Pork Industry Continues To Face Challenges

Over the years, the swine industry has long been a source of farm income stability for many farmers and in many rural communities; however, in recent years profitability in hog production has been much more mixed and has been negative for many producers. The swine industry was hit hard by the U.S. trade war with China in 2018 and 2019 and then by the Covid pandemic in 2020. In recent years, producers have dealt with higher input costs and interest rates, disease pressure that has reduced production levels, and market prices that have struggled to stay at profitable levels for long periods. In addition, they have dealt with the domestic pork sales problems caused by the implementation of the Proposition 12 legislation in California, as well as another looming trade war with China, Mexico, and other countries. These issues have especially impacted modest sized swine farrowing and finishing operations in the Midwest.
A comprehensive 2021 swine industry study titled “The United States Pork Industry 2021 Report”, involving USDA and several Universities, analyzed the economic impact of the pork industry on the U.S. economy, as well as looking at the economic impact for individual States. According to the Study, there were more than 66,000 pork producers in the U.S. in 2021 that marketed over 140 million hogs valued at over $28 billion in gross receipts. The value-added from the hog marketing’s resulted in a total of $35 billion in personal income and added $57 billion to the GDP in the U.S. The study estimated 610,000 jobs in the U.S. can be linked to the overall impacts of the pork industry. Based on recent pork industry data, it was estimated that the forty largest swine farrowing operations in the U.S. owned or managed over 70 percent of the swine breeding herd at the end of 2024.
Economic Challenges for Hog Farmers
Many hog producers lost $20 to $40 per head on every pig marketed during first half of 2023, after some showed negative profit margins in 2022. Obviously, farm operations can only withstand those types of losses for a given time before they need to make some decisions regarding their future in hog production. In the past two years, the number of producers exiting the hog business has increased significantly due to the low profit margins. In the short-term, the liquidation of mother sows sent even more hogs to market and added to the over-supply of pork in the U.S., putting even more downward pressure on already depressed market hog prices. In the bigger picture, the reduced sow numbers should result in reductions in the total hog inventory and help strengthen market prices.
An analysis of farm financial data through the University of Minnesota FINBIN farm management system for hog producers throughout the United States indicated some of the financial challenges that producers are facing. Most of the producers in the FINBIN analysis would be considered modest-size producers. The data showed that the average hog producer made an average net return to labor and management of only $.53 per head on every hog produced through a weaning-to-finish management system during an 7-year period from 2018-2024. The range was from an average positive profit margin of $13.75 per head in 2021 to a loss of ($18.18) per head in 2023. Other negative profit years per head were ($11.84) in 2018 and ($3.25) in 2022, while other positive return years per head were +.86 in 2019, +$12.85 in 2020, and +$7.88 in 2024. The FINBIN data also showed that the average direct expenses to produce a market hog from weaning to finish increased from near $90 per head from 2018-2020 to over $125 per head in 2022 and 2023, dropping back to  near $114 per head in 2024. 
For the same 7-year period (2018-2024), the FINBIN data showed an average return to labor and management of $9.34 per litter produced for farrow-to weaning hog operations. There was a wide range in profitability from year-to year ranging from a high return of +$48.05 per litter in 2022 to a loss of ($12.09) per litter in 2023, with only a modest recovery to a profit of +$4.17 per litter in 2024. The average number of sows in the FINBIN data was 1,100, with an average of approximately 2,300 litters per year. This would be considered a modest-sized farrowing operation in today’s U.S. hog industry. 
 
Tariffs and Another Possible Trade War Raises Concern
The on-again/off-again tariff scenario has raised concern among pork producers. They are especially concerned with potential retaliatory tariffs against the U.S. by China and Mexico, the two of the largest export destinations for U.S. pork products. In 2023, the U.S. exported $2.3 billion of pork products to Mexico, $1.4 billion to Japan, and $1.3 billion to China. Approximately 25 percent of the pork produced in the U.S. ends up being exported, so another trade war with the major export destinations could have major economic implications on the U.S. swine industry. Hog market prices dropped considerably during the last U.S. trade war with China in 2018 and 2019, costing the U.S. pork industry millions of dollars.
Proposition 12 Creates New Challenges for the Pork Industry
The “Farm Animal Confinement Initiative”, or the so-called “Proposition 12” law, was passed by the voters of California in November of 2018. The new law mandated that all whole pork sold in the State of California must come from market hogs that were born from sows that had had housing of at least 24 square feet of floor space with the ability to turn around, meaning that it would ban the use of sow gestation crates in hog facilities. The Proposition 12 law went into effect in on July 1, 2023, and applies to all uncooked pork that is sold is sold in California, whether it was raised in California or raised in any other portion of the U.S. or other countries. California accounts for somewhere between 10-15 percent of the total pork consumption in the U.S, based on various estimates; however, the State produces far less than one percent of the pork that is consumed within its borders. This means that most of the fresh pork being sold in California is likely being raised and processed in Iowa, Southern Minnesota, and other Midwest locations.
Most commercial sow gestation units in the Midwest currently have 18-20 feet of floor space per sow and utilize gestation crates that allow for individual customized feeding, breeding and care of the sows. Increasing the requirement to the new California standard of 24 square feet increases the space requirement per sow by 25-35 percent. This means that a producer can house 25-30 percent less sows in the same area of building space and produce 25-30 percent fewer hogs each year, compared to traditional sow housing systems. In addition, converting existing sow housing facilities to the new required standards can be quite expensive and there will likely be added labor expense to handle the sows in the converted sow housing style. Producers have no guarantee that they will receive any added value for the market hogs that are being sold to be processed for pork sales in California.
Bottom-line on Profitability for Hog Producers
At the farm level, the low profit margins have been driven by modest market hog prices, higher input costs, rising interest rates, and swine disease challenges. Some small-to-medium size swine producers have exited the business in the past two years, and more producers may be forced to leave hog production if profit margins do not improve in the next couple of years. In recent months crop producers have received economic assistance payments to offset low crop prices, and some may receive 2023 and 2024 disaster payments in the coming months; however, there have been no assistance payments approved to offset low prices and reduced profit margins for hog producers. It is hoped that some improved risk management “safety-net” provisions for hog producers can be included in the next Farm Bill. Fortunately, profit margins in hog production have improved slightly in the first half of 2025, mainly due to lower feed costs; however, the combination of higher than expected hog numbers and concern over tariffs has resulted in very modest improvement in hog market prices. At the retail level, fresh pork is still a very economical choice for consumers compared to other meat and protein food choices.
For additional information contact Kent Thiesse, Farm Management Analyst, Green Solutions Group
Phone --- (507) 381-7960; E-mail --- [email protected]