April 24, 2008

US pork group urges USDA for immediate action on feed crisis

The National Pork Producers Council (NPPC) asked the USDA on Wednesday for assistance in stemming mounting financial losses caused by rising feed costs and tightening credit markets.

NPPC officials met with agriculture secretary Ed Schafer and urged him to address the economic crisis in the hog industry. The group said the crisis could also affect the broader US economy.

Bryan Black, the council's president, requested that the USDA purchase an additional 50.5 million pounds of pork for various federal food programmes.

The secretary was also asked to implement emergency programs and loan guarantees to help producers purchase feed, consider allowing early release without penalty of non-environmentally sensitive Conservation Reserve Program acres back into crop production and support pork exports through USDA's Market Access Program and Foreign Market Development Program.

In a press release, the NPPC said the nation's pork producers have lost more than US$2.1 billion, mainly due to the doubling of feed costs.

Producers are reported to be losing US$30 to US$50 on each hog marketed, the organization said.

Lenders are estimating that some producers could lose as much as half or more of the equity in their operations by year-end, NPPC said.

NPPC said economists have estimated that the industry will need to reduce production by at least 10 percent, which would be a reduction of 600,000 sows, to restore profitability.

However, the cutbacks could be costly. Less-efficient packing plants may close, wholesale pork prices would rise because of the smaller supply, and there would be fewer pork industry jobs, analysts said.