1998 Hog Production Summary:
Excerpts from various sources

Livestock Update, September 1999

Cindy Wood, Department of Animal and Poultry Sciences, Virginia Tech

From Ron Plain's Swine Economics Report, May 3, 1999:
U.S. commercial hog slaughter totaled a record 101,029,305 hogs in 1998. Four states (Iowa, North Carolina, Illinois and Minnesota) accounted for 55% of total hog slaughter.

Last year, Iowa slaughtered 28.9 million hogs, 4.34 million more than Pork Board data says the state marketed in 1998. The situation was reversed in North Carolina where Pork Board hog marketings totaled 5.04 million more than the 9.7864 million hogs the state slaughtered last year.

The relationship between hog production and hog slaughter is important. Iowa's surplus in slaughter capacity yielded an average barrow and gilt price in 1998 of $34.33/cwt (according to USDA's Ag Prices) while the average price in North Carolina was only $32.13/cwt. In general, surplus kill capacity means packers must bid-up hogs to attract more to the state, providing there is more than one major hog packer in the state. A shortage of slaughter capacity, however, allows packers to be less aggressive when bidding for hogs.

The 14 states which slaughtered over 1 million hogs in 1998 are:

From USDA data:
Cash receipts from hogs and pigs totaled $9.4 billion during 1998, down 28% from 1997. Marketings increased to 26.5 billion lb in 1998, up 10% from 1997. The U.S. annual average price per 100 lb live weight fell from $52.90 in 1997 to $34.40 in 1998.

From a presentation by Al Tank, CEO of National Pork Producer's Council:
1998 was a year of records for the U.S. pork industry. Some of these records we are very proud of, including demand increases, export and consumption - others we are trying to forget as quickly as possible. These records include:

1. Slaughter - 101.2 million head;
2. Demand - up 7.7% from 1997;
3. Exports - up 15.6% in volume - an 8th consecutive annual record;
4. Canadian Live Hog Imports - up 31% compared to a year earlier;
5. Economic Losses - $3.5 billion in the production segment; and
6. Prices - the lowest levels, in deflated terms, in this century.

Four major factors converged to create the price crisis in the United States. These factors included: 1) the loss of and a resulting lack of slaughter capacity, particularly during the fourth quarter of 1998; 2) surging slaughter hog imports from Canada; 3) the inelasticity of live hog prices; and 4) a 10.1% increase in pork production. Taken alone, this production increase would have been challenging. However, when it was combined with the other factors mentioned it became a lethal mixture for U.S. pork producers. The 1998/1999 economic and price crisis in the United States was not the result of a lack of demand. Rather, this crisis was spawned by the loss of slaughter capacity, coupled with record Canadian live hog imports and inelasticity of demand. What began as a slaughter capacity crisis quickly created a liquidity crisis for most pork producers and is now a business crisis for the production segment of the pork chain in the United States.

From Ron Plain's Swine Economics Report, June 7, 1999
Iowa State University recently released their swine business record summary for calendar year 1998. As expected, all of the economic indicators were disastrous. There were 85 Iowa farrow to finish operations included in this year's summary. The average herd had a cost of production of $37.46/cwt of live hogs produced. They sold market hogs for $33.43/cwt and cull breeding stock for $21.70/cwt. These prices left the average operation with a net operating loss of $73,857 in 1998 or slightly more than $400 per sow. Even the best operations lost money last year. The top third had an average loss of $35,454. I've monitored the ISU hog farm records series since 1980 and this is the first year the top third of farrow to finish operations have failed to make money. One interesting side effect of the financial losses appears to be increased death loss. The 1998 death loss averages for pre-weaning, weaning to feeder, feeder to market, and breeding stock were all higher than in 1997. In addition, the average number of pigs weaned per litter was down from the year before. It could be that these Iowa herds experienced increased disease problems in 1998 or it could be that record low hog prices removed some of the incentive for keeping pigs alive. The big item that helped to moderate financial losses last year was low cost feed. The average cost of diet was $6.41 per hundred pounds fed. This was $1.58 lower than in 1997 and the lowest feed cost since 1987.

From National Hog Farmer magazine (May, 1999):
University of Missouri agricultural economist Glenn Grimes says environmental opposition is determining which states are gaining live hog production market share. Growth is occuring in states where producers can get permits without a two-year wait.

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