Commodity Pricing Hearing
(Continued from Page At)
board of directors, chaired by state
Rep. Sheila Miller, a long-time
advocate of agriculture in the state.
With the support of the board.
Rep. Miller called for a hearing to
receive comments on commodity
pricing and the effects upon the
state’s rural community.
The bearing was held in early
January, during Farm Show, at the
state Farm Show Complex in
Harrisburg.
Despite poor road conditions, it
was attended by a number of rep
resentatives of agricultural organi
zations with offices in Harrisburg,
as well as representatives of the
livestock production and process
ing industry in the southern region
of the state, and the state General
Assembly’s respective agricultur
al leaders and their
representatives.
In addition to Rep. Miller, also
representing the Center for Rural
Pennsylvania was its secretary, Joe
Dudick, who also serves on the
Center’s board as the representa
tive for Gov. Tom Ridge; and Bar-
LA
Quickly and Evenly Cover Large Areas
Broadcast Spreaders FS7OO
•3 hopper sizes availabe: 350, 563 and 673 lbs,
• One-piece, seamless construction allows material to
fall freely as hopper empties
• Material can be delivered completely to the left or
right or in a full width pattern
• Application rate is from 44 lbs. to 890 lbs. per acre
• 50 ft, spreading width
• Ideal for landscaping, nurseries, hobby farms, sod
farms and municipal applications
The Land Pride line of Broadcast Spreaders offers
quaHtyjjperformance and reliability.
Betts Equipment
3139 Windy Bush Road, Rt 232
New Hope, PA 18938
215-598-7501
Hoober, Inc.
Mam Street
Intercourse, PA 17534
717-768-8231
Hoober, Inc.
East Mam Street
McAlisterville, PA 17049
717-463-2191
Deerfield Ag & Turf Center, Inc.
RR 2 Box 212
Watsontown, PA 17777
717-538-3557
Detlan Equipment, Inc.
141 East Mam St
Silverdale, PA 18962
215-257-5177
Thomas L. Dunlap
Rt 220, Mam St Exit
Jersey Shore, PA 17740
717-398-1391
Eckroth Bros Farm Equipment
Rd 2, Box 24A
New Rmgold, PA 17960
717-943-2131
Rodio Tractor Sales
North White Horse Pike
Hammonton, N.J. 08037
609-561-0141
Warren County Service Center
228 Route 94, Blairtown, N J
908-362-6916
ry Dank, executive director of the
Center.
The hearing was held because of
severe declines in livestock and
grain producer prices, while con
sumer prices have not correspond
ingly fallen.
However, the plight of produc
ers of market hogs dominated
testimony.
According to information pre
sented, in Pennsylvania, from
November 1997 to November
1998, there was a 22-percent aver
age decline in producer prices.
While all livestock producers
received lower prices, independent
hog producers received the great
est reduction, with a 50-pcrcent or
more decline in price.
During the same time, the pice
of com, oats and potatoes, declined
by 25 percent.
Rep. Miller said that the effects
were not only felt by Pennsylvania
producers, but producers
nationwide.
She said that from July 1996 to
July 1998, producer prices
declined 25 percent, while con-
D PRIDE
Eckroth Equipment Co.
4910 Kernsville Rd
Orefield, PA 18069
610-366-2095
Hines Equipment
RT 220, Belwood, PA
814-742-8171
Keller Brothers
R 7 Box 405
Lebanon, PA 17042
717-949-6501
1950 Fruitville Pike
Lancaster PA 17601
717-569-2500
M.S. Yearsley & Sons
West Chester, PA
610-696-2990
Pikeville Equipment Inc
RD 2, Oysterdale Road
Oley, PA 19547
610-927-6277
Stoltzfus Farm Service
Cochranville PA
610-593-2407
Stouffer Bros Inc.
