Most of us are aware in general terms how large the US pork industry is. In 2011 US packers slaughtered 109,967,000 pigs under federal inspection. This was up from 109,292,000 head in 2010.
A couple of weeks ago I came across statistics for the pork slaughter industry in Germany courtesy of www.thepigsite.com. A couple of points immediately sprang to mind. The first is the size of the German slaughter industry. In 2011 they slaughtered an estimated 59.475 million pigs or 54% as many as US packers. Given the size of Germany relative to the US, this suggests Germany has a very dense population of pig farms, even accounting for the fact that a growing segment of Germany’s slaughter numbers are imported from Denmark.
It is also interesting to note that the 4 largest slaughter companies slaughtered 60.3% of all pigs slaughtered. The largest company in Germany is Tonnies at 25.9% of the slaughter industry, followed by Vion at 16.8%, Westfleisch at 12.0% and Danish Crown at 5.5%.
This slaughter industry structure is almost identical to the US slaughter industry . Dr Steve Meyer’s estimate of US slaughter capacity in 2009 for the National Pork Board was 444,925 head per day (www.pork.org).
Of this total, 4 companies have 64.4% of the total estimated capacity. Smithfield has an estimated 28.4% of the US slaughter capacity with its Smithfield Foods, John Morrell and Farmland divisions (126,300 head). Tyson Foods is second with 16.8% (74,550 head), followed by JBS Swift at 10.6% (47,000 head) and Cargill Excel at 38,500 pigs or 8.7% of the US total capacity.
If we round out the top 10 companies in the US we get 88.3% of all slaughter capacity. The next 6 largest slaughter companies in the US are Hormel at 8.3% (37,000 head), Seaboard Farms at 4.3% (19,200 head), Triumph Foods at 4.3% (19,000 head), Indiana Packing Co. at 3.7% (16,500 head), Hatfield Quality Meats at 2.4% (10,600 head) and J.H Routh at 0.9% (4,200 head).
US slaughter capacity isn’t likely to grow very much in the next few years. Dr Meyer says he has identified as few small increases in slaughter capacity, but we are still under 450,000 head per day total US capacity. While we think there will be enough capacity to kill all pigs in a timely manner this fall, both of us are worried about slaughter capacity in the fall of 2013. If production begins to expand this fall in response to the favorable prices offered on the futures market (up to last Friday’s sell off at least), do we have enough capacity to market and slaughter our pigs in an orderly manner or are we facing 1998 type pressures again?