Washington - Hog farmers, burdened by some of the lowest slaughter prices in 28 years, need a one-time federal subsidy of up to $50,000 apiece to stay in business, a farm group told lawmakers.
The request from the National Pork Producers Council came as the Agriculture Department forecast that market prices would remain below the break-even point for the first half of this year.
Market prices bottomed out last December at less than 10 cents a pound, about one-fourth of the cost of raising a hog.
The payments proposed by NPPC would be aimed at medium-sized operations. Until now, hog farmers have not received direct federal aid. Last month, the Clinton administration said it would pay up to $2,500 each to the 100,000 smallest hog farms.
Without help, NPPC vice president Craig Jarolimek said, family-sized hog farms “could become the seed stock for a massive vertical reorganization of the hog industry” that would result in a few large firms dominating production.
“We hope that you will support and Congress will pass a one-time emergency direct payment program to help producers recover a portion of the equity they lost and be able to remain in business and independent,” Jarolimek said.
“It would be based on marketings for the last quarter of 1998 and be capped at $50,000 per producer.”
One of the nation's largest meatpackers, Cargill Inc, told the committee that producer subsidy payments “would be the single greatest threat to livestock producers.” They would inspire farmers to ignore market prices and could cost U.S. access to major markets on grounds it was dumping meat.
“This is a step Congress and the industry must strenuously oppose,” said Greg Page, the vice president in charge of Cargill's red meat businesses. Page said it would be more fruitful to concentrate on rebuilding overseas demand for U.S. meats.
A NPPC spokesman said there was no cost estimate yet for the payments. There were about 114,000 hog farms in the country. Farmers who received aid from the $50 million program announced last month would not be eligible for the new payments, he said, nor would mammoth operators.
Nearly two-thirds of 63 million hogs in the United States were held by only 6% of the hog farms.
Pork output surged 10% in 1998, fueled by low grain prices and burgeoning demand, but were hammered by an abrupt downturn in demand, especially in Asia and Russia.
“Prices have recovered only to the point where losses have fallen to about $30-$35 per head,” Jarolimek said. “Independent family farm producers whose primary income is derived from pork production are the most in danger of losing their livelihoods right now.”
Keith Collins, chief economist at the Agriculture Department, said the government “expects continued large pork supplies will pressure hog prices during the first half of 1999...keeping prices in the $25-$35 per (100 pounds) range.”
“As hog slaughter begins to decline in the second half of 1999, prices are expected to rise above last year, especially in the fourth quarter,” Collins said.
Meat Industry Insights News Service
P.O. Box 553
Northport, NY 11768
Phone: 631-757-4010
Fax: 631-757-4060
E-mail: sflanagan@sprintmail.com
Return to Home Page