AGRICULTURE
Hog farmers brace for what may be worst year in history
Sunday, April 06, 2008
UNION TWP., Miami County — Six months ago, George and Tim Stebbins began spending more money raising pigs than they recouped when the hogs went to market.
The losses haven't let up; in fact, they've worsened in recent months. Tim Stebbins, 49, estimates the family now loses $36 to $40 for each pig sold, and that figure doesn't include labor and the cost of keeping up buildings. Each year, the family raises 3,000 hogs from the time they're weaned at 12 to 14 pounds until they weigh 260 pounds, ready for market.
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"There's no profit to be seen" in the foreseeable future, said Tim Stebbins, who with George has raised hogs since 1978 on the Miami-Montgomery county line.
The Stebbinses and other hog farmers are bracing for what could be the industry's worst year in history, according to Purdue University agriculture economist Chris Hurt. And Steve Meyer of Paragon Economics in Iowa expects losses to grow in 2008.
Ohio in 2006 ranked 10th nationally with 1.68 million pigs, up 17 percent from 1.44 million in 2002. Ohio's hogs are raised on fewer but larger farms — 4,100 in 2007, down from 14,000 in 1987.
The prolonged slump could push some hog producers out of business, especially smaller, independent ones, just as less severe losses did a decade ago.
Like other livestock sectors, the hog industry has been battered by much higher feed costs, brought on in part by the surge in ethanol production and crop exports.
Feed accounts for about two-thirds of the cost of raising hogs. Cash prices for corn, which is fed to hogs and also used in making ethanol, were $5.80 per bushel on Wednesday, up 64 percent from $3.53 per bushel a year ago. (The Stebbinses raise their own corn.) Meanwhile, another primary feed ingredient, soybean meal, jumped from $204 to $329 per ton.
"Not all farmers are getting rich on $5 corn," Tim Stebbins said, referring to the record net farm income forecast for 2008 due to high crop prices. He noted hog farmers also don't have a "safety net" in the form of government subsidies.
Higher feed prices have come even as a glut of hogs has reduced prices paid to farmers by 18 percent in the past year. A new U.S. Department of Agriculture report said market hog numbers are up 7 percent in the past year both in Ohio and nationally.
Increased efficiency has contributed to the glut, with the widespread availability of a vaccine for porcine circovirus resulting in more piglets saved per sow, said Dick Isler of the Ohio Pork Producers Council.
Imports from Canada also are driving up the number of hogs, accounting for a record 9 percent of U.S. production in 2007. The Canadian government is paying hog farmers to liquidate herds, and the weak U.S. dollar is encouraging the marketing of Canadian hogs here, said Steve Moeller, Ohio State University Extension swine specialist.
Smithfield, the largest U.S. hog producer, said it will cut annual hog production by up to 1 million animals. The company cited higher grain prices and U.S. policy favoring corn for ethanol.
Hog producers, however, have been heartened by record pork exports.
Greg Kaffenbarger, who finishes raising 6,500 hogs per year in Clark County, thinks he can weather current losses of about $38 per pig, noting his family for many years gained value from their corn by feeding it to hogs instead of selling it as a commodity.
Both he and the Stebbinses noted the business is cyclical, and a focus on the long term is critical.
"One thing about hog farmers — they're pretty stubborn," he said. "They're used to sorting hogs."
Contact this reporter at (937) 225-7457 or bsutherly@DaytonDailyNews.com.
