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Clean Water Act regulations may affect the size of some hog farms

Friday, June 15, 2012

In 2003, the U.S. Environmental Protection Agency strengthened Federal Clean Water Act (CWA) regulations governing the handling and application of manure by livestock operations. An important and unchanging feature of these CWA regulations is that operations confining more than a specific number of livestock face more stringent rules. Using U.S. Census of Agriculture data from 2002 and 2007, changes in the size distribution of hog farm operations in years before and after the stricter 2003 regulations can be identified. The distribution varies smoothly across the regulatory threshold of 2,500 hogs prior to the 2003 CWA rules, but shows a sharp discontinuity at the 2,500 head threshold by 2007. The unexpectedly large number of farms located just below the regulatory threshold in 2007 suggests that some livestock facility operators may be controlling the size of their hog inventories to avoid the costs of regulation. This chart is found in the June 2012 issue of Amber Waves magazine.

China's hog price surpasses the U.S. hog price in 2007-08

Friday, June 8, 2012

Rising prices in China's domestic market have been the main contributor to the country's rising pork imports. From 1991 to 2006, Chinese hog prices fluctuated within a relatively narrow range and were usually less than U.S. prices, but have been significantly higher than U.S. hog prices since their sharp increase during 2007-08. One of the main reasons for higher pork prices in China is the industry's rising production costs. ERS analysis of cost of production data from China's National Development and Reform Commission show that average hog production costs, converted to U.S. dollars, more than doubled from 2002 to 2009. Feed is the largest of the production expenses, accounting for about 60 percent of the total. The shift in prices is an indication of the general improvement of prospects for U.S. pork sales to China. This chart appeared in China's Volatile Pork Industry, LDP-M-211-01, February 2012.

China's hog cycle drives U.S. pork exports

Monday, March 26, 2012

U.S. pork sales to China tend to rise and fall in rhythm with cyclical changes in China's hog sector. Chinese retail pork prices rose more than 50 percent in 2007 over prices in the previous year, leading to increased U.S. exports of pork to China through the first half of 2008. Depressed hog prices and swine disease in 2010 led to a decline in China's hog inventory that set the stage for another surge in hog prices in 2011. In turn, U.S. pork exports to China rebounded strongly during the second half of 2011 after a 2009 ban on U.S. pork imports was lifted. This chart is found in the March 2012 issues of Amber Waves magazine.

Hog spot market prices not strongly associated with production contracts

Thursday, March 22, 2012

ERS researchers used farm-level data from the 2002 and 2007 Censuses of Agriculture to examine the effect of increasing use of hog production contracts on market prices, often referred to as "spot market" prices. Comparing the prices received by independent producers in regions of growing contract production with the prices in regions of shrinking contract production, researchers found no strong relationship between contract prevalence and spot market prices. Between 2002 and 2007, the average price received by all independent producers who specialized in growing hogs to market weight increased slightly more. In counties where the share of production under contract decreased or increased by a small amount (fewer than 25 percentage points), the average price increased by about $31.50 per head. Price increases were lower in counties where contracting prevalence either did not change or increased by more than 25 percentage points. However, the average-price differences between all the groups were relatively small. This chart is found in the March 2012 issue of Amber Waves magazine.

China and Hong Kong purchasing more pork imports

Thursday, February 16, 2012

China's potential to affect the world pork market derives from the size and volatility of its domestic pork market. China accounts for nearly half of the world's pork production and consumption. Its annual pork output is four to five times that of the United States and more than double that of the European Union. According to official Chinese statistics, China slaughters over 600 million hogs annually-one hog for every 2.2 domestic consumers. China and Hong Kong pork imports surged in 2007 when a shortfall in Chinese pork production led to record Chinese pork prices. That year, Hong Kong-China pork imports nearly doubled to just over 1 million metric tons (mmt), then rose to over 1.9 mmt in 2008. This chart comes from the ERS report, China's Volatile Pork Industry, LDPM-21101, February 2012.

