‘Not much appetite’ for hog expansion

Source: Iowa Farmer Today

It’s a mixed bag when it comes to expansion for the cattle or hog industries in the Midwest.

While cattle prices have hit record highs recently, hog prices are down and the industry could experience its worst losses since 2008.

“In many ways, 2023 is shaping up to be worse than 2008 when it comes to the hog industry,” says Lee Schulz, Extension livestock marketing economist with Iowa State University.

Schulz says hog slaughter in 2023 is estimated to be 1% higher than a year ago, which comes as a bit of surprise to him. He says expansion could come, but it will come without any increase in the sow herd.

“Pigs saved per litter is up 3% from a year ago in the most recent USDA report,” Schulz says. “So we’re having more pigs despite a decrease in the sow herd.”

He says it is important to understand that the pork being consumed today was produced through decisions made 10 to 18 months ago. That makes it difficult to slow down numbers.

He says investment in the pork industry is still being made despite the red ink. Schulz says there are producers who broke ground a year ago, and those pigs are finally being marketed. Other producers may be making adjustments necessitated by California’s Proposition 12 law, which will soon go into effect.

“Right now, there is not much appetite for hog expansion,” Schulz says.

There may be more of an appetite for expansion in the cattle industry as fed cattle prices continue to soar.

Any decisions will be based on those economics, says Dan Loy, director of the Iowa Beef Center and Extension beef specialist with Iowa State University. Loy says the 10-year cattle cycle still exists, making future expansion more predictable.

He says Iowa, for example, has lost half of its pasture land over the last 40 years, but the number of cows in the state has not reduced at that rate.

“Producers have become more efficient over the years, and they use technology such as rotational grazing to become more efficient,” he says. “They’re able to run close to the same number of cows by using those sorts of technology.”

Additional technologies exist that could also prompt expansion, Loy says. This includes things like confinement buildings and continued efforts to make more use of ethanol co-products.

“I don’t think we will ever get to 1 million beef cows, but I do think we can expect to see some growth in our cow-calf herd,” he says.

Loy says any increases in feedlot numbers may depend on the environment in the southern Plains. Drought conditions have been widespread for a few years now, making feed and water less readily available.

Consumer demand for beef is strong, which could also tempt producers into expanding.

Loy adds feedlots of 1,000 head or less are more common than they have been for many years.

“Those smaller feedlots are starting to fill up,” Loy says. “That tells me our numbers are about to start climbing.”