Glenn Grimes, University of Missouri agricultural economist, says environmental opposition seems to be determining which states are gaining pork industry market share.
"We are concentrating hog production geographically and are seeing the growth in the states in which one can get permits without a two-year wait," Grimes says. "A part of what is happening to the market share and distribution in the pork industry is being driven by the kind of reception people get when they want to build a hog operation."
Grimes based his analysis on National Pork Board data showing states that gained and lost market share during the period from 1993 to 1998 (see Tables 1 and 2). He also looked at states that gained and lost market share of slaughter hogs from 1997 to 1998.
Grimes says the states that have traditionally been considered on the "fringe" as far as pork production are generally going out of the hog business. Florida is one example.
Some states that have been smaller hog states have gained market share simply by adding few producers.
"One large group or even one large producer can make a difference in the market share growth in some states," Grimes explains. "For example, both Alabama and Mississippi showed some growth from 1997 to 1998 because Prestage Farms and maybe one other hog producer are expanding in those areas."
Wyoming also experienced market share growth. Grimes notes that the expansion of two or three operations in a state with a relatively small industry may look like a large expansion. Utah is another good example. The growth recorded comes from just one firm - Circle 4 Farms, Grimes explains. Circle 4 Farms was originally owned by four firms, Smithfield, Carroll's Foods, Prestage Farms and Murphy Family Farms.
Oklahoma Boom Oklahoma has gained market share by leaps and bounds, too. The industry increased form 191,000 hogs in 1991 to 1,920,000 in 1998. Seaboard Corp. is a main driving force behind the state's expansion. Their new packing plant in Guymon, OK, has also contributed to that growth. Seaboard's Guymon plant can kill four million head a year, and Seaboard has said they hope to have three million of that kill under their ownership by the end of 2000. And Seaboard is still looking at building a similar-sized plant in Great Bend, KS, ready by 2001.
Other firms contributing to the state's growth include Land O'Lakes, Dekalb Swine Breeders, Murphy Family Farms and Texas Farms.
Look for growth in Idaho as well. Permitting of hog farms has begun there as Sawtooth Farms, LLC, Ketchum, ID, moves forward on a coordinated project. The project involves Independent Meats, a Twin Falls, 5,000-head-a-week packer; Bell Farms, the Wahpeton, ND, based producer; and the Anderson Group, Mason City, IA. The Sawtooth project goal is an eventual 250,000 sows filling a 15,000-head-a-day packing plant.
And, remember that the influence of Canada can not be overlooked in evaluating where the numbers are going. Maple Leaf Foods is set to open a new plant in Brandon, Manitoba, this summer. Initial kill is expected to be 45,000 a week with one shift operating. Maple Leaf has been contracting with new growers in Canada and hopes to ramp production up to two shifts within two years.
Looking toward the future, Grimes believes a producer's level of efficiency will be the main factor in their survival, not size. Generally though, he agrees the larger operation is going to be more successful because of economies of scale. "It is important not to forget about the economies available in family operations where it is complimentary to raise corn and grow hogs," Grimes states.
The economist predicts that the pork industry will have to find some way to take the fluctuation out of the pork marketing cycle, or the industry will face vertical integration or a combination of vertical integration and vertical coordination. "Contracts would serve as the vertical coordination," Grimes says. "I think within at least the next 10 years, when a pig is born, the producer will already know shackle space is reserved for that pig."
