U.S. Pork Industry Structure 2003 Glenn Grimes Professor Emeritus University of Missouri-Columbia Website:

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm size (thousand head mktd. annually) Number of operationsMarket share Less than 159,950 1% ,630 8% % ,526 9% % % % Total70,130100% Estimated Total Number of Operations & Share of U.S. Slaughter in 2003 by Size Category

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm size (thousand head mktd. annually) Less than 1 32% 23% 17% 5% 2% 1% Share of Annual U.S. Hog Slaughter by Year and Size Category

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm size (thousand head mktd.) Number of Large Firms Producing Hogs

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm size (thousand head mktd.) %13%17%19% %24%35%40% Percent of U.S. Slaughter Hogs Marketed by Large Firms

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of U.S. Slaughter Hog Marketings by Type of Owner Operation wholly or partly owned by: Firm Size (thousand head mktd.) Veterinarian 0.20% 1.02% Feed company 1.23% 2.82% Packer or processor 0.47%23.30% Foreign firm or person 0.43% 3.54%

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Growth* Planned as Reported in 2000 Study Compared to Actual Growth Firm Size (1,000 head mktd annually) Planned in 2000Actual % - 41% or more *Percent increase in number of head marketed.

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Growth* Planned by Each Size Group and Firm Size (1,000 head mktd annually) Planned Planned % 18% *Percent increase in number of head marketed.

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) Do not plan to market more hogs 39%40%41%32%16%19% Market more through existing facilities Construct new facilities Purchase existing facilities Contract for more finishing space How Firms Plan to Expand (percent of firms responding in each size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Firms That Made a Profit in 2001 Firm Size (1,000 head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Firms That Made a Profit in 2002 Firm Size (1,000 head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Firms That Made a Profit in 2003 Firm Size (1,000 head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Firms That Started Marketing Hogs Prior to 1975 Firm Size (1,000 head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Firms That Started Marketing Hogs 1976 to 1985 Firm Size (1,000 head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Firms That Started Marketing Hogs 1986 to 1995 Firm Size (1,000 head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Firms That Started Marketing Hogs after 1995 Firm Size (1,000 head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) Percent of the firm’s feed is self-prepared 83%78%65% 40%59% replacement gilts are purchased hogs are raised indoors feeding is split sex facilities are wean- finish Production Information 2003 (average of percentages reported by individual firms)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Networking Activities of Producers Marketing 1,000-50,000 Head Annually Percent

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Commodity Firm Size (thousand head mktd.) Corn 94%90%84%73% Soybeans Wheat Dairy/milk Beef cow/calf Beef stockers Beef fed cattle Percent of Hog Operations Producing Other Commodities

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Commodity Firm Size (thousand head mktd.) Corn 52%61%56%50% Soybeans Dairy/milk Beef cow/calf Beef fed cattle Other Commodity Considered Most Important Produced on Hog Operation (percent of total firms in size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm size (thousand head mktd. annually) % 23% 60% Percent of Litters Sired by Artificial Insemination 1997, 2000, 2003

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) Collected by firm 18%14%16%30%23%87% Purchased Part-owned stud Other Where Firms Acquired Semen (percent of firms responding in size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firms Finishing Canadian-born Pigs Firm Size (1,000 head mktd annually) Percent of Firms % % % % % %

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) Spot market 89%67%72%71%96%42% Under marketing contract Transfer from own facility in Canada 2 Method of Pricing Canadian-born Pigs (percent of firms that fed Canadian pigs by size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) Load by load 77%70%66%55%13%33% Negotiated contract Group contract Own packing plant Other How Firms Marketed Slaughter Hogs, 2003 (percent of firms in size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) packer 58%47%42%38%15%24% 2 packers packers packers packers packers packers 19 8 packers 5 Number of Different Packers Sold to in 2003 (percent of firms responding in size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Marketings Sold to Producer’s Largest Buyer Firm Size (1,000 head mktd annually) Average of Firms Reporting % % % % %

