Economic and Marketing Information                                                                                                                                                                                          FOR INDIANA  FARMERS
Prepared by the Agricultural Staff of Purdue University, Lafayette, Indiana      
July  31,   1961
INDIANA  FARMERS
INDIANA HOGS SUPPLY A NATIONAL MARKET
by Richard L. Feltner and Thomas T.  Stout
Indiana hogs are sold and priced
as part of a nation-wide market. Any
occurrences that affect prices in any
part of the nation are quickly reflected in price adjustments throughout the market area. A packing plant
or transportation strike, changes in
imports or exports affect hog prices
over the entire country. Farmer acceptance of the feed-grain program
in Indiana affects hog prices in the
South. Population growth in New
York City affects the price of hogs in
Indiana.
Most of our national population
is concentrated in large cities and
towns, particularly in the eastern
states and the Atlantic and Pacific
coastal areas. But 80 percent of all
the hogs produced for the nation are
supplied from the North Central
States—the Corn Belt. In the western
Corn Belt many hogs move west to
supply consumption areas in the
Mountain states and along the Pacific coast. Surplus hogs from Iowa,
Illinois. Indiana and Ohio normally
move toward the great consuming
centers of the East.
Indiana is a principal contributor
to this national market, producing far
more hogs  than  are slaughtered  by
packers located within the state. Last
year Indiana farmers sold over iVz
million hogs for slaughter. About 5
million hogs were slaughtered by Indiana packers I a small percentage of
them from western states, but most
of them from Indiana farms I and
the remainder moved to the East and
Southeast. Thus, packers located
hundreds of miles from the major
hog supply areas slaughtered about
2V2 million Indiana hogs.
Nearly 2,400 packers that slaughter hcgs are scattered throughout the
United States. Over 50 percent of
these packers, with nearly 40 percent of total hog slaughter capacity,
are located in states to which Indiana
normally ships hogs. Most of the iVz
million hogs shipped out last year
went to Ohio. Pennsylvania. Maryland. New Jersey, and New York
City. Over 500 packers are located
in this area alone. Table 1 shows the
typical percentage distribution of
hogs shipped out of central Indiana
as reported by market operators in
a study of hog market prices completed recently at Purdue University.1
Hundreds of packers scattered over
a vast area are interested in buying
Table /.  Shipments of 180-270 pound slaughter hogs from central Indiana to
eastern and southern destinations, 1959-1960.
Remaining
in
Indiana
Eastern Pennsyl-
Ohio, Western       vania. New Jersey, New York
Pennsylvania and      Maryland & New and New
Southern Michigan             York City England
All Southern States
64.4%
14.3%
13.0%
2.4%
5.9%
Indiana hogs. Each packer sells to
many wholesalers, each wholesaler
supplies main retailers, and each retailer faces thousands of consumers.
That is a national market.
Price Determination  in a
National Market
How are prices determined in such
a vast system, and what is the impact on the pricing mechanism to the
individual market that serves the individual producer? A nation-wide system of public and private market
news reports, wire services and telephone connections permits rapid exchange of price and supply information that is essential for a national
market. Every morning each packer
knows what retail and wholesale buyers will probably pay for his product and what it will probably cost to
process live animals into the cuts and
products desired. With this knowledge
as a starting point he begins to shop
for hogs, knowing how much he can
afford to pay.
Whether he is a midwestern packer located in a heavy supply area, or
an eastern packer in a state where
hogs are scarce, he begins by checking the national market. Bv 9 a.m. he
has probably talked to Chicago, St.
Louis and Indianapolis, called various
shipping associations or country
market chains that ship from country
Teltner. R. L. Unpublished thesis, "An
Analysis of Market Price Structure and
Pricing Accuracy for Market Hogs in
Central  Indiana."