The hog sector began a major transformation in the early 1990s, and has experienced productivity growth and structural change, increased output and expanded exports ever since. The USDA Economic Research Service (ERS) issued a new report on August 16 examining the changes in hog production from 1992 to 2017.
“Spurred by technological innovation and greater use of production contracts, the hog industry has gradually moved to more specialized operations. Rather than raising hogs from birth to slaughter weight, more farms are specializing in fewer phases of production,” ERS reports.
Contract vs. Independent Hog Operations
From 1992 to 2015, the share of hog operations using production contracts increased significantly--though the percent of hogs produced under production contracts has been relatively stable since 2004, the report shows.
Still, regional differences in contract use remain. For example, in Iowa/Minnesota, contract and independent producers coexist, while in North Carolina, contract production dominates. Hog producers in Iowa/Minnesota are more diversified than those in North Carolina and have more acres of cropland. In both regions, off-farm income provides an important source of income for farm households.
Greater building capacity has provided the infrastructure that hog farmers need to adopt management practices for improved feed efficiency and helped reduce disease spread, ERS notes.
Production costs and labor hours to produce a pound of gain have declined. The cost reductions have contributed to an expansion of exports, with U.S. pork improving its competitiveness in foreign markets.
USDA Hog Operation Data
Here are a few key findings from the report:
- In 1992, just 3% of operations (5% of production) produced hogs under a contractual arrangement. This share increased to just more than half of all operations by 2015 (69% of production).
- The scale of operations increased with the average number of hogs sold or removed per farm. The numbers rose from 945 head in 1992 to 8,721 head in 2015.
- Operations that specialize in fewer phases of production, such as feeder-to-finish operations, became more common.
- Greater housing capacity for hogs at all phases of production provided infrastructure for the adoption of all-in/all-out management (commingling hogs of similar ages and weights as they move through different growth stages) and phase feeding (changing diets to meet nutritional needs as hogs age). These innovations were adopted to reduce the spread of disease and improve feed efficiency.
- From 1992 to 2015, real feed costs decreased for feeder-to-finish operations, while they declined on farrow to-finish operations until 2009 but increased in 2015.
- Real production costs (minus pig costs) decreased as labor productivity increased.
- During 1992–2015, the sector continued to replace unpaid labor with paid labor.
- The average hog farm applied manure to 112 acres in 2015, although the application varied. For example, in North Carolina, manure was spread on an average of 55 acres and on an average of 167 acres in Iowa and Minnesota.
- The hog industry exported more pork to foreign markets. In 2020, U.S. companies exported 7.3 billion pounds carcass weight equivalent (cwe) of pork to 118 countries for an export value of $7.7 billion, an increase from 420 million pounds of pork valued at $532 million in 1992.
“By 2017, the industry was producing more and larger hogs and generating more pork. In the face of flat demand from U.S. consumers, export markets have been able to accommodate the increased pork production,” ERS concludes. “However, the hog sector faced many challenges from external factors, such as the 2008-09 recession, the PEDv outbreak, export tariffs and COVID-19, each requiring hog producers to adapt to changing conditions.”
