More pigs, less money - the state of pork production in Kalona

By Mary Marek
Posted 12/31/98

Several people in the Kalona and Riverside area were interviewed for this article and, while all were willing, and in some instances, eager to tell their story, no one wanted to be identified or …

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More pigs, less money - the state of pork production in Kalona


Several people in the Kalona and Riverside area were interviewed for this article and, while all were willing, and in some instances, eager to tell their story, no one wanted to be identified or quoted directly. Therefore, out of respect for their wishes, sources will remain confidential with quotations unattributed and possibly paraphrased. The News thanks everyone for their candor and cooperation.

This little piggy went to market…….but nobody wanted him, so the farmer drowned him.

This may not actually be happening yet in Kalona, but it may not be far away. Everywhere people gather, rumors are flying. “Did you hear about the hog farmer who took his pigs to the packing plant but they wouldn’t take them so he backed his trailer into the Mississippi and drowned them?” “Did you hear about the farmer who wanted to charge $100 per person to let people ‘hunt’ his pigs but the animal-rights activists shut him down?” “Did you hear about the farmer who called DNR to ask how many hogs he could bury in one hole? They told him and he started digging holes.” “Did you know that so-and-so is losing $3,000 (or $4,000 or $6,000) a day on his hogs?” “The banks are just waiting until after the holidays, then we’ll see some people go under.”

Today’s pork market is like a nursery rhyme by Steven King (for those of you who might not be familiar with Mr. King, he writes horror stories). Hogs are selling at the lowest unit rate since 1962. In “real dollars”, hog prices have never been this low. Never.

Producers are receiving $10-$12 per hundred weight for hogs, when $35-$42 is their break-even point. What caused this crash in the hog market? Different people offer different answers to that question.

Some producers blame it on the processing plants, referring back to a year or two ago when there was a shortage of pork, which forced many packers to cut shifts or close plants. Now pork production is up, but packing plants have not reinstated their kill capacity to previous levels, thus causing a funnel effect.

Some people blame it on foreign markets, stating that producers were counting on exporting pork to countries who subsequently cut their pork consumption drastically. With exports up 37%, though, this argument doesn’t seem to stand up.

Some people blame it on the “big boys” from out of state who came to Iowa, offering big incentives to local producers to build large confinement buildings and feed pigs on contract.

Some people blame it on the increased efficiency of new hog-raising technology. The average farmer will sell an average of 15 pigs per sow per year. In a confinement setting, producers may sell an average of 22 pigs per sow a year.

Everyone agrees on one fact, though. Basically, there are just plain too many hogs. Regardless of how and why this is happening, the fact remains that many hog producers are facing some frightening facts right now.

One area farmer said that by the end of next week, he’ll know whether he’s still in the hog business or not. “The pork report comes out Tuesday and that’s when I’ll decide,” he said.

As it is for so many others, though, it’s not simply a decision of whether to continue raising pigs or not. The question for many is whether they’ve waited too long to make the decision. Can they still get out without losing everything, or have they waited too long?

This farmer, who raises hogs on a relatively small basis, said, “We’re losing $800-$1,000 per day, and have been for the last three to four months.” If prices rose today, how long would it take him to recoup his losses and begin making a profit again? It could take several years and he’s not sure he can wait that long. “I want to retire in a couple of years and I’ll need something to live on. I don’t want to risk losing everything else I’ve built up over the years.”

And, as with many hog producers, his hog setup is directly supporting more than one family. If it goes down, they all go down.

One couple who raises pork on a slightly larger scale pointed out that, “It’s not just us who will suffer if we fail. We have employees who will suffer, too.” They all have families who will be looking for other income sources if that one hog producer goes bankrupt.

Will they go bankrupt? That remains to be seen. If they do, it won’t be for lack of trying. “I love raising pigs. It’s all I’ve wanted to do ever since I got out of high school. I get up at 4 ‘clock every morning and work until 9 or 10 every night because I love what I’m doing and I don’t want to stop.”

When asked if he’s considered other options, this farmer said, “No. For me, there are no other options. I’ll just keep doing this until the bank says I can’t anymore.”

That’s the same answer many hog producers would give to that question. Of course, they all hoped to make money raising hogs, but for many that wasn’t the prime motivation. For many, farming, in whatever form, is more than a business. It’s their way of life, and they saw expanding their hog operations as a way of enhancing that life. Instead, it may prove to be the end of their life on the farm.

As well as being a financial nightmare, the situation is taking an emotional toll. Living with the daily stress can be hard on a couple. One farm wife explained that “the stress has to come out somewhere and it’s usually aimed at your spouse. We try to keep the lines of communication open, though, and we realize it’s not each other we’re really angry with.”

She continued that, “It’s especially hard at this time of year. The kids know that there will be fewer presents under the tree this year and I think they understand, but you try not to let them know how bad it is. We don’t want to scare them.”

“It’s important that farmers ‘be there’ for other farmers to talk to. We need to stick together and support each other, instead of pointing fingers and blaming each other for the situation,” she said. “We’re all in this together.”

Farmers aren’t the only people who will be affected by the current farm crisis.

One hog producer said, “I used to attend a church auction and lay down $1,000 - $1,500. I won’t be doing that again anytime soon.” Many churches may see their regular Sunday offerings decline as well.

An ag-specialist said, “A lot of farmers may not know just how bad it is until he sees his tax man after the first of the year. He’ll see a real erosion in his net worth. In the next 60 days we could see bankruptcies, liquidations and mergers,” and the failed farmers “may take people down with them.” Another source predicted that, “if there is no significant change in hog prices in the next 30-60 days, 30 percent of the hog producers nationwide will be liquidated.”

How will lower farm income affect local businesses? One farmer said, “We won’t be buying any new equipment, that’s for sure. We’ll make do with what we’ve got.” That philosophy will carry over into other areas as well. As their income drops, people will make clothes, furniture and cars last a lot longer, too.

If a farmer is no longer feeding pigs, he won’t be buying grain or feed from his suppliers. He won’t be paying a vet to treat pigs he doesn’t have anymore. He won’t be hiring trucks to haul grain and feed in or haul pigs out. He won’t be paying the utility company thousands of dollars per month for electricity anymore. And, he won’t be paying income taxes this year. In fact, he’s liable to get a refund of most of what he’s paid in the last couple of years; and lower tax revenues can affect the entire population.

Kalona may survive the current situation better than some small towns. It serves as a bedroom community for many people who derive their income from jobs in Iowa City, and thanks to the diversity of its local agriculture, not all ag-income is dependent upon hog prices. Dairy and poultry farmers are experiencing higher prices than usual and that will help maintain the local economy. However, it doesn’t mean Kalona won’t feel the repercussions of the low hog prices. Some local ag-related businesses may cut capitol expenditures and put repairs and purchases on hold.

Kalona survived the farm crisis of the ‘80s, and it will survive this one. Unfortunately, the same can’t be said for all area farmers. Only time will tell how many hog buildings will be standing empty when the current crisis is over.

How long can hog producers expect to see low prices? No one knows for sure. According to one source, we may see an upswing in prices in three to six months, but that probably won’t last. “1999 will be a ‘train wreck’,” according to this source, but things should be looking up by the turn of the century.

Until then, what should local pork producers do? “Sell the factory,” was the response of one source when asked that question. “There’s too much pork out there; stop producing more. Get emotion and fear out of the equation and treat agriculture like the business it is.” All good advice. Unfortuantely, it comes too late for some people.

One farmer said, “My father-in-law told me I was raising hogs with my heart, not with my pocketbook. Well, I did my homework and treated this like a business, but now it’s breaking my heart.”

Only time will tell.