2023 was tough for pig producers as costs outpaced profits. Will this year be better?

April 3, 2024, 10 a.m. ·

Pigs in Pen.webp
Courtesy Brad Lundell: Brad Lundell raises about 25,000 hogs a year on his operation in western Iowa. Lundell points to inflation as the major factor impacting the cost of raising pigs. On top of that, inflation has meant consumers have less to spend. “I would say for the past two years, it’s been pretty ugly,” he said.

Growing up on a hog farm in western Iowa, Brad Lundell has seen big changes in the business over the decades.

“Years ago, my dad and uncle had 100 sows. We had just a small farrow to finish farm, just like every farmer you know in the countryside,” Lundell said.

But the landscape shifted dramatically in 1998 when historically low pork prices took away profits, forcing some out of pig production.

“There were still some smaller guys out there. But we decided to step out of the hog business for a while,” Lundell said.

Hog producers faced another crossroads in 2023, which some agricultural experts have called the worst year on record. Producers lost on average $32 per head, mostly because of higher input costs.

Producers are hoping 2024 will be a better year, and so far, there are some positive signs.

Lee Schulz, an associate professor and extension economist at Iowa State University, predicts a 10% decrease in production costs this year over 2023. Yet those costs, including labor and energy, have more than doubled since 2020.

He said an increase in hog prices over the last 60-90 days is helping.

“Producers are getting back close to break-even levels,” Schulz said. “I think we’ve seen packers improve their margins too.”

Even so, last month Tyson announced plans to close a long-running facility in Perry, Iowa, impacting almost 1,300 jobs when it shutters in June. The plant slaughters and processes about 9,000 hogs each day.

The upcoming closure does put a strain on producers, according to the CEO of the Iowa Pork Producers Association, Pat McGonegle.

“Anytime we encounter these kinds of headwinds, nothing really surprises you. But certainly, it’s a shock to the community and to the industry,” McGonegle said.

Meanwhile, consumers are getting a bit of a break on pork prices. The latest data shows retail pork prices fell 1.6% in February 2024 from the year before. At the same time, grocery prices increased by about 1%, and restaurant prices jumped about 4.5%.

Another challenge for pork producers are new rules with California’s Prop 12 and Massachusetts Question 3 regarding how big of a space breeding pigs must have.

McGonegle said the past 20 months have been rough for all sides of the industry.

“But pork producers are resilient, and they’ll get things figured out,” McGonegle added.

Karla Kooi and her husband own a hog confinement in Sioux County, Iowa, where they feed 2,200 head of hogs at a time.

“It's just hit and miss. There's good days and bad days,” Kooi said. “However, we’re insulated so we don’t take the loss.”

That’s because the couple raises livestock for a company from Minnesota. The USDA estimates that 70% of all hog producers raise hogs for others.

“They buy them and ship them to our building. And then they get shipped out,” she said.

As for Lundell, he saw how the industry modernized after 1998 and became more commercial, with meat packers looking for farmers and companies that could provide larger contracts for hogs.

He changed the way his family operated when he returned to swine in 2006. Today they finish 25,000 head of hogs a year for a local veterinary company and are sheltered from market disruptions.

“Since we are custom feeders, the price fluctuations don’t affect us directly. We just rent out our barns to our integrator and do the chores,” Lundell said.

Even though Lundell may not directly feel the impact of low returns he worries about those up the food chain.

“But if they don’t make money, we don’t make money. You know we’re all in this together,” he said.

This story was produced in partnership with Harvest Public Media, a collaboration of public media newsrooms in the Midwest. It reports on food systems, agriculture and rural issues.