New capacity to spur U.S. hog industry restructuring (analysis)

The period ahead represents one of the most exciting times in the U.S. swine industry.

The ongoing expansion of the U.S. pork packing sector just got a bit more interesting.  Prestage Farms has announced that it will build a 10,000 head per day fresh pork processing facility in Mason City, Iowa.  The announcement comes on the heels of four additional plants that are in the works:

  - Clemens Food Group in Coldwater, Mich.
  - Seaboard Triumph Foods in Sioux City, Iowa
  - Prime Pork in Windom, Minn.
  - Moon Ridge Foods in Pleasant Hill, Mo.

The Moon Ridge and Prime Pork plants are reportedly going to be operational in 2016; the Michigan and Sioux City, Iowa, plants in 2017, and the Mason City, Iowa, plant following in 2018.

Interesting is an understatement. In the 20 years from 1996 to 2015, three new plants were added (Seaboard in Guymon Okla.., Triumph in St. Joe MO, Rantoul Foods in Rantoul, Ill.).  Now we’ll be adding five new plants in just two years!  An exciting time for the industry for sure (also an understatement)!

Hog Supplies & Capacity

Capacity will be constrained in late 2016-early 2017 due to some expansion that had begun in anticipation of this new packing capacity.  If Moon Ridge and Prime Pork can be fully operational prior to the end of the year as planned, that will be a welcome development.

Coupled with projects to increase capacity at existing plants, the table below outlines the impact of this new capacity.


New capacity to spur U.S. hog industry restructing



Based on marketing 22 pigs per sow per year, filling this new capacity will require another 500,000 sows over two-and-a-half years, or about 200,000 per year.  The industry has grown at these levels and greater in the past.  However, as difficult as it is to locate and permit sites and get new farms built, this will be a tall order…but one that will be accomplished, perhaps over a lengthier time period.  Of course, this presumes that no existing plants are shuttered. 

Adding second shifts to the three large plants (a desire by each of these processors ideally in a two to three year window) will require another 350,000 sows.  Again, a tall order but one that will be accomplished.

Pork Demand

Eleven million more pigs in two-and-a-half to three years.  That represents an increase of 9% over 2015 slaughter.  Another 8 million more pigs in five to six years when second shifts are added represents another 7% increase.  With domestic consumption of pork relatively flat since 1980, this obviously means that we will need to significantly grow exports.  As a global low cost producer of the highest quality and safest pork to a world population that is growing – in number and in prosperity - provided we can operate in free markets, this will happen.  Again, will it happen quickly enough as this capacity is added?

Industry Restructuring

The most fascinating development in all of this is the fact that four of the five plants being built are producer-owned.  This means that – in addition to the growth that needs to occur - producers who today supply hogs to other processors will be shifting supply to these new plants, thereby creating holes in existing plants.  This will fundamentally change the structure of the industry…furthering the evolution to more vertical integration and – as existing packers scramble for new sources of supply – more vertical alignment.  And in many cases changes in what had been longstanding relationships.

As someone who was fortunate to have been involved in growing a large production system in the 1990s and I have to say it was one of the most interesting and exciting times of my professional career.  Clearly these are positive changes that represent opportunities for pork producers.  I really look forward to witnessing and participating in these developments in the coming years.  It will be another period representing one of the most exciting times in the U.S. swine industry.

Steve Weiss is president and founder of NutriQuest in Mason City, Iowa

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