1. U.S. Pork Industry Structure 2006 Glenn Grimes Professor Emeritus University of Missouri-Columbia Website: http://agebb.missouri.edu/mkt/index.htm Rev 6/19/07

2. Firm Size (thousand head mktd. annually) Number of OperationsMarket Share Less than 148,4341% 1 - 34,0255% 3 - 51,1503% 5 – 101,1006% 10 – 501,45021% 50 - 500 164 21% 500+ 27 43% Total56,350100% Estimated Total Number of US Hog Operations & Share of US Hogs Slaughtered in 2006 by Size Category U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

3. Firm size (thousand head mktd. annually) 1988199119941997200020032006 Less than 1 32% 23% 17% 5% 2% 1% 1 - 2 19 20 17 12 7 85 2 - 3 11 13 12 10 5 3 - 5 10 12 10 7 43 5 - 10 9 10 12 10 96 10 - 50 12 13 16 18 1921 50+ 7 9 17 37 51 59 65 Share of US Hogs Slaughtered by Year and Size Category U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

4. Firm Size (thousand head mktd. annually) 19941997200020032006 50 - 50057127136149164 500+ 9 18 20 24 27 Number of Large Firms Producing Hogs U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

5. Firm size (thousand head mktd.) 19941997200020032006 50 - 5007%13%17%20%21% 500+10%24%35%39%43% Percent of U.S. Slaughter Hogs Marketed by Large Firms U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

6. Percent of U.S. Slaughter Hog Marketings by Type of Owner, 2006 Operation wholly or partly owned by: Firm Size (thousand head mktd.) 50 - 500500+ Veterinarian 1.90% 1.23% Feed company 4.80% 1.47% Packer or processor 1.90% 24.00% Foreign firm or person 2.86% 1.73% U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

7. Increase in Marketings Planned 2003-06 in 2003 Study Compared to Actual Marketings 2003-06* Firm Size (thousand head mktd. annually) Planned in 2003Actual 1 - 3 +18% - 35% 3 - 5 +3%- 23% 5 - 10 +22%- 31% 10 - 50 +11%+14% 50 or more +11% +15% *Percent increase in number of head marketed. U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

8. Increase in Marketings Planned by Size Group, 2006-07 and 2006-09 Firm Size (1,000 head mktd. annually) Planned 2006-07 Planned 2006-09 1 – 34%11% 3 - 51% 7% 5 - 102% 8% 10 - 502%18% 50 - 500 5%16% 500+5% 8% U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

9. Percent of Firms Planning to Reduce or Increase Marketings between 2006 and 2009 Firm Size (1,000 head mktd. annually) Reduce Steady Increase Unsure 50% or more 0 to 50% 50% or more 1 – 313%19%28%27% 6%7% 3 - 5 7%14%34%31%10%4% 5 - 10 5%16%25%39% 9%6% 10 - 50 5%10%20%48%10%7% 50 - 500 17%44%24%15% 500+10% 81% U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

10. Firm Size (thousand head mktd. annually) 1-33-55-1010-5050-500500+ Do not plan to market more hogs 63%53%58%45%26%10% Market more through existing facilities 19%25%16%20% 6%60% Construct new facilities 5%12%16%24%63%70% Purchase existing facilities 2%0%2%4% 1%22% Contract for more finishing space 2%3%11%21%13%5% How Firms Plan to Expand 2006-09: Percent of Firms Responding in Size Groups U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

11. How Firms Plan to Expand 2006-09: Percent of U.S. Hogs Owned by All Firms Reporting Percent of Hogs Do not plan to market more hogs28% Market more through existing facilities34% Construct new facilities50% Purchase existing facilities11% Contract for more finishing space10% U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

12. Percent of Firms That Made a Profit in 2004 Firm Size (1,000 head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

13. Percent of Firms That Made a Profit in 2005 Firm Size (1,000 head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

14. Percent of Firms That Made a Profit in 2006 Firm Size (1,000 head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

15. Percent of Firms That Started Marketing Hogs Prior to 1975 Firm Size (1,000 head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

16. Percent of Firms That Started Marketing Hogs 1976 to 1985 Firm Size (1,000 head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

17. Percent of Firms That Started Marketing Hogs 1986 to 1995 Firm Size (1,000 head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

18. Percent of Firms That Started Marketing Hogs after 1995 Firm Size (1,000 head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

19. Firm Size (thousand head mktd.) 1-33-55-1010-5050-500500+ Feed is self-prepared 74%70%61%60%25%63% Replacement gilts are purchased 212528357016 Hogs are raised indoors 6485889299100 Feeding is split sex 2043496274 71 Facilities are wean- finish 1614 2044 31 Grain raised by own firm 7479725855 2 Production Information 2006: Percent of Hogs Affected within Size Category U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

