Des Moines, IA - The future for many U.S. pork producers lies in the balance unless immediate and meaningful federal government intervention is taken by Christmas Eve. Otherwise many pork producers will not survive this catastrophic economic crisis through January.
Donna Reifschneider, President of the National Pork Producers Council during a teleconference, urged all pork producers to call their elected officials to tell them of the extreme low cash hog price situation being faced in the countryside and to request immediate government intervention.
“Hogs are literally worth almost zero. When you factor in the cost of inflation, never before have U.S. pork producers had such low cash hog prices. Such levels would be comparable to cattle producers getting $16.48 per hundredweight for market steers or corn growers being paid just 75 cents per bushel of their corn,” said Reifschneider, a producer from Smithton, Ill.
“There's no way anyone in production agriculture can make a living on such extreme take home prices for their commodities. USDA is estimating that our producers are losing over $144 million in equity per week. This is wreaking unheard of devastation on our industry,” she said.
Pork producers are facing a supply driven crisis with too many market hogs to efficiently slaughter, she explained. Hog production has increased by 10 percent over a year ago. USDA had projected just a 3 percent increase. Imports of Canadian hogs for slaughter in the U.S. have jumped by 37 percent. At the same time, in the last 18 months, producers have lost 37,000 head, or 8 percent, in daily slaughter capacity.
The packing plant crisis has led to a liquidity or business crisis, in which pork producers have far exceeded their available cash and credit resources. Reifschneider said pork producers need to have a meaningful and immediate cash infusion through a loan guarantee program, including interest assistance and a debt restructuring provision, and by direct payments to pork producers as an emergency disaster or as some form of deficiency payment.
More must be done, Reifschneider reiterated, to increase slaughter capacity while reducing the live hog bottleneck at packing plants. Suggested initiatives include increasing slaughter capacity through Saturday processing, overtime and second shifts. An increase is needed at the Carolina Food Products plant, owned by Smithfield, which has the capacity to slaughter an additional 28,800 to 48,000 hogs per week above the plant's existing 144,000 weekly kill.
Direct intervention to restrict imports of Canadian live hogs for slaughter must be taken. NPPC has requested immediate Canadian government intervention to end the Quality Meats strike in Ontario, Canadian industry/government intervention to increase Canadian packer capacity utilization, and strong encouragement to U.S. packers to kill U.S. pigs first prior to any Canadian slaughter hogs.
Another initiative pork producers want the federal government to consider is the implementation of a humanitarian “gilt lift” of 300,000 head of 200 - 250 pound gilts for Honduras, Nicaragua, Haiti, the Dominican Republic and possibly Mexico. This would provide greatly needed aid to regions of the world that experienced natural disasters this year, while helping U.S. pork producers reduce the slaughter capacity bottleneck.
Reifschneider said the supply crisis could also be aided by more purchases of pork and pork products for domestic and international feeding or humanitarian assistance programs. Those packers participating would be required to operate full Saturday slaughters.
“Our crisis is now,” Reifschneider said. “Now we are asking for a little help, help that can have the impact of allowing one of the most venerable agricultural enterprises to survive, and support the hundreds of farm communities who depend on it.”
Meat Industry Insights News Service
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Phone: 631-757-4010
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