Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 6/19/09

A group of U.S. pork producers who proposed the Producer Retirement Program announced Thursday that the sow cull program will not take effect due to a lack of participation.

"Market conditions have changed dramatically for the worse for the pork industry in the past few months," Chuck Wirtz, chairman of the board of directors of the PRP, said in a statement. "Unfortunately, since this group of pork producers began work designing the PRP, most producers with sows are no longer in a financial position to support the program."

The PRP was designed to supplement the cull price that the members would otherwise receive for their sows if they decided to exit sow production for two years. The retirement program was dependent on enough pork producers with sows signing up and paying a $20-per-sow subscription.

Sow cull still under way

While the PRP would have accelerated the process, sow herd culling is well under way, according to J.P. Morgan analyst Ken Goldman. In a note to investors, he quoted industry sources as saying sows are flooding to market, "with many buyers booked full for weeks in advance."

Smithfield CEO Larry Pope on Monday said the company has already begun reducing its sow herd by an additional 3 percent beyond last fiscal year's 10 percent reduction. 

Goldman sees the evidence that others are also culling sows as good news for Smithfield, even going so far as to say, "We think (Smithfield share) fundamentals have bottomed and are poised to turn around."