20. U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board. Production Information 2006: Percent of All U.S. Hogs Affected Feed is self-prepared54% Replacement gilts are purchased32% Hogs are raised indoors94% Feeding is split sex64% Facilities are wean-finish29% Grain raised by own firm35%

21. Networking Activities of Producers Marketing 1,000-50,000 Head Annually Percent U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

22. Commodity Firm Size (thousand head mktd.) Average 1-50 Size Groups 1-33-55-1010-50 Corn 89%93%94%92%91% Soybeans 84%88%87%83%85% Wheat 29%28% 33%30% Dairy/milk 6%0%4%7%5% Beef cow/calf 25%16%17%14%20% Beef stockers 8%5%2%3%6% Beef fed cattle 23%25%20%17%22% Hog Operations Producing Other Commodities U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

23. Firm Size (thousand head mktd. annually) 1997200020032006 1 - 3 10% 23% 22% 3 - 5 21% 33% 66%69% 5 - 10 39% 40% 79% 10 - 50 58% 65% 91%88% 50 - 500 75% 95% 98%100% 500+ 84% 91%100% Litters Sired by Artificial Insemination 1997, 2000, 2003, 2006 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

24. Firm Size (thousand head mktd.) 1-33-55-1010-5050-500500+ Collected by firm 10%25%16%26%11%86% Purchased 77%69%70%63%71%33% Part-owned stud 13% 5%14%11%23%14% Where Firms Acquired Semen (percent of firms responding in size category) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

25. Firms Finishing Canadian-born Pigs (percent of firms responding in size category) Firm Size (thousand head mktd.) Percent of Firms 1 - 3 4% 3 - 5 9% 5 - 1015% 10 - 5016% 50 - 500 5% 500+ 5% U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

26. Firm Size (thousand head mktd.) 1-33-55-1010-5050-500500+ Spot market 78%75%58%52%28% 0% Under marketing contract 22%25%42%48%72%100% Method of Pricing Canadian-born Pigs (percent of firms that fed Canadian pigs by size category) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

27. Firm Size (thousand head mktd.) 1-33-55-1010-5050-500500+ Load by load 82%65%67%57%28%32% Negotiated contract 9%16% 35%38%89% Group contract 10%17%19%21%56% 5% Own packing plant 4%5%9%10% 4%42% Other 4%7% 4% 1% 5% How Firms Marketed Slaughter Hogs, 2006 (percent of firms in size category) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

28. Firm Size (thousand head mktd.) 1-33-55-1010-5050-500500+ 1 packer 55%54%43%40% 6%37% 2 packers 35%24%40%37%41%16% 3 packers 7%17%12%14% 9%11% 4 packers 2%4% 5%42% 5% 5 packers 1% 2% 6 packers 1%2%11% 7 packers 8 packers 21% Number of Different Packers Sold to in 2006 (percent of firms responding in size category) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

29. All size groups Firm Size (thousand head mktd.) 1-33-55-1010-50 50-500 500+ Spot mkt. - negotiated20%58%32%30%32% 26%15% Contract - futures mkt. 7% 6% 7%13%14% 2% 5% Formula - hog prices57%28%36%38%37% 55%72% Formula - meat prices 6% 4% 6%10% 8% 5% 6% Formula - feed/ledger 1% 2% 1% 3% Formula - feed/no ledger 2% 1% 3% 2% Window – ledger 1% Window - no ledger 2% 1% 4% 2% 5% Other 4% 3% 7%4% 2% 1% Percent of Hogs Sold under Marketing Contracts (percent of total marketings of size category) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

30. Firm Size (thousand head mktd.) 1-33-55-1010-5050-500500+ Tight schedule 8%16%29%27%68%53% Somewhat flexible 26%27%36%43%25%21% Market at desired weight 65%57%36%30% 6%26% Flexibility in Marketing Dates (percent of firms responding in size category) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

31. Percent of Hogs Sold on Carcass Merit Basis Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

32. Firm Size (thousand head mktd.) 1-33-55-1010-5050-500500+ Use contract tied to futures 7%13%12%17% 2%11% Use futures at times 41%51%61%65%91%84% Never use 52%36%27%18% 9% 5% Use of Hog Futures Market by Hog Firms (percent of firms responding in size category) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

33. Firm Size (thousand head mktd.) 1-33-55-1010-5050-500500+ Bad results in the past 26%36% 32% 2% 5% Option premium too high 30%32%42%41% 4% Don’t like margin calls 28% 31%27% Too complicated 34%28%19%20% 3% Why Hog Producers Do Not Use Futures or Options (percent of firms responding in size category) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

34. Opinions on Marketing Contracts: Help Coordinate Slaughter Strongly disagreeStrongly agree Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

35. Opinions on Marketing Contracts: Felt They Were Treated Fairly under Contract Strongly disagreeStrongly agree Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

36. Opinions on Marketing Contracts: Plan To Continue Marketing with a Contract Strongly disagreeStrongly agree Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

