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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
"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."
complete study can be accessed online at farmdoc:
Click on "Latest Illinois Farm Economics Report" in the "What's New"
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