Pork production continues to migrate back to its roots in the Midwest corn belt. As many readers of this blog are aware, I track changes in the structure of the US industry by tracking what % of the total US inventory for the breeding herd and the kept for market herd is in each of the major swine producing states.
This tracking very clearly shows the dramatic growth in North Carolina beginning around 1990. This growth stopped in the spring and summer of 1997. On March 1 and June 1, 1997, North Carolina producers had 17.6% and 17.2% of the kept for market inventory. In the March 1, 2011 report, they had only 13.3% of the market inventory. This doesn’t seem large a very large change in inventory until you realize that from 1997 through 2005, they averaged 16.3% of the kept for market inventory, a very steady number.
Since then the US herd has grown while the moratorium on facilities has limited their ability to add or even replace facilities. In the past 3 to 4 years there has been a move by several production systems based in North Carolina to move their grow-finish pigs from the swine intensive counties in North Carolina to less swine dense counties in Indiana, counties that also grow corn. On March 1, 2011, North Carolina producers reported a kept for market inventory of only 7,750,000 pigs, the lowest inventory since March 1, 1996.
The other state that has been changing in this time period is Minnesota. Since 1996, Minnesota producers have been slowing growing their inventory of market pigs and share of the US herd. Up through 1996, Minnesota producers averaged 8.4% of the US market inventory. Since then, they have been gradually growing to the point where they now have 12.1% of the market inventory. For the last 4 US Hogs and Pigs reports, Minnesota producers have reported an on-farm inventory of 6.95-7.14 million pigs in the kept for market category.
When you plot the decline in inventory for North Carolina and the growth in inventory for Minnesota, the intersecting regression lines suggest that Minnesota will become the number 2 state in the US for growing pigs to slaughter sometime in the year 2015. There are many who think it will happen sooner than that.
Reasons cited in my conversations with others who follow these numbers include:
• The health challenges (mostly PRRS and dysentery) associated with having so many pigs in so few counties in North Carolina.
• The very high cost of corn and other feed ingredients. In Minnesota we always think of a negative corn basis (often $0-.30 to $-0.50 per bushel) while North Carolina producers always think of a positive basis ($0.20 to $0.50). In the early 90’s, as the North Carolina industry grew, they capitalized on their ability to have a much better feed efficiency than typical Midwestern producers. Since then, Midwestern producers have invested in facilities and other technologies that have resulted in feed conversions that are very similar to those achieved by North Carolina producers. North Carolina no longer as competitive as it once was in this regard.
• Facilities (and contract growers) are aging. The ‘new’ barns of the early 90’s are now approaching 20 years of use. Many are in need of substantial repairs in the next few years. With the moratorium replacing aging facilities is harder to do than constructing new facilities in states such as Indiana.
• The environmental pressure for alternatives to the lagoons typical on North Carolina sites continues to grow. What was once deemed as the ‘best available’ technology is now looked upon by many with terms such as ‘hazardous waste’. Cropping systems in the Midwest recycle the N, P and K from swine manure more readily and efficiently than does fescue and Bermuda grass pasture.