Hog Operations Increasingly Large, More Specialized
William
D. McBride and Nigel
Key
Structural change in U.S. hog production
during the past two decades has had profound effects
on industry performance and on strategies for dealing
with change. Hog producers have increased productivity
and reduced costs through major adjustments to the
size, organizational structure, and technological
base of their operations. These adjustments have
lowered pork prices for food processors and consumers.
However, concentrated hog production has imposed
environmental risks and nuisance impacts on nearby
communities. In addition, society in general has
raised concerns about food safety and animal welfare
issues.
As hog production has consolidated,
fewer and larger operations account for an increasing
share of total output. The number of hog operations
fell by more than 50 percent during the past two
decades, while the hog inventory remained relatively
stable. From 1992 to 2004, average production from
hog operations grew nearly fivefold to 4,646 head
in 2004. Over the same period, the share of the
total hog inventory held by operations with 2,000
or more head increased from less than 30 percent
to nearly 80 percent; in 2004, operations with 5,000
or more head held 50 percent of inventory.
The traditional approach of farrow-to-finish
hog production (all stages from breeding until slaughter)
has given way to operations that specialize in a
single production phase. Specialized hog finishing
operations accounted for 40 percent of hog operations
in 2004, up from 19 percent in 1992. Operations
specializing in farrowing and raising weanlings,
so low in number as to be rarely reported in 1992
and 1998, totaled 7 percent of operations in 2004
and produced an average of more than 20,000 head
per farm. Overall, the share of hog production from
farrow-to-finish operations fell from 65 to 18 percent
during 1992-2004, while that from specialized hog
finishing operations increased from 22 to 77 percent.
Contracting contributed to much
of the growth in production from specialized hog
operations. Production from hog operations using
contracts grew from 5 percent of the total in 1992
to 67 percent in 2004. Production contracts between
growers and hog owners, rarely used under the farrow-to-finish
approach, have facilitated the industry’s
shift toward specialization. Nearly three-fourths
of production from specialized hog finishing operations
and most production from specialized farrowing and
weanling operations was under contract in 2004.
Structural change has coincided
with substantial productivity gains in hog production,
suggesting that current trends are likely to continue
unless abated by other issues. For example, concerns
over the environmental risks posed by rapid growth
prompted legislators in North Carolina to place
a moratorium on the construction of new and expanded
hog operations, shifting expansion elsewhere. Such
issues may help shape the future of U.S. hog production.
This
finding is drawn from . . . |
| The
Changing Economics of U.S. Hog Production,
by Nigel Key and William D. McBride,
ERR-52, USDA, Economic Research Service, December
2007.
Characteristics
and Production Costs of U.S. Hog Operations, 2004, by William D. McBride
and Nigel Key, EIB-32, USDA, Economic Research
Service, December 2007.
|
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