Pork producers seek boost from federal purchases

Tim Landis

Pork producers have asked the federal government to buy $50 million worth of pork to prop up prices that dropped as much as 25 percent after an outbreak of swine flu last month.

The food, which would be in addition to $25 million purchased before the outbreak, would go to emergency pantries and low-income nutrition programs.

“The real challenge is that May, June and July are months when pork producers usually can make some money. Then, with this H1N1 virus coming out, it’s taken our markets even lower,” Phil Borgic, president of the Illinois Pork Producers Association, said Tuesday.

The industry also has launched a nationwide campaign pointing out the virus is properly known as H1N1, according to federal health experts, and that no illnesses have been linked to hogs or pork consumption.

While agreeing some might see the aid as an industry bailout, Borgic said, “It’s getting to the point where we’re all hitting the brick wall at the same time.”

The state association joined the National Pork Producers Council in a formal request for aid to the U.S. Department of Agriculture. Illinois is among the states where the outbreak has been most severe.

The Illinois Department of Public Health on Tuesday reported there have been 554 confirmed cases statewide.

While federal health officials have issued repeated assurances the virus is not transmitted by food, producers say the scare hit just when they were nearing the break-even point following last year’s losses.

May lean-hog futures traded a little below $62 per hundredweight Tuesday, down from a high of $74 in early April. Prices fell as low as $55 shortly after the virus outbreak.

The USDA purchased $25 million through the supplemental program in March in response to low prices, as well as $50 million in the summer of 2008, when hog producers were struggling with the high price of feed grains.

A call and e-mail to USDA on the status of the latest request were not returned Tuesday, but representatives of the pork council said a decision had not yet been made.

A Purdue University analysis released after China, Russia and the Ukraine banned pork imports from states that have had swine-flu cases and other nations implemented stricter screening, predicted “hundreds of millions of pounds of pork” would wind up on U.S. retail markets at discounted prices.

“Although no cases of the new H1N1 strain have been reported in pigs and properly handled and cooked pork is safe to eat, the pork industry is feeling the brunt of public misunderstanding of the virus,” the report concluded.

Iowa State University livestock economist John Lawrence said in response to e-mailed questions that the effect of government purchases on pork prices depends heavily on timing and the amount purchased.

At current prices, a $50 million purchase spread across 13 weeks would bring wholesale prices up about 4.8 percent, he estimated.

“If it occurs over a shorter time, the increase would be larger,” Lawrence said.

Illinois producers regularly donate to local food banks, said Pam Molitoris, executive director of the Central Illinois Foodbank, which serves 160 agencies in 21 central Illinois counties from a warehouse in Springfield.

Molitoris said the swine-flu/H1N1 outbreak has not affected donations or requests for assistance.

“I’ve had customers ask about it, but most people are smart enough to understand you don’t get it from food,” said Molitoris.

She said a nationwide recall of peanut butter and related products earlier this year had a much bigger effect.

“When we had the peanut scare, it was a real nightmare,” she said.

Tim Landis can be reached at (217) 788-1536 ortim.landis@sj-r.com.