Pork Powerhouses 2022: Sow numbers increase slightly despite high production costs

The 37 largest U.S. pig producers added a total of 99,086 sows for an inventory of more than 4.2 million sows within these operations in 2022. This 2.4% increase, the greatest expansion shown in the Pork Powerhouses series since 2018, represents cautious optimism among the top pork producers in a year with record-high production costs and continued health, labor, and regulatory challenges.

Higher production costs were driven by inflation and, perhaps more so, by shifts in supply and demand for various production inputs, most notably feed ingredients. Corn prices peaked at $7.38 per bushel in June 2022, according to USDA, with lower than expected supplies caused by war in Ukraine and drought across the Midwest. For pork producers, feed costs, which constitute about 60% of per-head costs, were up 24% in 2022 compared to 2021 and 59% compared to 2020, according to the National Pork Producers Council's analysis of numbers from Iowa State University (ISU) Extension. Total cost of production increased 21% from 2021 to 2022.

Disease a Serious Threat in 2022

While increasing costs for feed, construction, energy, transportation, and labor were on the minds of the large pork producers interviewed this year, several described disease as their greatest challenge in 2022. Strong consumer demand supported higher pig prices and enabled profitability most of the year. (Producers lost about $10 per head in November and $20 in December, according to ISU Extension.) However, sow farms were hit hard with diseases, especially porcine reproductive and respiratory syndrome (PRRS), in late 2021 and spring 2022 with another surge during an abnormal time — in April and May 2022, says Terry Wolters, National Pork Producers Council (NPPC) immediate past president and Stoney Creek Farms owner.

"There's been a lot of different PRRS viruses," says Rob Brenneman of Brenneman Pork (No. 22 with 43,500 sows) in Washington, Iowa, a heavily hog-populated area. "[This virus] responds a little bit different than other viruses in the past. There's just getting to be too many of them."

Other major concerns included finding and retaining good employees, the need for immigration reform, and increased regulatory pressure, such as California's Proposition 12 and Massachusetts' Question 3.

CALIFORNIA'S PROP 12

On May 11, the U.S. Supreme Court preserved Proposition 12. The measure approved by California voters in November 2018, requires pork sold in the state to have come from offspring of sows provided both open pens and at least 24 square feet of space.

The NPPC and American Farm Bureau Federation's legal challenge to Prop 12 advanced to the Supreme Court in March 2022, with oral arguments presented in October. While California's Prop 12 regulations took effect Jan. 1 for eggs and veal, compliance with pork provisions is currently on hold. NPPC is working with California officials on the implementation timeline. There is an injunction in place on enforcement of Prop 12 until July 1. California imports nearly all its pork and represents about 15% of the domestic U.S. pork market, according to the NPPC, making the Prop 12 decision a point of interest for the Pork Powerhouses producers.

"It's certainly possible [to produce Prop 12-compliant pork], but it comes at a considerable cost in both space and inventory management," says Bill Hollis, Doctor of Veterinary Medicine (DVM), president of Professional Swine Management LLC, which manages Carthage System headquartered in Carthage, Illinois. At No. 6 on the list with 180,400 sows, Carthage System does not currently manage any farms compliant with Prop 12. "We don't see that it does anything for the sow," said Hollis in an interview prior to the Supreme Court's decision.

Let's take a closer look at this year's Pork Powerhouses, which represent more than 68% of the nation's breeding inventory, based on data from the quarterly "Hogs and Pigs" USDA report released Dec. 23.

CHANGES IN 2022

The 28th annual Successful Farming Pork Powerhouses ranking shows 14 companies added sows while eight reduced numbers and 15 remained constant from 2021. One company, TriOak Foods, which first appeared on the list in 2008, dropped out of the ranking, and another, Win Productions LLC, was added. The Pork Powerhouses list is built using data provided by each of the companies, except Smithfield, for which estimates were provided by industry sources. No. 1 on the list since 1999, Smithfield closed its Farmer John packing plant in Vernon, California, in February, according to local news sources. Smithfield, which acquired the plant in 2017, announced in June 2022 it would "cease all harvest and processing operations in Vernon" in early 2023, citing the "escalating cost of doing business in California." The company, owned by China-based WH Group, also said it would decrease its sow herd in Utah and explore "strategic options to exit its farms in Arizona and California."

