Pork Powerhouses 2021: Bouncing back from COVID-19

With COVID-19 disruptions easing, the 37 largest U.S. hog farms posted a modest 0.5% increase in sow numbers in 2021 for a total of nearly 4.15 million hogs. The meager gain is the smallest expansion since Successful Farming magazine's Pork Powerhouses series began 27 years ago. (Sow numbers decreased in 2020, 2010, and 2009.)

But even a slim 20,813-sow expansion shows the largest hog farms were able to resist further contraction after last year's 1.4% reduction in sows. The stability of the sow herd is remarkable considering the difficult year just endured.

Based on data provided by each company (except Smithfield Foods, for which estimates were provided by industry experts), 19 hog farms made no change to herd size compared with 2020, while 11 farms increased, and seven farms decreased.

Strong market prices helped Pork Powerhouses recover from COVID-19 losses. "This year certainly turned out better than we thought," says Jason Hocker of AMVC Management Services, Audubon, Iowa. "As bad as the COVID year was, this is a decent rebound year. It's been good to bring some profitability back."

Profitable markets are expected to continue into 2022, but plenty of challenges remain and are enough to temper this group's optimism. Most companies are short-staffed; disease outbreaks are unusually bad; and issues like African swine fever (ASF) and California's Proposition 12 loom.

"This is a very stressful industry," says Bruce Livingston of Livingston Enterprises. "I don't know of any other [agricultural] industry that has as much stress to contend with as the swine industry. It's great to see that we are starting to regain profitability after last year's losses resulting from COVID."

Here's a close look at what's going on with the largest hog companies, which represent 60% of the nation's breeding herd, and the biggest issues ahead.

Download the PDF of exclusive ranking here: Pork Powerhouses 2021 Rankings

Changes in the List

Two longtime members of the Pork Powerhouses list are missing this year. J.C. Howard Farms of Deep Run, North Carolina, was purchased by Smithfield Foods. Industry experts estimate 15,000 sows were retained by Smithfield, bringing the U.S. largest pork producer to 930,000 sows.

Another North Carolina producer, Purvis Farms of Robbins, North Carolina, entered Chapter 11 bankruptcy this past summer, taking it off the list as well.

Veterinary-based management companies continue to grow in sow numbers. Ranked third on the list, Pipestone Management added 13,755 sows for a total of 288,000 sows it either manages or owns. The increase came from both company and client sow-farm changes, according to Barry Kerkaert, DVM, vice president of Pipestone Holdings. The Minnesota company also added substantial sow numbers to the farms it works with in China and Mexico.

Fifth on the list is Carthage System of Carthage, Illinois, another veterinary-based company. It added 13,000 sows.

Management firm Suidae Health & Production added 4,618 sows, bringing its total to 25,798 sows. The Algona, Iowa, company manages hog farms ranging from 50 to 6,000 sows in size.

A few independent producers added modest sow numbers. Tosh Farms of Henry, Tennessee, repopulated a 4,500-sow unit that was depopulated last year. This brings the company's total to 36,000 sows, according to owner Jimmy Tosh. The operation is working on a new 5,600-sow unit that won't be completed and filled until late this year.

TDM Farms added 5,000 sows to its herd after populating a new sow farm late last year. The Newton Grove, North Carolina, hog company is owned by Hog Slat Inc.

A smaller herd increase was reported by Holden Farms, which doubled the size of a sow farm, accounting for an extra 2,000 sows.

Herd Reductions

Seventh on the list, The Maschhoffs reduced its herd by 11,000 sows, making this the fourth consecutive year it has cut herd size. After allowing sow-farm contracts to expire, the Carlyle, Illinois, company now owns and manages 100% of its sow farms.

Other major herd reductions were noted at Seaboard Foods (–5,000 sows), Clemens Country View Family Farms (–6,000 sows), The Hanor Family of Companies (–7,500), and Allied Producers' Cooperative (–9,060).

Packer Updates

Several of the largest hog farms on the list are invested in pork packing companies. One investor relationship changed late last year during a difficult time in the hog market.

Producer-investor relationships with the Clemens Food Group's Coldwater, Michigan, plant ended. Speaking at a swine veterinarians meeting, Clemens CFO Josh Rennells said the equity component was returned to the producers.

"We wanted our producers to be … able to expand so we basically returned the equity but kept the same incentives," Rennells said. "As we talked to the group, we thought it was a better way. We were committed to sharing the success of the company, and they could use the equity to grow their business."

Twelve hog farms, including three on the Pork Powerhouses list (Sietsema Farms, Cooper Farms, and Hord Livestock Co.), were involved in the unique investor arrangement with the Clemens Michigan plant. They all continue to market hogs to the plant.

One pork packer/producer dropped off the list. Hormel Foods of Austin, Minnesota, reduced its sow herd to 19,000 from 22,000 last year.

Biggest problems

Nearly all Pork Powerhouses operations interviewed for this article said the No. 1 problem they face today is a non-pig issue: labor – and COVID-19 exacerbated the issue.

"Labor has been and continues to be a huge challenge," reports Zack McCullen III, vice president of Prestage Farms. "We are looking at some part-time labor. And everybody is having to increase their wage rates to keep the people they have."

Prestage is switching to automated feed systems and other automation to reduce labor requirements. "But you still need a lot of manual labor to take care of pigs," McCullen says.

Other farms, such as Livingston Enterprises in southeastern Nebraska, hire foreign workers on TN (temporary worker) or J-1 visas to keep their farms fully staffed. "We are fortunate to have them," Livingston says. "There just aren't enough local people to fill our needs."

COVID-19 brought on other labor issues, including vaccinations and health insurance. When unvaccinated employees become ill with COVID-19 and are hospitalized, insurance rates increase. Some frustrated producers talked about offering bonuses for vaccinations as well as cutting sick-pay benefits and adding a surcharge on health care benefits for unvaccinated workers.

Hot PRRS Outbreaks

PRRS (porcine reproductive and respiratory syndrome) variants causing substantial mortality were a major issue this year. Many farms, including Standard Nutrition Services of Emmetsburg, Iowa, experienced lasting effects of PRRS. Company President Pat Joyce reported the outbreak was more severe with higher rates of mortality in finishing and a longer duration.

PRRS outbreaks for many hog clients with AMVC Management Services were bad enough to prompt discussions of relocating.

"Some of our clients who have sow farms in swine-dense areas are really evaluating the path forward," reports Hocker, AMVC managing partner. "With the devastating PRRS we experienced in the last year, the question is should we relocate sow farms."

Hot Future Issues

As if current problems aren't enough, two big issues threaten to change the U.S. hog business in the near future. African swine fever now sits just 700 miles away from Florida. Recent ASF outbreaks in Haiti and the Dominican Republic have the United States on high alert for any sign of the disease. Any outbreak of ASF will be devastating to the U.S. pork industry.

California Proposition 12 with mandates for 100% pen gestation and other welfare rules also poses a financial risk to U.S. hog farms. Should the rules be implemented, many U.S. hog farms will need to remodel existing facilities or build new ones to be able to sell pork in California.

Download the PDF of exclusive ranking here: Pork Powerhouses 2021 Rankings

Editor's Note: This is the 27th installment of the Successful Farming® Pork Powerhouses® annual listing of the cumulative totals of the hog industry. This year, we feature only producers with more than 25,000 sows, and we did not include Canadian producers. For comments or questions, e-mail Karen McMahon at Karenkmcmahon@icloud.com.