March 16, 2007

 

US hog farmers may consume less corn due to ethanol
 

 

As corn prices continue go to up with ethanol plants being built throughout the country, some analysts believe US hog producers will consume less corn than in previous years.

 

The evolution of the hog industry over the last 15 years has seen larger operations overtaking smaller family operations.

 

Dan Vought, associate vice-president for A.G. Edwards and Sons, talked about the impact ethanol is having on the hog industry.

 

He said the US livestock industry has made its way through 6 billion bushels of corn over the past two years which represents about half the crops.

 

Vought said if predictions are right, the ethanol industry is on track to consume a large portion of the country's corn; about 5 billion corn bushels will be utilised in the next three years.

 

In acreage, the crop will consume about 30 million acres in 2008, he said.

 

With the expansion of ethanol plants around the US, Vought said analysts are predicting a 15 to 20 percent decrease in the amount of corn consumed by the hog industry.

 

Vought said the hog industry has evolved the last 15 years with larger operations producing more hogs than ever.

 

Vought said in 1992 there were about 150,000 small family farms with 100 hogs or fewer.

 

Now, it has plunged to 50,000 as they are producing 1 percent of the total hog population, he said.

 

Vought said the hog industry capacity has been maxed out in recent years. Expansion has come mostly from increases in efficiency and building of new barns and finishing houses.

 

With the expansion of larger facilities, Vought said hog producers likely won't back down their production.

 

Vought said along with the expansion of the hog industry in the US has posted an increase in exports.

 

He said a big leap has been made in the US pork industry when the country was a net importer in the 1980s to a net exporter in the early 1990s until now.

 

Vought said he believes the hog market will be strong this year, but some reduction could happen in the future due to erratic flow of prices and production increases.