10—Lancaster Farming, Friday, February 17, 1956
Production,
Address by Ezra Taft Bensom
Secretary of Agriculture,
United 1 States Department of
Agriculture, Before the Na
tional Swine Industry Com
mittee, Sherman Hotel, Chic ;
ago, Illinois, January 31,
1956, at 10:00 am.
This has been a 'difficult sea
son for hog producers They have
come through a season when tog
prices have been substantially
below production costs. They
have in some oases sold their
corn crop on the hoof for less
Chan it was worth in the crab.
They have seen hog prices de
fine Markedly while retail
prices of select pork cuts de
planed little. They have watched
their profits turn into losses
while processing and marketing
margins have increased.
Hog producers have suffered
a substantial decline in gross
receipts (from farm marketings,
while helplessly' watching costs
buy. They have been caught in
the web of a cost-price squeeze
that hurts.
Not Sharing Prosperity.
In short, they are not sharing
in the rising general prosperity
they see their nearby city cousins
enjoying. Small wonder then
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that our hog farmers are res
tive here in the great bread
basket of America'.
I appreciate your coming to
this conference today When I
telegraphed your chairman last
Wednesday requesting an op
portunity to meet with you, I
had every confidence that you
would be here to share your
counsel with me, even though
I knew all of you jwere very
busy men.
You are a group broadly re
presentative of the swine in
dustry. You represent producers,
marketing agencies, packers, dis
tributors. retailers, livestock or
ganizations, and farm organiz
ations And, of course, 'govern
ment is represented here today
also.
•When this committee met in
Chicage last July, you organ
ized and launched 'a broad pro
motional campaign to increase
the consumer demand for pork
(and pork products on the Ameri
can table. As a result, a tremend
ous job has been done in recent
months in promoting and selling
pork products. It has been a
multi-million dollar campaign.
The job could never have been
accomplished without complete
-teamwork by every segment of
the industry represented here
today. I, sincerely appreciate the
fine job that each of you has
done in this effective campaign.
Pork Consumption Is Up
We are moving pork into con
sumption in record quantities.
Per dapita-consumption of poric,
exclusive of lard, was 66 pounds
in 1955 compared with 60 pounds
the year before and the 1935-39
average of 56 pounds. It is esti
mated that consumption during
recent weeks has been at an an
nual rate of more than 80 pounds.
However, in sipite of these pro
motion efforts, hog producers
have continued in serious trouble
It is to that problem that I wish
to address the remainder of my
remarks
Hogs are important in the
Aimerican farm economy. They
rank third among all major farm
enterprises as a course of income
They normally account for about
one-eighth off our cash farm in
come- In the North Central
States they account for more
than one-fifth of total caslh farm
lineoime. In the states of lowia,
Illinois and Indiana, for example,
approximately two-thirds of all
farmers, raise hogs for market.
It is at once apparent that con
tinued economic distress among
this important group of farmers
will soon blight the economy of
entire communities, if not entire
IStates.
The price of harrows and gilts
at Chicago lalst December aver
aged $lO 73 per hundredweight
This was a 15 year low. It was
caused largely by the much
heavier than normal marketings
of hogs dunng that period. Low
prices continued into early Jan
uary, as marketings continued
heavy However, we are all
heartened by the substantial
price increase of the last 10 days,
which we feel is convincing
■.nuiuuian
workmen to assure its meeting en
act John Deere quality standards.
That’s why farmers everywhere
are loud in their praise for the de
pendability . . . the quality con
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evidence Chat the period of
heaviest supplies and unduly low
prices is 'behind us.
What Caused the Trouble?
It may be well to.reflect
briefly on causes Of our current
hog situation, if we are intel
ligently to discuss remedies.
In the first place, we have
been going through that phase
of the hog cycle which brings
increased numbers to the market
The hog cycle is normally about
5 years long—that is, 6 years
from high marketings to high
■marketings or from low market
ings to low marketings Con
versely, there is a time lapse of
approximately 5 years from low.
prices to low prices or from high
prices to high prices Most of
you are familiar with this cycli
cal movement It "occurs with a
good deal of regularity. It re
present farmers’ reactions to' high
or low prices, feed supplies, and
other factors as they plan
■their breeding programs for the
next yeah
The last high point in hog
slaughter 'occurred in 1951-52,
at which time prices received by
tfarmers declined However, the
■ impact of the Korean War at
that time partially obscured the
■full impact on price of market
ings cycle. Following that, hog
production was curtailed, and
■total slaughter decreased in 1953
land 1054. Prices rose. The hog
corn ratio again became favor
able to hog farmers. Increased
breedings and excessive market
ings followed in 1955. This
change underylrded at least a,
portion of the price decline me
have recently -
Slaughter of hogs under Federal
inspection during last October-
November was up 18 per cent
■over a year earlier The spring
pig crop had been around 8 per
cent
The hag market will improve
when numbers marketed' are
ibroug!ht in line mith demand.
This is (beginning to occur. Two
months ago farmers’ intentions
(to -breed indicated a 2 per cent
decline* in spring farrowings. Re
portsfrom marketing agencies
land packers in recent weeks
(covering sows and gilts coming
to market indicate that the ac
tual reduction may be greater
This would indicate that prices,
after their-" usual spring-summer
advance, should be stronger in
late summer, and should average
■above last fall.
Crested At Same Time
You are aware, I am sure, that
the hog marketing cycle and the
(cattle marketing cycle both
'crested at the same time in 1955
This is the first time this has
(happened in recent years It
probably has been an important
factor in causing the hog price
decline
Another reason for the low
hog prices, I am confident, has
been the sharply increased pro
cessing and merchandising costs,
most of whlidh ahv'e come out of
i»he hog check. But I’ll touch on
that later.
