It was a good run.
But America has probably reached peak hog productivity, according to a new report from the USDA.
“The era of dramatic productivity growth in hog production from 1992 to 2009 will likely remain unmatched, absent significant technological innovation,” agricultural economists William McBride and Nigely Key write in “U.S. Hog Production From 1992 to 2009: Technology, Restructuring, and Productivity Growth.”
The great productivity era was really good for consumers, helping keep retail prices flat in the face of rising feed costs.
It was also good for big ag, as exports increased to 17% of production by 2009 from 3% in 1992.
But the gains came at some environmental cost, as higher concentrations of manure meant greater amounts of nitrogen, phosphorus, and potassium, flowed into ground and surface water. (At the same time, increased productivity meant fewer resources were needed.)
And it also meant a decline in small farms.
Anyway, there are two reasons why it’s going to be pretty difficult to match the gains of that period, Key and McBride write:
“First, the gains from exploiting scale economies are nearly exhausted, as most hog production now takes place at a size where returns to scale are nearly constant.
“Second, the measurable technological and organizational innovations contributing to productivity growth (e.g., confinement housing, production contracts, artificial insemination…) are now widely diffused.”
What happens next? Productivity will remain subject to volatile commodities prices, which will have the effect of further squeezing out smaller operations.
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