Illinois  Pork, Packers, Politics and Mini-Building Boom

Illinois Pork, Packers, Politics and Mini-Building Boom

If there were a contest to name the ideal place to raise hogs, longtime Illinois pork producer Art Lehmann believes his state is as competitive as any location in the world. Even though grain inputs are much higher than they were, they are still as competitively priced here if not lower priced than for a lot of other people raising pigs, like in Europe, for example, Lehmann says. Illinois ranks number

If there were a contest to name the ideal place to raise hogs, longtime Illinois pork producer Art Lehmann believes his state is as competitive as any location in the world.

“Even though grain inputs are much higher than they were, they are still as competitively priced here — if not lower priced — than for a lot of other people raising pigs, like in Europe, for example,” Lehmann says.

Illinois ranks number two behind Iowa as the country's top corn and soybean producing state. Last year, Illinois farmers harvested 13.1 million acres of corn and 8.2 million acres of soybeans with average yields of 175 and 43 bu./acre, respectively.

Not only does the state's rich, black soil provide for abundant feed supplies, it offers an excellent waste management tool for livestock producers. “We have a good land base for applying manure,” notes Lehmann of Strawn.

“There's a tremendous value increase in manure,” he says. “I have neighbors calling me today wanting to buy manure, whereas I couldn't give it away five years ago.”

Lehmann's confidence in his home state is reflected in his actions. During the past five years, he and his brother, Ken, have expanded from 1,500 sows at the family's home farm to 7,500 sows on farms in central and southern Illinois, plus one site in Missouri. All of the operation's pigs are finished at contract sites in central Illinois.

Feed Prices Equal to Iowa

Conventional wisdom says Illinois pork producers pay more for feed than their counterparts in Iowa.

“In Illinois, we have a very good river system; it is a lot less costly to ship grain by barge to New Orleans than by truck or rail, so grain prices have been higher here,” says Bob Johnson, who owns a 1,300-head, farrow-to-finish operation in DeKalb with his sister, Carol Johnson, and sister and brother-in-law, Peggy and Steve Pate, DVM.

But Iowa's booming ethanol industry is changing the playing field, according to Johnson. “Finishing pigs in Iowa isn't nearly as advantageous as it used to be, because the corn price is just as high there as it is here,” he says. Iowa currently has 29 ethanol refineries operating, and Illinois has just eight.

Last year, corn was still about a nickel lower in Iowa than in Illinois, according to the United States Department of Agriculture (USDA). But if you look at what's happening so far this year — especially in some regions of the two states — Johnson's point is revealed.

For example, this March, elevators in northwest Iowa offered high bids of 17 to 34¢ more per bushel than elevators in northern Illinois, where Johnson lives, according to the USDA's Livestock and Grain Market News.

Compare that to March of 2000, when northern Illinois elevators were paying 8 to 13¢ more per bushel than buyers in northwestern Iowa.

Iowa's favorable feed prices were a big enticement when John Kellogg, of Yorkville, IL, was looking for a place to finish pigs weaned at the 1,500-sow, farrow-to-finish enterprise he owns with his wife, Jan.

In 1999, the Kelloggs landed an opportunity to rent six finishing facilities in north central Iowa. Today, they have roughly 17,000 pigs on feed in Iowa at any given time.

“When we first started finishing pigs in Iowa, corn was about 50¢ a bushel lower there,” says Kellogg, who buys about 300,000 bushels of corn annually.

However, since the Kelloggs started shipping weaned pigs to Iowa, an ethanol plant was built a short distance from the feedmill that supplies their corn. “Now, corn is not any cheaper there than it is in our own backyard,” he says.

“Really, though, it doesn't matter if you are in Illinois or Iowa, the ethanol industry has created huge challenges for the livestock industry,” Kellogg concludes.

Clear Regulatory Guidelines

How does Illinois' regulatory environment stack up for producers wishing to build or expand facilities?

“If you have a good site, it can be a friendly environment,” Lehmann says.

Illinois adopted a Livestock Management Facilities Act in 1996 (amended in 1998 and 1999) that put into law specific procedures and criteria for the design, construction and operation of livestock management and waste handling facilities. (See below for livestock rules.)

