ISU Economist Says Line Speed Court Ruling Will Slash Pork Processing Capacity by 2.5%

( )

At the end of March, a U.S. District Court for Minnesota struck down provisions of USDA’s New Swine Inspection System permitting faster line speeds at federally inspected pork processing facilities. Dr. Dermot Hayes, an economist with Iowa State University, says that even with possible mandatory overtime to compensate for lost capacity, the industry will lose 2.5% of overall harvest capacity if the ruling stands. 

He explains, “Six pork processing plants are currently operating at higher line speeds allowed under the new USDA inspection system. Five of these plants have been operating at these speeds for more than 20 years under the pilot program introduced during the Clinton administration.” Three of the impacted plants are located near top-producing Iowa.

He says this will cost producers $83.2 million via lower spot market prices, with small hog farmers likely to bear the brunt of the decision. “Packers will likely use Force Majeure provisions to declare their pricing contracts with hog farmers null and void, forcing these farmers to sell their hogs on the spot market,” Hayes says.

The decision is set to take effect July 1, 2021.


Latest News

Signal to Noise | July 26, 2021

Jim Wiesemeyer and guest host Davis Michaelsen discuss the week ahead in Washington...

Wheat inspections remain solid in face of rising prices

Corn inspections were also decent and above 1 MMT. Soybean inspections were near the upper end of expectations, though the overall tally was still pretty light.

Monday Morning Wake Up Call | July 26, 2021

Corn soybean and wheat futures open the week under pressure on Friday’s poor closes and overnight pressure. Cattle futures are firmer on USDA’s Cattle Inventory Report, out Friday. Hog futures are mildly softer.

What’s Needed to Improve USDA Estimates and Forecasts?

NASS and World Board willing to discuss, act on changes if needed - Funding key issue

Ahead of the Open | July 26, 2021

Ahead of the Open | July 26, 2021 Corn, soybean futures fall near two-week lows following Midwest rainfall, outlook for cooler temperatures.

First Thing Today | July 26, 2021

Hot, dry week likely for much of the Midwest & Plains. Low Parana River water levels likely to get worse before they get better. Vilsack predicts moderation in food inflation. Friendly cattle reports may boost futures.