More and more producers use up equity, leave business

By CAROL RYAN DUMAS

Capital Press

The USDA announced this month it will spend $30 million in additional government purchases of pork for federal food programs, a move pork producers welcome but say it won't save some producers from ruin.

That will bring USDA's total pork purchases for fiscal 2009 to about $151 million.

The National Pork Producers Council commended U.S. Agriculture Secretary Tom Vilsack for his decision to lend assistance to the U.S. pork industry and its efforts to reopen pork export markets that closed in the wake of the H1N1 flu outbreak.

"NPPC is extremely grateful to Secretary Vilsack for recognizing the plight of our producers and for taking action to help them," said Don Butler, president of the council.

Nonetheless, the industry has no delusions the purchases will return it to viable times.

"It's going to be a little bit of help. Obviously we need more," said Dave Warner, director of communications for the council.

Warner said he doesn't have solid numbers on how many producers have gone out of business due to unprofitable prices.

"We just know some have, and more will," he said. "We're hearing lenders can't give them any more money. They've burned through their equity."

Since September 2007, the U.S. pork industry has lost nearly $4.4 billion, with producers losing an average of $21.37 per pig over the past two years, according to National Pork.

"These purchases will assist pork producers who are currently struggling due to depressed market conditions," Vilsack said. "This action will help mitigate further downward prices, stabilize market conditions... ."

But it's not enough to help many struggling producers.

"A lot of them are going out of business. They've lost all the equity they dare lose in farms," said Dave Roper, a producer in Kimberly, Idaho.

The price of pigs is way below cost of production, and soybeans have soared to $550 a ton. Cost of production has increased to 70 cents to 80 cents a pound, up from about 40 cents in the first half of 2007.

At 50 cents a pound, compared with 72 cents a year ago, hog prices are down about 30 percent, according to the Daily Livestock Report.

Roper said he's losing a $1,000 a day.

"And futures on hogs went down again last week," Roper said. "The bleed is pretty severe in the pork industry right now. It's as grim as it's ever been."

The USDA purchase is a good gesture and pork producers appreciate it, he said, but he wondered if producers will survive.

"I see family farm operators going out of business. There's no one to give him any more money," Roper said. "It's as devastating as we've seen in a long time. I don't see any recovery anytime soon."

Add in continuous attacks from environmental and animal welfare groups, and "it makes you think maybe you don't want to continue the fight," he said.

Hog farmers, like a lot of commodity growers, saw a bump in prices last year, but now all that equity is drained, he said.

"I feel for the dairy industry ... but this is a little more grim than the dairy industry," he said.

The industry currently has thousands of independent pork producers. That's likely to change, he said.

"If it comes back, it'll be like the poultry industry, and that's unfortunate. There'll just be fewer people controlling the pork industry," he said.

"When and if it comes back, it's going to be a new dynamic and there'll be less players. And the sad thing is it won't be farms like me, family farms."

Staff writer Carol Ryan Dumas is based in Twin Falls. E-mail: crdumas@capitalpress.com.

Online

National Pork Producers Council: www.nppc.org

The AMS Commodity Procurement: www.ams.usda.gov/lscp