“People from other states who come into Illinois say our guidelines are pretty straightforward,” says Lehmann. “In some states, there is too much subjective opinion on who does or doesn't get a permit.”

Johnson points out that complying with the act isn't a guarantee against controversy. He tells of a neighbor who met the current regulations, but eventually dropped the project after unhappy neighbors convinced a court to grant an injunction to delay construction. “He had the permit to build, but local politics put enough pressure on him that he eventually gave up,” Johnson says.

Packer Options

Illinois has three primary packer options: Cargill's Excel plant at Beardstown, where 18,000 hogs are processed daily; Smithfield's Farmland Foods plant at Monmouth, with a daily capacity of 11,000; and the producer-owned cooperative Meadowbrook Farms, which processes about 3,500 head daily at its plant in Rantoul. Triumph Foods of St. Joseph, MO, is also scheduled to open a new plant in East Moline, IL, in mid 2010. (See page 44.)

Although there are just a few packers within Illinois' borders, Lehmann points out there are many options within a reasonable trucking distance, including several packers in Iowa and Indiana. A portion of his pigs go to Indiana Packers in Delphi, IN, and Meadowbrook Farms, with the majority going to Cargill at Beardstown, IL.

Cargill spokesperson Mark Klein says Illinois' robust swine industry is a “very important” resource to Cargill's pork business. Cargill purchased the Beardstown plant from Oscar Mayer in 1987. In 1995, Cargill doubled the processing capacity, moving from one to two shifts per day. Currently, the plant employs 2,200 people.

According to Klein, about 55-60% of the 18,000 hogs processed daily come from Illinois producers. The rest are from Iowa, Missouri, Indiana and Michigan.

Klein strikes a comparison between the Illinois plant and a plant Cargill purchased in Marshall, MO, in 1995, where the company later ceased slaughtering because of poor hog availability.

At Beardstown, “we can still get the hogs we need to run our business,” Klein says.

John Kellogg has one final thought on notable strengths of the state's pork industry. He points out Illinois' rich heritage of progressive-thinking producers. “We live in the legacy of people like George Brauer, Russ Jeckel and Willard Korsmeyer,” he says. “These are people who could see the benefits of confinement and were willing to be pioneers to develop many of the practices we use today.”

Producer Group Goes on Offense

For years, county and state pork producer groups have used grilling events to promote pork. In 2007, the Illinois Pork Producers Association (IPPA) launched Operation Impact, using producer messages to market the product, but also the families that produce the pork, says Tim Maiers, IPPA director of Public Relations.

Generations of Commitment is a tagline that IPPA developed to help convey the story that Illinois producers are committed to the environment, food safety, animal welfare and all those production issues they've focused on for generations.

“In the past at consumer shows, we really haven't had production-type information available; we've always talked about the finished product,” Maiers points out. “We haven't really tried to make the connection that here's the product, and here are the families who are producing the products.”

Producers and the IPPA board are tired of being on the defensive. They felt this might be a way to be proactive and ultimately educate consumers about what Illinois producers are doing for the long term.

Open houses for new hog buildings have drawn large, interested audiences, many of whom have never seen or held a live pig or have any idea of production practices.

Farmfest brought 90, 4th-grade Chicago schoolchildren to the John Kellogg farm at Yorkville, IL, where they asked lots of questions. “I think we assume consumers know about pigs, but often they don't even know we are raising pigs for food,” Maiers says.

Mike Borgic, eldest son of IPPA President Phil Borgic, was added to the staff in mid-December as director of Membership & Outreach. His job is a tough one: keep all 1,191 producer and allied industry members of the association and grow that number, while serving as a sounding board for those who call in to air their concerns.

Economic uncertainty may spawn a lot of producer calls to the IPPA offices in Springfield.

Jim Kaitschuk, IPPA executive director, says hopes are that some producer risk management seminars can soon be developed, and podcasts set up for those who can't get access to the information.

It couldn't come too soon as breakeven costs approach $80/cwt., he says. “This is a time when we need to be out there talking to producers to find out what they want us to develop for them, and not just sit in our offices waiting for the calls to come in.”

*Karen Bernick is a freelance writer from Long Grove, IA.