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USDA to buy pork for aid programs amid hog market woesWICHITA, Kan. (AP)--When Secretary of Agriculture Ed Schafer announced the government's plan to buy up to $50 million of pork products for child nutrition and other domestic food assistance programs, it seemed to be a generous effort to help poor families struggling with high grocery tabs. But what the U.S. Department of Agriculture failed to mention in making the May 1 announcement was that the move was just what the National Pork Producers Council had urged Schafer to do two weeks earlier to reduce sow numbers--ultimately driving up pork prices for all consumers. Hog producers say they are facing an economic crisis caused by soaring livestock feed costs and that they need higher swine prices to survive. They say they have lost $30 to $50 on each hog marketed, amounting to more than $2.1 billion over the past seven months. Among them are producers such as Ron Suther, who runs a 300-sow family operation in Blaine, Kan. He sells 435 hogs each month and said he is losing nearly $22,000 monthly. "We have had quite serious conversations with our banker. They are telling us if this continues much longer we are going to be forced out of business. Nobody wants to look at that straight in the eye," he said. "If this goes on until January there is no way we can survive." Hog industry leaders asked Schafer to purchase an additional 50.5 million pounds of pork sausage at roughly 99 cents a pound for federal food programs. Because sausage is made from sows, the purchase would cut the U.S. breeding herd by 163,600 head, bringing it closer to what economists say is needed to push hog prices to profitable levels, said Dave Warner, spokesman for the National Pork Producers Council. "Pork was chosen as a commodity because there are high supplies right now and it will ease financial losses currently felt by the nation's hog farmers," USDA spokesman Billy Cox said May 2. The government's purchase is in addition to 43 million pounds of pork the agency bought last year for domestic food programs, Warner said. It will cull 2.5 percent of the nation's sow herd, still short of the 10 percent reduction economists say is needed to drive down supplies enough to boost prices, said Steve Meyer, president of Paragon Economics in Adel, Iowa. The remaining herd reductions likely will come by natural attrition, given that producers are losing money. "With a shortage of pork, the price will go up," Suther said. "That is the only thing that is going to save us. It is a game of chicken to see who is going to survive to next year and reap those kinds of profits or prices." Meyer said swine prices need to be 30 percent higher to cover the increased costs of corn and soybean meal. The impact on hog prices from a smaller breeding herd will likely not be seen until a year from now, when retail pork prices are expected to go up 10 to 15 percent, Meyer said. USDA spokesman Keith Williams said May 2 that no one meeting resulted in the department's action, adding that the agency had been looking for several months at markets and supplies and trying to find ways to help people. "We can help a lot of people that need food," Williams said of the pork purchase. Schafer said in a news release announcing the purchase that the USDA provides food assistance to one in every five Americans. "We are working to increase benefits due to rising food costs and to ensure we have full funding for our food assistance programs," Schafer said. It is not the first time the USDA has stepped in to prop up hog markets. When hog prices plummeted in 1998 and 1999, the agency bought an extra 118 million pounds of pork, then worth $127 million, Warner said. "At this point we are trying to make sure that our general consumer base knows that our industry is struggling a little bit," said Tim Stroda, president of the Kansas Pork Association. At its worse in January and February, the Kansas hog industry was losing an estimated $10 million a month in equity, he said. Hog prices have gone up in the past two weeks, helping mitigate losses, Stroda said. Kansas represents about 2.5 percent of the nation's hog production, selling 3.1 million head of market hogs a year valued at $400 million, Stroda said. Pete Sherlock, a veterinarian in Washington, Kan., who also manages hog facilities for others in Kansas and Nebraska, said he already has seen a half dozen producers quit feeding pigs and get out of the business for now. Some producers are looking for outside employment. At the same time, demand for pork is rising worldwide as the more affluent middle class in China and India changes from grain-based diets to protein-based diets. In January and February, U.S. shipped 20 percent of its pork production overseas, Warner said. In 2007 and 2006, 15 percent of the nation's pork was exported. 5/12/08 Date: 5/6/08 Advertisement
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