1066 Lincoln Way West
Chambersburg, PA 17201
717-263-8424
New Jersey
Frank Rymon & Sons, Inc
RD 3, Box 355
Washington, N J 07882
908-689-1464
sumer prices increased 8 percent
In 1980, producers received 37
cents of the retail dollar, while it
declined to 23 cents in 1997.
“I’m sure any other industry
would not have survived” the
decrease in producer prices, she
said.
In 1997, producers lost $350
million, or an average of $6,400
per farm, according to Rep. Miller.
Furthermore, she stated that
between 1990 and 1997, the state
lost 3,000 farms, or an average of
one farm per day. In terms of pro
ductive farmland. Miller said that
during the same time, 400,000
acres of farmland were converted
out of agricultural production,
which she said equated to a rate of
135 acres per day.
Rep. Miller said that, in light of
the severity of the problem facing
domestic agricultural producers,
the hearing was held in an attempt
to gather information that could
help identify the causes for the
drqj in commodity prices; to better
quantify the impact of the prob
lem; and to generate suggestions
for what state government can do
to help.
“It is also important to tell
consumers what is happen
ing within the farm com
munity,” she said.
David Rcinecker, presi
dent of the Pennsylvania
Pork Producer’s Council
who raises Yorkshires in
Bermudian Springs, and
Oscar Manbeck, director of
the PPPC, testified fust.
Reinecket’s son Andrew,
a high school student
involved with the family
farm operation, sat next to
his father at the witness
table.
"'m.
Reinecker said the spate
of low prices is something,
”... the likes of which
haven’t been experienced
since the Great Depression.
We are victims of our own
success.
“We are simply produc
ing more than the market
will bear. It must correct
itself through a reduction in
national inventory,” he said.
As far as what the state
could possibly do to help
protect the instate industry,
be suggested that it create a
premium pricing program,
which in his description
sounded similar to what
Pennsylvania has estab
lished (and courts have
upheld against many chal
lenges) for the dairy produc
tion industry through the
authorities granted the Pen
nsylvania Milk Marketing
Board.
According to Reincckcr,
the background of Pennsyl
vania hog production is that
instate producers have had
an economic disadvantage
in raising hogs when com
pared to producers in Mid
western states, mainly
because com prices in Pen
nsylvania are higher than in
the Midwestern states.
Reinecker also said that
packers in the Midwestern
states compete for hogs, and
while Pennsylvania hog pro
ducers had previously
enjoyed about a $2.50 per
hundredweight price advan
tage compared to Midwest
ern competitors, the margin
has been nonexistent for
years.
He said the Depression
level producer prices receiv
ing currently by producers
are great for two leading
instate processor-buyers,
Lancaster Farming, Saturday, March 13, 1999-A23
Hatfield Qualify Meats Inc. and
Leidy’s. He also noted that those
buyers had recently established
minimum prices for producers.
“Currently their markets are
some of die strongest in the
nation," he said.
In addition to suggesting that
state government should create a
pricing law whereby instate pack
ers are required to pay instate pro
ducers more for their hogs,
Reinecker said the government
should also consider a labor sub
sidy for hog packers, in the form of
tax relief.
To help pay for the tax break, or
as a substitute program to add val
ue to instate produced market
bogs, it was also suggested that
some form of tariff on fuel, or a
Pennsylvania Turnpike toll incen
tive, could help to finance support
for instate producers and create a
disincentive for packers to purch
ase out-of-region produced hogs.
He said that, in his opinion, the
current producer-price crisis is “...
serious for all producers, large and
small. But I recognize the industry
is responsible for the the pices.”
Rep. Miller questioned
Reinecker about some of the spe
cific changes and advances made
within the pork industry that may
be partially responsible for the
overproduction for market.
She asked about the number of
sows (females producing young)
as compared to the number of
farms.
It was noted that while there are
many times fewer individual hogs
operations in the state and nation,
they are larger and overall hog pro
duction has increased.
While the number of sows pro
ducing feeder pigs may have
declined, it does not reflect a
decrease in feeder bog production.
