IATP Hog Report - Institute for Agriculture and Trade Policy

Section 1
I. Are Independent
Farmers an
Endangered Species?
Sub-sections:
The Irrationalization of U.
S. Hog Farming, 1950 to
2000
The Price Crisis and Its
Economic Impacts
Vertical and Horizontal
Integration and Vertical
Coordination
Manipulation of Markets
Other Concerns
Why Should We Care
about Independent Hog
Farmers?
Some Strategies and
Action Alternatives
Supportive of Independent
Family Farmers
References
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Are Independent Farmers an Endangered
Species?
In 1950, 2.1 million U.S. farmers sold hogs. 1 Average sales were 31 hogs
per farm. However, by 1950, radical structural changes had already begun
to occur in the hog industry, similar to the concentration and specialization
that had already taken place in the broiler industry. By the close of 1999,
only 98,460 U.S. farms sold hogs. 2 Average sales were around 1,100
market hogs per farm, but 105 farms having over 50,000 pigs each
accounted for 40% of the U.S. hog inventory. The largest four operations
Smithfield Foods, Inc., ContiGroup (Continental Grain and Premium
Standard Farms), Seaboard Corporation, and Prestage Farms sold 11.6
million, 2.9 million, 2.5 million, and 2.2 million market hogs, respectively,
accounting for nearly 20% of total U.S. hog production. 3
The Irrationalization of U.S. Hog Farming, 1950 to 2000
Prior to 1950, most U.S. hog farms operated seasonally. Hogs were
"mortgage lifters," adding value to crops grown on the farm and adding
significantly to the farm's cash flow. 4 Most farms were independently
owned and managed by families whose members also provided the major
part of the farm's labor. Hogs were raised outdoors with access to bedded
shelters or indoors in pens bedded with straw or hay. Sows, adult females,
gave birth, or farrowed, once or twice a year. Half a year later the grown
market hogs were sold. Sales took place primarily on competitive, open
markets with a large number of buyers bidding for hogs. Farms were
characterized by low capital costs and a diverse enterprise structure,
combining crops, forage, and one or more species of livestock. These
features of independent farms made it relatively easy for the industry to
contract or expand supply, as farmers went into and out of the hog
business in response to changes in the market price.
With the discovery of vitamins A and D in the early 20th century, it had
become possible to confine farm animals indoors without sunlight and
produce year round. 5 But indoor confinement had contributed to disease
and death losses. The discovery in the late 1940s that low-level antibiotic
feeding helped suppress disease outbreaks made it possible to crowd more
animals into a single building, contributing to the trend toward intensive
confinement. 6
Higher capital costs of confinement led to the development of specialized
technologies to save on space and increase output per unit of investment.
Individual crates, roughly the size of a standing sow, allowed twice the
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