Hog farmers urgently need help to weather crisis
Economist Steve Meyer has been around the hog industry his entire life. And in the 30 years he has watched the highs and lows of the swine markets this is by far the largest economic hit he has ever seen the producers suffer.
"Nothing compares to this," said Meyer, an economist wtih Kerns & Associates. "(Producers) are coming off a two-year period where they had hoped to make money and because of trade disruptions its been basically break even for the average producer out there. Producers are going to be in dire straits. I haven't heard much about bankruptcies, but they're coming based on what I know about production and the kind of economic losses we're facing."
U.S. hog farmers continue to face an unprecedented emergency as a result of COVID-related challenges, with an estimated two million hogs still backed-up on farms. During a press briefing, the National Pork Producers Council (NPPC) described the damage exacted on hog farmers and urged Congress to act swiftly to preserve their livelihoods.
According to Meyer's analysis, based on lean hog futures prices on March 1 and July 10 and actual hog prices in the interim, potential 2020 revenue from hog sales has been reduced by roughly $4.7 billion. Other losses associated with euthanasia, disposal and donation of pigs with no market outlet and insufficient space to hold them mean U.S. pork producers have lost nearly $5 billion in actual and potential profits for 2020. He said it appears those losses will continue into 2021.
“Hog farmers are now looking at $5 billion in losses – or $37 per hog – relative to what they expected for 2020 before the COVID-19 crisis began. Roughly two million hogs are still backed up on farms and this is likely to cause more pigs to be euthanized to prevent suffering due to overcrowding. If COVID prompts additional plant disruptions – a real possibility – the number of hogs backed-up on farms will swell precipitously.”
Wisconsin hog farmer and NPPC President Howard "AV" Roth says without help from the federal government thousands of generational hog farmers - himself included - may lose their livelihoods.
"This would forever change the agricultural and economic landscape of our country," the Wauzeka farmer said. “As the Senate begins work on the next COVID relief package, we urge lawmakers to provide a critical lifeline to hog farmers across the nation to minimize what has already been significant damage to our producers.”
Roth pointed to legislation crafted and introduced earlier this month by Sens. Jim Inhofe, R-OK, Richard Burr, R-N.C., Joni Ernst, R-IA, Chuck Grassley, R-IA and Thom Tillis, R-N.C.. The RELIEF for Producers Act of 2020, would provide compensation for farmers are forced to euthanize or donate animals that can’t be processed into the food supply chain as a result of COVID-19, among other provisions.
While pork processing plants have come back on line and are operating at 95% capacity, Meyer says things may appear to be returning to normal on the surface, but lurking below is a slow motion disaster.
"Producers have done everything they can to avoid euthanizing pigs, putting them on diets that meet their nutritional needs but don't provide enough energy and protein for growth in order to hold them from getting too heavy," he said. "In doing so they've backed up supplies of pigs in their other barns and on farms all across the U.S."
Nick Giordano, NPPC vice president and counsel, global government affairs said farmers are doing their best to keep the hogs viable.
"They're doing a good job of trying to manage it but you can't keep doing that indefinitely," he said.
Roth says its imperative that Congress act now.
"Or else thousands of farmers could go out of business, leading to consolidation and contraction of the U.S. pork industry.”