This little piggy gluts market

Hogtied farmers: Pork prices plummet for producers, but not for bewildered consumers.

January 22, 1999

REMEMBER those ads touting "the other white meat"? They've been very successful, as consumer demand for pork continues to grow and supermarket prices stay firm. But farmers who paid for the promotion are understandably unhappy -- hog prices hit a 50-year low last month and most producers are still selling their swine for half the cost of raising the animals.

The nation's 115,000 pork producers have seen price drops of as much as 80 percent within a year. Political fallout from their financial toll threatens the success of the landmark Freedom to Farm Act of 1996, which steered national policy away from deep farm subsidies.

The Agriculture Department has responded with appropriate relief: $50 million in emergency payments, a doubling of pork orders for school lunch programs, and plans to spend $80 million to cull 1.7 million infected hogs. But no ongoing subsidies are planned.

That is wise, given the reasons behind the price plunge. With retail pork prices down only 2 percent, shoppers complain they aren't seeing the benefits of the low farm prices. Instead, retailers and packers are gaining larger shares of the consumer pork dollar.

One reason is the relatively high hog prices in two previous years. Other explanations include reduced exports to Asia and the consolidation of packing plants. In fact, the concentration of pork-packing facilities is fueling fears about an increase in integrated contract hog-growing such as dominates the poultry industry on Maryland's Eastern Shore.

But the main reason for the price plunge is that farmers produced more hogs than expected, a 10 percent jump in supply.

A market glut that drives down packer prices doesn't justify long-term government subsidies, even if short-term relief is needed to stabilize the industry. A free market system means that those who live high on the hog some days must expect to live low on the hog others.

Pub Date: 1/22/99

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