US pork producer marketing groups urge USDA aid with sow buyout plan

 

 

Three US pork producer marketing groups have proposed a sow buyout programme and are urging the government's support to help the ailing pork industry.

 

The three groups include the Producers Livestock Marketing Association, National Farmers Organization and Allied Producers Cooperative. They are asking the US Department of Agriculture to evaluate the market effect of a US$200 million federally funded sow buyout programme to reduce pork supplies.

 

Losses are now estimated at US$30 per head and are projected to climb to US$54 later this year.

 

Rick Keith, president of Producers Livestock, in a release said, "US pork producers have been increasing production in recent years as they responded to growing export demand. But this year, they've been financially clobbered when AH1N1, wrongly labelled swine flu, appeared in Mexico and fear of North American pork hammered those exports ... no one can get the flu [from] eating pork."

 

A steep drop in lean hog futures of 35 percent since mid-July and a decline of nearly 34 percent in pork exports in June have contributed to producers' losses this summer.

 

Some agricultural economists estimate a US sow reduction of 10 percent to 12 percent is needed for the industry to return to profitability, which would require a reduction of at least 400,000 sows.

 

The buyout plan targets about 500,000 sows, using government funds at US$400 per animal for a total of US$200 million. The proposal states producers would provide cash receipts verifying that those sows had been sold for slaughter and sign a document testifying to their sow herd count plus promise not to add sows back for a minimum of three years. Random checks by USDA to verify participating producers are honouring their commitment would be required.

 

"The industry is grappling with downsizing supply right now, and some consideration toward government assistance in reducing the sow herd is warranted," said NFO President Paul Olson.

 

The three groups emphasize that consideration toward government assistance in reducing the sow herd should be seriously contemplated. "If the federal government can bail out companies that have been badly managed, why can't it assist an industry that is well run, but got unfairly hurt by circumstances outside of its control," asked Olson.

 

"There are pork producers going out of business today who did nothing to bring this on themselves," he said.