Journal-Standard | By Pam Eggemeier | March 7, 2004 FREEPORT -- There have been hogs on Brad Brudi's farm between Stockton and Woodbine for more than 100 years. Brudi still raises his own hogs but he is a dying breed in a market that has squeezed out the little guys and turned much of the nation's hog production over to large corporate operations. The hog industry has struggled mightily since 1998, when hog prices dropped to 50-year lows, bottoming out at $8 per hundredweight. Prices have been at the break-even point ever since, keeping many producers hanging on by a thread. Brudi remembers 1998 very well, as prices hit single digits. A particular incident during the holidays drove home to the Brudis how serious their financial situation had become. "My cousin came to our house from out of town for Christmas that year," Brudi said. "She paid more for the Christmas ham that year than we were getting for a whole hog." Prices have never bounced back to the point hog producers had hoped - prices are now in the $45 dollar per hundredweight range which is about what it costs to produce them. Now producers must contend with corn prices that are up about 70 cents a bushel and soymeal that has skyrocketed from about $178 a ton to $280 a ton. Factor in high fuel prices, and it could be the final straw for many producers. "Between feed, fuel and electricity, the margins just keep getting smaller," Brudi said. "The higher feed prices could push out quite a few of those people who are hanging on by a thread." Former State Rep. and farmer Ron Lawfer says he has watched as area hog farmers have been squeezed out of the market. "There are probably only one or two people who are actually farrowing anymore in Jo Daviess County," Lawfer said. "Beef and hog prices usually run about the same, but hog prices have just never come back as expected after '98." Dale Durchholz, senior market analyst at the Illinois Farm Bureau's AgriVisor services, said grain prices have definitely produced what he calls "pinched margins." "The hog prices had been doing reasonably well lately but now these feed increases put a new spin on the hog situation," Durchholz said. "They haven't had to deal with this high feed input since '96 or '97. It's no secret that this is going to put some pressure on the few remaining independent producers." So why haven't hog prices rebounded enough to produce bigger profit margins? Wayne Schlueter, whose family has been an independent hog producer near Rock City since 1955, says it's too much consolidation and not enough competition. "The big corporations like the Smithfields and the Tysons control the market," Schlueter said. "What they don't supply for themselves or buy on contract, they get on the open market and they don't have to bid up on that." Canadian hogs have also flooded the market, and with currency rates in their favor, producers are gearing up to send more to the United States. That has had an impact on the U.S. slaughter capacity, which is now about 2 million head a week. Pressures on hog farmers are not expected to subside any time soon and the corporate producers even claim they are being squeezed. Consolidation is expected to continue, even weeding out some of the large producers, when hog structures can be bought for as little as half of what they are worth. According to statistics from the Department of Agriculture, there were 73,000 hog farms nationwide at the end of 2002. That compares to 248,700 in 1992, and 482,190 in 1982. Overall hog production has managed to remain steady through this upheaval because of the efficiency of the large corporate farms. Despite the difficulties, Brudi and Schlueter are not planning to abandon their family operations. "My daughter runs it now and she plans to keep on going," Schlueter said. "But with fuel and feed costs way up it isn't getting any easier. We've just been breaking even for a while now and most of the people I know who raised their own have gotten out or are getting out." Even though contract producers are protected from extreme lows, they also don't benefit much from higher prices. "We're trying to cut back on the soybean meal we feed them," Brudi said. "There are so many more hogs in contract but we really like being one of the independent guys." Pam Eggemeier can be reached at 232-0146 or via e-mail at pam.eggemeier@journalstandard.comJournal-Standard:
