Left unchallenged, a recent federal district court ruling will result in a 2.5 percent loss in pork packing plant capacity nationwide, and more than $80 million in reduced income for small U.S. hog farmers, according to an analysis by Dr. Dermot Hayes, an economist with Iowa State University. The National Pork Producers Council (NPPC) is urging the U.S. Department of Agriculture (USDA) to intervene before the ruling takes effect at the end of next month. The ruling will dramatically reduce hog farmer market power—particularly smaller producers located near impacted plants—and undermine pork industry competition.
The federal court’s decision struck down a provision of USDA’s New Swine Inspection System (NSIS) allowing for faster harvest facility line speeds. NSIS, initiated during the Clinton administration and evaluated at five pilot plants over 20 years, was approved for industry-wide adoption in 2019. NSIS modernized an inspection system that had remained unchanged for more than 50 years.
The court’s ruling will have the opposite effect sought by those seeking to expand the number of meat packing plant facilities. Lawmakers have recently called for increasing the number of pork processing facilities nationwide by bringing smaller state plants up to federal inspection standards. These facilities represent less than one percent of total harvest capacity.
“The U.S. pork production system, the most advanced in the world, is characterized by robust competition, innovation and efficiency. With the stroke of a judge’s pen, the lives of many hog farmers will be upended if this misguided ruling takes effect,” said NPPC President Jen Sorenson, communications director for Iowa Select Farms in West Des Moines, Iowa. “The lost revenue projected by Dr. Hayes is not theoretical; it is based on breeding decisions made several month ago and pigs already in the production cycle that will go to market in a few months.”
According to Dr. Hayes, while the court decision will affect all hog farmers, small hog farmers will disproportionately bear the brunt, especially those near affected processing plants. Michigan pork producer Ed Reed sends 80 percent of his hogs to an affected plant 15 miles away from his farm. “I’m a small farm and we’re trying to capture as much value as we can,” he said. “If we were to slow the plant down…we’re going to have capacity issues,” he said, with the next closest processing plant two-and-a-half hours away. Those added transportation costs may be too much for producers to bear, he noted.
“As a small producer, small changes in packer capacities impact us,” said Minnesota hog farmer Dani Stonestrom. “If we can’t pay our people because the funds aren’t coming in, we have to let them go. In a small community, where we’re a large employer, removing the jobs from our community is detrimental to these families and the vitality of the community as a whole,” she added.
NPPC is urging USDA to appeal the ruling, seek a stay while the appeal is considered and request the agency pursue a new, fast-tracked rulemaking that better reflects the modern processing plant technologies and practices and allows for higher line speeds. To learn more about this issue and hear more hog farmers describe the impact the court ruling would have on their operation, visit https://nppc.org/issues/issue/preserve-u-s-pork-industry-competition/.