SIC 0213 Hogs

 
INDEX
FREE EXCERPT

SIC 0213

This category covers establishments primarily engaged in the production or feeding of hogs on their own account or on a contract or fee basis. A general trend toward vertical integration in the industry has resulted in larger, more integrated hog operations that often play diverse roles—including breeding, raising, feeding, feed production, butchering and processing, distribution and marketing—in the process of getting hogs from the weaning pen to the market place.

NAICS CODE(S)

112210

Hog and Pig Farming

INDUSTRY SNAPSHOT

The U.S. Department of Agriculture estimates that American producers maintained about 97 million hogs on farms and feedlots in 2003, compared to 61 million in 1997. Processed pork totaled 97 million pounds in 2003. Throughout the late 1990s and early 2000s, consumer demand for pork continued to grow, fueling roughly $38 billion in annual sales by 2003, as well as $72 billion in economic activity. U.S. hog production is only about 10 percent of the world total, but the United States is the second-largest exporter of pork in the world.

ORGANIZATION AND STRUCTURE

Besides meat, pork products provide a broad range of needs, serving as a source for over 40 drug and pharmaceutical products as well as varied industrial and consumer products, from chemicals to leather goods. Such widespread demand fueled increasingly fierce competition, with a general trend toward larger farms and vertically integrated operations that controlled every step of the production process, from birth to grocery store sales. With escalating competition, industry leaders in the 1990s and 2000s strove to increase pork's market share by appealing to consumers. Lower prices resulting from supply surfeits of the early 1990s were a start. But the pork industry was faced with the task of reversing years of market decline largely brought on by consumers' growing health concerns, which had resulted in a general shift in consumption from pork, beef, and red meats to less fatty fish and poultry. In 1986 the National Pork Producers Council (NPPC) launched its "Pork—the Other White Meat" promotional campaign to emphasize a new health-awareness in the industry and to lend fresh pork a brand name type identity. In 1996, NPPC began a new phase of its campaign, emphasizing the versatility of pork, epitomized by its "Taste What's Next" slogan.

In December 1991 the University of Wisconsin, working with the U.S. Department of Agriculture and the hog-raising industry, published findings that indicated that pork examined in 1990 contained 31 percent less fat, 17 percent fewer calories, and 10 percent less cholesterol than its equivalent in the 1983 USDA Nutrient Handbook. The NPPC estimated that in contrast to the hog of the 1950s, the hog of the 1990s contains 50 percent less fat. Whereas before the average hog had 2.86 inches of backfat, now the average hog only has 1.1 inches.

In the early 2000s, roughly 80 percent of the nation's hogs came from farms that produced over 5,000 hogs a year. Furthermore, a survey by Brock Associates of Milwaukee and Elanco Animal Health division of Eli Lilly & Co., suggested that the country could have as few as 100 producers by the year 2050. The majority of survey participants—250 leading hog producers, veterinarians, meatpackers, and scientists—believed that the pork industry would move along the same lines that the poultry industry had in previous years, with a massive shakedown in the number of small or independent producers. Industry observers noted that hog production was rapidly becoming less labor-intensive and more capital-intensive, a condition that had not been problematic for corporate outfits able to bring significant resources to bear. Independent farmers, however, have to compensate for their lack of capital through extra work and by securing the latest technology through public universities, cooperative deals, and other sources.

Competition for such resources to acquire the necessary funding for the buildings, equipment, and technology needed to produce the most competitive hogs has grown increasingly fierce. Producers have to seek increasingly tight financing through combinations of credit institutions, investor groups, insurance companies, and allied industries such as feed producers and packers. Financing is contingent on overall efficiency, management ability, complete and accurate records, and a sound business plan. In order to best meet such demands, producers have to rely increasingly on genetics, nutrition, and...

To continue reading

FREE SIGN UP