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Pork Producers Ready to Expand

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Pork Producers Ready to Expand

 

Ron Plain
Ron Plain

Indiana Pork producers were paying close attention to Friday’s grain reports as they get ready to expand their operations, now that profits are again likely.  The USDA quarterly hogs and pigs report showed an industry poised for expansion. The breeding herd, at 5.882 million head, was up 3/10 of 1% from last year and well above trade expectations. Farrowing intentions for this summer and into the fall showed producers’ intent to increase production, something Dr. Ron Plain, livestock economics U of MO says is consistent with black ink on the bottom line, “The history of the hog business is that producers respond to the bottom line. When producers make more money they put on more sows.”  Profits for the past 2 years have not been good, and pork production has declined.  According to USDA’s figures updated on Friday,  Indiana producers had a total inventory of 3.60 million hogs and pigs on June 1, 2013, down 5 percent from a year ago. Market hogs, at 3.33 million head, were 5 percent below last year. Breeding inventory, at 270,000 head, was 4 percent below the previous year. Sows farrowed totaled 135,000 during the March-May 2013 quarter, down 10 percent from the previous year.

 

Plain said it will not make much to increase production because pigs per litter has hit a new record high of 10.31 pigs per litter. Indiana had a litter rate averaging 9.85, up 1 percent from 2012. Plain says producers are keeping their operations very efficient and doing a good job of producing pork. He says, if corn prices stay in the $5 range, producers will expand production beginning this fall, “Sows farrowed was down 2% in the quarter just ended; they are forecast to be down 1/10 of 1% in the next quarter. And, in the 4th quarter, they are expect to be up a full percent; that is what you sort of expect as feed prices go down.” Plain believes this trend of expansion will continue into next year if corn and soybean production is good this year.

 

But Joe Kerns, Kerns and Associates, Ames, IA, says expansion this time around may be a little different, “We might market the same amount of pounds, they just might have fewer legs.” He said producers will simply start feeding hogs to higher weights rather than farrowing more pigs. “Producers are going to be very cautious about expansion this time around,” Kerns told HAT. He said the industry does not have the capacity to process a large increase in hogs coming to market.