The late December announcement of assistance to pork producers by Secretary of Agriculture Dan Glickman was termed a 'positive first step.'
It will provide a 'temporary lifeline for many pork producers and their families,' says Donna Reifschneider, president of the National Pork Producers Council (NPPC).
However, she cautions 'much more must be done to effectively address the crisis pork producers are experiencing.'
USDA's relief announcement included:
* Notice of a Farm Service Agency (FSA) guaranteed operating loan for all commodities, including pork producers. The targeted loan guarantee program offers a special $1 billion allocation of funds to guarantee producers operating loans. Earlier, Glickman called on FSA to facilitate loan applications by basing pork prices on futures contracts rather than current market prices. The agency is expected to permit certain existing borrowers to shift payments due this year to the end of their loan period.
* A moratorium on FSA loans for construction of new hog facilities.
* Acceleration of the National Pseudorabies (PRV) Eradication Program. Glickman says the government will pay current market prices to buy out hogs afflicted with PRV. The program would allow those PRV-positive hog herds to be depopulated, with slaughter through rendering.
The voluntary program, projected to cost around $85 million, will take six months to complete, says USDA. That compares with projections of two more years using vaccination to eradicate the disease. (Completion of eradication has been slated for the end of the year 2000.) There are about 1,200 quarantined, infected herds in the U.S. The indemnification program to be set up by USDA's Animal and Plant Health Inspection Service is expected to remove 1.7 million hogs from the marketplace. PRV-free status could open up new export opportunities, says USDA.
* Additional purchases of pork and pork products for domestic and international feeding or humanitarian assistance programs.
* Probes of contracts and any other non-competitive pricing practices in the marketplace.
* Support for the voluntary live hog price floor established by Hatfield Quality Meats and Farmland Foods Inc.
The two became the first packers to set voluntary minimum prices. Hatfield established a price of $25/cwt. through at least December, after which the policy was to be reviewed. Farmland set a floor price at $15/cwt., which is available to producers who sold hogs to the farmer-owned cooperative between Sept. 1 and Dec. 19, 1998.
Glickman says he is encouraged by the action of some packers to offer a minimum floor price. But other packers and retailers need to do more to pass on the low prices to consumers.
USDA is also urging bankers to be flexible with pork producers who are impacted by the low prices.
Glickman repeated calls for federal agencies to increase pork purchases.
Despite requests from both NPPC and the American Farm Bureau Federation for loans directed to pork producers, the agriculture secretary says he has no legal authority to do so. He predicted that money budgeted for USDA direct operating loans will run out before the end of fiscal year 1999, and will probably need supplemental budgeting from Congress to continue. Glickman says USDA is looking at improving structural programs to help prop up U.S. livestock producers.
NPPC Calls For Relief NPPC had hoped the USDA aid package would be more comprehensive. But Glickman went out of his way to make it clear that his announcement is only the start of an effort to provide meaningful assistance to pork producers, says Reifschneider.
The producer from Smithton, IL, stated in a Dec. 18 teleconference call that without quick federal assistance, many pork producers will not survive catastrophically low prices through January.
'Hogs are literally worth almost zero. When you factor in the cost of inflation, never before have U.S. pork producers had such low cash prices. Such levels would be comparable to cattle producers getting $16.48/cwt. for market steers or corn growers being paid 75 cents/bushel for their corn,' Reifschneider says.
Other areas that NPPC suggested would aid live hog prices include:
* Direct intervention to deal with Canadian live hogs that have been streaming south to the U.S. for slaughter. Those imports increased 37% in 1998, the result of the weak Canadian dollar and ongoing labor problems, including a strike at Quality Meats in Ontario, that began Dec. 7. The strike could send 25,000 more hogs to the U.S. each week. NPPC asked that the Canadian government work to increase Canadian packer slaughter capacity.
NPPC also urged the U.S. government to consider filing a Section 201/anti-dumping investigation against Canada.
'Based on current data, we anticipate more than 4 million Canadian hogs will have been imported into the U.S. in 1998, representing over 20% of Canadian hog production,' says Reifschneider.
* Increase slaughter capacity to exceed 2.2 million head/week and/or reduce supply to under 2 million head/week. To accomplish this, increase slaughter capacity of the Carolina Food Processors (Smithfield) plant in North Carolina from 144,000 hogs/week to 172,800 hogs/week. Current U.S. slaughter capacity is 383,000 head. Glickman said USDA is also looking at using excess slaughter capacity in Mexico.
* Limit labor disruptions linked with the Immigration and Naturalization Service.
* Urge an orderly reduction in breeding herd.
* Start a humanitarian 'gilt lift' of 300,000 head of 200- to 250-lb. gilts for countries hit by natural disasters in 1998.
* Purchase the equivalent of at least one day's slaughter for Russia or other republics of the former Soviet Union. Packers involved would be required to operate a full Saturday slaughter operation. Glickman has included 110,000 lb. of pork in the Russian food aid package.
* Purchase pork and pork products for domestic and international feeding programs and humanitarian assistance efforts.
USDA has agreed to buy up to 50 million lb. of pork picnics and fresh hams to help alleviate the oversupply of pork. The boneless picnics and hams must come from hogs slaughtered on Saturdays and/or Sundays, and only from plants that are operating at full capacity.
* Participation in a pork industry summit to set short- and long-term survival strategies.