USDA Reports On Rise Of Hog Production Contracts Over The Past 20 Years

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The U.S. hog industry has experienced structural change, productivity growth, and increased output since the early 1990s. The average U.S. hog farm has become larger, more specialized, and focused on contract production. Hog and pig producers sold more than nine times the volume of hogs per farm in 2015 than in 1992, ending at 8,721 head of hogs per farm in 2015.

Over the same period, feeder-to-finish operations-those specializing in raising feeder pigs from 30-80 pounds to market weights of 225-300 pounds-became the majority, growing from 19 to 60 percent of all hog operations. Hog operations also became increasingly likely to use production contracts. A sharp increase in contract production occurred from 1992 to 2004, but contract production leveled off near 70 percent between 2004 and 2015.

By 2015, the majority of hogs and pigs were being produced on specialized operations (89 percent) and under contract production (69 percent). From 1992 to 2015, production contract use increased from 3 to 53 percent of operations, with roughly 71 percent of feeder-to-finish operations engaged in contract production by 2015.

These agreements were attractive because contractors typically provided the hogs and feed, made many management decisions, transported animals to market, and decided where and when hogs were to be sold. This chart appears in the USDA, Economic Research Service’s report U.S. Hog Production: Rising Output and Changing Trends in Productivity Growth, published August 2022.