Farmscape for July 15, 2021

An Economist with Partners for Production Agriculture says a court ordered rollback of U.S. pork harvesting facility line speeds will force the construction of new processing plants rather than allow increased capacity through improved efficiency.
The Biden Administration has until the end of August to appeal a federal court ruling which took effect June 29 striking down pork harvest facility line speeds allowed under the USDA’s New Swine Inspection System.
Dr. Steve Meyer, an Economist with Partners for Production Agriculture, explains the ruling has cut the capacity of five U.S. processing plants, four of which had been part of a 20-year pilot project, from about 13 hundred 50 hogs per hour to about 11 hundred per hour.

Clip-Dr. Steve Meyer-Partners for Production Agriculture:
If we look at that in total it cost us about two and a half percent of our slaughter capacity in the United States or about 85 thousand head per week.
The danger there of course is if they get hog numbers that are high you might run into that slaughter capacity constraint.
As of last summer, we had about 2.768 million head per week on a 5.4 workday week, which is the standard one that I computed on.
This would have taken us back to about 2.683 million head and, based on the March Hogs and Pigs report we were at some risk of running into that slaughter capacity constraint.
The June Hogs and Pigs report with its three percent lower March-May pig crop had pulled those numbers back so I don't think there's an immediate threat to the capacity situation, of running into capacity even with these lower chain speeds but longer term it takes away some capacity and it's pretty easy capacity to add if you play by the rules and do the things that USDA found during the long pilot project.
So, still troubling even though given the projected fourth quarter slaughter I don't think it's going to be a big problem this year.

Dr. Meyer says the ruling sets a precedent for the future that says, to get more capacity, you may have to build a new plant.
He suggests the easiest way to add capacity is to run the plants we have a little harder.
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Bruce Cochrane.

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