Returns for Iowa's hog producers in 2002 were worse than expected, according to John Lawrence, Iowa State University economist.
“Farrow-to-finish producers lost an average of $16.22/head marketed during the year with losses in September near $36/head,” he says.
“While hog prices did not fall to single digits as they did in December 1998, live hog prices dipped below $20 during the month of August, the lowest level since January 1999,” he says.
Besides cash losses, Iowa producers also lost equity in their operations. Equity is the value of a property after deducting any charges against it.
“A farrow-to-finish farmer marketing 1,000 head a month would have lost nearly $200,000 in 2002,” says Lawrence. “Producers were slowly rebuilding from the financial losses of 1998-1999. However, losses during 2002 put accumulated returns for the five years since 1997 back into a negative position.” That leaves producers with less equity than five years ago.