John Miranowski is chairman of the Agricultural Economics Department at Iowa State University in Ames, Iowa.

Q What are some of the overall trends you see in agriculture?

A One is structure. There is a gradual movement off the farm in good times and bad, but more farmers are involved in off-farm work today. The age structure is growing older, which affects farmers’ willingness and interest in being involved in the pork industry.

The biggest thing that’s happening in agriculture is the information revolution. We can transmit information instantaneously and inexpensively. There also are major changes in technology from biologicals to new production practices, many of which are only successful on larger operations.

Also, consumer choice will be transmitted through the marketplace faster and more efficiently than in the past. Producers will have to respond by supplying the product characteristics the consumer demands to remain competitive.

Q How do the current changes compare with other periods in agriculture?

A The rate of change is faster than it has been in the previous 50 years.

Consolidation of the food chain is inevitable, but that doesn’t mean one company will control it. Resources will come from various sources. The principal driving factor will be a producer’s ability to transmit information in the system inexpensively and quickly.

There’s little we can do to alter the trends, regardless of how we feel about them. We can pass legislation, but that will only shift the location of production between states and countries. It will probably do little to protect family farms, but we do need to focus our concerns on the welfare of farm families.

Q What will the pork industry look like in five to 10 years?

A Current trends will continue. Producers with smaller, more traditional operations will exit, and larger operations will be more prevalent. I anticipate 3,000- to 4,000-head facilities may be the norm, but one producer may own several units.
Facility siting will be critical. We will continue to see the trend toward multiple-site operations because they’re better dispersed for environmental purposes.

Q How will all of the consolidation ultimately affect the pork industry?

A We went from 34,000 pork operations in Iowa in 1992 to 14,000 today. Those producers are producing more pork and the operations are definitely more efficient. As producers reduce the cost of production, however, real prices will follow with a long-term decline.

One thing that’s going to provide opportunity in rural areas is value-added livestock entities. These will give producers a chance to increase returns in the future. We will end up with more consolidation in the pork industry, while creating a market for more designer products. Producers will create their own product identity through alliances and larger, organized marketing opportunities.

Q Can independent pork producers compete in the future?

A Yes, if they can maintain adequate size and efficiency in their production.

Also, they will gain more from speciality product development vs. going head to head on commodity hog production. The key is value-added alliances. Farmers in many areas have to become more interdependent to remain independent.

Q What types of business practices will producers need to adopt to stay competitive?

A On the farm management end, producers will need accurate production and financial records. They will have to get adequate financing and maintain a high rate of through put.

Another important area is utilizing more strategic-marketing and risk-management tools, such as selling hogs on a forward contract and using hedging strategies.

The spot market may still be functioning 10 years from now, but few producers and primarily those running small operations will use it. Spot markets will become a less reliable price indicator. Thus, mandatory price reporting won’t be a long-term solution to the price discovery issue.

Q How will the producer’s role in adding value to products or linking through the pork chain evolve?

A Adding value will center on the food chain, especially as we develop more brand identity. There will be more producer alliances to add value to pork, corn and soybeans. But, adding value will only be successful if a producer can do it more efficiently than the competition or successfully develop brand identity.