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U.S. Pork Industry Structure Study 2001. Glenn Grimes Professor Emeritus University of Missouri-Columbia. U.S. Pork Industry Structure Study, 2001. U.S. Marketings by Producer Size. Hogs marketed annually 1988 1991 1994 1997 2000 Under 1,000 32% 23% 17% 5% 2%

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slide1
U.S. Pork Industry

Structure Study 2001

Glenn Grimes

Professor Emeritus

University of Missouri-Columbia

slide2

U.S. Pork Industry Structure Study, 2001

U.S. Marketings by Producer Size

Hogs

marketed

annually 1988 1991 1994 1997 2000

Under 1,000 32% 23% 17% 5% 2%

1,000-1,999 19 20 17 12 7

2,000-2,999 11 13 12 10 5

3,000-4,999 10 12 12 10 7

5,000-9,999 9 10 12 10 10

10,000-49,999 12 13 13 16 18

50,000 & up 7 9 17 37 51

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide3

U.S. Pork Industry Structure Study, 2001

Estimated Number of Operators and

Share of U.S. Hog Slaughter

by Size Category in 2000

Size class Number Market share

(annual mktgs.)operators(percent)

< 1,000 54,513 2%

1 - 2,000 10,034 7

2 - 3,000 4,118 5

3 - 5,000 3,312 7

5 - 10,000 2,627 10

10 - 50,000 2,501 18

50 - 500,000 136 17

500,000+ 20 35

Total 77,260

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide4

U.S. Pork Industry Structure Study, 2001

Number of Large Hog Firms

Year

Size

(thousand head)1994 1997 2000

50 - 500 57 127 136

500+ 9 18 20

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide5

U.S. Pork Industry Structure Study, 2001

Percent of Marketings

by Large Hog Farms

Year

Size

(thousand head)1994 1997 2000

50 - 500 7 13 17

500+ 10 24 35

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide6

U.S. Pork Industry Structure Study, 2001

Age of Major Equity Holder

Size Class Age

(no. head) 1997 2000

1 - 2,000 47.6 50.0

2 - 3,000 48.0 48.5

3 - 5,000 48.8 49.0

5 - 10,000 48.4 49.0

10 - 50,000 48.3 47.9

1 - 50,000 48.8 49.0

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide7

U.S. Pork Industry Structure Study, 2001

Age Distribution of Major Equity Holder

Medium Size Operations

1-50,000 hd. marketed annually

Percent

Age

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide8

U.S. Pork Industry Structure Study, 2001

Percent of Litters Sired

by Artificial Insemination

%

Size of Operation (thousand head mktd.)

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide9

U.S. Pork Industry Structure Study, 2001

Percent of Farms

Increasing or Decreasing Production since Beginning Marketing Contracts

(1,000 - 50,000 hd. size)

Farms increasing production 12%

Average increase on these farms 73%

Farms decreasing production 4%

Average decrease on these farms 50%

Farms reporting they were larger

because they had a contract 17%

Average increase on these farms 114%

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide10

U.S. Pork Industry Structure Study, 2001

Planned and Actual Growth of Hog Producers by Size 1997-2000

Marketings

(thousands) Planned Actual

1 - 2 10% - 22%

2 - 3 6 - 27

3 - 5 15 - 20

5 - 10 25 13

10 - 50 39 37

50 & up 41 48

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes,Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide11

U.S. Pork Industry Structure Study, 2001

Growth Plans More Modest

in 2000 than 1997

Size

(thousand head) 1997-00 2000-03

1 - 2 10% 1%

2 - 3 6 12

3 - 5 15 5

5 - 10 25 12

10 - 50 39 12

50 - 500 66 18

500+ 27 12

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes,Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide12

U.S. Pork Industry Structure Study, 2001

How Satisfied Are You with Pork Production?

Size Class

(no. head)

1 = not satisfied at all. . . . . . . 6 = extremely satisfied

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide13

U.S. Pork Industry Structure Study, 2001

Limits on Further Expansion by Size

Size Class

(no. head)

1 = no effect . . . . . . . 6 = greatly limits

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide14

U.S. Pork Industry Structure Study, 2001

Limits on Further Expansion by Size

Size Class

(no. head)

1 = no effect . . . . . . . 6 = greatly limits

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide15

U.S. Pork Industry Structure Study, 2001

Limits on Further Expansion by Size

Size Class

(no. head)

1 = no effect . . . . . . . 6 = greatly limits

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide16

U.S. Pork Industry Structure Study, 2001

Limits to Further Expansion

Size Class

(no. head)

1 = no effect . . . . . . . 6 = greatly limits

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide17

U.S. Pork Industry Structure Study, 2001

Percent of Farms with a Profit in 2000

Size Class

(no. head)

Percent

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide18

U.S. Pork Industry Structure Study, 2001

Factors that Limit Expansion

1 - 50,000 sizes

1 = no effect . . . . . . 6 = greatly limits

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide19

U.S. Pork Industry Structure Study, 2001

Percent of Hog Firms that Will Stay in Business

until 2003 with $40-42 Hog Prices

Size Class

(no. head)

