A FEDERAL JUDGE DECISION REDUCES HOG FARMER MARKET POWER

Preserve U.S. Pork Industry Competition; Support the Modernized Pork Inspection System

 

“This plant in particular that markets our pigs…was built and designed for this type of an operation. To set it back 20-plus years and reduce its capacity by 20% daily is going to require somebody leaving the industry in Michigan. We’ve had several difficult years in a row. This is just one more issue to push back to the farm level and hurt the farm economy.”

 – Rick Sietsema, Michigan hog farmer

 

 

The Situation:

A recent federal court decision struck down a provision of the U.S. Department of Agriculture’s New Swine Inspection System (NSIS) allowing for faster line speeds at federally inspected pork harvest facilities. The NSIS, initiated during the Clinton administration and developed over more than 20 years to modernize a pork inspection process that had not changed in more than 50 years, was approved for industry-wide adoption in 2019. It allows for faster harvest facility line speeds. Unless reversed, the federal court ruling will have disastrous consequences for U.S. pork producers, resulting in a 2.5 percent loss in pork processing capacity nationwide and costing hog farmers $82.3 million this year alone, according to Dr. Dermot Hayes, an economist from Iowa State University. Reduced harvest facility capacity reduces pork producer market power, leaving them with fewer options to market their hogs and disproportionately hurting smaller farmers located near impacted plants.

 

The Impact:

The court decision will impact the U.S. pork industry by:

  • reducing harvest capacity, impacting smaller producers the most, especially those located near affected processing facilities;
  • requiring hog farmers to transport market-ready hogs to longer distances, forcing them to incur significantly increased transportation costs;
  • limiting competition, driving industry consolidation; and
  • increasing worker safety risks by requiring longer hours for harvest facility workers.

Dr. Hayes’ detailed analysis of the federal court decision’s impact on the U.S. pork industry can be read HERE.

 

In Their Own Words:

Watch this video addressing the negative impact of the federal court’s decision on the U.S. pork industry. Listen to these hog farmers describe the impact of the ruling on their farm operation.

 

The Solution:

The USDA can help U.S. hog farmers by seeking a stay of the court’s order, which is set to take effect on June 29, 2021.