Citing a “lack of participation,” the U.S. hog farmers behind a proposal for a sow “retirement” program say their plan will not go ahead.
“Market conditions have changed dramatically for the worse for the pork industry in the past few months,” Iowa producer Chuck Wirtz said in a release Thursday from his group, called the Producer Retirement Program (PRP).
Wirtz and his partners unveiled their proposal earlier this month at the World Pork Expo in Des Moines.
“Unfortunately, since this group of pork producers began work designing the PRP, most producers with sows are no longer in a financial position to support the program.”
The proposed PRP was designed to supplement the cull price that paying members would otherwise receive for their sows if they decided to exit all or a portion of their production for a two-year period.
The retirement program was dependent on a sufficient number of pork producers with sows signing up and paying a US$20-per-sow subscription.
The program’s organizers had hoped to take 300,000 breeding swine out of the U.S. herd, leading to a smaller supply of market hogs and, in theory, improved prices for hog producers come spring 2010.
Wirtz told the Prairie hog industry-sponsored radio program Farmscape earlier this month that such a program hadn’t been tried before in the U.S. so its rate of acceptance couldn’t be accurately predicted.
U.S. hog farmers have begun facing losses over about the last year and a half, following almost three and a half years of profitability.
Manitoba Pork Council general manager Andrew Dickson said recently on Farmscape that it’s not clear why U.S. producers continued to produce as many hogs as they have in the past year and a half, in terms of their reaction to market signals.
“The only thing we can think of is there’s so much money had been saved and so much debt paid off in the previous 40 months that they can keep on going,” Dickson was quoted as saying.
More recently, however, some U.S. producers have begun to pare back their breeding herds. Pork processor and hog producer Smithfield Foods recently announced it will cut back its sow herd by another three per cent, following a 10 per cent sow cull in its 2009 fiscal year.
Smithfield CEO Larry Pope was quoted in Wednesday’s Wall Street Journal as saying recent unprofitability in hogs has proven such a drain on equity that U.S. Farm Belt lenders are now pressuring farmers to cull their herds. However, it could take the rest of the calendar year for a reduction to take hold, the New York-based financial paper quoted Pope as saying.
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