US pig market close to collapse?
Pig producers in the US are facing a collective $5 billion loss for the remainder of the year due to coronavirus crisis. Despite the fact that the federal government announced a series of measures meant to support small businesses, 25% of the hog producers in the country are not eligible for the financial aid due to restrictive conditions imposed by the Small Business Administration’s (SBA) Payroll Protection Program (PPP).
Specifically, PPP eligibility is determined by a positive farm profit in the calendar year 2019, or the last 12 months. For many pork producers, 2019 was not profitable as they bore the brunt of trade retaliation in China and Mexico, among two of the largest export markets. Using SBA’s restrictive language, an estimated one-quarter of the US hog industry is automatically disqualified from applying to the program, said the National Pork Producers Council in a press release.
“Our hog farmers are underwater through no fault of their own,” said National Pork Producers Council President Howard “A.V” Roth, a pork producer from Wauzeka, Wisconsin. “Hog farmers were at the tip of the trade retaliation spear in 2018 and 2019, losing $20 off the price of every hog. In 2020, they were forecast to make a $10 profit on every hog, until the COVID-19 crisis hit. The virus has decimated our industry and for SBA to unfairly punish pork producers and deny them access to this program is adding insult to injury.”
“We urge SBA to expeditiously remove this arbitrary restriction and allow our hog farmers, deemed essential throughout this pandemic, to access this vital program,” Roth added. In his opinion, US pork producers desperately need significant and immediate government aid or else many generational family farms will go bankrupt. At this time, the industry is also confronted with severe disruptions in the supply chain which reduced the processing capacity by 32%.
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