Hogs and Pigs report shows Prop. 12 impacts

DES MOINES, Iowa — Did California’s Proposition 12 cause some pork producers across the nation to shrink their sow numbers in 2021?

And is the possibility that the law could be overturned by the U.S. Supreme Court, when it hears challenges to the law in October, be the reason producers are growing the U.S. swine breeding herd?

It could be a reason, said a pork industry analyst, speaking after the release of the second-quarter 2022 U.S. Department of Agriculture Hogs and Pigs Report.

“I suspect some of the reason for the pullback in the breeding herd numbers, especially in the second half of last year, had to do with the Proposition 12 coming into play,” said Altin Kalo, head economist at Steiner Consulting Group.

He discussed the report numbers and what they could mean for the industry in a webinar sponsored by the Pork Checkoff.

Kalo said the pullback may have had more to do with producers trying to find a fast way to comply with the space requirements in Prop. 12.

“One way in which you can increase the square footage per sow is by reducing the number of sows you have. It’s not an easy decision. But if someone pays you enough to do that, maybe some producers are out there doing that, especially the vertically integrated ones,” he said.

While the U.S. breeding herd, at 6.17 million, as of June 1, was down 1% from the same time last year, it was up 1% from last quarter.

“With that decision (on Prop. 12) being postponed and the possibility that it may not go into effect, that may have encouraged that a little bit,” Kalo said.

But he cautioned that rising feed costs could see that number go back down.

“We’ve had some previous years, 2012-2013, where going into the summer we had an up-tick in the breeding herd and then those high feed costs come into play and the margins started to erode and you saw that breeding herd pull back,” he said.

The second hogs and pigs report of the year brought few surprises.

“This is a neutral report. Most of the numbers came very close to what analysts were expecting coming into the report,” Kalo said.

The all hogs and pigs inventory as of June 1 was 72.5 million. That was down 1% from a year ago and down slightly from last quarter.

The market hog inventory stood at 66.4 million, down 1% from last year and down slightly from the previous quarter.

Each of the market hog weight categories was within small percentage points of the numbers a year ago.

As of June 1, the under 50 pound category stood at 21.08 million; the 51 to 119 pound category was 18.81 million; the 120 to 179 category had 13.73 million; and the 180 pound and over had 12.72 million pigs on hand.

Producers had 2.99 million sows farrow in the March-May period, compared to 3.03 million farrowed the same period in 2021.

June-August intentions were at 3.01 million intended to farrow, compared to 3.05 million actual farrowings a year ago. September-November intentions are at 3 million, compared to September-November actual farrowings of 3.04 million.

“It seems to me that farrowing intentions, at least from a historical perspective, are a little bit on the low side and we may actually have a few more farrowings than what the USDA survey suggested,” Kalo said.

The March-May pig crop was at 32.9 million, down 1% from a year ago. The pigs saved per litter, at 11 for the March-May period, was an increase from 10.95 last year.

Kalo said the pigs saved per litter number could indicate higher supplies toward the end of the year and going into 2023. That number has been steadily increasing as producers increase productivity, but had flattened in the last few years.

“Are we going back to that growth trend? If we are able to manage the farrowings better and if we have got a little bit more pigs per litter, then the expectation would be to get a little bit more supply, especially in the December-February period,” he said.