990331 Live Hog Prices: The Good, The Bad and The Ugly

Raleigh, NC - Pork producers in North Carolina and across the nation continue to be hammered by low prices for their hogs even as export and domestic demand for pork and pork products remains strong. During 1998 domestic demand was almost 7% higher than 1n 1997 and export demand was up over 18%.

The Good -- prices paid to pork producers today are almost 2 1/2 times what they were just prior to Christmas 1998.

The Bad -- even though prices have increased significantly and are in the mid twenties on a live weight basis, producers are still losing approximately $30 per head on every 245 pound market hog that they sell.

The Ugly -- from January 1 of 1998 through the end of January 1999, pork producers in North Carolina have lost some $311 million dollars in equity. Pork producers really don't expect to see prices get to the $40 / cwt. breakeven price until sometime this summer. North Carolina's losses could exceed $400 million dollars before prices turn around. North Carolina's gross income from the sale of hogs in 1998 was $800 million dollars less than it was in 1997. That $800 million dollar reduction equals approximately 80% of the value of North Carolina tobacco crop for one year. Nationwide, pork producer's losses will exceed two billion dollars.

North Carolina's agricultural sector is struggling. Depressed hog prices, tobacco allotment reductions, low prices for cattle, corn, cotton and soybeans are taking their tolls on not only farmers, but on banks, farm supply dealers, equipment dealers, insurance agencies and on any business that depends on agriculture for a portion of their income.

Unless the agricultural sector rebounds quickly, many farmers may be forced out of business and allied industries and rural towns across North Carolina are sure to follow. Many small towns in the Midwest ceased to exist during the farm crisis in the mid 1980's, the same thing could very well happen in North Carolina.

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