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 (per cwt.) during the week of August, the lowest level since January 1999," he says.
Low hog prices are expected to continue through late spring 2003.
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.