Farmers struggling with low pork prices

This article submitted by Linda Stelling on 12/22/98.

Pork farmers are struggling to make ends meet with pork prices averaging $7 to $10 for feeder pigs, the lowest in 60 years.

John Beckius, Paynesville area pork farmer, said to break even he needed $30 per feeder pig. Last week they were selling for $7.

“The prices are ridiculous,” Beckius said. “Once the prices started sliding, it has been steady and hasn’t stopped. I can’t remember when the prices have been this low.”

Beckius has almost 300 sows on his farm and raises feeder pigs. “A person can’t even butcher a hog and come out ahead, it costs more to process them than they are worth,” he added.

Beckius said hog farmers are losing money and don’t know when it will end. “Many farmers owe the bank thousands of dollars and don’t feel they can borrow more to make ends meet,” he said.

“It isn’t the pigs fault farmers are losing money. I feel large corporation farms are hurting the family farmer,” Beckius said.

Beckius said butcher hogs (240 to 260 pounds) are averaging six to seven cents per pound on the market.

“Raising pigs is a lot of work and a touchy business. I feel great if eight piglets survive per litter. The larger the litter, the lower the cost for production,” Beckius said. “If I were to liquidate my hogs, I couldn’t make enough money to pay for the feed bill,” he added.

At the Dale Melin Feeder Pig Inc., Sauk Centre, they are buying feeder pigs at $7 per pig and paying 15 cents per pound for anything over 40 pounds.

Beckius said with the pork prices so low, maybe the checkoff reserve funds should go back to the farmers to help cover expenses. The checkoff reserve is designed to promote the pork industry. A dollar from every pork sale is voluntarily placed in the checkoff reserve.

Jeff Ampe, who farms east of Paynesville, said he is getting out of the pig business this spring. “My equipment is getting old and worn out. I can’t replace it with the low prices we are receiving for pigs,” Ampe said.

“We have lost big time already and are having problems making ends meet,” Ampe said. “We have had pigs on the farm all my life. I don’t remember a time when we haven’t had pigs on the farm, even as a child.”

Ampe has a farrow to finish operation (birth to market as butcher hogs) with 60 sows. “I’ll get out of the business for a while and raise dairy heifers instead. My barns aren’t designed strictly for pigs, they could be used for anything,” he added. “With 200 acres, I have plenty of pasture space for heifers.”

“There have been certain times of the year when prices have been low before, but never this low,” Ampe said. “During the depression years pigs sold for five to six cents per pound but farmers didn’t have the expenses they have today. Many raised their pigs out in the grove and did not have barns.”

Ampe hopes the farmers who stick with raising pigs can survive.

Ron and Carol Klehr, St. Martin, have a farrow to finish hog operation. She said they are surviving the low prices. “We’ll hang in there and wait to see what the prices do,” Mrs. Klehr said. “When people come to the farm to purchases pigs, we sell them anywhere from $25 to $30 because that is the market price. However, if you purchase a whole ham in the store it will cost you about $48. That doesn’t seem fair,” she added.

Klehr agreed with Beckius that the large corporate farms decide the prices. “The middle man is getting the money, the farmers sure aren’t,” she said. Klehr said she heard news reports where pigs are selling for $1 in Louisiana.

“We’re lucky we raise most of our own feed and don’t have to purchase much for the pigs,” Klehr said. Ron took over the farm from his dad and there have been pigs on the farm more than 30 years.

Dallas Fenske, Paynesville, said this is the worst he has seen the pig market since starting farming more than 30 years ago. “In the late 1960s pigs were selling for $9, but then everything else was cheaper too,” Fenske said.

“We’ve talked about selling our boars and cutting back on the number of our sows,” Fenske said. “But then the prices dropped out of the market. We have seen dips that lasted three months before but this is going on nine months. It is hard to be positive when you walk into the hog barn.”

“It is too bad the consumer doesn’t experience the same low prices at the market, as well,” Fenske added.

“Some farmers have erected new barns and with the low prices are having a hard time paying for them,” Fenske said.

Fenske added because of the low prices, the feeder pig market at Swanville is closing at the end of the year. “The corporate farmers are squeezing out the little guys,” he said.

Leta Beier, Regal, has a farrow to finish operation with 700 pigs on the farm. Last week she shipped pigs and received 11 cents per pound for a 250 pound butcher hog. This week that same hog would sell for only eight cents per pound. “We need 30 to 35 cents per pound to break even on a butcher hog,” Beier said.

Beier’s father raised pigs close to 30 years. Older farmers have said the market hasn’t been this low since the depression.

Beier said she raises her own corn and doesn’t need to buy a lot of extras.

