Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 6/5/09

An independent group of U.S. hog producers has organized a sow buyout program aimed at helping producers get out of the hog business in response to low hog prices and high production costs.

During a news conference at the World Pork Expo this week in Des Moines, Iowa, group chairman Chuck Wirtz said producers would pool their resources by paying $20 per sow they own to join the Producer Retirement Program. The funds would be used to buy and slaughter sows from hog producers who want to exit the business, according to Bloomberg.

Wirtz, a producer in Whittemore, Iowa, said the program would begin taking bids by June 15 from interested farmers.

The program concept is similar to the dairy cow herd retirement program conducted by Cooperatives Working Together.

The reasoning behind the program is that reducing the hog herd will help producers remaining in the business by decreasing supply, which should boost prices.

A positive sign

Although the group is new and the program has yet to begin, J.P.Morgan analyst Ken Goldman sees it as a sign of hope in a dire moment for the hog industry.

"It is our understanding, from speaking to PRP members this week, that interest among sow owners to participate is high," he wrote in a note to investors. "We do not know how effective PRP will be in culling the herd, but it seems to be off to a solid start and every bit of incentive will help."

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