 991237 Smaller U.S. Hog Herd May Improve 2000 ProfitsDecember 20, 1999 Chicago - After a year of extremely low hog prices that forced many producers out of business and pared down the herd, the coming year offers hope of higher prices and profits for struggling producers. Fewer hogs, low feed prices and continued strong consumer demand for pork should restore some financial health to an industry that endured the lowest hog prices in 50 years a year ago. “There is no doubt we have lost producers because of the very bad year last year,” said Joe Kropf, livestock analyst with Kropf and Love Consulting, a Kansas City-based agriculture consulting firm. However, Kropf said hog producers should profit for much of 2000, with even the lowest prices next year covering production costs. “I think for a lot of the industry it will be profitable,” said Kropf, who said hog prices of 45 to 50 cents per pound should be common in 2000. Hogs this week sold for about 35 cents a pound in Iowa, which John Lawrence, an extension livestock economist at Iowa State University, said nearly covered production costs for efficient producers. Prices should rise in 2000 with the highest prices in the spring and summer, he said. “I would not be surprised to see highs near 50 (cents a pound). I think the cost (of production) would be in the upper 30 (cent) range,” said Lawrence The better prices will largely be the result of fewer hogs. Low hog prices the past two years forced many producers out of business and others to raise fewer hogs. A USDA hog inventory report due out on Dec. 30 should confirm industry forecasts for fewer hogs next year. Lawrence and other analysts said the report should show about 59 million hogs were on U.S. farms as of Dec. 1, down 5% from a year ago. Glen Keppy, an Eldridge, Iowa, producer, borrowed money but was able to maintain his 3,000 head herd despite watching hog prices drop to 8.50 cents a pound last year. That was the lowest price in 50 years and well below the cost of production. “I really feel the pigs that will be born this spring have a pretty good chance of making a pretty good profit. We are optimistic,” said Keppy. Steve Meyer, director of economics at the National Pork Producers Council, said the Dec. 30 USDA report should also show more producers quit the business in 1999. A year ago, USDA reported there were 114,380 producers. “It will almost certainly be less than 100,000. I would bet the farm on it,” he said. The strong economy should keep supermarket pork sales strong in 2000, Meyer said, even though less pork production may reduce per capita consumption. USDA expects per capita consumption in 2000 at 51.5 pounds versus 54 pounds for 1999. “Our demand is up 2.1% through October,” said Meyer of 1999 supermarket pork sales. “Meat demand has had one of its best years ever. The economy is the big reason.”
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