NPPC: Hog producers to lose $5 billion, need aid now
National Pork Producers Council officials said April 14 that pork producers will lose $5 billion by the end of the year due to the coronavirus pandemic and other problems, and they need immediate help in the form of direct payments, government purchases and increased exports or many will face bankruptcy.
While pork supplies for grocery stores remain plentiful because there is lots of pork in storage, the U.S. pork industry is faced with the loss of the food service market due to closed restaurants and institutions and reduced demand from packing plants due to the suspension of plant operations and rising employee absenteeism due to COVID-19. In addition, there is a COVID-related slowdown in most export markets including Mexico, which usually buys a lot of American ham, but like the United States, is sheltering in place.
“We are taking on water fast. Immediate action is imperative, or a lot of hog farms will go under,” NPPC President Howard A.V. Roth, a pork producer from Wauzeka, Wis., said in a news release.
Asked whether the pork producers want USDA to make up for the entire $5 billion loss with direct payments, Nick Giordano, NPPC vice president and counsel for global affairs, did not respond directly but said “the bigger the better.” A lot of equity has been “blown out” of the industry, Giordano said. The Coronavirus Aid, Relief, and Economic Security Act created a $9.5 billion emergency fund, but it is supposed to be shared among livestock and dairy producers and specialty crop growers, particularly those who sell locally.
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NPPC is also asking USDA to spend $1 billion to buy pork that has been packaged for restaurants and other segments of the food service industry for distribution to food banks, which are reporting increased demand and reduced supply.
Finally, Giordano said, China should remove the tariffs it has imposed on U.S. pork products in retaliation for the tariffs that President Donald Trump has imposed on Chinese goods. China should remove the tariffs because it has a pork shortage due to African swine fever. Giordano said NPPC has taken no position on the tariffs Trump has imposed on Chinese goods. He noted that China has been buying pork from the European Union and other competitors to the U.S. pork industry, but hinted that U.S. pork could compete on price because prices are so low in the United States. But Giordano said NPPC’s top priorities are the direct payments from USDA and purchases by USDA.
NPPC is also asking Congress to raise the cap on the number of employees that a company can have and qualify for the Small Business Administration’s Paycheck Protection Program from 500 to 1,500. Asked what kind of hog farm has 1,500 employees, NPPC CEO Neil Dierks said the question was not so much about farms with 1,500 employees but those with a few more than 500.
Dierks explained that when USDA provided trade aid to operations hurt by the loss of exports to China and other places, only 26% of hogs were covered because the farms ran into restrictions on the size of operations to be aided. The pork industry has not had a supply control program since 1952 and has such a small “government interface” that USDA used standards for other sectors to determine the eligibility for pork operations. Some hogs are grown by packers, and Roth said he wants “all U.S.-raised pork” covered by the relief program.
Like many other agricultural groups, NPPC is asking Congress to tell the SBA that it was congressional intent in the CARES Act to make farmers eligible for the Economic Injury Disaster Loan program.
Dermot Hayes, an economist with Iowa State University, and Steve Meyer, a pork industry economist with Kerns & Associates, estimate that hog farmers will lose nearly $37 per hog for each hog marketed for the rest of the year, but Giordano said the loss is up to $50 per animal. “It is unsustainable. It is devastating. Unless there is a large cash infusion from the federal government, we are going to lose a lot of producers. The economics just don’t make sense. Feeding the hog is more costly than the price they can get for the hog,” Giordano said.
Giordano noted that hog farmers have been “at the tip of the trade retaliation spear” and that the loss of the Chinese and Mexican markets had already taken $20 off the price of every hog. The new trade agreement with Japan is good, he said, but until it went into effect, the countries that were part of the Trade Pacific Partnership from which Trump withdrew “were eating our lunch in that market.”
One official noted that the Environmental Protection Agency permits the number of hogs on each farm, but has granted NPPC’s request to increase the limit for farms that cannot find a market for their hogs that are ready for slaughter.
Under questioning, the officials said that they believe hog producers may euthanize animals, particularly baby pigs.
“Producers are in the business of providing safe, delicious pork. It goes against the grain to euthanize,” said Dierks.
But Roth noted that, with his own children out of school, “COVID-19 has turned my farm from a part-time to full-time classroom.” His children, he said, helped him breed pigs that will be born in the next few weeks. “It will be a big decision — what can I do with those piglets?” ❖
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