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Producers Not Hog Wild About Prices

"Georgia hog producers had a roller-coaster ride in 1995," said John McKissick, a livestock economist with the University of Georgia Extension Service.

Pork prices and costs fluctuated enough during the year to make heads spin and leave farmers reeling.

The year's highlight was that for the first time in history, the nation became a net exporter of pork. Largely because of demand from the Orient, the United States exported more pork than we needed for domestic consumption.

With increasing worldwide demand, prices increased slightly more than many economists expected to a high of about $50 per hundred pounds.

As the year comes to an end, though, prices have dropped back to about $40 per hundredweight -- fairly low -- and grain prices soared.

"That walked away with any profits hog producers were able to accumulate during the middle part of the year," McKissick said.

McKissick expects pork production to be down 1 percent to 2 percent in 1996, compared to 1995. That decrease could drive prices slightly higher -- possibly $1 to $3 per hundredweight higher than 1995 average prices.

However, with the higher grain prices increasing their costs, that extra money will go toward meeting feed costs rather than profits for hog farmers.

This market forces farmers to control costs even more carefully than ever. Shrinking profits remain in jeopardy as producers struggle to meet retail demand with ever-increasing costs.

"Consumers will see a slight increase in pork prices at the grocery store because of diminishing pork production," McKissick said. "Retail prices would be something in the neighborhood of 2 percent to 3 percent higher in 1996."

He adds, though, that when those prices are adjusted for inflation, prices will remain fairly stable. The higher-quality pork cuts, such as roasts, hams and loins, may increase in price more quickly than bacon or ribs.

Many export markets pay top dollar for prime cuts. Space in many countries, especially in the Orient, is unavailable for raising hogs, so buyers pay premium prices for specialty cuts. This market could be the best chance for Georgia producers to make money in 1996.

If the industry liquidates its stock of hogs, McKissick said, prices may rise briefly. If farmers sell hogs for the slim profits, they may not replace those animals in their herds, further decreasing supply.

"As we begin (1996) we will likely be in the low $40 range (per hundredweight)," he said, "moving up into the $50 range by midyear and back down into the mid-$40s as we close 1996."

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