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Hog profits     Send a link to a friend

[AUG. 5, 2003]  URBANA -- After three consecutive profitable years, Illinois hog producers saw their total economic costs exceed total returns in 2002, according to a University of Illinois Extension study.

"Lower market hog prices, especially during the last three quarters of 2002, proved decisive for the negative profit margin," said Dale Lattz, U of I Extension farm management specialist who conducted the study based on data from the Illinois Farm Business Farm Management record keeping and business analysis program.

"Feed costs did increase some in 2002 but were still at relatively low levels."

The result for the average Illinois hog producers was an $8.13 per hundredweight drop in profits as compared to 2001. Total returns in 2002 averaged $32.25 per hundredweight produced compared with $42.54 in 2001. Total production costs for the farrow-to-finish hog enterprises exceeded total returns by $5.57 per hundredweight produced in 2002.

"Lower total non-feed costs helped cushion the drop in hog prices," said Lattz. "The 2001 return was $2.56. For the five-year period 1998 through 2002, production costs exceeded returns by $1.92 per hundredweight. The negative returns for the most part were due to 1998, when total costs exceeded returns by $15.44 per hundredweight. Three of the past five years show a positive return for farrow-to-finish operators."


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Lattz believes there may be some improvement in 2003.

"Hog prices are expected to average about $40 per hundredweight in 2003," he said. "The size of the corn and soybean crop will have a significant effect on feed costs. As of the middle of July, most of the soybean and corn crop is rated in good to excellent condition.

"Current crop prospects would indicate that feed costs should decrease during the second half of 2003. Feed costs are expected to average about $22 per hundredweight and non-feed costs $16.50 in 2003. Total costs of production would be $38.50 per hundredweight, or about $1.50 per hundredweight below the average price received. If these projections materialize, 2003 will result in a slight profit for hog producers."

The complete study can be accessed online at farmdoc: http://www.farmdoc.uiuc.edu/. Click on "Latest Illinois Farm Economics Report" in the "What's New" section.

[University of Illinois news release]


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