Percent

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing

slide20

U.S. Pork Industry Structure Study, 2001

Type Payment Production Contracts

No

Type Incentive Incentive Total

Pig space 19% 18% 37%

Head 37 14 51

Pound 7 2 9

Other -- -- 3

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide21

U.S. Pork Industry Structure Study, 2001

Use of Production Contracts as

Percent of All U.S. Hogs

Size Class All HogsHogs under Contract

(no. headFarrowed by Finished by

marketed)contractors contractors Farrowed Finished

1997 2000 1997 2000 1997 2000 1997 2000

--- percent --- --- percent --- --- percent --- --- percent ---

1 - 50,000 10 5 14 9 1 2 8 3

50 - 500,000 8 8 9 13 4 7 7 10

500,000+ 22 26 22 33 11 13 16 21

Total 40 39 44 55 17 22 30 34

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide22

U.S. Pork Industry Structure Study, 2001

Pricing Hogs by Large Producers

% Use

Cash

Marketing Contracts

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide23

U.S. Pork Industry Structure Study, 2001

Percent of U.S. Hogs Sold through

Various Pricing Methods, 1997 & 2000

% Use

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide24

U.S. Pork Industry Structure Study, 2001

Percent of Market Hogs Sold

on Carcass Merit Basis

%

Size of Operation (thousand head mktd.)

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide25

U.S. Pork Industry Structure Study, 2001

Opinions about Marketing Contracts

Size (hd. marketed/yr.)

1,000 - 50,00050,000-

with without500,000 500,000+

contract contractwith with

Better coordinate slaughter 3.66 2.94 4.60 4.85

Lower cash prices 4.19 4.23 3.78 2.80

Producers with contracts

receive higher prices 3.88 3.46 3.89 4.06

Undue preference in who is

offered a contract 3.52 3.49 3.51 2.22

Should be made illegal 2.70 3.07 1.69 1.37

Should be more closely monitored 3.97 4.01 3.09 1.63

Prefer marketing all on cash 2.97 4.13 2.78 2.37

Have been fairly treated 4.36 4.63 4.38

Plan to continue mktg. on contract 4.19 4.83 4.85

1 = strongly disagree; 6 = strongly agree

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide26

U.S. Pork Industry Structure Study, 2001

Marketing Contract Preference

Minimum Price Tied to Feed Costs

Size Class

(no. head)

1 2 3 4 5 6

1 = not important at all . . . . . . . 6 = very important

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide27

U.S. Pork Industry Structure Study, 2001

Marketing Contract Preference

Size Class

(no. head)

1 2 3 4 5 6

1 = not important at all . . . . . . . 6 = very important

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide28

U.S. Pork Industry Structure Study, 2001

Marketing Contracts

Size Class (no. head)

1 2 3 4 5 6

1 = strongly disagree . . . . . . . . . . . . . 6 = strongly agree

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide29

U.S. Pork Industry Structure Study, 2001

Marketing Contracts

Prefer To Market All Hogs on Cash Market

Size Class

(no. head)

1 2 3 4 5 6

1 = strongly disagree . . . . . . . . . 6 = strongly agree

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide30

U.S. Pork Industry Structure Study, 2001

Marketing Contracts

Size Class

(no. head)

1 2 3 4 5 6

1 = not important at all . . . . . . . 6 = very important

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide31

U.S. Pork Industry Structure Study, 2001

Marketing Contracts

Size Class

(no. head)

1 2 3 4 5 6

1 = not important at all . . . . . . . 6 = very important

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide32

U.S. Pork Industry Structure Study, 2001

Marketing Contracts

Size Class (no. head)

1 2 3 4 5 6

1 = strongly disagree . . . . . . . . . 6 = strongly agree

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide33

U.S. Pork Industry Structure Study, 2001

Marketing Contracts

Size Class (no. head)

1 2 3 4 5 6

1 = strongly disagree . . . . . . . . . . . . . 6 = strongly agree

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide34

U.S. Pork Industry Structure Study, 2001

Marketing Contracts

Size Class (no. head)

1 2 3 4 5 6

1 = strongly disagree . . . . . . . . . . . . . 6 = strongly agree

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide35

U.S. Pork Industry Structure Study, 2001

Marketing Contracts

Size Class

(no. head)

1 2 3 4 5 6

1 = not important at all . . . . . . . 6 = very important

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide36

U.S. Pork Industry Structure Study, 2001

Marketing Contracts

Reduced Price Risk

Size Class

(no. head)

1 2 3 4 5 6

1 = not important at all . . . . . . . 6 = very important

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide37

U.S. Pork Industry Structure Study, 2001

Medium-sized Producers

Percent Involved in Networking

0% 10% 20% 30%

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide38

U.S. Pork Industry Structure Study, 2001

Medium-sized Producers

Percent of Production Involved in Networking

0% 10% 20% 30%

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide39

U.S. Pork Industry Structure Study, 2001

Medium-sized Producers

Maximum Percent of Their Production Involved in Networking

%

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide40

U.S. Pork Industry Structure Study, 2001

Vertical Integration in the U.S. Hog Industry

%

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide41

U.S. Pork Industry Structure Study, 2001

Percent of Hogs Sold on Spot Market

%

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.

slide42

U.S. Pork Industry Structure Study, 2001

University of Missouri, Iowa State University, National Pork Board, Pork magazine, PIC, Land O’Lakes, Dekalb Choice Genetics,

and Research Institute for Livestock Pricing.