Omaha, NE - The David-and-Goliath debate between giant hog facilities and small, independent operations may be a waste of energy -- at least as long as producers are losing $25 to $30 a hog, producers and analysts say.
“When prices are this low, no one is thinking about expansion,” said Gale Schafer, agriculture operations manager for Sand Livestock Systems Inc. of Columbus.
Though Sand Livestock intends to complete projects already under way in western Nebraska, other plans for expansion have been put on hold.
“I think all of us in the business are reassessing those plans,” Schafer said. “There (aren't) really a lot of domestic projects that are too attractive to us at this time. This has been devastating.”
Nancy Thompson, an analyst with the Center for Rural Affairs in Walthill, said several large operations nationwide have announced plans to halt expansions that have fired controversy in the industry in recent years.
Smaller pork producers, she added, are predicted to leave the industry in droves.
“I think it's affecting everybody,” Thompson said. “But I would say it's affecting the smaller producers more heavily than the larger ones, because they don't have the deep pockets that will allow them to hold out as long.”
If pork prices do not rebound soon, 20 to 25 percent of producers will go out of business in six months, Thompson said, citing national reports.
Jim Pillen, part owner of Progressive Swine Technologies of Columbus with facilities in a six-county region, also said expansion plans within the industry will not materialize if the market stays where it is.
“I guess I would say that for any size facility, when you go through something like this, it's like getting cancer -- it doesn't discriminate,” Pillen said. “It affects any size producer. The only producers that are going to survive are the most efficient producers.”
But Pillen does not agree with predictions that many farmers -- even the smaller ones -- will be leaving the industry voluntarily.
“Nobody's going to be excited to get out of the business,” he said. “Everybody that's in the business is there because they feel they can compete. The only reason they'll get out is if they're forced to -- because there's no more money to pay the bills.”
Steve Cady of Hickman, the new director of the Nebraska Pork Producers Association, argues that the forced exodus already has begun.
“Yes, there are a lot of them getting out,” Cady said. “We're having so much trouble finding new leaders for local organizations in the rural areas.”
Cady, who sells livestock veterinary supplies, said he has seen low hog prices create a domino effect of losses on the agriculture industry, from producers to veterinarians to feed dealers.
“This issue has been happening all fall,” he said. “A lot of farmers are just throwing in the towel.”
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