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Higher On The Hog


Economic Trends

HIGHER ON THE HOG

The productivity gains that have made agriculture a highly efficient sector of the U.S. economy are surfacing in an area once thought to be resistant to change--hog production. In the process, they are boosting profits for large, well-capitalized operators, driving thousands of smaller farmers out of the hog-raising business and helping to keep a lid on food inflation.

Competitive pressures are forcing these changes. While per capita U.S. consumption of poultry has nearly doubled since 1980, per capita consumption of pork has marked time--a victim of the falling relative cost of poultry and of consumer aversion to fat-laden meat.

To stay competitive, notes economist Gary Benjamin of the Federal Reserve Bank of Chicago, hog raisers have followed the lead of the poultry industry, moving from small operations to huge, specialized hog-production complexes. Since 1979, the number of U.S. hog farms has plunged nearly 70% (chart), and today just 6% of hog farms account for 55% of the nation's hog population.

Most of these operations, which can involve as many as 10,000 or 15,000 animals, make use of genetic breeding, scientifically formulated feed mixing, automated feeding machines, climate-controlled pens, and in-house veterinary care. The result has been a 50% increase in pork productivity per sow since the mid-1960s--and leaner, higher-quality, less costly meat for consumers. Last year, the real retail price of pork was nearly 20% less than in 1970.

Over the long run, the industry is looking overseas. While pork exports are relatively small, they have started to accelerate--particularly to Japan, which took 45% of exports last year.BY GENE KORETZ


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