Pork Powerhouses 2020: Backing up

For the first time in a decade, the largest U.S. pig farmers have cut sow numbers. According to the exclusive Successful Farming Pork Powerhouses ranking of the 40 largest U.S. pork producers, sows dropped by 60,475 in 2020, a 1.4% reduction from one year ago.

The last time a reduction occurred on this list, which represent two-thirds of the nation's sows, was in 2010. It's been a decade of solid expansion by the biggest producers since then.

Of the top companies this year, 16 reduced sow numbers compared with one year ago, 14 stayed steady, and 10 expanded. On the list are about 37,000 new or acquired sows.

Download the complete list here.

COVID-19 can be blamed for sparking the cutback, as food service companies and restaurants closed in March and packing plants slowed and shut down in April due to workers ill with the coronavirus. The largest producers had to euthanize small pigs and market hogs when there was no place to take hogs. Before the pandemic hit in March, the U.S. pork industry had been expanding.

Read More: How Christensen Farms worked its way through COVID-19

Let's dive into the report, starting with the largest producer. Smithfield Foods did not supply data for the first time in 26 years. "We no longer make sow or other production numbers publicly available," says Lisa Martin, director, corporate communications. The company, which is owned by China-based WH Group, is cutting back production. Estimates by multiple industry experts who spoke exclusively to Successful Farming magazine put Smithfield at a 15,000-sow drop this year, for 915,000 sows total. There are additional sow farms that have been depopulated, but those farms will be restocked.

Smithfield regularly looks for ways to create efficiencies and maximize productivity, says Brady Stewart, executive vice president of hog production. "Earlier this year, after identifying an opportunity to improve our business by reallocating pig flows within our system, we executed the closure of multiple sow farms in Missouri. We will continue to consider ways to improve our hog production operations."

Smithfield incurred over $500 million and counting in expenses related to COVID-19, says Stewart. "We have done everything we can, as fast as we can."

A focus for the company is the expansion of projects to capture methane on hog farms to generate renewable natural gas (RNG). Smithfield is implementing RNG projects across its hog finishing spaces in North Carolina, Utah (shown above), Virginia, and Missouri. "These projects positively impact the environment, energy consumers, and family farmers who benefit from the opportunity to add a new revenue stream on their farms," says Stewart.

More sow reductions

Several longtime independent producers in North Carolina, including N.G. Purvis Farms, and J.C. Howard Farms, have reduced sows this year. Howard is down to 22,000 sows, after shutting down a farm of 6,000 sows in Alabama in April. It was built in 1979. "It was a large farm then, but small now," says Jimmy Pollock, production manager. The company was still dealing with backed up heavy hogs in late summer. "We are marketing them wherever we can," says Pollock. "We did some euthanizing in the farrowing house to create more full-value pigs. You will see fewer pigs from J.C. Howard the last half of this year and into next year."

N.G. Purvis Farms, Robbins, North Carolina, downsized to 20,500 sows. "We eliminated a couple of farms, one off-site and one that we owned. That should be the end of it," reports Scott Holbrook, controller. Purvis did not have to euthanize market hogs last spring, he reports. "We've had to double up. We upped what we normally would cull as far as weight goes in the farrowing house. Other than that, we didn't do any large-scale euthanizing yet. But we are still backed up a lot of hogs."

Maxwell is out

Maxwell Foods, Goldsboro, which had 54,000 sows last year, will be weaning its last pigs in the middle of December, controller Ryan Jennings says. "By the end of December all of the sows we have remaining will be nonproductive sows simply waiting to go to a cull market." For that reason, Maxwell is not on the Pork Powerhouses list this year.

Maxwell Foods has filed a lawsuit against Smithfield Foods, claiming Smithfield breached a contract by failing to pay a fair price for hogs and failing to purchase all of Maxwell's hogs. Vertical integration in the pig industry over the past three decades left the company with no bargaining strength in its dealings with Smithfield, according to Maxwell. The lawsuit calls Smithfield's actions unlawful, unfair, and predatory. Maxwell had already sold 46,000 sows in August 2019 to the Clemens Food Group.

"It is regrettable that one of our longstanding hog farming partners, Goldsboro Milling, the parent company of Maxwell Foods, who has been a valuable part of our supply chain for many years, is taking legal action against us for what is fundamentally a commodity market issue of low livestock prices, from which we have also suffered," says Smithfield in a statement. "The allegations by Maxwell Foods are not true, and we will respond to the lawsuit accordingly."

Matching production to packing

Other companies that reduced sows this year include The Hanor Family of Companies, Enid, Oklahoma, which dropped 5,000 sows "to match the packing capacity we see going forward," says Myrl Mortenson, president. Allied Producers' Cooperative, Westside, Iowa, a group of 32 independent producers, cut back to 85,700 sows from 102,500, reports Doreen Hansen, CEO.

The Maschhoffs, Carlyle, Illinois, cut sows this year by 8,000 to 187,000. "We continue to monitor the market telling us we need to remove sows from the U.S. inventory," says Bradley Wolter, CEO and president. The company is focusing on ownership of breeding herd assets, says Wolter, and has "let a few partner sow farm contracts expire. We are doing our part in support of finding that point of equilibrium that enables a return for the risk taken in this business."

Tosh Farms, Henry, Tennessee, will be down 3,000 sows by the end of October, reports owner Jimmy Tosh. A new 2,400-sow farm will be stocked this year, but no pigs till late winter. Tosh ended a contract on one sow unit. "Also, because of COVID-19, we have depopulated a 4,800-sow unit to remodel and convert to open gestation," he reports.

Bob Ruth, senior vice president at Clemens Food Group, Middletown, Pennsylvania, says the company has not expanded past the Maxwell acquisition of last year. "That is certainly enough in these market conditions."

One company that is out altogether is Hitch Pork Producers, Guymon, Oklahoma. In business since 1995, when Seaboard Foods announced the opening of a pork processing plant in Guymon, Hitch had a 15,000-sow farrow-to-finish operation. It is in the process of being sold to Seaboard, say sources in the industry. It is unclear how many sows will be retained or if the barns will be converted to finishing.

Still some expansion

Two veterinary-based management companies did grow sow numbers from one year ago – AMVC Management Services, Audubon, Iowa, added 6,800 sows, and Carthage System, Carthage, Illinois, added one 5,600-sow multiplier in Indiana.

Kalmbach Feeds, Upper Sandusky, Ohio, added 2,500 sows and is now at 27,500. Kalmbach and Holden Farms, Northfield, Minnesota, formed a joint venture this year, HK Property Holdings, to purchase the J.H. Routh Packing Company in Sandusky, Ohio. Holden has 70,000 sows.

New to the Pork Powerhouses list this year is Sandy Road Farms, Lamar, Colorado, which bought Kansas Smith Farms in September. Sandy Road Farms now has 21,800 sows.

Other large farms

Belstra Milling, DeMotte, Indiana, 19,000 sows

Dykhuis Farms, Holland, Michigan, 17,000 sows

New Horizon Farms, Pipestone, Minnesota, 16,500 sows

Canada

The United States may be pulling back, but the top five producers in Canada expanded this year, adding 73,000 sows. The largest, Olymel, Saint-Hyacinthe, Quebec, now has 134,000 sows with the acquisition of F. Ménard.

No. 2, HyLife, based in La Broquerie, Manitoba, and owned by Thailand-based Charoen Pokphand Foods, has 132,000 sows after buying about 44,000 sows from ProVista Agriculture. HyLife, which owns the Prime Pork plant in Minnesota, is going after the high-value Japanese market.

Download the Pork Powerhouses 2020 list here. Note: You must register on the site first.