The Future of Hog Futures -- and what does this foretell?
by Mia MacDonald
The Viva Vine: vol #4, no #2: March / April 1995
The Chicago hog futures market sets the price that pork will fetch in the coming months based
on investor expectation. The lower the expectation, the lower the price. According to a recent
story in Barrons, pork prices are on a downward spiral. The Dec. 1994 hog futures contract
price fell 30% from the June 1994 contract, to 37 cents per pound of pig. According to the
article, in the case of hog futures, these lower prices, in fact, mark a trend and portend, no
less, the end of the hog futures market altogether.
What does this mean for vegetarians? There's no need for vegetarians to care about financial
profits off the backs of sentient life. Not usually. In this case, however, the trend away from
a futures market in hogs indicates to us that something is happening on a bigger scale.
One might ask, doesn't lower prices for pork mean pork consumption is declining? Not exactly
-- at least not yet; not until the word spreads that pig flesh is unhealthy, unnecessary and
belongs only with and on pigs. For the moment, another factor is at work. The price fall in
futures prices is the result of a glut of supply; that is, more pounds of pork being produced.
The pork producers, it happens, are pigging out. They're raising so many more pigs each year
to end up as bacon, pork roast and ham sandwiches that prices for pork are falling (supply is
exceeding current demand). And although lower profits for pork producers and investors sounds
like good news, in the long run it is not.
The trend is toward consolidation, in the meat industry. And as more and more
mega-corporations like Tyson (already the chicken emperor) and Smithfield Foods get into the hog
business, more and more small hog farmers are getting out. Small farmers just aren't able to
ride out the low prices. In 1993, six percent fewer hog farms (286,000) were operating in the
U.S. than in 1992; one analyst expects almost all small operators to close by the millennium.
The Barrons article explained that as the hog business becomes consolidated into the hands of
a few big operators (as has already happened in the chicken business), there becomes less and
less need for a hog futures market. When a cartel controls production, there is little
uncertainty as to a future price. Indeed the chicken industry is concentrated in so few hands
that the price per pound of chicken has stayed the same for years. The need to hedge against bad
prices by selling futures simply doesn't exist. And no one plays a market which never moves!
The consolidation of food animal industries, however, is only part of the story which brings
companies like Tyson to the top of the heap. The other part of the story is that those on the
bottom are the ones to pay the price. The modus operandi for the new mega producers is a system
of mechanizing production, paying workers low wages, and basing all decisions on profit figures.
Ultimately, the windowless, overcrowded animal factories of today are more and more where "food"
animals will spend horrible lives. So, as a result of market factors, more and more pigs and low
skilled people than ever before will become prisoners of them.
Even though the Chicago hog futures market may be on the road to extinction, the hog business
isn't just yet. Indeed, with lower prices for pork (as The New York Times recently predicted),
per capita pork consumption in 1995 is expected to rise to 51.5 pounds per person per year, two
pounds more than the 1994 total. Americans, it seems, are going just a little bit hog wild. Woe
is us, and the pigs.
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