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handle fewer
pigs today. However, they still provide
needed price discovery and livestock assembly services
in some areas, especially those distant from packing
plants or terminal markets.
Producers also have the option of
selling directly to
packers and delivering pigs to the plant or
to buying
stations. This type of marketing has increased over the
years and is now used for the vast majority of the pigs
produced.
Over 70 percent of the pigs produced in the U.S. are
now sold on “carcass merit”
pricing systems in which a portion of the
price is determined by certain
characteristics of the animal. Current systems pay
premiums for pigs with low amounts of fat and high
amounts of muscle. Advanced measurement systems
that soon will allow premiums to be paid for carcasses
with better-flavored, juicier and more tender meat are
being researched by producers and processors.
The marketing chain
for pigs is made up of a wide
variety of businesses that include pork producers,
packers, processors, purveyors, retailers and
foodservice operators. All play an important role in
adding value to pigs by producing pork products that
meet the needs and desires of consumers worldwide.
Prices for Pigs
No matter what marketing system is used, prices are
generally determined by supply and demand. There have
historically been few government subsidies to support
producers in times of low prices. If supplies are low
and/or demand is high, prices will be high. If supplies
are high and/or demand is low, prices will be low.
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Pig prices vary
cyclically and seasonally. Cyclical
price variation is caused by the time lags
inherent to
biological production. When prices are high, more sows are
bred and more pigs are produced. But these pigs will not
reach market for about a year after they are conceived. When
they do, supplies increase and prices fall, thus causing a
price cycle.
Seasonal price variation
is caused by changes in
production efficiency due to weather variation and by
different demand levels, such as higher demand during
summer months due to people grilling outside.
Producers can manage the prices they receive by
hedging hogs with futures or options contracts or by
forward contracting hogs with a packer. Futures and
options are traded on the Chicago Mercantile Exchange (Lean
Hogs and Pork Bellies contracts) and the Mid-American
Exchange (Lean Hogs).
Co-Products of Pork
Production
There is more than
just meat produced when a pig is
raised. Many of the co-products of the pork industry
save lives (replacement heart valves, skin grafts for burn
victims) or allow people to lead normal lives in spite of
illness (insulin). Others are used in making many food and
industrial products such as gelatin, plywood adhesive, glue,
cosmetics and plastics.
By far the largest volume co-product of pig production is
manure, an effective, low-cost source of nutrients for crops
and pastures. In fact, decisions regarding the type of
buildings to construct frequently depend on the producer’s
need for and ability to efficiently use the nutrients found
in pig manure. When properly handled and applied, manure can
be an asset to pig operations and provide extra income to
the operators by reducing the need to purchase fertilizer.
Open front and hoop buildings usually involve handling
manure as a solid. Other types of buildings usually have
pits or holding tanks in which manure is stored as a liquid.
This liquid is periodically applied to cropland or pastures.
Both systems provide organic matter, nitrogen and
phosphorous to growing vegetation. |
