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Major USDA Purchase Boosts Pork Producers

by 5m Editor
4 September 2009, at 11:00am

US - Embattled pork producers who have seen a stream of losses for two years learned Thursday that the US Department of Agriculture would buy $30 million worth of pork immediately.

"Every little bit helps, and we appreciate it," said Howard Hill, president of Iowa Select Farms, which finishes about 3 million hogs in confinements in Iowa. "But this by itself won't bring us back to profitability. It's been a bloodbath out there."

Pork producers thought they would have to wait until after 1 October, the beginning of the federal fiscal year, for another federal purchase of pork. Agriculture Secretary Tom Vilsack had said last month that no money was available this fiscal year.

"Iowa's hog farmers and their families have struggled as the price of pork has fallen steadily the past two years," said US Rep. Leonard Boswell, a member of the House Agriculture Committee and chairman of the general farm commodities and risk management subcommittee. "I applaud the USDA's planned pork purchases as one more step to getting Iowa's pork producers back on their feet."

Don Butler, National Pork Producers Council president, said, "The action by USDA to buy additional pork will benefit America's pork producers, the US economy and the people who benefit from government food programs. NPPC is extremely grateful to Secretary Vilsack for recognizing the plight of our producers and for taking action to help them."

The USDA will buy the pork for food and nutrition initiatives, such as school breakfast and lunch programs. More money could be available during the next fiscal year.

The purchase falls short of the $50 million that the National Pork Producers Council, along with Iowa Governor Chet Culver and eight other governors, requested last month.

"I applaud and thank Secretary Vilsack and President Obama for responding to the challenges farmers are facing," Governor Culver said. "Today's decision by USDA is a great step forward in providing much-needed help to pork producers in Iowa and across the nation."

The USDA already had spent $62 million on pork in the last year to try to shore up hog markets, reports DesMoinesRegister.com.

Hog prices have fallen from almost $1 per pound a year ago on futures markets to under 50 cents per pound because of oversupply, loss of some exports in the world economic downturn, and the slump in demand after the H1N1 flu virus scare arose in late April. Fresh publicity about what has commonly been called swine flu, accompanying the opening of schools and the need to protect students, further stoked market fears.

Nonetheless, pork prices rose by 1 cent per pound to 50 cents on the October contract at the Chicago Mercantile Exchange Thursday. Longer-term contracts for delivery next spring and summer show prices at 68 cents per pound.

Iowa is the nation's largest hog producer, with an inventory of 19 million animals. The state accounts for about 23 per cent of US pork production, and hog sales put $4 billion to $5 billion into Iowa's economy annually.

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