The National Pork Producers Council rolled out a potentially multi-billion dollar survival plan for the industry Tuesday that calls for the Agriculture Department to make massive purchases of pork and direct payments to hog farmers with increasing expenses.
The producers are left with animals to feed as packing plants close or slow operations to control the spread of COVID-19 among their employees.
The plan comes as Agriculture Secretary Sonny Perdue mulls over ways to aid several segments of agriculture that have lost sales and markets as U.S. and world economies weaken under travel, transportation and business coronavirus health restrictions.
Congress provided the department with a $9.5 billion fund and $14 billion to replenish the Commodity Credit Corporation, which the USDA uses to operate farm income, price support, conservation and international food programs.
The National Pork Producers Council, which represents hog farmers, released a study that estimates hog producers could collectively face $5 billion in losses through the rest of 2020. The analysis by Dermot Hayes, an economist with Iowa State University, and Steve Meyer, a pork industry economist with Kerns & Associates, estimates that hog farmers will lose nearly $37 per market-ready animal. The two say the industry began 2020 on a brighter projection that called for profits of $10 per hog before the novel coronavirus started to ripple through the U.S. economy.
Several officers and staff members from the NPPC told reporters Tuesday on a call that the USDA and Congress should take immediate action to ease the financial pressures on hog farmers, some of whom have begun euthanizing piglets that would normally go to slaughter in the fall.
“The crisis today is on the farm and not at the grocery store. It’s on the farm,” said Nick Giordano, NPPC's vice president and counsel for global government affairs.
Neil Dierks, NPPC's CEO, said many hog farmers involved in operating partnerships found themselves excluded from trade aid payments in 2019 because of the restrictions. He said the USDA did not tailor the eligibility criteria for the way the hog industry functions, he said.
"That's why we're looking to open that as broadly as possible so producers can get access. Often at these times, the payments go directly to lenders," Dierks said.
The industry faces a glut of pork because of the packing plants slowdowns and the loss of the food service market as public health restrictions closed restaurants, K-12 schools and universities and other businesses that sell prepared meals.
The pork group calls for action on several fronts:
- USDA purchases of at least $1 billion in pork products that could be distributed to food banks or federal nutrition programs.
- USDA direct payments to hog farmers of possibly up to $5 billion with fewer eligibility restrictions than usually apply. NPPC was unclear on whether this would mean easing the adjusted gross income limit or the total payment a pork producer could receive.
- Congressional changes to a small business loan program in the most recent economic relief bill (PL 116-136) to make the hog industry eligible to participate and to raise the current cap of 500 employees to 1,500 employees for pork businesses.