US Herd Reduction Half of What is Needed

US - An agricultural economist with the University of Missouri estimates the US hog industry has reduced production by about half the amount necessary to stimulate a rebound in live hog prices, writes Bruce Cochrane.
calendar icon 10 August 2009
clock icon 3 minute read

American hog producers have lost money in 20 of the last 22 months and losses in Canada have continued even longer.

Agricultural economics professor Dr. Ron Plain says a stronger world economy and more demand for pork and more exports would help and probably, what's more realistic, is to cut back on production, tighten up supply of pork and push up prices that way.

Dr. Ron Plain-University of Missouri

Both herds are being reduced which is what needs to happen.

The reduction's been much larger in Canada than in the United States.

Again, because of the exchange rate differences, the red ink started flowing a little bit sooner and it's certainly been worse financially in Canada than it has in the United States and Canadian producers are well ahead of the United States on cutting back.

The Canadian breeding herd's down six per cent or so compared to a year ago.

The US sow herd is not quite three percent smaller so a much bigger cutback occurring in Canada than here in the United States.

Since this thing has started we've been talking about trying to and probably needing to down-size the US sow herd by about 10 per cent.

We're only down about four percent or so from that peak that we had back there in December of 2007 so we have not quite gotten half way to what I think it's going to take in order to get hog numbers low enough that we can have a very good chance of making a profit for an entire year.

Dr. Plain notes, because the US industry is three times the size of that in Canada, a cut in Canada doesn't move us as far toward getting the total pork supply down as is the case when we reduce numbers in the United States.

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