Washington - The Clinton administration said Friday it will provide hog farmers with $130 million to compensate for World War II-era pork prices that are driving some producers out of business.
Vice President Al Gore announced the assistance during a trip to Iowa, the biggest producer of hogs in the United States which also holds one of the first important political contests for presidential candidates.
“I want to reassure pork producers and their families that President Clinton and I are doing everything we can to help soften the blows and get producers back on their feet, not just so they can survive, but so they can share in the nation's continuing prosperity,” Gore said in a statement.
In addition to $50 million in direct cash payments, the government will also transfer $80 million to the U.S. Agriculture Department's voluntary hog pseudorabies eradication program to help reduce the oversupply of hogs. That money will be used to compensate farmers for the slaughter of many of the 1.7 million U.S. hogs infected with the virus.
Although pseudorabies does not pose a threat to humans, it is an extremely contagious virus that is costly for producers.
Market prices paid to farmers for hogs plunged last month to World War II levels of 8.5 cents a pound, far from break-even costs of 40 cents per pound. Prices have been driven down by oversupply and a bottleneck at slaughter facilities.
But while farm prices sank, retail grocery prices remained stable, raising suspicions among Democratic senators that the packing industry is taking advantage of farmers.
The financial crisis that is driving U.S. hog farmers out of business has jammed Congressional members' phone lines with calls from producers asking for help.
“A lot of folks are out there hanging on by their fingertips,” said an aide to Democratic Minority Leader Tom Daschle, a Democrat from South Dakota.
President Clinton met with pork producers at the White House this week to discuss the low pork prices and set up a task force to develop ways to help hog farmers. The Agriculture Department set up a separate panel.
Industry groups applauded the payments but many said they would only scratch the surface of the problem.
“This is a very good start,” said Tom Buis, vice president of the National Farmers Union. “Producers are in a desperate situation, and it's probably going to take a special appropriation by Congress to help them.”
Agriculture Secretary Dan Glickman told reporters Thursday that his department has limited powers without extra money from Congress.
But the head of the U.S. House Agriculture committee criticized the direct payment plan, saying the money should have been used to buy pork for the school lunch program.
“The administration's plan to shift dollars around sadly amounts to only a drop in the bucket,” said Rep. Larry Combest, the Texas Republican who heads the House agriculture panel.
Private agriculture consultant John Schnittker called the direct payments “negligible,” but said that government officials are “probably doing about all they can.”
“Realistically, it is a token amount of money,” he said. The $50 million in direct payments equals approximately 90 cents for every U.S. pig being fattened for market.
Traders shrugged off Gore's announcement as cash hog and pork prices were already supported this week by frigid temperatures across the United States, which has reduced the number of hogs going to slaughter.
But, the $50 million in cash payments will be especially critical because a USDA operating loan guarantee program made available to pork producers last month will run out of money by February, a National Pork Producers Council spokesman said.
“There is an urgent need for cash assistance to producers right now,” he said.
The pork council, the American Farm Bureau and National Farmers Union have proposed several solutions ranging from an airlift of pigs to hurricane-battered farmers in Honduras to huge donations of processed pork to Russia.
Other ideas include trucking hogs across the border to slaughter plants in Mexico and Canada and some type of unemployment payments for farmers. Several weeks ago, the Agriculture Department announced it would buy an additional $15 million of pork for programs to feed the needy.
Details about the maximum cash payment per hog farmer or the pseudorabies eradication program were not immediately available from the USDA.
“There's certainly nothing in my lifetime to compare to the free fall in prices in the past two months,” said Illinois Farm Bureau President Ron Warfield. “It almost defies adjectives and it certainly compares to the Depression.”
An equivalent price drop for other key U.S. farm goods would mean corn selling at 41 cents a bushel, soybeans at $1.04, wheat at 58 cents a bushel and cattle at 14 cents per pound, according to analysts.
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