM.
The nation’s largest pork packer, IBP, is also looking at pig production. In its second quarter earnings report released on July 18, 1997, IBP says it is committed to becoming more directly involved in hog production. “We believe we must align ourselves closer to pork production, said CEO Bob Peterson. “This will give us better access to hog supplies.” IBP spokesperson Gary Mickelson says the company has no ownership of pigs yet, but “we will be more directly involved in hog production. What form it will take or when it will happen has yet to be determined.”
DeCoster stocking farms despite controversy
DeCoster Farms of Iowa is stockings sow farms this fall while trying to pull itself out from under continuing environmental litigation. Iowa Attorney General Top Miller has filed three cases against DeCoster for manure management violations. A 1997 Iowa law says anyone with pending environmental litigation cannot construct a new hog unit of any size. The DeCoster sow units had permits prior to the law. DeCoster has built dozens of hog barns since 1991, most of them leased to Iowa Select Farms, but has only owned sows for a year. Today DeCoster has 2,200 sows in southern Iowa and 4,000 sows in north-central Iowa. By next summer, the company will have 24,000 sows in production, says Peter DeCoster, son of owner Jack DeCoster.
“We are looking at contract finishing and would be interested in talking to grain producers,” says Peter. The company has bought land in South Dakota, but has no pigs there yet.
In July, DeCoster formed a new company in Iowa called Premier Farms LLC. Skeptics say DeCoster will try to get permits under this new name. Peter DeCoster denies this, saying Premier is just the production side of their business. “We have another name for the construction side, for example,” he says. “We break down cost units.”
The main business for DeCoster is not pigs, but eggs. The company has over four million layers in Iowa now, and is building a fourth laying complex to bring the total to 6.4 million. This is in addition to millions of hens in Maine, where the family originates.
Hitch gets into hogs
Pigs are akin to armadillos for many cattle feeders – not something to be respected. So when Hitch Enterprises of Guymon, Oklahoma, branched out into pig production in a big way (15,000 sows today), the cattle industry took note.
“We got into pigs because it was profitable and used our assets of land, water, and money,” explains Paul Hitch. “We put the pigs in the irrigation corners.”
Hitch Enterprises dates back to 1884 when Paul’s great-grandfather started a cattle camp in No Man’s Land, which is not the Oklahoma Panhandle. Paul’s father, Ladd, was involved in Hitch’s pig business before he passed away last year. “He was enthusiastic about the hog business,” says Paul.
There are differences between cattle and pig people, says Paul. “Cattlemen are traders and gamblers. They think about the markets. Pig people are producers. They think about feed efficiency and pigs per litter.”
Because he is a cattleman at heart, says Paul, he gave his pig manager, Mike Brandlherm, a clean sheet of paper. “I said, ‘Here’s the water and land; give us a pig operation.’”
Are pigs good for his state? “I’d like to see continued growth in pigs around here,” says Paul. “It’s good for rural Oklahoma. More pigs in Oklahoma will lead to an increase in cattle over the next 10 to 15 years.”
Countrymark, GROWMARK involve din pig production
Citing a need in the Midwest to help member co-ops and their producers maintain a viable hog industry, Countrymark Co-op and GROWMARK say they are partnering with co-ops and farmers to produce pigs under contract. The two companies consolidated management last year, with livestock production based in Indianapolis and agronomy and energy based in Bloomington, Illinois.
Wendell Law, a president of production livestock animal nutrition for the consolidated management team, tells Successful Farming magazine that Countrymark Co-op and GROWMARK say they are partnering with co-ops and farmers to produce pigs under contract. The two companies consolidated management last year, with livestock production based in Indianapolis and agronomy and energy based in Bloomington, Illinois.
Wendell Law, president of production livestock animal nutrition for the consolidated management team, tells Successful Farming magazine that Countrymark Co-op and GROWMARK have 10,000 sows in partnership production today with more sow units under construction. The sows are located in Indiana, Illinois, and Ohio. Further expansion is planned for Wisconsin, Iowa and Ontario.
Before the consolidation, Countrymark Co-op had been involved in partnering with pork producer members for seven years, says Law.
“It’s been a very productive learning curve,” he says. “Today, we think the units and models can compete with any in the industry.”
The minimum size unit in the partnering program is 1,200 sows. The ideal model, says Law, is for a producer to partner either in feeder pig production or finishing, so the operation mirrors a farrow-to-finish farm, allowing minimal movement of pigs.
“Our objective is to partner with our members and producers to share the risk and investment, and provide management assistance,” says Law. “This allows producers to compete long term and provides an avenue for young producers to enter the industry on a scale that is competitive. This will also help provide for succession of the farm to the next generation.”
If you are interested in the program,, contact your local Countrymark Co-op or GROWMARK member co-op. More information is also available at www.countrymark.com.
South American markets for U.S. pork ease trade restrictions
Venezuela is opening its market to U.S. pork, says Nick Giordano with the National Pork Producers Council (NPPC). Venezuela has banned U.S. pork imports in fear of PRRS (porcine reproductive and respiratory syndrome) transmission to its own herd, even though scientific studies show PRRS is not transmissible through meat. When Venezuela tested its own herds and found PRRS, the country decided to officially allow U.S. pork imports.
Argentina has similar concerns about PRRS transmission from U.S. pork. NPPS hopes a report by the Animal & Plant Health Inspection Service on PRRS transmission will convince Argentina officials that PRRS is not transmissible through meat. NPPC expects Argentina to open itself to American pork in the next few months, says Giordano.
There are three kinds of producers in the swine industry today: Sunsetters raising hogs until they retire or sell out; New Money folks strictly in it for the investment; and true producers with a passion for pigs. They are all represented in our list of Pork Powerhouses. You decide who is who.