|INDIANAPOLIS, Ind. — Lt. Governor Becky Skillman and Indiana Agriculture Director Andy Miller recently released two preliminary studies on the pork industry commissioned by the Indiana State Department of Agriculture. The first, The Changing U.S. Pork Industry and Implications for Future Growth, is an overview of the industry. The second, Doubling Hog Production, is an in-depth look at the Indiana pork industry through the eyes of the state’s producers.
“As we move Indiana agriculture forward, we will be dynamic and responsible,” said Lt. Governor Skillman who also serves as Secretary of Agriculture and Rural Development. “The data in these reports provide valuable information that can give us clear guidance as to what is feasible and what will truly benefit our agricultural economy. I am encouraged that these studies reinforce the bold and exciting direction we are taking in Indiana agriculture.”
“Both studies clearly reinforce Indiana’s opportunities to expand our pork industry,” said Miller. “They also underscore some on-going challenges of consolidation within the industry and how farms will integrate into their communities.”
Both reports provide an economic overview of the industry as a whole. The pork industry is highly integrated, and that trend will continue. The industry has seen rapid consolidation during the last 10 years, and today two-thirds of the independently-owned hog operations use long-term contracts to stabilize their price and market risk.
Future consolidation will have a similar impact. Specifically smaller farrow-to-finish operations - those less than 600 sows - may find it harder to compete in the current commodity market. Despite this trend, there is an emerging market opportunity for specialty pork products and many of these operations could take advantage of this new trend.
The Changing U.S. Pork Industry and Implications for Future Growth report also highlights that pork industries in other states have grown due not only to natural advantages in production, but also to key companies and state legislation. Indiana’s natural advantages of abundant feed grains and water, sufficient cropland for distribution of organic animal nutrients and sufficient processing capacity and skilled producers, combined with the state’s support, should encourage the industry’s growth.
In addition, Indiana’s pork industry offers significant opportunities for local producers in its processing sector. Hoosier producers have opportunities in finishing hogs to market weight. Finishing operations involve lower investments than farrow-to-finish, as well as less labor, lower risk and less hands-on management allowing them to fit into traditional farming operations, such as grain farms.
Both reports also highlighted concerns from the pork industry about negative public perception about environmental and animal welfare issues. While the report notes that these concerns typically are the result of a small number of bad actors, who caused environmental damage from accidental manure spills or poor management, these incidents are used repeatedly to heighten pollution concerns and the industry must address this public perception issue.
While providing an overview of the pork industry, the Doubling Hog Production report also offered results of a statewide industry survey. The goal of this survey was to collect opinions about challenges the industry faces and reaction to ISDA’s goal of doubling hog production. The industry is concerned about environmental issues, including permitting, local zoning and control, odor mitigation, waste management technologies and producer education; protecting profit margins from market volatility; maintaining cost and availability of inputs, such as corn.
The industry also is concerned about proactively addressing animal welfare issues to maintain consumer trust; finding and developing a dependable labor force; educating consumers about the industry; site selection for expansion and maintaining a level playing field for all Indiana producers.
When asked specifically about ISDA’s goal for doubling pork production, Indiana’s pork producers are pleased that the administration recognizes their sector’s importance to the agricultural industry and state’s economy. However, producers are concerned that growth takes place at the same pace as demand so the market will not suffer.
“These two studies give us increased confidence and a lot to consider as we move forward with our pork strategy,” said Miller.
“We recognize that the demand and processing capacity must be in place so market prices do not drop with increased production. We also are focused on environmental and animal welfare issues, as well as advocating new technology in our strategy, and these reports confirm we need to continue in exploring these avenues.”
This farm news was published in the February 8, 2006 issue of Farm World.