“The market prices better go up quickly or a lot of farmers will be going out of business. If the small farmers can’t make a go of it, the larger ones won’t either,” Beier added.

The Minnesota Farm Bureau Board of Directors is requesting Secretary of Agriculture Don Glickman to investigate the possibility of a pork disaster assistance program and conduct an immediate investigation into any anti-trust or price setting activities.

The Farm Bureau would also like to see increased utilization of existing Farm Service Agency guaranteed loan pro-grams to authorize emergency disaster loans to benefit the farmers and to maximize purchases of pork for use in all government institutions.

On Dec. 18, Minnesota Congressman David Minge, D-Montevideo, said Glickman has approved a multi-faceted plan to assist pork producers during this time of historic low prices. The United States Department of Agriculture (USDA) will make an accelerated purchase of $3 million in pork for the school lunch program and another $30 million of pork purchases by the end of February for other government facilities.

The USDA is currently working on a package of export guarantees for South Korea that would boost international demand.

Glickman had scheduled a meeting for Dec. 21, with meat packers, processors and retail food industry representatives to urge them to expand hog slaughter and increase movement of pork products in retail outlets.

The USDA has estimated American pig farmers collectively are losing $144 million per week. David Preisler, executive director of the Minnesota Pork Producers Association, estimates that in the past six months, Minnesota pork producers have lost more than $300 million worth of equity.

Amy Brandel, in the communications office of the Minnesota Pork Producers Association, said the main problem is the lack of slaughtering plants. “Too many pigs are being taken to market. The slaughtering plants can’t handle the large numbers,” she said. “This isn’t just a crisis in the United States, but worldwide, affecting Canada and European hog producers as well.”

It’s a disaster that comes despite a 32 percent increase in U.S. pork exports and a seven percent increase in domestic pork consumption this past year, according to the Minnesota Pork Producers Association.

Jim Quackenbush, president of the Minnesota Pork Producers, said the demand is there, the supply is there, but the kill capacity isn’t there.

“The U.S. has a pig killing capacity of 385,000 animals a day. Four packing plants closed in the last 18 months creating an even bigger bottle neck. Slaughter houses are working overtime to meet the demand for pork,” Quackenbush said.

“Adding to the problem is an influx of pork from Canada. Their packers are on strike which is forcing more pork onto the U.S. market. Instead of importing 7,000 to 8,000 pigs per day into the U.S. between 12,000 and 15,000 have been coming in from Canada,” Quackenbush added. In addition, an Environmental Protection Agency ruling in North Carolina won’t allow them to raise their killing capacity. In North Carolina, producers have a strict limit to follow.

Quackenbush explained to stay efficient, packing plants/slaughter houses need to operate at 95 percent efficiency. This allows plants to bid to get the best hogs. With packing plants operating at 102 to 103 percent capacity, there is no competition between the plants, thus there is no need to raise prices to get farmers to market their pigs.

Quackenbush said hog prices were in the 30 cent per pound range in October which was far below last year’s prices.

Quackenbush and two brothers have a farrow to finish hog operation with 300 sows near Chokio.

“Prices are always changing, but who will still be in the industry when they start to climb again,” he added. “Nobody thought the prices would stay low this long.”

Quackenbush added the hog market has been profitable for producers over the long-haul. Grain farmers expanded to raising hogs. Disease in Taiwan and the Netherlands meant good export markets and virtually every segment of the industry grew.

However, the low prices today are hitting farmers hard. A number of producers are on the brink of losing their farms. Whether they can hang on until a cash infusion arises is unknown, Quackenbush said.

The Minnesota Pork Producers Association have formulated long-term and short-term legislative and lending proposals. “The short-term strategies are efforts we would like to see happen within 60 days. The key to these initiatives are producer involvement. Producers are being asked to write letters and make calls to their lawmakers,” Quackenbush said.

The Minnesota Pork Producers are also working with the University of Minnesota task force and making crisis materials easily available to farm families. Meetings have also been initiated with lenders and key state and federal leaders.

The National Farmers Organization (NFO) has called for immediate USDA payments to save family-sized inde-pendent pork producers.

“Today’s pork industry is in an extremely critical situation that demands swift and sure action on the part of USDA,” Gene Paul, NFO president, said. “There is an immediate need for a direct infusion of capital into family-size independent producer operations. That capital would allow producers to stay afloat momentarily, restoring some hope and stability to the industry until they can meet with their lenders to work out a long-range marketing plan.”

Some industry analysts and political representatives believe family-sized pork producers are innocent victims, suffering because of untamed corporate mono-polization of the agricultural industry. In addition, many political leaders from ag states are calling attention to the fact the price consumers pay for pork has only fallen two and one-half percent in the last year, while pork’s wholesale value has fallen to levels not seen in six decades, Paul added.

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