Rather, there has been a dramatic
increase in production per sow, in
terms of the average number of
piglettes in each litter, as well as
the number of litters per year.
Production has ballooned
because of the advantages of better
nutrition, genetics, and husbandry
techniques, he said.
At die same time, the animals
being produced are not as diverse
in carcass composition as in the
past, which makes for more con
sistency, requiring less overhead
costs for packers.
Reinecker said the low hog pro
ducer prices have created a finan
cial nightmare for farmers who
have watched their investments
depreciate toward bankruptcy, and
has caused bankers to tighten up on
loans.
“When prices plummet, banks
pull back to guard their assets.
Banks are getting very jittery
(about their loans) without having
assets on the farm to cover them,”
Reinecker said.
He expressed hope that lenders
would be patient with clients who
produce hogs, because it is
Reineckcr’s belief that the current
price decline is part of a cyclical
price movement and that it will
rebound.
However, it was noted that
when producers are receiving $4O
to $5O per animal that normally
would faring $250, it is difficult to
absorb that kind of loss.
It was reported that, as of early
January, scone pork producers had
already pushed their credit line to
the point where they had only
enough credit to cover the cost of a
week's worth of feed.
“December has been ugly, ugly,
ugly for the peak industry," he
said.
In response to questions from
Dudick and Miller, the representa
tives of the state's pork producers
said that while the 1996 Farm Bill
was designed to wean all United
States agricultural production
away from government support
prices, in preparation for eliminat
ing hurdles to creating fair interna
tional free trade pacts, the pork
production industry, especially in
Pennsylvania, has never relied
much on government support.
It was said that while this is still
the assumed preference of pork
producers, several outside causes
prompted the plunge in prices
specifically, the failures of the
economies of nations to which
much of the surplus pork was
intended to be exported
Instead, all that pork that was to
be headed for China, etc., was
foisted upon the domestic market
It was also explained by a mem
ber of the audience that die major
reason wholesale and retail prices
have not dropped in response to
producer prices is because of a bot
tleneck in the slaughtering
industry.
It was explained that in response
to increased federal government
rules and regulations of slaughter
house and butcher houses (which
were created in reaction to inci
dents involving illnesses and
deaths that resulted from the con
sumption of undercooked, conta
minated meats), as well as
increased efficiencies, the nation is
limited in the number of hogs that
can be slaughtered daily.
According to a member of the
audience, there are only 380,000
shackles (which hold the killed
market hogs) nationally, implying
that regardless of the number of
hogs waiting to be killed and pro
cessed, the nation's plants have
been running at full capacity, and
the cost of slaughtering and mark
eting hasn’t changed, just the cost
of the raw product.
It was estimated that, as a result
of the failed exports being dumped
on the domestic market, six
months worth of additional supply
was in the producer-to-market
pipeline.
It was also reported that the cur
rent glut of market hogs on the
domestic market may well result in
the failure of a fourth of the
nation’s producers before the surp
lus can be absorbed.
“We’re not talking months,"
Reinecker said. “We’re talking
days and weeks. We need help
immediately."
Dudick said that in very short
time, China has become a world
leader in apple production, pres
suring not only Pennsylvania apple
growers, but even Washington
state apple growers, whose pro
duction usually affects Pennsylva
nia producer prices.
He asked if it were possible for
China to adopt United States hog
production technology to become
a world leader in low-cost pork
production.
According to representatives of
the PPPC, while it is best to never
say “never," the climate of the
United States is ideally suited for
bog production, whereas there is
no comparably sized favorable cli
mate region in China.
While that doesn't necessarily
preclude China from becoming a
world-leader in hog production, it
makes it less likely.
It was explained that hogs have
a preferential temperature range of
60 to 70 degrees, and while they
can tolerate temporary swings in
temperature above and below opti
mum, they don’t do well if the
temperature is consistently higher
a lower.
(Part n Next Week.)