990632 Hog Farmers Still Not Breaking Even

Des Moines, IA - Pork industry leaders say the hog market has recovered from its worst crisis in decades, but farmers aren't so sure. After months of losing an average of $25 on each hog sent to market, they have seen prices increase a bit, but they're still not making money.

“We're close to break even,” said Karl Johnson, a hog farmer from Mankato, Minn. “But we're going to have to have some relatively decent markets for a while to make up for the money we lost the last nine months or so.”

Johnson and thousands of other producers traveled to Des Moines this month to attend the World Pork Expo, the industry's annual trade show.

While industry leaders discussed ways to restore hog prices -- from reducing the number of pigs going to market to opening more slaughtering plants -- many farmers wondered if they would be able to hang on.

“Talk to my banker,” said Johnson, who sells about 30,000 hogs a year but doesn't know how much longer he'll be in business. “We'll see how long the banking industry wants to hang with us here.”

Years of expansion in the pork industry, with more huge hog confinement units being built, increased the number of hogs going to market in 1998 by about 10%. That, combined with plant closings that cut the nation's slaughter capacity by about 8%, sent hog prices plummeting to lows not seen in decades.

Hog prices fell from 55 cents a pound, or about $165 for a 300-pound hog, to as low as 8 cents a pound, or $24 for the same hog. They've rebounded some, with the same 300-pound hog today bringing $90 to $120.

Chuck Levitt, a livestock analyst for Alaron Trading Group in Chicago, said the glut of hogs going to market during the past year has built up “a mountain” of processed pork in cold storage. And, he said, depressed foreign markets continue to hold back exports, leaving a reduced domestic supply of fresh pork as the only way to clear out the meat in storage.

Earlier this year, farmers cut back the number of sows they keep for breeding. An Agriculture Department report said the number of sows farrowed from March through August should be down 7% from 1998 levels, cutting into the number of hogs going to market this year.

But Darrell Axtell, a commodity broker at Cedar Rapids-based Securities Corp. of Iowa, said the number of hogs going to market today is more than USDA had predicted in March, a troubling indication that hog production may not have been cut back as much as predicted.

“American agriculture does the best job anywhere in the world in producing grain, livestock, whatever it is,” Axtell said. “But somewhere along the line, I think we've gotten so busy with production that we've not been very good marketers. ... We have to match production to demand.”

Leo and Millie Huseman of Lafayette, Ind., said their ability to sell purebred pigs for show at livestock competitions has helped them weather the bad times. “But if I had just a commercial herd, I would quit,” said Huseman, who attended the Pork Expo.

The Husemans' life work is raising hogs and they can't afford to get out of the business. “I've been doing this since I was a kid in 4-H,” Leo Huseman said. “It's what I've done all my life and I enjoy doing it. But you can't keep losing money and keep doing it.”

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