October 23, 2009

Advocates for small American farms are calling for government aid to specialised hog and poultry operations to stop, after the government loaned more than US$260 million over the past two years.

A coalition of farm groups sent a letter this week to Agriculture Secretary Tom Vilsack, head of the USDA, asking him to stop giving or backing loans for the construction and expansion of larger hog and poultry facilities.

The coalition said the loans are contributing to an oversupply of poultry and pork that is pushing small operators out of business.

The USDA is continuing to guarantee the loans for expansion but they are being asked to bail out the industry at the same time, said Rhonda Perry, executive director of the Missouri Rural Crisis Centre.

The USDA bought US$25 million of pork in April and US$30 million in May. Since then, the industry representing large-scale operators has asked for another US$100 million in pork purchases.

That is completely irresponsible, said Matt Ohloff from the Iowa Citizens for Community Improvement, part of the coalition.

The letter said the loans are going mainly to large-scale operations to expand their facilities or build new ones. In the last fiscal year, 98.9 percent of the loans went to contract producers, not independent producers, said the USDA.

But suspending the loans will have little effect, as few people are now entering the pork industry which has lost US$5.3 billion in the past 24 months, said analysts and representatives of the pork industry.

Barely anyone is expanding right now, as most people are just trying to get by, said Don Nikodim of the Missouri Pork Association.

In the past fiscal year, the USDA gave US$10.3 million in guaranteed loans to expand hog and poultry facilities in Missouri, and about US$19 million in 2008.