Hog Farmers Question Division of
By DIRK JOHNSON
With prices for hogs so low that farmers are being
paid less than it costs to raise the livestock,
agriculture groups today raised questions about why
pork prices in stores are not also plummeting.
While hog prices fell 39 percent for the 12 months
ending in September, according to the United States
Department of Agriculture, retail pork prices declined
only 1.5 percent. Since then, prices have dropped
even more, down 49 percent for the first 10 months
of 1998, with farm groups estimating that producers
are losing $20 to $50 on every pig they raise.
''This is an issue on which farm and city people come
together,'' said Ron Warfield, president of the
Farm Bureau, contending that the gap between hog
prices at the farm and pork prices at supermarkets
was wider than ever before.
In announcing plans to monitor and publicize the gap
each week, farm groups clearly hope to pressure
retailers into promoting pork and cutting prices,
moves that could help hog prices rebound by stoking
consumer demand. But the farm advocates were
careful to use wording to avoid antagonizing
retailers or encourage scapegoating, the old
prairie-style penchant for distrusting markets and
''We are not accusing supermarkets of gouging
consumers,'' Mr. Warfield said. ''We are not calling
retailers greedy middlemen. The days of farmers
bashing 'the middleman' are long gone.''
Groups that represent the interests of supermarkets,
meanwhile, say the Agriculture Department's
measurement overstates the gap between farm and
retail prices. Tim Hammonds, president of the Food
Marketing Institute, a Washington trade group for
supermarkets and wholesalers, said the Agriculture
Departure based its retail prices on average weekly
prices in stores, which does not accurately measure
purchases, since consumers buy a disproportionate
share of pork, or anything else, during special sales.
Mr. Hammonds also said live hogs were only one
part of the price equation, noting that costs related
to slaughtering, processing and distribution had not
''With unemployment levels as low as they are,'' he
said, ''I think it's safe to say that a lot of labor
have gone up.''
Finally, Mr. Hammonds said retail prices were rarely
affected by the valleys, or the peaks, experienced
by farmers. He said that when hog prices for farmers
jumped 26 percent in 1996, retail prices climbed only
about 10 percent. But Mr. Hammonds said
supermarkets would gladly join a campaign to
highlight the value of what the pork industry called
the other white meat.
The main cause of the falling hog prices, all sides
agree, is an overproduction of swine. Hog production
was extremely profitable in 1996 and 1997, and the
big gains prompted many swine operations to
Moreover, political resistance to large-scale,
confinement hog operations in the Midwest and the
South has led some of them to expand before states
declare a moratorium on hog farms, as some have
done. On the Federal level, the Environmental
Protection Agency is preparing to work with the
states to impose strict pollution-discharge permits on
all large farms by 2005.
So far this year, 84.6 million hogs have been
slaughtered, an increase of about 11 percent from
last year. Consumption grew about 7 percent in the
United States, and exports have continued to rise,
although the Asian economic crisis has taken its toll.
The typical American eats about 52.3 pounds of pork
a year, according to the National Pork Producers.
The farm bureau here estimates that farmers lose
$20 to $50 a hog at current prices, a situation that
will surely drive many farmers out of business if the
prices remain low.
The $6 billion in emergency farm aid passed recently
by Congress does not directly affect livestock
producers. Instead, it is directed at grain farmers.
Iowa is the leading hog-producing state, followed by
North Carolina, Minnesota and Illinois.
Steve Meyer, an economist for the pork producers
group, said a drop in slaughterhouse capacity in
recent years was problematic for hog producers.
Slaughterhouses were once centered in big cities like
Chicago, which the poet Carl Sandburg described as
hog butcher for the world. But the slaughterhouse
industry moved to rural regions long ago, and in
recent years, the capacity has been shrinking.
''We've lost 35,000 per head per day of capacity in
the last two years,'' said Mr. Meyer, who noted that
some big hog and packing companies, like Smithfield,
had bought slaughterhouses and closed them.
The growing dominance of factory-like hog
companies makes it increasingly difficult for smaller,
independent operations to compete.
Dan Steimel, 34, who farms with his father, Roger, 61,
near De Kalb, Ill., was preparing to ship a load of
hogs to market for a sale that will bring about half
what it cost them to raise the livestock.
''We had some good years, and we paid down some
debt,'' said Mr. Steimel, an economics graduate from
the University of Illinois. ''We knew the prices would
go down again. But no one could ever have predicted
they would have gone this low.''
He added, ''There are going to be some farmers
asking themselves a lot of hard questions this
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