37. Opinions on Marketing Contracts: Should Be More Closely Monitored by USDA Strongly disagreeStrongly agree Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

38. Opinions on Marketing Contracts: Prefer To Market All Hogs on Cash Market Strongly disagreeStrongly agree Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

39. Opinions on Marketing Contracts: Have Caused Lower Cash Market Prices Strongly disagreeStrongly agree Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

40. Opinions on Marketing Contracts: Producers with Contracts Get Higher Prices Strongly disagreeStrongly agree Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

41. Opinions on Marketing Contracts: Packers Showed Undue Preference in Offering Contracts Strongly disagreeStrongly agree Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

42. Opinions on Marketing Contracts: Should Be Made Illegal Strongly disagreeStrongly agree Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

43. Firm Size (thousand head mktd.) Farrowed by contractorsFinished by contractors 19972000200320061997200020032006 1 - 50 10% 5%15%3%14% 9%13%12% 50 - 500 8% 13%14% 9%13%12%14% 500+ 22%26%4041%22%33%39%40% Total 40%39%6855%45%55%64%66% Percent of U.S. Hogs Raised by Firms That Are Contractors, 1997-2006 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

44. Firm Size (thousand head mktd.) FarrowedFinished 19972000200320061997200020032006 1 - 50 1% 2% 7% 1% 8% 3% 5% 7% 50 - 500 4% 7% 5% 4% 7%10%11%14% 500+ 11%13%17%15%16%21%25% Total 17%22%23%20%30%34%41%46% Percent of U.S. Hogs Raised under Contract, 1997-2006 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

45. Average Length of Production Contracts in Months Firm Size (thousand head mktd) 1 - 5050 - 500500+ 200320062003200620032006 Finishing412768786981 Nursery462568845459 Farrow or farrow-finish496662756483 Nursery-finishing293153866391 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

46. Training and Supervision Provided by Contractors to Growers (percent of firms responding in size category) Firm Size (thousand head mktd.) 1 - 5050 - 500500+ Train and supervise closely 23%59%82% Train briefly and supervise little 9% 5%17% Find experienced producers who need little training or supervision 57% 36% 6% U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

47. Contractors’ Expectations for Next 5 Years (percent of firms responding in size category) Firm Size (thousand head mktd.) 1 - 5050 - 500500+ Expand their contract production 21%20%53% Reduce their contract production 23%35% 0% Keep their mix steady56%44%47% U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

48. How satisfied are you with hog production? Firm Size (thousand head mktd.) Satisfaction Rating 1 = very dissatisfied 6 = very satisfied 200020032006 1 - 33.44.2 3 - 53.94.2 5 - 103.74.5 10 - 503.84.7 50 - 5004.73.85.2 500+5.03.75.0 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

49. How satisfied are contractors with contract hog production? Firm Size (thousand head mktd.) Satisfaction Rating 1 = very dissatisfied 6 = very satisfied 20032006 1 - 504.434.24 50 - 5004.444.23 500+4.84 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

50. How satisfied are growers with contract hog production? Firm Size (thousand head mktd.) Satisfaction Rating 1 = very dissatisfied 6 = very satisfied 200020032006 1 - 504.64.94.6 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

51. When Growers Began Contract Production Percent of Growers Before 1985 2 1985 - 1989 5 1990 - 199414 1995 - 199946 2000 - 200530 2006 - 2007 4 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

52. Grower Plans after Contract Expires Percent of Growers 20032006 Stop producing hogs 2 2 Contract with different company 9 6 Continue with same company 8078 Become independent 414 Other 50 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

53. Number of Contracting Companies For Which You Have Been a Grower Percent of Growers 1 contractor59 2 contractors29 3 contractors 9 4 contractors 3 5 contractors 1 U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

54. What Do You See as the Greatest Challenges to the U.S. Pork Industry over the Next 5 Years? U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board. Rank: 1 = extremely serious 6 = not serious Firm Size (1,000 hd. mktd.) 1-5050-500500+All Disease & health management2.32.12.02.1 Compliance issues2.72.0 2.2 Maintaining desired productivity2.42.62.02.3 Animal care & well-being, animal activism2.82.02.52.4 Input purchasing2.9 1.92.6 Alternative feeds: profitability & environ. impact3.02.52.8 Establishing consumer trust & confidence2.73.02.72.8 Finding, training, retaining employees4.02.12.42.8 Facilities management & maintenance3.03.43.03.1 Health effect of prod. on employees & neighbors3.53.63.93.7 Finding higher value pork alternatives, niche mkts.3.8 4.13.9 Reorganizing farm business3.95.14.14.4

55. Percent of Firms That Will Stay in Business until 2009 with Average Hog Price $43 - $45 & Central Iowa Corn Price $3.00 Percent Firm Size (thousand head mktd. annually) U.S. Pork Industry Structure Study, 2006 University of Missouri, Iowa State University, Pork magazine, Pig Improvement Company, National Pork Board.

56. Any questions?