Increasingly, more pork producers are negotiating marketing contracts with packers– and more of the slaughter hogs within the United States market are sold in that manner.
Marvin Hayenga, Iowa State University agricultural economist, et al., estimated that 87 percent of U.S. market hogs in 1993 were sold in the cash market, with another 13 percent either owned by packers or contracted for delivery to packers.
Today, those percentages are nearly reversed. A survey of packers for January 2001 hog slaughter conducted by Glenn Grimes, University of Missouri, agricultural economist, and Steve Meyer, economist for the National Pork Board, suggests that only 17 percent of the hogs processed were bought in the cash market. The remainder was largely procured via some type of marketing agreement. By contrast, their 1998 survey indicated 57 percent of U.S. market hogs were contracted, leaving 43 percent in the cash market.
The results of the 2001 Pork Industry Structure Study survey indicate a slightly higher percent age of hogs in the cash market than has been reported by recent studies. (See Table 13a.) This difference could result from surveying producers rather than packers. Another possibility is that the industry structure results represent all of 2000 rather than only one month, as was the case in the January 2001 packer survey.
In January 2000, Grimes and Meyer did show approximately a 27 percent market share for cash hog sales – comparable to the 2001 Structure Study. John Lawrence, Iowa State University agricultural economist, et al., surveyed packers in 1999 and also found a 27 percent cash market share.
Regardless of the actual numbers, all of these studies report a similar trend of market hog sales shifting away from the cash market and toward pre-arranged, or contract, agreements with a packer.