U.S. Pork Industry
Structure Study 2001
Glenn Grimes
Professor Emeritus
University of Missouri-Columbia
U.S. Pork Industry Structure Study, 2001
U.S. Marketings by Producer Size
Hogs
marketed
annually
1988
1991
1994
1997
2000
Under 1,000
1,000-1,999
2,000-2,999
3,000-4,999
5,000-9,999
10,000-49,999
50,000 & up
32%
19
11
10
9
12
7
23%
20
13
12
10
13
9
17%
17
12
12
12
13
17
5%
12
10
10
10
16
37
2%
7
5
7
10
18
51
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Estimated Number of Operators and
Share of U.S. Hog Slaughter
by Size Category in 2000
Size class
(annual mktgs.)
< 1,000
1 - 2,000
2 - 3,000
3 - 5,000
5 - 10,000
10 - 50,000
50 - 500,000
500,000+
Total
Number
operators
54,513
10,034
4,118
3,312
2,627
2,501
136
20
77,260
Market share
(percent)
2%
7
5
7
10
18
17
35
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Number of Large Hog Firms
Year
Size
(thousand head)
50 - 500
500+
1994
1997
2000
57
127
136
9
18
20
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Percent of Marketings
by Large Hog Farms
Year
Size
(thousand head)
50 - 500
500+
1994
1997
2000
7
13
17
10
24
35
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Age of Major Equity Holder
Size Class
(no. head)
1 - 2,000
2 - 3,000
3 - 5,000
5 - 10,000
10 - 50,000
1 - 50,000
Age
1997
2000
47.6
48.0
48.8
48.4
48.3
48.8
50.0
48.5
49.0
49.0
47.9
49.0
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Age Distribution of Major Equity Holder
Medium Size Operations
1-50,000 hd. marketed annually
Percent
40
36
30
25
20
20
10
15
4
0
Under 30
31-40
41-50
51-60
60+
Age
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Percent of Litters Sired
by Artificial Insemination
1997
%
2000
95
100
91
84
75
80
70
65
58
60
49
40
33
25
17
20
21
39 40
21
4
0
1-2
2-3
3-5
5 - 10
10-50
50-500
500+
All
Size of Operation (thousand head mktd.)
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Percent of Farms
Increasing or Decreasing Production
since Beginning Marketing Contracts
(1,000 - 50,000 hd. size)
Farms increasing production
Average increase on these farms
12%
73%
Farms decreasing production
Average decrease on these farms
4%
50%
Farms reporting they were larger
because they had a contract
Average increase on these farms
17%
114%
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Planned and Actual Growth of Hog
Producers by Size 1997-2000
Marketings
(thousands)
1-2
2-3
3-5
5 - 10
10 - 50
50 & up
Planned
10%
6
15
25
39
41
Actual
- 22%
- 27
- 20
13
37
48
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes,Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Growth Plans More Modest
in 2000 than 1997
Size
(thousand head)
1-2
2-3
3-5
5 - 10
10 - 50
50 - 500
500+
1997-00
10%
6
15
25
39
66
27
2000-03
1%
12
5
12
12
18
12
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes,Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
How Satisfied Are You with Pork Production?
Size Class
(no. head)
50,000 500,000
4.67
500,000+
4.95
1
2
3
4
5
6
1 = not satisfied at all. . . . . . . 6 = extremely satisfied
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Limits on Further Expansion by Size
Size Class
(no. head)
Other loan limits
Facility loan limits
2.48
2.44
1 - 2,000
2 - 3,000
2.81
2.54
3 - 5,000
2.81
2.55
3.1
2.92
5 - 10,000
3.15
3.2
10 - 50,000
1
2
3
4
5
6
1 = no effect . . . . . . . 6 = greatly limits
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Limits on Further Expansion by Size
Size Class
(no. head)
Hiring good employees
No one to take over
3.34
1 - 2,000
2.53
2 - 3,000
3.12
2.78
3 - 5,000
2.96
3.2
2.85
5 - 10,000
3.76
2.37
10 - 50,000
4.02
1
2
3
4
5
6
1 = no effect . . . . . . . 6 = greatly limits
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Limits on Further Expansion by Size
Environmental regulations
Size Class
(no. head)
1 - 2,000
2.65
2 - 3,000
2.62
Local opposition
3.75
3.57
2.83
3 - 5,000
3.81
5 - 10,000
3.16
10 - 50,000
3.3
4.12
4.19
1
2
3
4
5
6
1 = no effect . . . . . . . 6 = greatly limits
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Limits to Further Expansion
Size Class
(no. head)
Lack of market outlets
Lack of profit
1 - 2,000
4.34
4.04
2 - 3,000
4.19
3.52
4.16
3 - 5,000
3.44
4.33
5 - 10,000
3.24
4.22
