Deconstructing the USDA’s Hog Report
The USDA released a report last month titled “Trends and Developments in Hog Manure Management: 1998-2009”. While trends in manure management are important and interesting, I found the industry’s production stats to be much more intriguing.
First, a little overview of the report. The analysis spans the eleven year period from ‘98 to ‘09. It includes farms having more than 25 pigs at any time during the year. To give you some perspective, with just a few sows and one boar a farmer could get well beyond 25 pigs on the farm at any given time. 25 hogs is about what you’d get from one sow in a year if you pushed her (3 litters, 8 per litter). So this study includes the very small to the very large. The survey represents more than 90% of all hog inventory in the representative years.
Here’ a tabular overview of the hog operation statistics between 1998 and 2009.
What can be gleaned from the report?
Based on the charts above I have a few key takeaways:
- The industry is consolidating at a rapid pace. This is not only indicated by the increase in animals/farm and the decrease in total hog operations, but also by the rapid increase in farmers under contract for production.
- More farmers under contract for production means that big ag companies are further consolidating down the line.
- Industry “specialization” is proliferating. Farrow-to-finish operations declined over 50% while Feeder-to-finish was up almost 50%.
- Small hog producers (<300 head/yr) are approaching extinction. We lost over 40,000 small farm producers in 11 years and only 10,000 remain.
- If the decline continues at this rate we’d be left with 2,500 small producers in 2020.
- Large producers (>1,000 head/yr) continue to take share. The large farm population doubled from 2,000 to 4,000.
- Small farms previously produced 35% of the industry’s output, today it is only 8%.
- Large farms absorbed the majority of that decline and now produce over 55% of the total output, up from 34% in 1998.
Other interesting commentary within the report
- The 48% of farms under production contract in ‘09 accounted for over 70% of hog production.
- The share of feed consumed by hogs and produced on the same farm fell from about 50% in ‘92 to below 20% by ‘04.