The Kansas City-based farmer-owned cooperative, which runs the sixth-largest pork processing operation in the country, said effective today, it will pay a base price of no less than $15 per hundredweight for market hogs that meet the weight and quality specifications of Farmland Foods. Producers eligible to receive this price, which becomes effective Tuesday, Dec, 22, 1998, are those who sold hogs to the farmer-owned cooperative between Sept. 1' 1997 and Dec, 19, 1998.
"We are deeply concerned about the farmers who supply us with market hogs," said Gary Evans, Executive Vice President and Chief Operating Officer, Farmland Meats Group. "Establishing a price floor is an essential step to help our farmer-owners through one of the toughest economic periods in the history of the pork industry This price floor is proof positive that Farmland is "Proud to be farmer-owned(R)."
Evans said the concept of establishing a price floor was developed after the cooperative's leaders studied several ideas put forth during their annual meeting two weeks ago in Kansas City. Farmland typically buys hogs at competitive prices, markets pork products under the Farmland(R) brand, and then pays out its profits to livestock producers and local cooperatives in the form of patronage reflinds.
"With some recent reports of producers receiving less than $10 per hundredweight for market hogs, we felt compelled to take this step to help producers contain their losses until the backlog of hogs can be moved through the country's pork processing facilities," Evans said "Because we are the nation's only producer-owned pork processor, we felt a moral obligation to attempt to provide assistance to our producers," Evans added.
Farmland will continue to monitor the hog market situation and evaluate the need for this floor on a weekly basis.
The pork industry is experiencing a highly unusual glut in the number of hogs that are ready for market. Despite strong consumer demand for pork, there simply are too many hogs in the production pipeline for processing plants to keep pace, said Harry Febrenbacher, a pork producer from Effingham, Ill.
"We recognize that a price floor is not the total solution," said Fehrenbacher. "Nevertheless, for hundreds of producers it could mean the difference between staying or leaving the pork business."
Evans said Farmland's four packing plants and nine processing facilities are operating at complete capacity and are expected to process more than 8 million hogs this year, about 15 percent more pork than the previous fiscal year. The packing plants are located at Crete, Neb,; Denison, Iowa; Dubuque, Iowa; and Monmouth, Ill.
"We need a stable supply of high-quality hogs over the long-haul," said Evans. "If this helps producers weather the economic storm, then we're doing our job." Evans said Farmland already has instructed its hog buyers to incorporate the price floor. Meanwhile, Farmland will be notifying pork producers in a special letter that will be issued this week.
Farmland has already returned $82.6 million in cash to its members this year.
Headquartered in Kansas City, Mo., Farmland Industries is the largest farmer-owned cooperative in North America and one of the top 200 Fortune 500-listed companies. In 1998, company sales were $8.8 billion. When including third-party sales of Farmland's venture businesses, total sales exceeded $11,9 billion. Focused on meeting the needs of these 600,000 farmer-owners throughout North America, Farmland is a highly diversified company with major business lines in crop production and crop protection products, livestock feeds, petroleum, grain processing and marketing, and the processing and marketing of pork and beef products
back to Press Releases Index