The impact of COVID-19 has caused hog values to plummet, creating a financial disaster for pork producers nationwide who face a collective $5 billion loss for the remainder of the year. At a press briefing, the National Pork Producers Council outlined the crisis as described by producers and the immediate relief they are requesting from the administration and Congress.
“We remain committed to supplying Americans with high-quality U.S. pork, but face a dire situation that threatens the livelihoods of thousands of farm families,” said NPPC President Howard “A.V.” Roth, a pork producer from Wauzeka, Wisconsin. “We are taking on water fast. Immediate action is imperative, or a lot of hog farms will go under.”
The suspension of pork packing plant operations and rising employee absenteeism due to COVID-19 has exacerbated an existing harvest facility capacity challenge due to a labor shortage in rural America. With limited harvest capacity, a surplus of pigs exists, causing hog values to plunge. The loss of the food services market (i.e. restaurants) and the COVID-related slowdown in most export markets has crashed demand and overwhelmed the cold storage of meat.
Dr. Dermot Hayes, an economist with Iowa State University, and Dr. Steve Meyer, a pork industry economist with Kerns & Associates, estimate that hog farmers will lose nearly $37 per hog, or almost $5 billion collectively, for each hog marketed for the rest of the year. Prior to the COVID-19 crisis, and after two challenging years, hog farmers were generally expecting a profitable year, with industry analysts forecasting earnings of approximately $10 per hog on average for 2020.
Roth added, “The pork industry is based on a just-in-time inventory system. Hogs are backing up on farms with nowhere to go, leaving farmers with tragic choices to make. Dairy producers can dump milk. Fruit and vegetable growers can dump produce. But, hog farmers have nowhere to move their hogs.”
NPPC, in consultation with hog farmers across the nation, identified several measures it has raised with federal policy makers, including:
- Over $1 billion in pork purchases by the USDA to clear out a backed-up meat supply, supplementing agency food bank programs facing increased demand due to rising unemployment. These purchases should accommodate pork products packaged for restaurants and other segments of the food services market.
- Equitable direct payments to producers participants without eligibility restrictions.
National Pork Producers Council is also seeking a legislative fix to emergency loan programs that have left farmers behind. Approximately 10,000 family hog farms are in jeopardy because they do not have access to much-needed capital offered by the Small Business Administration. NPPC urges Congress to increase the cap on qualifying businesses to those that employee up to 1,500 and to make agricultural businesses eligible for the Economic Injury Disaster Loan program.
The economic impact analysis by Hayes and Meyer was based on live hog futures between March 10 and April 10.