January 22, 2008

Canadian hogs and rising feed prices troubles Nebraska's hog industry 
 

Nebraska Pork Producers Association has contacted Nebraska's congressional delegation last week concerning two issues that are threatening the state's pork industry, said Larry Sitzman, executive director of the Association.

According to Sitzman, the circovirus vaccine has allowed the pork industry to market additional animals, at the same time that there is a liquidation of about 8 million hogs from Canadian herds that are coming into the US, leading to an oversupply of hogs.

This, when coupled with rising feed costs, creates a negative financial development which could be a possible disaster for the industrial, Sitzman said.

Corn prices are rising up to US$5 per bushel and soy to US$12 per bushel. Sitzman said there is a challenge for 15 billion gallons of ethanol now and a near future of 36 billion gallons will cause grain prices to have a more rapid surge. 

Price increase of corn from US$2.50 to US$4.50 per bushel has cost Nebraska's pork producers an additional US$130 million annually, while the price increase of soymeal costs an additional US$67 million annually, a combined total of US$197 million, Sitzman said.

Last January, market hogs were sold in the US$60 per hundredweight range. Currently, they are selling close to the US$40 per hundredweight ranges, meaning there is a loss of about US$25 per marketed hog.

Sitzman said it has been estimated that the price needs to be in the mid US$50 per hundredweight range to break even, and reduction of the US breeding herd and Canada's liquidation has pushed the kill percentage of swine to 18 percent above the record volume of last year.

The situation is not helped by the devalued dollar. Nebraska have more independent producers than the majority of other states and with these problems, the industry may be forced to consolidate even more in the hands of a few contract growers.

Sitzman believes that there needs to be a balance between energy and animal agriculture grain needs in this nation immediately.

Nebraska is one of the nation's leaders in hog production and slaughter.