Purdue News
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May 26, 2000 Hog industry poised to prosper after enduring the '90sWEST LAFAYETTE, Ind. – Having said good riddance to the transitional and at times traumatic 1990s, Indiana's hog industry now can acknowledge that it managed the decade's low-price crisis better than some may have thought. Purdue University agricultural economist Chris Hurt said Indiana and its neighbors in the Eastern Corn Belt didn't lose as much hog-industry ground as it once appeared they would, and now they can look forward to more prosperous times within a changed industry. "The amount of pork produced and processed in the region dropped by only 4 percent," Hurt said. "This could be defined as almost holding your own." The low-price extremes brought losses, but also some wins for Indiana. Hurt said, however, that the decade's only constant was change: "The industry shifted its production technology, shifted from small farms to large farms, and even shifted geographic locations," he said. "However, Indiana's industry had several positive developments." Those positives included a modest 1 percent gain in Indiana production while production fell in many other Eastern Corn Belt states. Still, when viewed in a national context, Indiana's 1 percent gain was a significant loss of market share because the rest of the nation saw an overall increase in hog production of 26 percent. Back on the upside, Indiana's packing capacity rose sharply at the start of the decade, Hurt said. By the end of the '90s, Indiana was processing substantially more of its own hogs and had grabbed a bigger share of the Eastern Corn Belt hog industry. The Eastern Corn Belt states of Illinois, Indiana, Ohio, Michigan and Wisconsin differed greatly in how they weathered the '90s' extremely low prices. While Indiana gained 1 percent in production and 78 percent in the number of hogs slaughtered, Ohio's production rose 7 percent, yet lost half of its processing capacity. Illinois saw a 9 percent production loss and a 10 percent gain in slaughter, while Michigan gained 2 percent in production, but lost nearly all its processing – 95 percent. Wisconsin had a 28 percent production drop and a 70 percent loss in processing since 1985. Hurt said that in 1990, Indiana brought 7.1 million hogs to market, and by 1999 that number had increased to 7.2 million, representing 1.7 billion pounds of live animals – a strong contrast to some neighboring states such as Illinois with its 9 percent drop. The real gain in Indiana, Hurt said, came in processing. "Two major new packing plants were added in the '90s at Delphi and Logansport," Hurt said. "In 1990, only 3.6 million animals were processed in the state, but by 1999, that had exploded to 6.2 million. "These changes mean that Indiana has become more of a regional center for hog production, and especially processing. As producers and processors become more closely aligned through long-term marketing agreements, Indiana will likely be more positively viewed as a location for the industry, at least relative to some neighboring states." In 1990, Indiana producers shipped 3.5 million, or 49 percent, of their hogs out of state for processing. By 1999, only 1 million head were shipped out of state – just 14 percent of the state's production. In the region, Hurt said Indiana did comparatively well. "At the start of the decade Indiana's production was 29 percent of the Eastern Corn Belt, but 31 percent by the end." The statistics are better for processing alone, with Indiana's share of the total Eastern Corn Belt processing market rising from 18 percent in 1990 to 34 percent in '99. The trend toward processing bodes well for the future of Indiana's hog industry, Hurt said. "The concept of a regional production and processing center is one that the state's industry can build around. Increasingly, producers in Michigan, Ohio, and eastern Illinois are looking to Indiana for processing capacity. The next step is to continue to build on these gains by maintaining or even expanding processing capacity and promoting the state as the regional center of hog production and processing." CONTACT: Hurt, (765) 494-4273, hurtc@purdue.edu Compiled by: Amanda Siegfried, (765) 494-2080, asiegfried@purdue.edu Purdue News Service: (765) 494-2096; purduenews@purdue.edu
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