September 3, 2011

 

Cargill to boost Texas hog production

 

 

Cargill Inc., one of the four major US pork processors, sees US meat exports will keep climbing and plans to begin hog breeding this month at a Texas farm it bought from a competitor.

 

An expanding middle class in developing nations should help to increase global meat consumption, said Dirk Jones, president of Cargill Pork in Wichita, Kansas. The US has the land and labor available to raise hogs more cheaply than countries such as Mexico, he said.

 

"We do take a longer-term view," Jones said. "Our industry should be optimistic about growth. We see the growth continuing in the industry, specifically in the export market."

 

US pork exports climbed 15% in the first six months of 2011 to about 2.45 billion pounds, according to government data. Per-capita pork consumption in China, the world's second-largest economy, jumped 18% to 38 kilogrammes (84 pounds) in 2010 from 32.3 kilogrammes in 2007, USDA data shows.

 

"The real growth is outside the US," said Erin Borror, an economist for the US Meat Export Federation. "Export markets are outbidding US customers."

 

Cargill bought its 21,500-acre hog production site near Dalhart, Texas, in April. It paid US$33 million to Smithfield Foods Inc. (SFD), the world's largest hog producer, for the facility, which will supply pigs for Cargill's processing plants in Beardstown, Illinois, and Ottumwa, Iowa. Meat from the hogs reared at the Texas site, which has been idle since spring 2010, will be sold both domestically and outside the US, Jones said.

 

About 5.8 million sows were held for breeding in the US as of June 1, almost the lowest on record, the Department of Agriculture said June 24. US per-capita pork supplies will drop 3.8% to 45.9 pounds this year, the government has forecast. The price of animal feed has climbed, with the most- active corn futures in Chicago rising 70% in the past 12 months.

 

Cargill's expansion plan is one of the only ones in the US pork industry, said Steve Meyer, president of Paragon Economics in Des Moines, Iowa.

 

"People are afraid of expensive corn," he said. Tyson Foods Inc. and JBS Swift are the second- and third-largest US pork processors, according National Pork Board data.

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