10 - 50,000
3.26
1
2
3
4
5
6
1 = no effect . . . . . . . 6 = greatly limits
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Percent of Farms with a Profit in 2000
Size Class
(no. head)
65
1 - 2,000
77
2 - 3,000
3 - 5,000
79
5 - 10,000
78
10 - 50,000
77
50 - 500,000
90
500,000+
95
0
10
20
30
40
50
60
70
80
90 100
Percent
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Factors that Limit Expansion
1 - 50,000 sizes
2.83
Facility loans>
2.67
Other loans>
3.16
Hiring good employees>
2.86
Local opposition>
Environmental regulations>
3.85
3
No one to take over>
3.54
Lack of market outlets>
4.25
Lack of profits>
1
2
3
4
5
6
1 = no effect . . . . . . 6 = greatly limits
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Percent of Hog Firms that Will Stay in Business
until 2003 with $40-42 Hog Prices
Size Class
(no. head)
69
1 - 2,000
2 - 3,000
71
3 - 5,000
70
5 - 10,000
75
10 - 50,000
75
50 - 500,000
88
500,000+
89
0
10
20
30
40
50
60
70
80
90 100
Percent
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing
U.S. Pork Industry Structure Study, 2001
Type Payment Production Contracts
Type
No
Incentive Incentive
Total
Pig space
19%
18%
37%
Head
37
14
51
Pound
7
2
9
Other
--
--
3
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Use of Production Contracts as
Percent of All U.S. Hogs
Size Class
(no. head
marketed)
All Hogs
Farrowed by Finished by
contractors contractors
1997 2000
1997 2000
Hogs under Contract
Farrowed
1997 2000
Finished
1997 2000
--- percent ---
--- percent ---
--- percent ---
--- percent ---
10
5
14
9
1
2
8
3
8
8
9
13
4
7
7
10
500,000+
22
26
22
33
11
13
16
21
Total
40
39
44
55
17
22
30
34
1 - 50,000
50 - 500,000
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Pricing Hogs by Large Producers
50,000-500,000 hd. mkt'd.
% Use
100
500,000+
89.1
80
60
41.9
40
17
4.9
2.2 3
1.7
1
r
r
0
ge
ge
o
le
d
,l
ed
W
in
d
ow
,n
ow
W
in
d
,n
ed
Fe
Fe
ed
o
le
d
,l
ed
ge
ge
r
r
tu
re
s
Fu
m
ea
rm
ul
a
Fo
Fo
rm
ul
a
liv
e
t
0
10.4
t
1.4 4
13.9
po
7.2
1.3
S
20
Cash
Marketing Contracts
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Percent of U.S. Hogs Sold through
Various Pricing Methods, 1997 & 2000
1997
% Use
60
2000
52
50
40
43
39
29
30
20
10
3
4
5
7
8
3
0
Formula
Futures
Fixed, feed
Risk share
window
Cash or
spot
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Percent of Market Hogs Sold
on Carcass Merit Basis
1997
%
2000
100
88
80
80
65
60
100
97
67
80
70
71
3-5
5 - 10
77 77
87
76
73
61
52
40
20
0
1-2
2-3
10-50
50-500
500+
All
Size of Operation (thousand head mktd.)
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Opinions about Marketing Contracts
Size (hd. marketed/yr.)
1,000 - 50,000
with
without
contract contract
Better coordinate slaughter
Lower cash prices
Producers with contracts
receive higher prices
Undue preference in who is
offered a contract
Should be made illegal
Should be more closely monitored
Prefer marketing all on cash
Have been fairly treated
Plan to continue mktg. on contract
50,000500,000
with
500,000+
with
3.66
4.19
2.94
4.23
4.60
3.78
4.85
2.80
3.88
3.46
3.89
4.06
3.52
2.70
3.97
2.97
4.36
4.19
3.49
3.07
4.01
4.13
3.51
1.69
3.09
2.78
4.63
4.83
2.22
1.37
1.63
2.37
4.38
4.85
1 = strongly disagree; 6 = strongly agree
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contract Preference
Minimum Price Tied to Feed Costs
Size Class
(no. head)
Give up higher prices
Pay back difference at higher prices
3.82
3.9
1 - 2,000
2 - 3,000
3 - 5,000
5 - 10,000
10 - 50,000
1 - 50,000
3.47
3.95
3.67
4.04
3.39
4.14
3.49
3.83
3.55
4
1
2
3
4
5
6
1 = not important at all . . . . . . . 6 = very important
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contract Preference
Size Class
(no. head)
Higher than spot, no risk protection
Ability to receive higher price
5.19
1 - 2,000
4.18
4.84
2 - 3,000
4
3 - 5,000
3.86
5 - 10,000
10 - 50,000
1 - 50,000
4.89
4.92
3.28
4.87
3.69
4.93
3.75
1
2
3
4
5
6
1 = not important at all . . . . . . . 6 = very important
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Contracts have caused lower prices
Packers showed undue preference in offering contracts
Size Class (no. head)
4.23
1 - 2,000
4.85
3.93
2 - 3,000
4.81
3.88
3 - 5,000
3.71
5 - 10,000