Smithfield declined to provide its 2022 sow numbers. However, industry sources say Smithfield likely reduced its operations in the West by about 45,000 sows by December while keeping 25,000 to 30,000 sows in housing that is or will be compliant with California's Proposition 12. This would put Smithfield's sow numbers at about 885,000.

Seaboard Foods remains No. 2 on the list with an increase of 29,000 sows, including its 22,000-sow purchase of The Maschhoffs' Oklahoma hog farms. Seaboard is based in Shawnee Mission, Kansas, and The Maschhoffs in Carlyle, Illinois. "[The sale] fit our strategy and supported theirs, so it was a win-win transaction for both organizations," says Bradley Wolter, CEO of The Maschhoffs. In total, The Maschhoffs' herd is down 26,000 sows, dropping it two positions to No. 9 on the list, with 150,000 sows.

EXPANSION AT THE TOP

Pipestone Management further cements its No. 3 position at 330,070 sows (up 42,070 sows).

This growth came from a balance of new construction and acquisitions, says Barry Kerkaert, DVM, vice president of Pipestone Holdings and president of Pipestone Management.

Of the new construction, some replaced existing facilities, which were no longer sustainable because of factors including disease pressure, and some expanded existing facilities to make them compliant with consumer-driven housing requirements, including those set by Prop 12.

Iowa Select Farms continues to follow Pipestone at No. 4, with 250,000 sows (up 7,500 sows). JBS jumps from No. 8 to No. 5 with the largest expansion of 2022, adding 76,000 sows.

The bulk of the JBS expansion came from the deal it reached with TriOak Foods, based in Oakville, Iowa, in early December. TriOak confirmed its 70,000 sows were part of the asset sale, dropping the family operation off the list. TriOak had been selling market hogs exclusively to JBS USA since 2017, and several of its hog farms included multiple open-pen gestation facilities and farms compliant with California's Prop 12. "I am very proud of all that TriOak has accomplished and am excited to strengthen our relationship with a trusted partner," Randy Pflum, TriOak Foods president and CEO, said in a press release announcing the sale.

UPS, DOWNS, IN THE MIDDLE

Both The Hanor Family of Companies (No. 12 with 82,500 sows) and Allied Producers' Cooperative (No. 19 with 61,304 sows) show reduced numbers (down 5,000 and 15,336 respectively) for the third consecutive year. Other reductions include Christensen Farms (No. 10 with 140,000, down 3,000 sows), Tyson Foods (No. 14 with 77,000, down 5,000 sows), and Standard Nutrition Services (No. 24 with 38,000, down 6,000 sows). On the expansion side, AMVC Management Services (No. 8 with 155,000 sows) added 4,500 sows into existing facilities that either had been previously shuttered or remodeled. Pillen Family Farms (No. 13 with 78,000 sows) grew by 5,000 sows through acquisitions. Reicks View Farms (No. 18 with 62,000 sows) is up 12,000 sows after recovering from last year's health- and fire-related losses and replacing one barn with a new Prop 12 site, says owner Dale Reicks. Brenneman Pork (No. 22 with 43,500 sows) added 10,500 sows by building a new farm.

Other expansions included Schwartz Farms (No. 15 with 73,500, up 11,500 sows), Wakefield Pork (No. 21 with 56,300, up 1,500 sows), and Tosh Farms (No. 25 with 37,000, up 1,000 sows).

INCREASES AT THE BOTTOM

Relatively new Pork Powerhouses based in Iowa, VMC Management (No. 34 with 29,850 sows) and Suidae Health and Production (tied for No. 35 with 27,500 sows) posted moderate expansions of 2,350 and 1,702 sows, respectively.

NEW PORK POWERHOUSE

Win Productions LLC, based in Valley City, Illinois, was identified as a newcomer to the Pork Powerhouses list this year. Shawn O'Brien, interim CEO for Win Productions, put the company at 26,000 sows for 2022, a reduction of 2,000 sows from 2021. O'Brien says the company plans to expand in 2023.