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May 29, 2003

Economist: Indiana pork processing at record high level, value

WEST LAFAYETTE, Ind. – While most of Indiana's economy struggles for jobs, one sector has been growing, according to Purdue University Cooperative Extension Service agricultural economist Chris Hurt.

"Hog processing in Indiana has reached record high levels," he said. "In 2002 we processed 7 million head of hogs in the state. That's a dramatic increase from where we were in 1990. Then we had about half that amount, with 3.6 million processed."

Hurt sees this increase in pork processing as a boon for the state.

"The retail value of the 1.8 billion pounds of pork processed is a staggering number," he said. "We're estimating that the value of all the pork processed in Indiana is about $2.5 billion. Broken down, $600 million is the contribution that producers provide, $400 million is the value provided at the processing level and the remaining $1.5 billion is from the marketing side of things, including transportation, packaging and the functions of the retail sector."

Hurt attributes the growth to the modernization of two Indiana processing plants located in Delphi and Logansport. The standard line speed of modern plants is 1,000 head per hour, most running two shifts per day.

So many hogs are being processed at these and several other smaller plants that there aren't enough Hoosier hogs to fill the demand, he said.

"It turns out that we are processing so many animals in Indiana that we actually had to bring animals into the state." Hurt said. "That's in addition to the 1.8 billion pounds of pork that was produced within the state."

Last year a record number of hogs were brought in as young pigs for finishing. The Indiana Board of Animal Health reported that 1.3 million head of hogs were imported from other states and Canada. An additional 600,000 head of market-ready hogs also were imported for processing.

Hurt said bringing the hogs in for finishing adds economic value by utilizing corn and soybean meal produced in Indiana. It also requires other inputs such as buildings, equipment and labor, all of which are readily available in Indiana.

"Our geographic location is good, our climate is good for raising corn, one of the primary ingredients for hog production, we have knowledgeable farmers, and then we have access to markets on the East Coast and in the Midwest," he said.

The growth in processing is good news for hog producers who've struggled in the past. Hurt said Indiana's pork industry is in better shape than most other states.

"I think without question, the pork industry is much stronger in Indiana because we have the processing capacity, we have the production, and we're increasing the finishing substantially," he said. "I think one of the other keys is the natural resource base – the land, the crops, the climate and the location to consumer markets makes Indiana a vital place for this industry."

As it stands, Indiana produces about 7 percent of all the pork in the United States. Hoosiers consume roughly one-third of the pork that's processed in the state. The other two-thirds is exported to other states and overseas, especially to Asia.

Even though processing has been increasing for the past decade, Hurt sees that at a plateau for now.

"We're not likely to see increases in processing capacity – we already have two major plants. I really don't believe we'll see increases, but we do have these modern plants and I think they'll continue to operate and be a vital part of their communities. When you're adding $2.5 billion of retail sales, that's a substantial amount of economic activity."

Writer: Kay Hostetler, (765) 494-6682, kjh@purdue.edu

Source: Chris Hurt, (765) 494-4273, hurtc@purdue.edu

Related Web site: Indiana State Board of Animal Health

Ag Communications: (765) 494-2722; Beth Forbes, bforbes@aes.purdue.edu; http://www.agriculture.purdue.edu/AgComm/public/agnews/


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