U.S. Pork Industry

1

• U.S. Pork Industry
• Structure Study 2001

Glenn Grimes Professor Emeritus University of
Missouri-Columbia
2
U.S. Pork Industry Structure Study, 2001
U.S. Marketings by Producer Size
Hogs marketed annually 1988 1991 1994 199
7 2000 Under 1,000 32 23 17 5 2
1,000-1,999 19 20 17 12 7 2,000-2,999 11
13 12 10 5 3,000-4,999 10 12 12 10 7
5,000-9,999 9 10 12 10 10 10,000-49,999 12
13 13 16 18 50,000 up 7 9 17 37 51

University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
3
U.S. Pork Industry Structure Study, 2001
Estimated Number of Operators and Share of U.S.
Hog Slaughter by Size Category in 2000
Size class Number Market share (annual
mktgs.) operators
(percent) 2,000 10,034 7 2 - 3,000
4,118 5 3 - 5,000 3,312 7
5 - 10,000 2,627 10 10 - 50,000
2,501 18 50 - 500,000 136
17 500,000 20 35
Total 77,260
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
4
U.S. Pork Industry Structure Study, 2001
Number of Large Hog Firms
Year Size (thousand head) 1994 1997 2000 50 -
500 57 127 136 500 9 18 20
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
5
U.S. Pork Industry Structure Study, 2001
Percent of Marketings by Large Hog Farms
Year Size (thousand head) 1994 1997 2000 50 -
500 7 13 17 500 10 24 35
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
6
U.S. Pork Industry Structure Study, 2001
Age of Major Equity Holder
Size Class Age
(no. head) 1997 2000 1 - 2,000
47.6 50.0 2 - 3,000 48.0 48.5 3
- 5,000 48.8 49.0 5 - 10,000 48.4 49.0
10 - 50,000 48.3 47.9 1 -
50,000 48.8 49.0
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
7
U.S. Pork Industry Structure Study, 2001
Age Distribution of Major Equity Holder Medium
Size Operations 1-50,000 hd. marketed annually
Percent
Age
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
8
U.S. Pork Industry Structure Study, 2001
Percent of Litters Sired by Artificial
Insemination


Size of Operation (thousand head mktd.)
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
9
U.S. Pork Industry Structure Study, 2001
Percent of Farms Increasing or Decreasing
Production since Beginning Marketing
Contracts (1,000 - 50,000 hd. size)
Farms increasing production 12 Average
increase on these farms 73 Farms decreasing
production 4 Average decrease on
these farms 50 Farms reporting they were
larger because they had a contract 17
Average increase on these farms 114
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
10
U.S. Pork Industry Structure Study, 2001
Planned and Actual Growth of Hog Producers by
Size 1997-2000
Marketings (thousands) Planned
Actual 1 - 2 10 - 22
2 - 3 6 - 27 3 - 5 15
- 20 5 - 10 25 13 10 -
50 39 37 50 up 41 48
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes,Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
11
U.S. Pork Industry Structure Study, 2001
Growth Plans More Modest in 2000 than 1997
Size (thousand head)
1997-00 2000-03 1 - 2 10
1 2 - 3 6 12 3
- 5 15 5 5 - 10 25 12
10 - 50 39 12 50 - 500 66
18 500 27 12
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes,Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
12
U.S. Pork Industry Structure Study, 2001
How Satisfied Are You with Pork Production?
Size Class (no. head)

1 not satisfied at all. . . . . . . 6
extremely satisfied
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
13
U.S. Pork Industry Structure Study, 2001
Limits on Further Expansion by Size
Size Class (no. head)

1 no effect . . . . . . . 6 greatly limits
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
14
U.S. Pork Industry Structure Study, 2001
Limits on Further Expansion by Size
Size Class (no. head)

1 no effect . . . . . . . 6 greatly limits
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
15
U.S. Pork Industry Structure Study, 2001
Limits on Further Expansion by Size
Size Class (no. head)

1 no effect . . . . . . . 6 greatly limits
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
16
U.S. Pork Industry Structure Study, 2001
Limits to Further Expansion
Size Class (no. head)

1 no effect . . . . . . . 6 greatly limits
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
17
U.S. Pork Industry Structure Study, 2001
Percent of Farms with a Profit in 2000
Size Class (no. head)

Percent
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
18
U.S. Pork Industry Structure Study, 2001
Factors that Limit Expansion 1 - 50,000 sizes

1 no effect . . . . . . 6 greatly limits
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
19
U.S. Pork Industry Structure Study, 2001
Percent of Hog Firms that Will Stay in
Business until 2003 with 40-42 Hog Prices
Size Class (no. head)

