Wednesday, December 30, 1998

Industry grapples with plummeting pork prices

MACON, Ga. (AP) -- Pork producers, struggling with their lowest prices in 40 years, are trying to find a solution to their plight.

"The pork industry is in shambles," said Georgia Agriculture Commissioner Tommy Irvin. "Prices have been falling steadily ... and everybody in the business is losing money."

An oversupply of hogs has caused pork prices to drop to less than $10 per hundredweight in some areas of the country, down from $46.50 just a year ago.

Georgia pork producers met Monday with Irvin, Georgia Farm Bureau representatives and U.S. Department of Agriculture officials to look for ways to resolve the problem of plunging pork prices.

Roger Bernard, executive director of the Georgia Pork Producers Association, said some meat packing plants closed in the Midwest last summer, leaving the nation with more hogs than the industry can slaughter.

Bernard said some of Georgia's 400 pork producers are losing $50 to $75 per hog because of the low prices.

"That's disastrous," he said. "It's possible some of our producers may not be able to withstand the market problems."

Rodney Newton, a Jefferson pork producer and president of the state association, said he believes the prices will stay low for several months, until the supply dwindles.

"If it doesn't improve soon, there's not going to be much of the industry left," he said.

The situation is so bad that former President Jimmy Carter intervened earlier this month on behalf of the state's hog farmers.

Carter wrote to President Clinton asking for emergency low-interest loans for hog farmers battling what he termed "the most serious crisis among farmers that I have witnessed since the Great Depression."

U.S. Agriculture Secretary Dan Glickman also has gotten involved.

Glickman has formed a task force to find ways to help hog producers. He also is working with Congress, governors and the heads of major slaughterhouses to try to increase the number of hogs that are butchered.

And, he has announced that the USDA would temporarily stop lending money for new pork production plants.

Irvin has talked to Glickman about the crisis as well. "I told him we need the USDA to lend any assistance they could to get us through this serious situation," he said.

In Des Moines, Iowa, meanwhile, a special legislative committee was convened Monday to consider what to do about what many see as a crisis in the hog industry.

But John Lawrence, a livestock economist at Iowa State University, told the lawmakers that there is little they can do right now to turnaround pork prices.

Instead, he urged lawmakers to focus on long-term issues such as restructuring the debt of farmers who have lost equity because of tumbling hog prices.

The number of hogs slaughtered has soared past 2 million a week, straining the ability of the meatpacking industry to keep pace, Lawrence said. With supplies huge, prices tumble, he said.

One bit of good news for farmers is that this year's losses haven't wiped out profits hog producers made in 1996 and 1997, Lawrence said.

Lawrence predicted that seasonal variations will begin to reduce the number of hogs being sent to slaughter, a change that is likely to begin moving prices back up.

"I think by the first of February we're going to see prices start to inch back up," Lawrence said.

"We're in a waiting game, waiting for the numbers to decline," he said. "There's not a lot we can do in the short run."