May 13, 2009

Pork producers in the US have asked the federal government to buy US$50 million worth of pork to support prices that dropped as much as 25 percent after an outbreak of AH1N1 last month.

 

The food, which would be in addition to US$25 million purchased before the outbreak, would go to emergency pantries and low-income nutrition programs.

 

According to Phil Borgic, president of the Illinois Pork Producers Association, the real challenge is that May, June and July are months when pork producers usually can make some money but the AH1N1 have taken their markets lower.

 

The industry also has launched a nationwide campaign pointing out AH1N1 have no concrete links to hogs or pork consumption, as declared by health experts.

 

While agreeing some might see the aid as an industry bailout, Borgic said, "it's getting to the point where we're all hitting the brick wall at the same time."

 

The state association joined the National Pork Producers Council in a formal request for aid to the US Department of Agriculture. Illinois is among the states where the outbreak has been most severe.

 

The Illinois Department of Public Health on Tuesday reported there have been 554 confirmed cases state-wide, including one in Sangamon County.

 

Despite repeated assurances that the virus is not transmitted by food, producers say the scare hit just when they were nearing the break-even point following last year's losses.

 

May lean-hog futures traded a little below US$62 per hundredweight Tuesday, down from a high of US$74 in early April. Prices fell as low as $55 shortly after the virus outbreak.

 

The USDA purchased US$25 million through the supplemental programme in March in response to low prices, as well as US$50 million in the summer of 2008, when hog producers were struggling with the high price of feed grains.

 

A Purdue University analysis released after China, Russia and the Ukraine banned pork imports from states that have had AH1N1 cases and other nations implemented stricter screening, predicted "hundreds of millions of pounds of pork" would wind up on US retail markets at discounted prices.

 

The report concluded that "although no cases of the new H1N1 strain have been reported in pigs and properly handled and cooked pork is safe to eat, the pork industry is feeling the brunt of public misunderstanding of the virus."

 

Iowa State University livestock economist John Lawrence said that the effect of government purchases on pork prices depends heavily on timing and the amount purchased.

 

At current prices, a US$50 million purchase spread across 13 weeks would bring wholesale prices up about 4.8 percent, he estimated.