US: Pork plant closure could rise hog prices
An Iowa State University (ISU) Extension livestock economist says that the closing down of Smithfield's John Morrell pork processing plant in Sioux City, IA, USA will lead to higher prices for pigs.
On the website of the US Pork magazine, John Lawrence, ISU, launched his view on the effects of the plant closing this April. Both the 1,500 employees and the suppliers will be impacted, he says.
The negative impact for pork producers may be limited, he says, although pork producers will have to find another buyer, and that could involve higher transportation costs. Lawrence added, "In addition, producers who don't have a track record with a buyer may want to start shopping around now to determine where their hogs will do best."
Since the hog industry is reducing production, the Morrell plant closing will better match slaughter capacity to US production levels. "The smaller supplies will result in higher hog prices over all."
Competition may thus be increased, as due to smaller national market hog supplies, packers may have to bid more aggressively to assure business. "The plant closing will reduce the hog demand for the region, but there are seven plants within 100 miles of Sioux City that represent five different companies," Lawrence noted.
• Iowa State University
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