MARKETING
PIH-85
pork industry handbook
PURDUE UNIVERSITY COOPERATIVE EXTENSION SERVICE • WEST LAFAYETTE, INDIANA
The Structure of the U.S. Pork Industry
Authors
V. James Rhodes, University of Missouri
Glenn Grimes, University of Missouri
Reviewers
David Meisinger, Mundelein, Illinois
Emmett Stevermer, Iowa State University
In the early 1970s a farm marketing more than 5,000 hogs a year was a “big operation.” By 1990, marketing of 50,000 hogs per year was considered a big operation. We forecast that early in the 21st century a firm will probably have to produce 500,000 hogs to be regarded as big.

The U.S. Agricultural Census provides some landmarks of change. The proportions of “hogs and pigs” sold by farms (places) marketing annually 1,000 head or more were: 34% in 1978, 48% in 1982 and 57.5% in 1987. If the U.S. Census counted business units (involving 2 or more hog farms) rather than farms (places), the growth would be even faster. The Census also indicates the number of farms marketing hogs and pigs fell from 424,000 in 1978 to 315,000 in 1982 and to 239,000 in 1987.

The following estimates of 1988 marketings summarize the current structure of U.S. hog production:
•	61-64% of the marketings were from business units (operations) marketing 1,000 to 50,000 head. This group includes a majority of single units, most of the multiple units, and about 1,000 small contractors. Most operators would probably call themselves family farmers, although some are feed dealers, investors, and others.
•	30-32% of the marketings were from operations marketing fewer titan 1,000 head. Some are growers (contractees) but most are independents.
•	6-7% of the marketings were from operations each marketing 50,000 or more head per year. About half of these hogs were contracted. These producers-contractor or independent-are the big firms such as Cargill, Carroll, Dreyfus, Goldkist, Hastings Pork, Murphy, National Farms, Prestage, and Tyson.
Reasons for Structural Change
Part of the shift toward production in larger units is associated with the postwar growth in the typical commercial farm and the dropping-out of agriculture of many small hog producers. The shift was associated with a growing specialization in farming. It has been generally believed that one can compete better by doing one or two things expertly. As a farmer’s corn acreage rose from 160 to 640, or more, the ten-sow enterprise changed from an important income supplement to a nuisance. Undoubtedly, other important factors were the developments in animal technology (production scheduling; health aids; feed additives; and feed, air and manure handling equipment) that permitted efficient, labor-saving, year-round production. There arc cost economies of size available to the large units arising from technical efficiencies, cheaper inputs and better prices for hogs.

Until 1979, new technology and rising costs of labor relative to capital facilitated industrialization of hog production. Profitable hog prices during 1965-79 and an income tax structure that encouraged investment of earnings in additional facilities also encouraged the adoption of large-scale production methods and facilities. The farm crisis of the 1980s squeezed out numerous hog producers. Some independents turned to contracting as the only available source of capital for continued hog production.

Location, Size and Ownership
Typically, hogs are produced where the feed is grown. About 76 to 78% of hog production is located in the North Central (NC) region (the block of North Dakota, Kansas, Michigan, Ohio and the 8 states in between). That percentage has been relatively constant for 30 years or more. However, more than 78% of the smaller producers and less than 78% of the larger
Cooperative Extension work in Agriculture and Home Economics, state of Indiana, Purdue University and U. S. Department of Agriculture cooperating. H. A. Wadsworth, Director, West Lafayette, IN. Issued in furtherance of the acts of May 8 and June 30, 1914. The Purdue University Cooperative Extension Service is an affirmative action/equal opportunity institution.