Market analyst predicts ?payback? for pork producers in 2000 and 2001

Back-to-back years of huge financial losses have the nation?s hog producers feeling pretty edgy, but one industry analyst says it?s time for a little payback.

Economist Ron Plain expects this year?s hog prices to be eight cents per pound higher than 1999 and 1998. The simple translation is that it once again will be profitable to raise pigs.

Plain will cast his positive outlook when he speaks Feb. 1 at the Swine Profitability Conference, hosted by Kansas State University. Plain is an agricultural economist with the University of Missouri-Columbia.

?If feed costs remain low, hog producers should expect to show a profit,? Plain said.

In 1998 and 1999, swine producers lost a record $4 billion, Plain said. ?This has caused a modest cutback in hog numbers, which will yield higher prices in 2000 and probably still higher in 2001,? he said.

Hog producers should expect 2000 hog slaughter to be about 4 percent below last year?s record slaughter of 101.5 million head.

Plain said he thinks the number of hog farms will continue to decline and the average size of hog farms will continue to increase.

?I expect to see more contract production and more marketing contracts as hog producers try to cope with the enormous financial risk they face,? he said.

?Two things appear to be the key to survival,? Plain said. ?As always, production efficiency is a must. There is little need for hog farms which do not efficiently convert grain into meat.

?Equally important is the ability to manage price risk. The modern hog industry is facing more price volatility, [in] both hog and feed prices, than in the past. Lenders are likely to force producers to adopt effective price management strategies.?

Plain?s comments will kick off the day-long conference, which aims to help swine producers make more money through better production management, marketing and business decisions.

Information about the Swine Profitability Conference is available at local extension offices in Kansas, or by calling K-State?s Department of Animal Science at 785-532-6533.

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