June 30, 2020
Backlog on US hog farms might reach two million heads
According to three economists, as much as two million hogs are backed up on US farms because of coronavirus slowdowns and shutdowns at meatpacking plants, Successful Farming reported.
The backlog will likely persist into the fall and oversupply will weigh on market prices unless there is a strong recovery as the economy reopens, they said.
Hog farmers have pointed to the backup as evidence of their need for additional government assistance. They say huge losses are possible if they are forced to cull hogs because there is no room for them at pork plants.
Economist David Miller of Decision Innovation Solutions estimated a backlog of 1.2 million hogs. He also calculated that 2.1 million heads had disappeared since March 1, either through direct sales and custom butchering or because of euthanasia by farmers. During a teleconference sponsored by the National Pork Board, Miller said that "as long as we're backing up hogs," market prices this fall could be 20% to 25% lower than a year ago.
Associate professor Lee Schulz of Iowa State University said the backlog could exceed 2.2 million heads— "a week's worth of slaughter backed up in the system." Scott Brown, an associate professor at the University of Missouri, said his estimate of the backlog was "not all that far from what David has talked about."
Brown, Schulz, and Miller spoke about the backlog while discussing a USDA report that estimated a national hog herd of 79.6 million heads on June 1, the largest June 1 inventory in 56 years of recordkeeping. The June figure was up 3% from the March 1 inventory, which was the highest March 1 total on record.
"A lot of hogs we have to deal with," said Brown, and "not a lot of help on prices." Market prices could average US$4 to US$6 per 100 pounds lower in the fall and winter than estimated by the USDA, he said.
Schulz said the backlog could be whittled down if packing plants are able to run at high capacity this summer. Slaughter rates slowed in April and May because of coronavirus outbreaks at meat plants.
"We know we have large numbers of hogs coming," said Schulz, referring to the record number of market hogs, 73.3 million heads, on farms as of June 1.
Iowa is the No. 1 hog state, with 25.2 million heads, followed by Minnesota, with 9.6 million heads, and North Carolina, with 9.4 million heads.