Industry economic outlook shows no sign of recovery
By CAROL RYAN DUMAS
The USDA's purchase of up to $50 million of pork for federal food programs will help producers, according to industry leaders.
Don Butler, president of the National Pork Producers Council, said his organization is thankful for the announcement made Nov. 11 by Agriculture Secretary Tom Vilsack.
"The action by USDA to buy additional pork will benefit America's pork producers, the U.S. economy and the people who rely on government food programs," he said.
Butler said the government purchase will help "bring pork supply and demand back into balance."
The industry has been struggling with high input costs and low hog prices for 26 months. Since September 2007, the U.S. pork industry has lost $5.4 billion, with producers losing an average of more than $23 on each hog marketed, according to the council.
In September, producer Dave Roper said he was losing $1,000 a month on his family farm in Kimberly, Idaho.
"The bleed is pretty severe in the pork industry right now. It's as grim as it's ever been," he said.
Roper questioned how many producers, who have burned through equity while losing money on their hogs, would be able to survive.
"I don't see any recovery anytime soon," he said.
The latest analysis from Steve Meyer, livestock analyst and president of Paragon Economics, seems to bear that out.
Using Sept. 28 lean hogs, corn and soybean meal futures prices, Meyer forecasted pork producers' losses would exceed $25 a head for pigs sold in September, $30 a head for those sold in October and $40 a head for those sold in November. He expected losses to continue well into 2010.
The pork buy is the third supplemental purchase this year. In March, USDA agreed to buy $25 million of pork, and in early September, it bought an additional $30 million. Annually, the agency buys pork for federal food programs, including the school lunch and breakfast programs. Last year, USDA purchased $62.6 million worth of pork.
The council stated it is grateful for congressional efforts to help the U.S. pork industry, particularly the 63 U.S. representatives and 24 senators who signed a letter urging Vilsack to make additional purchases of pork, CEO Neil Dierks said.
"The support U.S. pork producers have received from Secretary Vilsack and many members of Congress has been tremendous and very much appreciated," he said. "And this latest purchase of pork should provide some relief to our industry and to rural America."
National Pork Producers Council: www.nppc.org.