4.47
10 - 50,000
3.63
3.89
1 - 50,000
3.91
4.58
3.51
3.78
50 - 500,000
500,000+
4.46
2.22
2.8
1
2
3
4
5
6
1 = strongly disagree . . . . . . . . . . . . . 6 = strongly agree
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Prefer To Market All Hogs on Cash Market
Size Class
(no. head)
1 - 2,000
4.78
2 - 3,000
4.21
3 - 5,000
3.81
5 - 10,000
3.59
10 - 50,000
3.27
1 - 50,000
4.03
50 - 500,000
2.78
500,000+
2.37
1
2
3
4
5
6
1 = strongly disagree . . . . . . . . . 6 = strongly agree
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class
(no. head)
1 - 2,000
2 - 3,000
3 - 5,000
Increased price
3.75
2.25
3.71
2.85
3.89
2.76
4.13
5 - 10,000
3.46
3.85
10 - 50,000
1 - 50,000
Access to capital
3.35
3.9
3
1
2
3
4
5
6
1 = not important at all . . . . . . . 6 = very important
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class
(no. head)
1 - 2,000
2 - 3,000
3 - 5,000
Allowed to be in hog business
Allowed expansion
2.91
2.14
2.9
2.18
2.95
2.11
3.47
5 - 10,000
10 - 50,000
1 - 50,000
2.96
3.55
2.73
3.18
2.47
1
2
3
4
5
6
1 = not important at all . . . . . . . 6 = very important
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Help coordinate slaughter to meet industry needs
Producers with contracts received higher prices
Size Class (no. head)
1 - 2,000
2 - 3,000
3 - 5,000
5 - 10,000
10 - 50,000
1 - 50,000
50 - 500,000
500,000+
3.27
4.12
3.99
3.45
3.78
3.49
4.03
3.68
3.78
3.8
3.97
3.5
3.78
4.06
4.6
4.85
1
2
3
4
5
1 = strongly disagree . . . . . . . . . 6 = strongly agree
6
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Should be illegal
Should be more closely monitored by USDA
Size Class (no. head)
4.78
4.23
4.51
3.93
1 - 2,000
2 - 3,000
4.18
3.88
4.19
3.71
3 - 5,000
5 - 10,000
3.84
3.63
10 - 50,000
4.37
1 - 50,000
50 - 500,000
500,000+
3.91
3.09
1.69
1.63
1.37
1
2
3
4
5
6
1 = strongly disagree . . . . . . . . . . . . . 6 = strongly agree
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Have been treated fairly under my contract
Plan to continue with contract when current one matures
Size Class (no. head)
1 - 2,000
4.08
4.21
2 - 3,000
4.11
3 - 5,000
3.97
4.28
5 - 10,000
10 - 50,000
1 - 50,000
50 - 500,000
500,000+
4.61
4.35
4.42
4.42
4.18
4.19
4.36
4.83
4.63
4.85
4.38
1
2
3
4
5
6
1 = strongly disagree . . . . . . . . . . . . . 6 = strongly agree
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Size Class
(no. head)
1 - 2,000
2 - 3,000
3 - 5,000
5 - 10,000
10 - 50,000
1 - 50,000
Producer not treated fairly by packer
Locked out higher price
1.84
2.19
1.77
2.3
2.18
2.53
2.2
2.57
2.06
2.51
2.04
2.45
1
2
3
4
5
6
1 = not important at all . . . . . . . 6 = very important
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Marketing Contracts
Reduced Price Risk
Size Class
(no. head)
1 - 2,000
3.14
2 - 3,000
3.67
3 - 5,000
3.61
5 - 10,000
10 - 50,000
1 - 50,000
4.29
3.5
3.73
1
2
3
4
5
6
1 = not important at all . . . . . . . 6 = very important
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Medium-sized Producers
Percent Involved in Networking
1997
8
Input purchasing
Feed milling
7
5
4
14
15
Hog marketing
9
Information sharing
Genetic access
2000
7
6
4
7
Farrow-finish
6
10
Feeder or weaned pigs
7
0%
10%
20%
30%
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Medium-sized Producers
Percent of Production Involved in Networking
1997
2000
12
Input purchasing
7
7
Feed milling
5
17
17
Hog marketing
13
Information sharing
10
11
Genetic access
6
8
Farrow-finish
6
13
Feeder or weaned pigs
10
0%
10%
20%
30%
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Medium-sized Producers
Maximum Percent of Their Production
Involved in Networking
%
90
80
70
60
50
40
30
20
10
0
1997
2000
81
61
59
50
Farms
Production
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Vertical Integration in the U.S. Hog Industry
%
30
23
25
20
15
10
9.4
6.4
5
0
1994
1997
2000
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
Percent of Hogs Sold on Spot Market
%
80
70
62
60
50
40
30
43
29
20
10
0
1994
1997
2000
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.
U.S. Pork Industry Structure Study, 2001
University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,
and Research Institute for Livestock Pricing.