NPPC is asking for federal help to survive crisis
By Janet Kubat Willette
WASHINGTON — The National Pork Producers Council is asking the federal government to purchase more pork, support pork exports, implement emergency programs and loan guarantees to help producers purchase feed and allow the early release of CRP acres in an effort to help struggling pork producers.
NPPC staff and officers met with U.S. Agriculture Secretary Ed Schafer last week and urged him to take action to address the crisis in the pork industry.
Pork producers are losing $30 to $50 a head on finished hogs, said Dave Warner, NPPC communications director. Pork prices are good, Warner said, in the mid to upper $40s per hundredweight, netting about $120 per hog. The problem is it costs $150 to $180 per head to finish the animal.
The main culprit behind the rising finishing cost is the cost of corn, which has nearly doubled from a year ago. Warner said 65 percent of the cost of raising a hog is the cost of feed. The remaining costs, including the cost to heat and cool barns, has also increased, but corn prices are the major reason pork producers are in such dire straits, he said.
There really aren’t other feed options for pork producers, Warner said. Distiller’s grain from the ethanol industry is not a great option for pork producers, he said, because above a certain percentage of the diet it affects meat quality.
In September 2006, pork producers testified before Congress on the rapid expansion of ethanol. The NPPC supports alternative fuels, but also wants a level playing field for pork producers. Because of the 51 cents per gallon federal tax credit, ethanol plants can afford to pay $1.50 more per bushel than pork producers, Warner said.
Pork producers were worried about what would happen if there was a short crop with the increased demand for corn for ethanol production, he said.
Pork producers held their own through September 2007, Warner said. In the seven months since, they’ve lost more than $2.1 billion. One analyst said the pork industry is losing $17 million a day.
Economists have estimated that the industry will need to reduce production by at least 10 percent, or 600,000 sows, to restore profitability, Warner said.
Some farmers who are raising both hogs and corn may switch to only raising corn, Warner said.
Smithfield Foods, the largest producer of hogs in the United States, as well as a leading processor and marketer of fresh pork and packaged meats, announced plans in February to reduce its sow herd by 40,000 to 50,000 sows, or 4 percent to 5 percent.
The pork industry has been growing, with the hogs and pigs inventory showing the number of pigs up 7 percent at the end of March. Exports are strong and vital to keep U.S. pork producers from losing even more money, Warner said.
If the sow herd is reduced, the NPPC warns that packing plants may close, there will be less manure for crop fertilizer, there may be a hike in pork retail prices and lost pork industry jobs.
The organization will keep lobbying for action, Warner said, particularly talking to members of Congress on the agriculture committees.