Hog producers not going to have a very merry Christmas this year

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As Christmas approaches, some seasonal elves will shop, some will bake, some will string a couple of megawatts of colorful lights from the front porch to the barn.

I hope to avoid most of this season-pushing by burrowing into my den of paper to wait out all this buying, baking and beautifying. Three weeks from now I plan to emerge from my reading with some of my energy, humor and wallet intact. Initially, however, this season’s reading seems more for Halloween than Christmas.

Scary developments

For example, the week after Thanksgiving, DTN livestock analyst John Harrington filed a well-written, clever analysis of how Big Meat is now squeezing the stuffing out hog producers.

According to U.S. Department of Agriculture data on the October pork trade, writes Harrington, “Processors commanded 16.3 percent of the retail dollar last month, a piece of pie 10 percent larger than 2009 and 11 percent greater than the three-year average.”

Wasn’t it Pythagoras who postulated that if someone is gonna’ take a bigger share of the pie, somebody else is gonna’ get less pie?

“Last month’s farm share of retail spending dropped to 27 percent,” explains the Nebraska-based analyst-writer, “down sharply from the spring high of 36 percent.”

Hog losses

That nine percent cut, Harrington continues, looks small when compared to blood-filled 2009 yet it’s big enough to deliver “significant levels of red ink and equity losses” to hog farmers this fall. And, he adds, all of this is occurring as the “average retail price of pork in October totaled $3.363 (per pound), 17 percent above 2009 … the highest pork price ever put before consumers (and) the sixth consecutive month that such a record has been set.”

So, after years of verticalizing the pork sector — with the help of U.S. ag policy and a blind U.S. Department of Justice — Big Meat is now grinding up hog farmers bones and all: Record retail prices at the meat case, record share of the retail dollar for the Meat Gang and “significant levels of red ink and equity losses” for producers. Merry Christmas.

Making money

Here’s another cheery note, courtesy of the New York Times: Even as almost 20 percent of all Americans remain unemployed or under-employed, “American businesses earned profits at an annual rate of $1.659 trillion in the third quarter (2010) … the highest figure recorded since the government began keeping track over 60 years ago.”

Wow, that’s news. Despite their ceaseless wails about government rules, taxes and paperwork, corporate chieftains can still make a buck — make that 1.7 trillion bucks in just 90 days. That will buy a lot of eggnog for the company Christmas party, eh?

Course the ‘nog — eggs, cream, nutmeg and, ah, other, ah, special ingredients — will be safely consumed because of federal food safety rules; rules that were strengthened by Senate this past week and now await House and White House action. Why tougher, stronger rules?

Stronger rules

Partly because, as a Dec. 1 Times story notes, “… of the growing industrialization and globalization of the nation’s food supply. Nearly one-fifth of it, including as much as three-quarters of its seafood, is imported, but the Food and Drug Administration inspects less than one pound in a million of imported foods.” One pound in a million? That’s not an inspection system; that’s a recipe (as 2010 proved again) for disaster.

Moreover, the story continues — if you read between the lines — the new rules might give American farmers a leg up on the free trade flood of imports.

“The bill gives (FDA) more control over food imports, including increased inspection of foreign processing plants and the ability to set standards for how fruits and vegetables are grown abroad.” Great, the first gift of the season.

Cheers.

About the Author

Alan Guebert was raised on an 800-acre, 100-cow southern Illinois dairy farm. After graduation from the University of Illinois in 1980, he served as a writer and editor at Professional Farmers of America, Successful Farming magazine and Farm Journal magazine. His syndicated agricultural column, The Farm and Food File, began in June, 1993, and now appears weekly in more than 70 publications throughout the U.S. and Canada. He and spouse Catherine, a social worker, have two adult children. farmandfoodfile.com More Stories by Alan Guebert

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