Hogs

Hogs. Iowa’s love and Iowa’s problems. Historically, pigs have done wonders for Iowa farmers. They have been called mortgage lifters because they were a vital and reliable source of revenue to help pay down debts. During this time, there were more farmers, diversified farms, and these farms and pigs were spread more evenly across the countryside. This was also the time when water in Iowa was not well, poop. People could grow up on a farm, make a living, and not worry about swimming in various streams, lakes, and ponds unlike today.

Farmers also had economic liberty from large corporations. This is when working class farmers could earn an honest income and not be sized up against the mighty meatpackers. While these times were not perfect, this agricultural system provided a better outcome for many parts of society. Unfortunately, due to corporate consolidation in the meatpacking industry, all this disappeared leading to less diversified farms, more pigs and poop concentrated in fewer and fewer areas, dirtier water, and hollowed out communities.

As always, thank you to Farm Action and their report for a lot of this information. In case you are a visual learner instead of a reader, More Perfect Union also has a wonderful video on how consolidation has affected the hog industry.

I was born in 1992, and my earliest memory of growing up on the farm was the smell of hogs at my grandparents’ place. But this is only a faint memory because soon after, the hogs were gone due to this consolidation.

Before my time on this blue marble began, farmers raised pigs from birth to the time they were sold (aka “farrow to finish”) in a cash market. Feed came from the crops in the field, and their manure went back out onto the land in nature’s circular pattern. A farmer raised only as many hogs as one could sustainably raise due to physical, mental, and logistical demands. Because of human capabilities, this prevented consolidation, and the hogs were more evenly dispersed across the landscape.

Definitely not a CAFO. Photo by Marek Piwnicki on Unsplash

Due to the lack of antitrust enforcement and starting in the early 1990s, meatpackers consolidated and gained more power over the markets and farmers. Their power took away these mortgage lifters and the ability to keep another generation on the farm. What happened to the farmers due to their power is the meatpacker forced the farmer to play by their rules and to specialize. Instead of farrow to finish, one hog operation would do farrow to wean (giving birth to weaning at about three weeks), nursery or also know as feeder pigs (fattening the pigs from 12-14 pounds at weaning to 40 pounds), and finishing with finishing (they are fed to about 270-285 pounds) before they go off to the meatpackers.

Throughout this recently consolidated system, the meatpacker provides the piglets and feed for the animals with the farmer exercising an ever-increasing declining control over the hogs. The little control farmers get is the capital investment to build CAFOs and the mountains and mountains of poop. This poop is valuable as a fertilizer, but it can only be economically shipped so far which can lead to an overapplication.

At no point in this consolidated process do farmers own the hogs. In this process, the consolidated meatpackers always do. Farmers sell their hog growing services but not the hogs. Meatpackers take on the less risky part of business-like owning infrastructure while reaping the rewards.

Before the meatpackers gained control, farmers, when they still owned their own hogs, sold their market ready hogs through marketing agents at terminal stockyards, auctions at local sale barns, or negotiated sales in regional cash markets. Since the consolidation of the industry, where in 1980 the top four dominant firms controlled 34% of the market, it has since jumped to 65% in 2010. This has led to these markets being an afterthought while alternative marketing arrangements (where farmers do not own the hogs, and the pigs and poop are more consolidated) have become the predominant methods for transacting hogs.

This has led to JBS USA (Brazilian owned) WH Foods-Smithfield (China owned), Tyson Foods, and Hormel slaughtering over 70% of the hogs processed annually. Nine out of ten hogs are processed by the largest ten hog packers and 96% are processed by the largest twenty. This consolidation and letting foreign countries own parts of our food system leads to our water and communities being sacrificed.

Some of this consolidation was driven by advancements in packing and processing technology, which incentivized economies of scales. These dominant pork processors built larger plants with plants processing at least one million hogs accounted for 38% of hog slaughter in 1977. By 2021, these large plants accounted for 92% of industry production. According to Farm Action, there is no evidence that multi-plant ownership yields ascertainable efficiencies in hog processing. Keeping these consolidated companies together is not worth it.

This consolidation has begets consolidation in another sector. As these meatpackers consolidated their power, they have forced pork producers to consolidate and grow larger. Between 1997 and 2017, hog farms declined 47%, the average farm size doubled, and the share of farms with 5,000 or more heads rose from 40% to 73%. The meatpackers want farmer consolidation because it ensures a large and steady flow of livestock.

This also affected smaller farmers as the meatpackers gained a larger and larger share of hogs sold on alternative market contracts. This resulted in the cash market being snuffed out. If a farmer did not want to deal with a meatpacker, there were, unfortunately, not many other places to sell their hogs like there was before consolidation.

Since farmers do not own the hogs and only provide the lucky service of helping raise them and the capital investment into the buildings, Smithfield owns nearly 20% of the United States hog inventory. This level of control allows them to manipulate market prices by using their own supply of animals to flood the market and drive down prices which effectively eliminates price discovery.

In 1994, the cash market accounted for 62% of sales, but by 2009, it was 8%. The thinness in the cash market allows large meatpackers to have an undue influence on prices and allows them to offer lower prices under contract. This has led to the United States losing 45% of its hog farms, nearly 50,000 between 1997 and 2022. This leads to wealth extraction by these large, consolidated meatpackers and foreign countries while rural Iowa and America is hollowed out by them and the corporate managed hog operations, who contribute more water and air pollution and declining property values.

It is time to break up these meatpackers so they cannot exert their control over farmers and the hog industry. By using antitrust laws to break them up, it will lead to an actual free market and less capital intensiveness to become a farmer. Give farmers economic liberty and let a kid growing up on a farm smell an American owned pig, not a foreign owned one. This will lead to more farmers on the land with hogs further spread out across the countryside with less poop concentrated in fewer areas leading to better water and more wealth staying in the community. American farmers will raise American hogs for the American people. This is better for everyone.