USDA Asked To Address Pork Industry Crisis

April 30, 2008 — 

In the face of rising feed costs and tightening credit markets and in an effort to stem mounting financial losses, the U.S. pork industry has asked the U.S. Department of Agriculture for assistance.

Officers and top staff with the National Pork Producers Council (NPPC) today met with Agriculture Secretary Ed Schafer to urge him to take immediate action to address what now is a hog industry economic crisis, which likely will affect the broader U.S. economy.

Over the past seven months, U.S. pork producers have lost more than $2.1 billion. Due almost solely to a doubling of feed costs, producers now are losing $30-$50 on each hog marketed. Lenders are estimating that some producers could lose up to half or more of the equity in their operations by year-end.

Economists have estimated that the industry will need to reduce production by at least 10 percent - meaning a reduction of 600,000 sows - to restore profitability. But that cutback could be costly, with less-efficient packing plants closing; less manure for crop fertilizer and correspondingly a need for more man-made, foreign-produced fertilizer; a hike in pork retail prices because of a smaller supply; and lost pork industry jobs. Other industries that benefit from pork production, such as Main Street businesses, feed mills and trucking companies, also likely would see job losses. Additionally, there likely would be agricultural credit problems as some producers default on loans.

During discussions with Schafer - and in a letter presented to the secretary - NPPC President Bryan Black, a pork producer from Canal Winchester, Ohio, requested that USDA purchase an additional 50.5 million pounds of pork for various federal food programs. This would reduce the U.S. sow herd by nearly 163,600 animals. Black also asked that the secretary implement emergency programs and loan guarantees to help producers purchase feed, consider allowing early release without penalty of non-environmentally sensitive Conservation Reserve Program acres back into crop production and support pork exports through USDA's Market Access Program and Foreign Market Development Program.

Source:
NPPC