August 18, 2009

The National Pork Producers Council is urging the US Department of Agriculture to provide additional financial help for the nation's swine producers.

 

Since September 2007, US pork producers have lost nearly US$4.5 billion, more than half of their equity, said NPPC officials in a release. The NPPC also held a teleconference with representatives of the media Monday afternoon.

 

"US pork producers are in desperate straits right now, and they need a little help from USDA," said NPPC President Don Butler in a release. "The request NPPC has made today not only will help pork producers and Americans who benefit from government feeding programs but tens of thousands of mostly rural jobs supported by the US pork industry."

 

Butler said the losses amount to about US$21 for every hog marketed since September 2007. And the outlook for this fall remains bleak with losses projected at up to US$54 per head.

 

The sum of all actual and projected losses in producer returns since April 24 through the end of the year from the AH1N1 influenza is US$1.256 billion. The misnaming of the AH1N1 influenza as "swine flu," exacerbated the situation and losses, NPPC said. The misnaming contributed to import bans on US pork and reduced demand worldwide.

 

In addition, Chicago Mercantile Exchange lean hog futures prices project further losses for producers through April 2010, Butler said.

 

Based on these extensive losses, a letter requesting multiple forms of support has been sent to USDA Secretary Tom Vilsack. Producers are beginning to go out of business, which will affect many rural jobs.

 

NPPC's request includes three separate US$50 million purchases of pork for use in food assistance programs. The first of these would come from 2009 budgeting. The second is requested to come from the lifting of a cap on Section 32 funding. The third US$50 million purchase would be requested to occur on Oct. 1 using fiscal 2010 funds.

 

In addition, NPPC requests US$100 million in additional support from the US$1 billion appropriated towards the AH1N1 influenza effort. The organization wants US$70 million to go towards swine disease surveillance, US$10 million for diagnostics and development of vaccines, and US$20 million for industry support.

 

Another part of the request is for a study of the economic impact on the livestock industry of an expansion of corn-ethanol production and usage. The US Environmental Protection Agency has proposed raising the cap on blending ethanol into gasoline to 15 percent from its current 10 percent. NPPC said the losses incurred over the past 23 months have been primarily from higher feed and other input costs. Only recently have hog prices fallen below historic break-even costs.

 

In addition, the letter urges the US Trade Representative to reopen export markets to US pork. Several countries, including China, continue to impose unwarranted bans on US pork because of the AH1N1 flu.

 

Even if all of these support efforts are met, it won't be enough to pull prices up and make producers profitable, said Steve Meyer, president of Paragon Economics.

 

"It will help," but producers will still be losing money, Meyer said.