Processing Magazine

Feed costs, swine flu put small hog farms in peril

June 22, 2009
High-energy costs and rising feed costs due to the production of ethanol has increased competition for corn and soybeans, which has forced hog farmers to sell off their business. Marty Malecek’s father started their hog farm nearly 20 years ago. Today, they are selling their 1,700 hogs and auctioning off land after it became clear that they could no longer cover their farming costs. A drop in demand as the recession hit meant people were eating less meat. The resulting oversupply that kept prices low-and then came the swine flu. The pain has been felt across the industry. While larger, more-diversified operations will likely survive, industry officials, producers and analysts say many small- and medium-sized farmers could be forced out of business. Most are family-run operations, meaning relatives could all be out of work. And it could mean roller-coaster prices at the store until supply and demand come back in line. The industry produced a record number of hogs in 2008, with the U.S. Department of Agriculture showing 116.5 million hogs slaughtered. Now, since the swine flu outbreak, USDA forecasts call for U.S. pork exports to decline at least 12 percent in 2009. Through April, they''re down about 11 percent, or about 167 million pounds, according to the USDA. The industry has lost an estimated $4 billion over the past 20 months, said Dave Warner, spokesman for the Washington-based National Pork Producers Council. Although a drop in exports has worsened matters, feed costs may be the biggest problem. Producers were losing up to $45 a head in mid-2008, Warner said. That dropped to about $11 a head when the swine flu outbreak hit in late April, and have since climbed to $20 a head. Those kind of numbers mean smaller farmers could face pressure to shut down.