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) Less than 50 mi. 42%29%21%18%4% mi mi mi mi mi. or more Distance Hogs Are Hauled for Slaughter (percent of firms responding in size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. All size groups Firm Size (thousand head mktd.) Spot market - negotiated21.5%53%40%29%26%11%15% Contract - futures market Formula - hog prices Formula - meat prices Formula - feed/ledger Formula - feed/no ledger Window - ledger Window - no ledger Other Percent of Hogs Sold under Marketing Contracts (average of percentages reported by each size group)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) Tight schedule 10%15%26%35%45%61% Somewhat flexible Market at desired weight Flexibility in Marketing Dates (percent of firms responding in size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Hogs Sold on Carcass Merit Basis Percent Firm Size (thousand head mktd. annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) Use contract tied to futures 19%28%33%28% 4%14% Use futures at times 17%27%33%44%83%67% Never use 64%45%34%27%13%24% Use of Hog Futures Market by Hog Firms (percent of firms responding in size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd.) Bad results in the past 23%34%30%35%30%69% Option premium too high Don’t like margin calls Too complicated Other Why Hog Producers Do Not Use Futures or Options (percent of firms responding in size category)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Opinions on Marketing Contracts: Help Coordinate Slaughter Strongly disagreeStrongly agree Firm Size (thousand head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Opinions on Marketing Contracts: Felt They Were Treated Fairly under Contract Strongly disagreeStrongly agree Firm Size (thousand head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Opinions on Marketing Contracts: Plan To Continue Marketing with a Contract after Current One Matures Strongly disagreeStrongly agree Firm Size (thousand head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Opinions on Marketing Contracts: Should Be More Closely Monitored by USDA Strongly disagreeStrongly agree Firm Size (thousand head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Opinions on Marketing Contracts: Prefer To Market All Hogs on Cash Market Strongly disagreeStrongly agree Firm Size (thousand head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Opinions on Marketing Contracts: Have Caused Lower Cash Market Prices Strongly disagreeStrongly agree Firm Size (thousand head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Opinions on Marketing Contracts: Producers with Contracts Get Higher Prices Strongly disagreeStrongly agree Firm Size (thousand head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Opinions on Marketing Contracts: Packers Showed Undue Preference in Offering Contracts Strongly disagreeStrongly agree Firm Size (thousand head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Opinions on Marketing Contracts: Should Be Made Illegal Strongly disagreeStrongly agree Firm Size (thousand head mktd annually)

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd) Farrowed by contractors Finished by contractors % 5%15%14% 9%13% Total Percent of U.S. Hogs Raised by Firms That Are Contractors,

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd) FarrowedFinished % 2% 7% 8% 3% 5% Total Percent of U.S. Hogs Raised under Contract,

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Average Length of Production Contracts Firm Size (thousand head mktd) Finishing41 mo.68 mo.69 mo. Nursery46 mo.68 mo.54 mo. Farrow or farrow-finish49 mo.62 mo.64 mo. Nursery-finishing29 mo.53 mo.63 mo.

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Training and Supervision Provided by Contractors to Growers Percent of Reponses by Firm Size (thousand head mktd) Train and supervise closely 20%76% Train briefly and supervise little 816 Find experienced producers who need little training or supervision

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. When Growers Began Contract Production Percent of Growers Before %

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Grower Plans after Contract Expires Percent of Growers Stop producing hogs2% Contract a different company9% Continue with same company80% Become independent4% Other5%

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Number of Contractors Per Grower in Last 5 Years Percent of growers 1 contractor80% 2 contractors15% 3 contractors4%

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Contractors’ Expectations for Next 5 Years Percent of Responses by Firm Size (thousand head mktd) Expand their contract production 16%30%24% Reduce their contract production Keep their mix steady715652

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. How satisfied are you with hog production? Firm Size (1,000 head mktd annually) Satisfaction Rating 1 = very dissatisfied 6 = very satisfied

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. How satisfied are contractors with contract hog production? Firm Size (1,000 head mktd annually) Satisfaction Rating 1 = very dissatisfied 6 = very satisfied

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. How satisfied are growers with contract hog production? Firm Size (1,000 head mktd annually) Satisfaction Rating 1 = very dissatisfied 6 = very satisfied

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Firm Size (thousand head mktd) Air quality regulations 43% 23% 65% Water quality regulations Restrictions on antibiotic use Civil suits against production units Animal rights issues Packer concentration Vertical integration Over-supply of hogs Adoption of COOL What Do You See as the Greatest Challenges to the US Pork Industry over the Next 5 Years?

U.S. Pork Industry Structure Study, 2003 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board, Monsanto Choice Genetics, and Land O’ Lakes. Percent of Firms That Will Stay in Business until 2008 with Average Hog Price $40-42 & Central Iowa Corn Price $2.40 Percent Firm Size (thousand head mktd annually)