More hog operations adopted nutrient management plans and received EQIP payments in 2009

Wednesday, February 1, 2012

Federal Clean Water Act regulations provide an incentive for large livestock operations to adopt a comprehensive nutrient management plan (CNMP). A CNMP is a set of conservation practices and management activities designed to match crop nutrient needs to applications so that as few nutrients as possible are lost to the environment. The USDA's Environmental Quality Incentives Program (EQIP) helps defray the costs of meeting environmental regulations by partially funding the planning, installation, and maintenance of conservation practices. Between 2004 and 2009 the share of hog operations that had a CNMP and the share that received EQIP payments increased. This chart comes from the December 2011 issue of Amber Waves magazine.

Feed efficiency improved more on feeder-to-finish hog operations

Tuesday, December 27, 2011

The average quantity of feed required per hundredweight of gain declined 44 percent for feeder-to-finish hog operations between 1992 and 2004. Most feeder-to-finish operations operate under production contracts. Contractors typically bear the cost of supplying feeder pigs and feed to the farming operation, so they may invest in genetic improvements in the animals and improved feed formulations to reduce their costs. And since contracts allow farmers to specialize in the grow-out phase of the production process, they have more often adopted practices that further increase feed efficiency, such as grouping pigs by age and weight so feed rations can be formulated for each pig's specific needs. In contrast, the average feed conversion rate on farrow-to-finish hog operations-which are less likely to have production contracts and are less specialized-declined by only 15 percent in 1992-2004. This chart is found in the December 2011 issue of Amber Waves magazine.

Small hog operations decline in number; production shifts to larger operations

Monday, October 3, 2011

Between 1998 and 2009, the total number of hog operations fell by about 60 percent, and the average inventory grew from 2,589 to 7,930 head. Over this period, the number of hog operations producing fewer than 300 animal units declined rapidly, resulting in a shift in production to larger operation. In 2009, over half of all hog production occurred in operations with 1,000 or more animal units. This chart is from Trends and Developments in Hog Manure Management: 1998-2009M, EIB-81, September 2011.

Pigs per litter reaches a record high

Tuesday, July 26, 2011

U.S. hog producers broke through the 10-pigs-per litter barrier in the March-May 2011 quarter, according to the latest count. Averaging 10.03 pigs per litter, the U.S. hog production industry is now positioned to possibly eliminate Canadian hog producers' longstanding litter-rate lead. U.S. litter rates have trended upward for more than two decades due to widespread adoption of technologies that have improved animal handling procedures, breeding methods, and nutritional composition. Technological innovations contributing to larger litters, superior survival rates, and improved weaned-pig numbers are both a cause and a consequence of the hog industry's move from a very large number of small operations to a relatively small number of very large, specialized operations. This graph appears in Livestock, Dairy, and Poultry Outlook, LDP-M-205, July 18, 2011.

More farms find methane digesters profitable at higher carbon prices

Monday, March 21, 2011

Methane digester systems capture methane from lagoon or pit manure storage facilities and use it as a fuel to generate electricity or heat. In addition to providing a renewable source of energy, digesters can reduce greenhouse gas emissions and provide other environmental benefits. Methane digesters have not been widely adopted in the United States mainly because the costs of constructing and maintaining these systems have exceeded the value of the benefits provided to the operator. But policies to reduce greenhouse gas emissions could make such biogas recovery facilities profitable for many livestock producers. Without a carbon market (when the price is zero), no hog and few dairy operations find it profitable to adopt a digester. As the carbon price increases, more operations adopt digesters, lowering emissions. At a carbon price of $13, greenhouse gas emissions could be reduced by 9.8 and 12.4 million tons (carbon dioxide equivalent) for the dairy and hog sectors, respectively. This amounts to reductions of 61-62 percent of manure-generated methane in these sectors. A doubling of the carbon price to $26 could cause manure-based methane emissions from dairy and hogs together to be reduced by 78 percent. This chart was originally published in Carbon Prices and the Adoption of Methane Digesters on Dairy and Hog Farms, EB-16, February 2011.

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