pork industry handbook
COOPERATIVE EXTENSION SERVICE • PURDUE UNIVERSITY • WEST LAFAYETTE, INDIANA
PIH-12.
Choosing a Slaughter Hog Market
Authors
J. Marvin Skadberg, Iowa State University
Steve C. Marks, Oregon State University
M. Brice Kirtlev, University of Illinois
Reviewers
M. S. Turner, University of Nebraska
Jack Rundquist, Butler, Illinois
Choosing a market is one of the important decisions a hog producer must make before he sells his slaughter hogs. The market selected will affect the income and profitability of his hog enterprise.

Prices vary between markets, and marketing costs such as selling charges, transportation and shrink can also vary. There are differences in the number of buyers competing, volume of hogs offered, packers’ requirements for certain types of hogs, and charges for marketing services performed, Consequently, hog producers need to be aware of the alternative markets available to them and to choose the one which yields the greatest net dollar return.

This fact sheet describes the major kinds of markets available for slaughter hogs, and their strengths and weaknesses, It focuses on the important considerations that will help the hog producer select the most favorable market.

While some general statements may be made about the attributes of market outlets of a certain type, it does not mean that all market outlets of that type have those attributes or have them to the same degree. For example, in Iowa auctions are not a major market for slaughter hogs; therefore auctions are not generally a good market for slaughter hogs in Iowa because they have inadequate competition. However, this does not mean that all auctions have inadequate competition, because in some geographic areas they are major markets.

As a part of the marketing process, producers need to check periodically the prices and market conditions at more than one market. Even those producers who traditionally sell to one market should occasionally examine other market alternatives. Hog producers should contact other markets in their area, occasionally selling to
them to test price levels, gross costs and net returns. This can be done by sending split loads of hogs to separate markets on the same day.

The question “Should I market my own hogs?” is one of the most important marketing decisions a hog producer needs to make. The hogman must objectively assess his own marketing abilities to determine if he has both the skill and the time to negotiate directly with the buyer. If he feels he does not have either the time or skill, he should choose a market alternative (i.e., terminal, auction, marketing pool) where he uses other people’s skills to assist in the marketing process.

A producer marketing his own hogs typically will be selling to a packer buyer, an order buyer or a commission agent buying for a packer. One advantage of selling one's own hogs is that the price or a very close approximation may be known before hogs are moved from the farm. The producer who retains control of his hogs on his farm pending final sale has maximum market flexibility and possesses some market power. He can choose to accept or reject any price bid. He can do this without incurring any marketing costs, such as transportation, shrink and yardage.

The producer using a public market incurs those costs before knowing the final price. He must ship his hogs to market, accepting whatever price happens to prevail. It is usually not practical, in most public markets, to hold hogs over for later sale (although at times this is done) or to bring them back to the farm.

But the flexibility and the market power the producer has in marketing his own hogs is of little value if he possesses insufficient market knowledge to evaluate adequately market conditions applicable to the sale and prices being offered. To bargain effectively with the buyer,
Cooperative Extension Work in Agriculture and Home Economics, State of Indiana, Purdue University and U. S. Department of Agriculture Cooperating. H. G. Diesslin, Director, West Lafayette, Ind. Issued in furtherance of the Acts of May 8 and June 30, 1914. It is the policy of the Cooperative Extension Service of Purdue University that all persons shall have equal opportunity and access to its programs and facilities without regard to race, religion, color, sex or national origin.