Meat Industry INSIGHTS Newsletter

981134 Pork Producers Ask Packers to Increase Capacity

November 24, 1998

DES MOINES, IA - Declaring the “current market for live hogs is an economic crisis for pork producers,” the National Pork Producers Council urged America's packers to alleviate the current slaughter bottleneck by increasing capacity. Any increase in slaughter capacity would benefit producers.

Pork producers are facing the lowest commodity prices since 1971 and are losing an average of $50 to $75 per market hog. The USDA has estimated that pork producers are receiving approximately $144 million less per week on average than they did during the past five years.

“The current price levels are unacceptable and unsustainable and are creating a cash flow and equity crisis among producers,” wrote NPPC President Donna Reifschneider in a Nov. 21 letter to pork packers. “Clearly, if this disastrous situation is not reversed quickly, the impact on producers and the rest of the pork chain will have a long legacy.”

The letter acknowledged the efforts of certain packers for increasing slaughter capacity, but warned that without additional action, a “massive liquidation of pigs and exodus of producers” would begin to take place. The letter to packers called for three actions: 1) an increase of slaughter capacity, 2) a request to slaughter U.S. hogs first, and 3) an offer to assist with any regulatory issue that might be restricting slaughter capacity.

Packers are being asked to take these immediate steps: 1. Slaughter U.S. hogs as a priority -- Canadian packers are operating at less than capacity, yet 60,000 hogs per week from Canada are being slaughtered in the U.S. For that reason, packers in the United States should purchase and slaughter U.S.-produced hogs as a priority until June 1, 1999, and until the Canadian Government allows U.S. market hogs from PRV Level 4 and 5 states of the National Pseudorabies Eradication Program to freely enter Canada for slaughter.

2. Increase weekend slaughter runs -- Saturday and, if at all feasible, Sunday slaughter capacity should be increased to approximately 375,000 head. NPPC will "aggressively communicate" the need for producers to deliver hogs for Saturday, Sunday or overtime kills. Packers were asked to further consider offering higher bids for weekend-delivered hogs.

NPPC said it would be willing to assist packers in overcoming any regulatory barriers that might postpone or prevent increasing slaughtering capacity.

Last week, NPPC requested President Clinton to take immediate action in five areas to prevent the financial destruction of pork producers and their families.

This Article Compliments of...

Iotron Technology Inc.

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