Consolidation of Hog Industry Drains Iowa’s Rural Economies

IOWA CITY, Iowa—Iowa produces more pigs than any other state in the country. In years past, hog farming and pork processing boosted Iowa’s rural economies. But as the pork packing industry consolidated, the economic benefits of the hog sector shifted from rural Iowa to Wall Street. Today, growth in the consolidated hog industry has become a mechanism for draining value from, not adding to, Iowa’s rural economies.

Today, the national consumer group Food & Water Watch released a report, The Economic Cost of Food Monopolies, documenting the declining economic value of large-scale hog production on Iowa’s economy. Between 1982 and 2007, the market share of the top four hog processors almost doubled, the number of hogs sold in Iowa doubled, but the real economic value of hog sales declined by 12 percent.

“Consolidation in the pork packing industry has contributed to the decline in hog prices and the rapid erosion in the number of independent, medium-sized hog producers in Iowa,” said Food & Water Watch Executive Director Wenonah Hauter. “In addition, there are fewer but larger processing plants, which no longer pay middle-class wages. It is little wonder that these forces have meant stagnating household earnings and declining county-wide income. 

The study analyzed county-level economic, agricultural and demographic data in five-year intervals from 1982 to 2007. During those years, Iowa lost 82 percent of its hog farms and the remaining farms grew to enormous sizes. Iowa counties with the highest level of hog sales and the largest hog farms had worse and declining economic outcomes than the overall statewide averages.

“There used to be hog stations all over Iowa where different packers would bid for my hogs, but today most of the hogs are practically owned by the packers before they are born,” said Larry Ginter, an independent hog farmer from Rhodes, Iowa, and a member of Iowa Citizens for Community Improvement. “Today, the four biggest packers in Iowa slaughter nine out of 10 hogs, and independent farmers cannot get a fair price with that kind of stranglehold on the market.”

The study found that:

• County-wide real personal income declined in Iowa counties with the highest hog sales and largest hog farms. Meanwhile, Iowa’s overall real personal income grew by more than half.
• Real median household income grew significantly more slowly in counties with high hog sales and large hog farms than it did for average Iowa families.
• The average number of non-farm small businesses per county declined by 10.8 percent in counties with high hog sales, and by 24.4 percent in counties with large hog farms. In contrast, the county average statewide increased 29.7 percent between 1982 and 2007.
• Iowa added nearly half a million (460,000) wage and salary jobs between 1982 and 2007.  During those same years, counties with high hog sales and large hog farms lost jobs.
• Real earnings for Iowa meatpacking and processing jobs declined by $133 million during the years studied.

An analysis of Iowa’s hog industry by the Agricultural Policy Analysis Center at the University of Tennessee further confirmed the study findings. Additional hog production had a positive effect on total real county personal income and real median income in 1982 and 1987. As concentration in the hog-packing sector increased, however, the flow of economic benefits reversed and began to drain economic value out of rural counties. During the last 10 years studied, adding 1,000 hogs to a county’s economy actually reduced total real county personal income by $592.

“The value of hog production to local economies has declined sharply,” said Harwood D. Schaffer, Research Assistant Professor at the Agricultural Policy Analysis Center. “At the same time, control of the slaughter and processing of hogs has become concentrated into fewer large corporations. The conclusion that agribusiness concentration has contributed to economic decline in Iowa is consistent with our study.” 

The Iowa hog case study was part of a multi-sector examination of the cost of consolidation in the U.S. food and agriculture industry. Other sectors and regions included milk processing and dairy farming in upstate New York; poultry production on Maryland’s Eastern Shore; organic soymilk production and organic soybean farming; and California’s processed fruit and vegetable industry. 

“The consolidation of the food and farm sector is sucking the economic vitality out of rural America and shipping it off to Wall Street,” said Hauter. “These findings shine a much-needed light on the negative economic impact that farm and agribusiness monopolies have on farmers, consumers and rural communities.”

Read the Report: The Economic Cost of Food Monopolies

Contact: Darcey Rakestraw, 202-683-2467, drakestraw(at)fwwatch(dot)org