For Immediate Release
December 16, 1998

U.S. pork producers are experiencing an economic crisis of paramount proportions. Cash hog prices have fallen below $10 per hundredweight in some locations. This is the lowest price paid to producers in more than 40 years. The National Pork Producers Council (NPPC) has requested USDA's immediate action in addressing this crisis.

In a letter today to Ag Secretary Dan Glickman, NPPC President Donna Reifschneider, a producer from Smithton, Ill., urged him to implement immediate intervention strategies discussed during their meeting on Dec. 11. The proposed low hog price remedies include guaranteed loan programs and/or cash infusion, increasing slaughter capacity and direct U.S. government intervention on Canadian live hog for slaughter imports.

"How these issues are addressed will determine the fate of thousands of pork producers throughout this country," Reifschneider wrote. "We cannot understate the need for immediate action to address this crisis. The ownership, the structure and the future of pork producers and the pork industry is now being determined."

By way of graphic illustration, if other ag commodities were experiencing the same economic destruction pork producers are with sub-$10/cwt. live hogs, their prices would be estimated at: $16.48/cwt. cattle, $.75/bu. corn, $1.50/bu. soybeans and fluid milk worth less than $5/cwt.

NPPC recommended the following live hog price remedies for consideration:

1. Immediate application of a sufficiently funded Farm Service Agency loan guarantee program for pork producers. Producers need some form of immediate cash infusion or interest and debt restructuring assistance.
2. Credit forbearance. All federal banking and lending institutions should be urged to work with their producer clients who are facing an equity or cash flow crisis.
3. Direct intervention on Canadian Live Hog for Slaughter imports;
   1. Immediate Canadian government intervention on Quality Foods strike in Ontario;
   2. Intervention strategies to mitigate currency exchange rate differences that encourage north to south product flow;
   3. Canadian industry/government intervention to increase Canadian packer capacity utilization;
   4. Strong encouragement to U.S. packers to kill U.S. pigs first prior to any Canadian slaughter hogs;
   5. U.S. government initiation of Section 201 and/or Dumping investigation.
4. Increase slaughter capacity to exceed 2.2 million head per week and/or reduce supply to less than 2.0 million head per week;
   1. Increase the slaughter capacity of the Carolina Food Processors (Smithfield) plant from the current 144,000 hogs to 172,800 hogs per week;
   2. Limit labor disruptions associated with the Immigration and Naturalization Service's Operation Vanguard;
   3. Encourage slaughter capacity increases through overtime, second shifts and Saturday slaughter operations;
   4. Encourage an orderly reduction in breeding herd.
5. Implementation of a humanitarian "gilt lift" of 300,000 head of 200 - 250 pound gilts for Honduras, Nicaragua, Haiti, the Dominican Republic and Mexico. This would provide greatly needed aid to regions of the world that experienced natural disasters this year, while helping U.S. pork producers reduce the slaughter capacity bottleneck.
6. Purchase of the equivalent of a minimum of a day of slaughter, 380,000 head, of carcasses (to minimize labor) for Russia or other republics of the former Soviet Union. Participating packers would be required to operate a full Saturday slaughter operation.
7. Purchases of pork and pork products for domestic and international feeding and humanitarian assistance programs.
8. Investigation on the impact of contracts on the value of live hogs.
9. Immediate investigation of noncompetitive pricing practices.
10. Participation in a Pork Industry Summit to establish short- and long-term strategies.

This is a continuation of a series of efforts initiated by NPPC on behalf of U.S. pork producers. NPPC, on Nov. 20, sent a letter to President Bill Clinton asking for "direct and immediate action to prevent the financial destruction of pork producers and their families." On Nov. 21, a letter was sent to all U.S. pork packers urging their assistance to alleviate the current slaughter bottleneck by increasing slaughter capacity. To address Canadian live hogs imported for slaughter in the U.S., a letter was sent to the Canadian Pork Council on Dec. 11. It requested an increase in the number of hogs slaughtered in Canada to relieve the capacity bottleneck currently being experienced at U.S. packing plants.

"Never before have U.S. pork producers experienced such a devastating economic state. With looming supplies and current capacity challenges, our producers cannot survive without immediate government intervention," Reifschneider said. "The size and scope of this economic crisis is far beyond that of individual pork producers."

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