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Livestock Production
Wednesday, December 26, 2007 5:23:09 PM
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Hog production alternatives

 
Lance Gegner

 

 

Today's independent hog producers have to choose between production systems that lead in different directions. One is toward confinement feeding of hogs and contracting with vertical integrators, where the motto is ''get big or get out.'' The other direction is toward more sustainable production of a smaller number of hogs and marketing them, through various methods, as part of a whole-farm operation. Kelly Klober, author of Storey's Guide to Raising Pigs and himself a farmer and value-added marketer, notes the large difference between the two types of production.

 

Some large, independent hog operations, seeing the wide price fluctuations for finished hogs in the past few years, have started to move into contracting. As Jane Feagans, of Oasis Farms in Oakford, Illinois, says, ''Our strategy right now is to survive. I don't see the pork business as a particularly good business to be in right now¡­.
 
We went into the contract arrangements as a risk-management tool. But it's like insurance. Risk management comes at a cost, because it limits the upside of the market. Producers who want to raise a large number of hogs will most likely need to contract with someone. As Chris Hart, Purdue University Extension marketing specialist explains, ''The financial risks of not being aligned in some way in the pork marketing chain are just too extreme.
 

Many of these independents are saying enough is enough.''

 

However, before producers decide to sign a contract to produce hogs for a vertical integrator, it is best to understand all aspects of the contract. Farmers' Legal Action Group, Inc., located in Minnesota has several publications and articles on livestock production contracts. Some key questions to be addressed in contracts are listed in FLAG's publication Livestock Production Contracts: Risks for Family Farmers:

 

In addition, many state departments of agriculture and Cooperative Extension Services have publications available to help producers better understand contracts. It is very important for all parties to read and understand everything before they sign.

 
 

For more of the article, please click here.

 

Source: National Sustainable Agriculture Information Service (ATTRA)

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