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Market Contracts are Here to Stay
By Marlys Miller, Pork Magazine - Selling a product without securing a market outlet is risky business, but that's how agriculture has operated for years. For the pork industry, that scenario began to change in earnest during the 1990s.
In 1993, 87 percent of U.S. market hogs were sold in the cash market, 13 percent were contracted to packers, according to Marvin Hayenga, Iowa State University agricultural economist. Less than 10 years later, that scenario is nearly reversed.
Based on a January 2001 packer study, Glenn Grimes, University of Missouri agricultural economist, found that 83 percent of U.S. domestic hog slaughter is now sold through contract arrangements.
The 2001 Pork Industry Structure Study has the market contract figure at 71 percent, but it's based on 2000 sales. Grimes' figure for 2000 was 73 percent.
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(July 2001)
