Pork industry group says hog farmers are facing a crisis
With market prices for hogs down by 50%, hog farmers are losing money on every animal and some will soon debate whether it’s cheaper to kill a pig than feed it, said Wisconsin producer Howard Roth, president of the National Pork Producer Council, on Tuesday. The NPPC said there is plenty of pork at the grocery store, so there is no need for consumers to worry about supplies despite coronavirus slowdowns at processing plants.
“The crisis today is on the farm, not at the grocery store,” said Nick Giordano, NPPC counsel.
Whether they grow cattle, poultry, or hogs, livestock producers are calling for the USDA to provide direct relief to them. The pork council asked for more than $1 billion in government purchases “to clear out a backed-up meat supply” and for “equitable direct payments to producers…without eligibility restrictions” — language that could allow meatpackers to collect money alongside independent farmers. By one estimate, packers own 30% of the U.S. hog herd.
House Agriculture chairman Collin Peterson urged the USDA to maximize its purchases of agricultural commodities as part of the coronavirus relief program that it is designing. Agriculture Secretary Sonny Perdue has said it will include purchases of surplus food as well as cash payments to farmers and ranchers. He has $15.5 billion at his disposal at the moment.
“The pictures and video of milk being dumped and fresh vegetables being plowed into the ground is unsettling to most Americans, but it is heartbreaking for those farm families who produced that commodity,” said Peterson in a letter to Perdue.
“We are in a crisis and need immediate government intervention,” said Roth during a teleconference. He said the financial survival of some producers is in jeopardy. “Sadly, it is true euthanization (of hogs) that is a question that is going to come up on farms,” he said, unless there is federal help. The NPPC said hogs were “backing up” on farms because demand for pork is down.
A record number of slaughter pigs, 71.3 million head, are on U.S. farms for this time of the year. Economist Dermot Hayes of Iowa State University said there already were too many hogs for packers to handle before the coronavirus pandemic destroyed the food-service market for pork and illness slowed pork production. Two large slaughter plants, in Sioux Falls, South Dakota, and Columbus Junction, Iowa, are closed temporarily due to coronavirus infection among workers. Hayes estimated that 93% of slaughter capacity remained available although some plants have slowed output.
Ample amounts of pork are available, said Hayes. According to USDA, frozen pork supplies during February were 7% larger and pork bellies — the source of bacon — were 38% larger than a year earlier. “The only concern (about retail supplies) would be if we lost several plants,” he said.
Farmers will lose $37 a head for hogs sold for the rest of this year, or $5 billion in all, estimated Hayes and private economist Steve Meyer. Before the coronavirus, analysts expected hog farmers to make $10 a head in 2020. Pork producers suffered in 2018 and 2019 from retaliatory tariffs, which cut into exports, an outlet for 10% or more of U.S. pork.
“We have seen cattle and hog prices continue to plummet, particularly for pork, which is now down basically 50% for the year and live cattle down about 30% because of backups of processing of pork and beef due to plant closures and plant slowdowns at the slaughter-plant level,” said economist Scott Irwin of the University of Illinois during a webinar. “We’re trying to get a handle on how severe and how long that will last.”
Per-capita meat consumption is forecast at a record 226.7 pounds this year, following increases in red meat and poultry production.
The cattle industry lobby group said the closure of a JBS USA beef plant in northern Colorado for two weeks will affect market prices. “Plant closures or slow-downs have significant regional and national implications that will ripple through the marketplace at a time when cattle producers are already suffering from market uncertainty and economic hardship,” said Colin Woodall, chief executive of the National Cattlemen’s Beef Association.
The National Chicken Council, a trade group for the broiler industry, asked Perdue to include chicken farmers in coronavirus relief to offset a drop in chicken sales. The industry is grappling with large reserves in cold storage, reduced workforces at processing plants, and the overnight loss of food-service sales.