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FARM SCENE: Hog Prices Plummet

January 12, 1998

MADISON, Wis. (AP) _ Hog prices are declining, but there is no guarantee consumers will see a change.

Prices paid to farmers have plummeted from $61.50 per 100 pounds live weight to $36 since June, a 41 percent decline.

Prices were fairly steady until late last year, said Bob Uphoff, a Dane County, Wis., hog farmer and a member of the National Pork Producers Council board.

Often there is a two-month lag between lower hog prices for producers and lower pork prices in grocery stores, he said.

``Sometimes the pork prices don’t go down at all,″ Uphoff said. ``Grocery stores will charge what the market will bear.″

The decline in hog prices comes at an especially difficult time for many farmers.

The 40 percent drop in income that John Lader, a hog farmer in Rock County, Wis., has faced in the last six months is particularly trying as property taxes and other year-end bills come due.

``My taxes stay the same whether hog prices are up or down,″ Lader said.

Part of the drop in prices is due to depressed foreign markets including Japan, said Merle Suntken, livestock director for the National Farmers Organization in Ames, Iowa.

Last year, the U.S. hog industry geared up for big exports to Japan and other Asian countries following outbreaks of swine disease in Taiwan.

But for various reasons, including devalued foreign currencies and increased production in Pacific Rim countries, the United States has not shipped as much pork overseas as expected.

Increased hog imports from Canada, estimated at 40,000 animals per week, is another source of pressure for U.S. producers.

Many of these farmers say they are selling their hogs at $4 to $8 per 100 pounds below their cost of production. ``They are in serious trouble,″ Suntken said. ``We are definitely going to lose some hog farmers this year.″

Producers sending their animals to slaughter at heavier weights than a year ago is another factor in the price decline.

``It has the effect of adding several hundred thousand tons of pork″ to a market that already has too many hogs, Suntken said.

Hog futures fell to a two-year low last week on the Chicago Mercantile Exchange.

Analysts expect hog and pork supplies to be ample through the year, leaving poor prospects for high prices.

``It’s hard to be optimistic about the hog market,″ said Joe Kropf, analyst at Kropf & Love Associates in Shawnee Mission, Kan.

Kropf said he suspects that hog futures prices will rebound, but they must bottom out first, and that may not happen for a few more weeks.

Wisconsin has 730,000 hogs, down from 800,000 in 1996 and 1 million in 1994.

``The people coming into this business are probably going to be in it for the long term,″ said Lynn Harrison, president of the Wisconsin Pork Producers Association. ``They aren’t making decisions based on what’s happening this one year.″

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