Court ruling will concentrate market power in pork sector

INDIANA – The past few years have been incredibly difficult for hog farmers like me. After more than two years of the trade retaliation that limited pork producers’ ability to compete effectively around the globe, the COVID pandemic unleashed unprecedented challenges for the entire food supply chain.

Brian Martin, of Martin Family Farms in Williamsport

Now, just as produces are returning to normalcy, another looming disaster threatens pork producers’ livelihood and the prosperity of many hog farmers like if Brian Martin, of Martin Family Farms in Williamsport, if not quickly addressed. It will also erode industry competition by placing more market power in the hands of pork packing plant operators. 

Recently, a federal court decision struck down a provision of the U.S. Department of Agriculture’s New Swine Inspection System (NSIS), which allows for pork processing facilities to operate at a faster rate. NSIS, initiated during the Clinton administration and evaluated at five pilot plants over 20 years, was approved for industry-wide adoption in 2019.

Unless reversed by June 29, the federal court ruling will result in a 2.5 percent loss in pork packing plant capacity nationwide, and $82.3 million in reduced income for hog farmers, according to Dr. Dermot Hayes, an economist with Iowa State University.

While the court decision will affect all U.S. hog farmers, smaller producers will disproportionately bear the brunt, especially those located near affected processing facilities.

The line speed ruling from NSIS will greatly affect our operation. Under the proposed decrease in line speeds, processing plants will need to decrease the number of pigs they accept. That means my farm will not be able to sell as many pigs, creating a backup of animals on the farm. The proposal puts us in a place that we don’t know where the pigs will be processed in the future, said Martin.

This proposal could also mean a decrease in the amount pork producers receive when they sell their pigs. As more pigs are on the market, prices could drop which impacts families’ bottom line. 

“The decrease inline speed seems to be more of a bureaucratic issue than a safety issue,” Marin added. “Should this proceed, the farmer is the one paying the price for something that really isn’t hurting anybody. Ironically, many lawmakers on Capitol Hill have called for an increase in federally inspected meatpacking capacity. Some have suggested bringing smaller, state packing plants up to federal inspection standards as a solution. Unfortunately, these state packing plants represent less than one percent of overall pork harvest facility capacity.”

The court ruling will affect Indiana’s nearly 3,000 hog farms and trickle down throughout the entire economy. The state’s hog production generates 14,590 jobs, contributing more than $633 million in personal income. All of this could be in jeopardy if this damaging court ruling stands, added Martin.

“If small hog farmers are forced out of business, we will see a more consolidated pork industry,” Martin added. “This could reduce competition, drive industry consolidation, and concentrate more power in the hands of pork processors – all with the stroke of a judge’s pen. We can avoid these damaging outcomes. We need USDA to stand up for Iowa hog farmers and producers across the country by both appealing the federal court decision and seeking a stay, halting the ruling from being enacted at the end of next month. This will help preserve our state’s highly competitive pork production system, and the significant economic benefits it provides to our communities around the country.”

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