New report sheds light on how industry has evolved since the 1990s.
By Krissa Welshans
A major transformation of the U.S. hog industry began in the early 1990s bringing with it productivity growth and structural change, increased output and expanded exports. Although the number of hog farms has declined over time, farm size has increased, and the regional pattern of production has changed. These are findings in a newly released USDA Economic Research Service report compiled by a group of USDA economists.
The comprehensive report, “U.S. Hog Production: Rising Output and Changing Trends in Productivity Growth,” found that the number of hog operations with inventory declined by approximately one-third between 1997 and 2002 and then began to level off. However, the average farm size, measured by hogs per farm, roughly doubled between 1997 and 2012 but remained relatively stable afterward. Further, production shifted from farms with fewer than 5,000 head to those with 5,000 or more head, the economists found.
“As of 2017, roughly 93% of hog inventory was on farms with 2,000 or more head, a change largely driven by the increase in the share of inventory on farms with 5,000 or more head from 40% in 1997 to 73% in 2017,” they noted.
The average number of hogs sold or removed per farm rose from 945 head in 1992 to 8,721 head in 2015 while average slaughter weight also increased from 256 to 289 pounds. USDA reported that each hog weighed an additional 33 pounds at slaughter in 2017 compared with 1997, and the overall weight of the hog inventory grew 34%. These two factors—more hogs and larger hogs—contributed to an increased supply of U.S. pork, although exports have helped absorb some of the growth.
As the industry has undergone change, it has not been without challenges. To name a few, the 2008-09 recession, the porcine epidemic diarrhea virus outbreak, export tariffs and COVID-19 have each required hog producers to adapt to changing conditions, the USDA economists noted.
Industry undergoes transformation
The report also delved into how the U.S. hog industry has evolved. The economists found that hog production throughout most of the 20th century was concentrated in the Heartland Region near feed crop producing regions and interregional transportation systems. During the 1990s, however, larger numbers of hog farms began locating in the Southern Seaboard Region, primarily in North Carolina, with increased use of production contracts. This evolution has been attributed to a familiarity with poultry contract production in the Southern Seaboard Region.
Growth in Western regions also occurred, likely due to proximity to commercial feed, the economists suggested.
Meanwhile, another key transformation occurred as the hog sector shifted from independent hog production to contract production. USDA found that nearly all hog operations were independent in 1992 (97%) but that this had declined to less than half of all operations (47%) by 2015. An even more dramatic shift was found in the percentage of hogs produced under contract—in 2015, 69% of hogs were raised on contract operations compared to only 5% in 1992.
Spurred by greater use of production contracts and
technological innovation, the report pointed out that the hog industry gradually moved to more specialized operations.
“Rather than raising hogs from birth to slaughter weight, more farms are specializing in fewer phases of production,” the economists noted. In 2015, 60% of hog farms were feeder-to-finish operations, producing 83% of all market hogs.
Additionally, greater housing capacity for hogs at all phases of production provided infrastructure for the adoption of all-in/all-out management and phase feeding. These innovations were adopted to reduce the spread of disease and improve feed efficiency, the economists explained.
Along with the operational changes that occurred, USDA found that labor use on hog farms declined by 83% between 1992 and 2015, the bulk of which occurred between 1992 and 2004. The number of hours required to produce 100 pounds of weight gain also shrank from 1.2 hours to 0.2 hours. For all types of hog farms, 100 pounds of weight gain required six times the number of labor hours in 1992 than in 2015.
Producer at a glance
The U.S. Census of Agriculture indicates that the average age for all U.S. producers was 58 years in 2017, and 34% of all producers were 65 years or older. In comparison, the 2015 ARMS data indicate that hog producers were 55 years of age, on average and 22% were 65 years or older.
In 2017, only 2% of farms were operated by a beginning producer— one who has spent 10 years or less operating any farm or ranch—specialized in hog production, down sharply from 2015 ARMS data that showed 17% were operated by a beginning producer.
“Startup costs for hog production can be significant, particularly for beginning producers,” the USDA economist noted.
