With cash hog prices plummeting into the teens, the National Pork Producers Council (NPPC) took two strong steps in late November.
On Nov. 20, NPPC leaders called upon President Bill Clinton to take "direct and immediate action to prevent the financial destruction of pork producers and their families."
According to NPPC, pork producers are facing the lowest cash prices for their commodity since 1971 and are losing $50 to $75/market hog sold.
And, on Nov. 21, in a letter declaring the "current market for live hogs is an economic crisis for pork producers," NPPC leaders urged U.S. packers to reduce the current slaughter bottleneck by increasing capacity.
Five-fold Request A letter to the president signed by NPPC President Donna Reifschneider, a pork producer from Smithton, IL, stated "losses are of such historic proportions that if this dangerous situation is not reversed quickly, it will result in the failure of tens of thousands of pork producers and a massive restructuring of pork production in the United States. We believe the economic crisis facing America's pork producers must be viewed as a national emergency, warranting immediate intervention by the U.S. government."
USDA estimates that American pork producers are receiving $144 million per week on average less than they have during the past five years. Most producers are not eligible for financial assistance in the Omnibus Consolidated and Emergency Supplement Appropriations for fiscal year 1999.
NPPC has asked the president to:
1. Create an economic crisis task force. The task force would create a pool of resources and expertise from federal agencies to address the crisis.
2. Increase daily slaughter capacity. The U.S. pork industry has lost 37,000 head of daily slaughter capacity since June 1997. That, combined with a record 10% increase in production over 1997, has created a marketing bottleneck.
3. Increase government purchases of pork and pork products. NPPC requested the administration increase its pork purchases for the breakfast and school lunch program, Emergency Food Assistance Program, Food for Peace, Food for Progress and other humanitarian assistance programs.
On Nov. 23, NPPC hailed USDA for swiftly taking action. USDA announced a $50 million bonus pork purchase for federal food assistance programs.
4. Grant credit forbearance for producers. The NPPC letter suggested that all federal banking and financial institutions work with producer clients during this crisis.
5. Make the emergency disaster loan guarantee program available. With many pork producers facing economic disaster, the government was asked to make pork producers eligible for this program.
The NPPC letter to U.S. packers called for three actions:
1. Make slaughtering U.S. hogs a priority. According to NPPC, Canadian packers are operating at less than capacity, yet 60,000 Canadian hogs a week are being slaughtered in the U.S. For that reason, U.S. packers should purchase and slaughter U.S.-produced hogs as a priority until June 1, 1999, and until Canada allows U.S. market hogs from PRV stage 4 and 5 states of the National Pseudorabies Eradication Program to freely enter Canada for slaughter.
2. Increase weekend slaughter runs. Saturday and, if feasible, Sunday slaughter capacity should be increased to about 375,000 head.
3. Assist U.S. packers with any regulatory barriers that might postpone or prevent increasing slaughter capacity. In an open letter to pork producers, the NPPC Board of Directors explained that the crisis is not due to the industry producing too much pork.
Domestic consumer demand is up 7-8% over 1997, says ag economist Ron Plain of the University of Missouri. Consumers are paying only 1% less in price for pork now than they did a year ago.
And international demand for U.S. pork is also running 32% above 1997 for the period January-August.
The catch is the industry is producing too much pork for the existing slaughter capacity, causing producers to lose bargaining power with the packers.
Federally inspected slaughter exceeded 2 million hogs per week seven of eight weeks in the fall. And slaughter is running almost 10% higher than a year ago, points out Kelly Zering, extension livestock marketing specialist, North Carolina State University.
Storage data released Nov. 20 by USDA's National Agricultural Statistics Service showed frozen pork stocks up 17% from a year ago. Stocks of pork bellies were 15% above a year ago.
NPPC encouraged pork producers to urge retailers to regularly feature pork. NPPC is meeting with all major retailers to coordinate a special coupon promotion and also to discuss price margins.