Who Will Pay the Cost of Reduced Line Speeds in Pork Plants?
Wanda Patsche
For fifth-generation pig farmer Brian Martin in north central Indiana, the recent line speed ruling for pork processing facilities will greatly affect his operation.
“Our predominant customer or processor is greatly affected in that they will need to decrease the number of animals they receive by 20%, which in effect, whether it's 20% of the producers or 20% of the pigs, means that anyone who’s a customer would need to plan to decrease what they send there. In a very consolidated industry, that puts us in a place where we don't know where those pigs belong, or where they will be processed in the future,” Martin explained.
As of June 30, Martin will have to make some hard decisions about where to send pigs. One option is to drive hundreds of miles to find a place for them to be harvested, he said.
“Coping with reduction in capacity is not as easy as driving down the road to the next plant,” the National Pork Producers Council (NPPC) said in a statement. “Estimates show that long-haul hog deliveries can cost approximately $10/hog. When combined with the estimated $10.70/cwt reduction in price, many farmers will not be able to break even regardless of their success in finding a new buyer.”
Martin said the worst-case scenario is looking at alternatives like euthanizing pigs rather than processing them.
Wanda Patsche, a pig farmer from southern Minnesota, said she would hate to think that the industry might have to go through what it did a year ago.
“We talked about euthanasia when the meat packers had to shut down because of COVID, I can't even go there. I can't even think about that being an option,” Patsche said.
She sells about 6,800 pigs a year to Hormel located in Austin, Minn.
“I'm sitting here paying the bills, and I'm trying to figure out how am I going to pay the bills. It's not even enough to cover some of the basics like the feed and the cost of the pig. Even though it looks like the impact of this court case or these changes would affect the meat packers, I don't disagree with that, but the biggest impact is going to be me and our farm.”
The court ruling’s impact on hog farmers disproportionately impacts smaller producers, as harvest facilities are more incentivized to maintain relationships with larger producers who make up a higher percentage of their supply, NPPC said.
Iowa State University economist Dermot Hayes estimates these producers will lose $10.70/cwt (per one hundred pounds). Should the resulting drop in hog prices create unprofitable conditions for these smaller producers, many multi-generational small farms may be forced into bankruptcy or a consolidation-driving sale of their farming operation, the statement said.
“To many, it would seem that it's more of a bureaucratic system-oriented discussion as opposed to hurting and helping anyone. Ultimately, in the end, the farmer is the one that pays the price for something that really isn't hurting anybody,” Martin said.
Read more at https://nppc.org/issues/issue/preserve-u-s-pork-industry-competition/.
More from Farm Journal's PORK:
Line Speed Ruling is Another Reminder of the Supply Chain’s Fragility
USDA Will Not Appeal Line Speed Ruling in Pork Processing Plants
Line Speed Ruling Will Drastically Reduce Pork Harvest Capacity in Some Regions
Misguided Ruling Could Upend the Lives of Many Hog Farmers, Sorenson Says
Court Ruling Will Concentrate Market Power in Pork Sector