I could go on listing addition
al factors Which caused the price
decline, such as the production
of feeds from diverted acres, the
trend of consumer purchases
'away from over-fat pork, and
the like However,' I want to
move on quickly to a brief'dis
cussion of what we are doing to
alleviate the situation, and to
discuss With you Whiat further
needs to be done
Government Purchases Total 95
Let me review briefly some of
the things the Department is
doing at the present time.
Last October when hog prices
began their serious decline, I
promptly invited to Washington
representatives of the entire
■ swine and pork industry—pro
ducers, packers, Wholesalers, re
tailers. and others Together we
frankly discussed the marketing
porblem that faced hog pro
ducers The group then came up
with a recommended program.
We in the Department of Agri
culture have been guided by
the recommendations developed
(at that meeting
The Department started a pork
purchasing program, under which
to date we have purchased 95
million pounds of pork and lard.
This is now in full distribution
to the school lunch program.
We have stepped up our, pork
purchases. In each of the "last
three weeks, for example, we
have bought close to 10 million
pounds of pork. We are broad
ening our purchase operations
to include additional pork pro
ducts in order to remove from
the market even greater quanti
ties of pork.
Expanding Contracts
We also have lard in distri
bution to needy persons and in
stitutions m the various states,
and shortly expect to make pork
available for such distribution.
We are also expanding outlets
for government-purchased pork,
through contracts with additional
states for needy person distri
bution, through work with ICA
m foreign relief programs, and
through contact with the volun
tary religious and charitable
overseas relief agencies,
: Just last week we signed an
agreement with Yugoslavia for
the sale of 88 million pounds of
lard for foreign currency. And
we are continuing to press for
additional overseas sales. We are
pressing also for the sale of pork
for foreign currencies.
Our commercial exports of
lard this year are running about
100 million pounds ahead of last
year.
I pledge-to you again today,
as I have on frequent occasion*
m recent weeks, that as long as
the need exists,.the Department
will use every resource at its
command to develop outlets for
pork, and will do everything in
the best interest of hog pro
ducers themselves to bolster hog
prices. However, we do not in
tend to contribute to the pro
blems of livestock farmers by
approving any program for the
Government to purchse and
store vast quantities of meat
products for which it has no
visible outlet. We feel that to
do this would do irreparable
injury to the industry.
Distribution Costs Are Too High
I have been extremely con
cerned m recent months that
prices to farmers were going
down while marketing margins
were going up. In other words,
low hog prices were not fully
reflected in pork values to the
consumer. On the one hand the
producer was being squeezed by
high costs and low prices for his
hogs while, on the other hand,,
processing and distributing
charges remained relatively con
stant and even increased
The average marketing , for
pork in 1955 was 5 per cent
wider than the previous record
margin established in 1954, and
13 per cent wider than the 1950-
54 average. Both the retail price
and farm price averaged lower
in 1955 than in 1954. But the
retail price declined less than
the farm price, so the market
ing margin increased,’particulaily
in the second half of 1955. In
the fourth quarter of 1955, the
farm price of pork was 30 per
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cent lower than a year eaili
but the marketing margin i
13 per cent higher than a vi
earlier. Compared with doa i
Quarter of 1953, farm p"ice
the last quarter of 1955 was
per cent down, but the OS4
ing margin was 18 per cent i
About the same thing has be
happening in beef. In the ),
quarter of 1955, the retail pu
of choice' grade beef declui
5 per cent from a year ear he
but the farm price declined
per cent. During 'this mteu
charges for marketing beef j
vanced 26 per cent-
The farmers’ share of tl
dollar that consumers spent (
meat products declined from |
cents in 1954 to 54 cents in 19;
Processing Costs Up
I am fully aware that to!,
costs of processing and merchan,
ismg pork have gone up. as the
have in other farm commoditie
Wage rates have increased eac
year and are almost 100 per cei
above 1954. Freight rates ar,
other costs, such as packagu
materials, containers, fuel, equi;
ment, rents, and the like are t
about two-thirds. But all i
these higher costs in
and merchandising pork hai
been offset in good measure I
the increased marketing of hog
during this season. And all th<
the farmer has gotten out «
these increased marketings hnj
been low prices and sharply i>]
dueed income.
I believe firmly you’re entitle®
to a fair return. But when onl
segment of the meat team is suj
fering, gentlemen, it cannot M
too long before other segment
also will suffer. Now I want t
speak very bluntly with you l
is essential that marketing mail
gins be kept in line so they dl
not exceed real costs and thafj
i farmers be paid as much as po'i
sible for their products. Thl
welfare of the livestock «farme|
is of vital interest to you. TJ
stay in the hog and cattle bu
siness, the farmer must, year 11
and year out, be able to maike
his grain and forage througt
animals at a profit. As proces
■sors and retailers, you are esl
sential to the farmer because
you sell his end product. I
The Depatment of AgricultuuS
and the American farmer havel
no desire to interfere with oi
change the legitimate function'
of the meat industry. In geneial
the processors have done a splen
did job of Slaughtering and hand
ling a near record supply of hogs
in an effective manner. Prof
cessors, wholesalers, and ie t
ftailers are doing a g'wd job o!j
selling and merchandising. Foi
this we are grateful. But each
group needs to be fully aware
of its responsibility to return to
the farmer maximum prices for
his meat animals.
Keep Your Costs Under Conti o!
I urge you in industry to
(Continued to page 11)