Percent
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing
20
U.S. Pork Industry Structure Study, 2001
Type Payment Production Contracts
No Type Incentive Incentive
Total Pig space 19 18 37 Head 37
14 51 Pound 7 2 9 Other -- -- 3
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
21
U.S. Pork Industry Structure Study, 2001
Use of Production Contracts as Percent of All
U.S. Hogs
Size Class All Hogs Hogs under
Contract (no. head Farrowed by Finished by
marketed) contractors contractors Farrowed
Finished 1997 2000 1997 2000 1997
2000 1997 2000 --- percent --- --- percent
--- --- percent --- --- percent --- 1 - 50,000
10 5 14 9 1 2 8
3 50 - 500,000 8 8 9 13 4
7 7 10 500,000 22 26 22 33 11
13 16 21 Total 40 39 44 55 17
22 30 34
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
22
U.S. Pork Industry Structure Study, 2001
Pricing Hogs by Large Producers
Use

Cash
Marketing Contracts
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
23
U.S. Pork Industry Structure Study, 2001
Percent of U.S. Hogs Sold through Various Pricing
Methods, 1997 2000
Use

University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
24
U.S. Pork Industry Structure Study, 2001
Percent of Market Hogs Sold on Carcass Merit
Basis


Size of Operation (thousand head mktd.)
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
25
U.S. Pork Industry Structure Study, 2001
Opinions about Marketing Contracts
Size (hd. marketed/yr.)
1,000 -
50,000 50,000- with
without 500,000 500,000
contract
contract with with Better
coordinate slaughter 3.66 2.94
4.60 4.85 Lower cash prices 4.19
4.23 3.78 2.80 Producers with
contracts receive higher prices
3.88 3.46 3.89 4.06 Undue
preference in who is offered a contract
3.52 3.49 3.51 2.22 Should
be made illegal 2.70 3.07 1.69
1.37 Should be more closely monitored
3.97 4.01 3.09 1.63 Prefer
marketing all on cash 2.97 4.13
2.78 2.37 Have been fairly treated
4.36 4.63 4.38 Plan
to continue mktg. on contract 4.19
4.83 4.85 1 strongly
disagree 6 strongly agree

University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
26
U.S. Pork Industry Structure Study, 2001
Marketing Contract Preference Minimum Price Tied
to Feed Costs
Size Class (no. head)

1 2 3
4 5 6 1 not
important at all . . . . . . . 6 very
important
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
27
U.S. Pork Industry Structure Study, 2001
Marketing Contract Preference
Size Class (no. head)

1 2 3
4 5 6 1 not
important at all . . . . . . . 6 very
important
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
28
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class (no. head)

1 2 3
4 5 6 1
strongly disagree . . . . . . . . . . . . . 6
strongly agree
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
29
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Prefer To Market All Hogs on Cash Market
Size Class (no. head)

1 2 3
4 5 6
1 strongly disagree . . . . . . . . . 6
strongly agree
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
30
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class (no. head)

1 2 3
4 5 6 1 not
important at all . . . . . . . 6 very
important
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
31
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class (no. head)

1 2 3
4 5 6 1 not
important at all . . . . . . . 6 very
important
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
32
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class (no. head)

1 2 3
4 5 6 1
strongly disagree . . . . . . . . . 6 strongly
agree
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
33
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class (no. head)

1 2 3
4 5 6 1
strongly disagree . . . . . . . . . . . . . 6
strongly agree
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
34
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class (no. head)

1 2 3
4 5 6 1
strongly disagree . . . . . . . . . . . . . 6
strongly agree
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
35
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class (no. head)

1 2 3
4 5 6 1 not
important at all . . . . . . . 6 very
important
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
36
U.S. Pork Industry Structure Study, 2001
Marketing Contracts Reduced Price Risk
Size Class (no. head)

1 2 3
4 5 6 1 not
important at all . . . . . . . 6 very
important
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
37
U.S. Pork Industry Structure Study, 2001
Medium-sized Producers Percent Involved in
Networking

0 10 20
30
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
38
U.S. Pork Industry Structure Study, 2001
Medium-sized Producers Percent of Production
Involved in Networking

0 10 20 30
University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
39
U.S. Pork Industry Structure Study, 2001
Medium-sized Producers Maximum Percent of Their
Production Involved in Networking


University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
40
U.S. Pork Industry Structure Study, 2001
Vertical Integration in the U.S. Hog Industry


University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
41
U.S. Pork Industry Structure Study, 2001
Percent of Hogs Sold on Spot Market


University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.
42
U.S. Pork Industry Structure Study, 2001

University of Missouri, Iowa State University,
National Pork Board, Pork magazine, PIC, Land
OLakes, Dekalb Choice Genetics, and Research
Institute for Livestock Pricing.