U.S. hog farmers have plenty to worry about with input costs, international trade disputes and the impact of the COVID-19 pandemic on supply chains.
With the stroke of a judge’s pen, those concerns take a back seat to a dispute over how fast hogs move through packing plants. A U.S. District Court vacated a portion of a government rule that allowed for faster line speeds at some pork-processing facilities, meaning plants will be forced to reduce their output and, as a result, purchase fewer hogs.
The faster the line, the more efficiently packing plants operate. But workers worry about an increased risk of injuries at higher speeds, so the United Food and Commercial Workers challenged the U.S. Department of Agriculture’s New Swine Inspection System or NSIS.
The court said the USDA did not adequately consider worker safety, but it’s not that simple. The NSIS was based on a pilot program that dates back to the Clinton administration. It was part of an effort to modernize an inspection system that had been unchanged for 50 years. Food Safety and Inspection Service data reveals that workers in NSIS program facilities experienced fewer injuries over an eight-year period, compared to non-NSIS facilities.
A subtext of this debate involves the consolidation in the packing industry. While the belief is that slower lines would hurt larger facilities and promote more diversity, one analysis shows that the rejection of NSIS will roil markets in ways that hurt small farmers the most.
Research from Iowa State University shows that rejection of NSIS line speeds will result in a 2.5% decrease in processing capacity and create an oversupply because you can’t just flip a switch and have fewer piglets tomorrow. Hog breeding decisions are made months in advance. Packers could use force majeure provisions to declare their pricing contracts with hog farmers null and void, forcing these farmers to sell their hogs on the spot market.
Iowa State anticipates prices dropping by more than $20 an animal and farmers losing an estimated $80 million nationwide in 2021. That’s a lot of money leaving small towns and rural communities across the country.
Last week, U.S. Rep. Sam Graves, R-Tarkio, signed a letter with more than 70 others in Congress urging the Biden administration to defend the NSIS program through legal appeals and new rulemaking authority that reflects modern processing technologies.
Politically, the issue creates a dilemma for President Biden, who must choose between farmers and unionized plant workers — two important constituencies. Economically, he has no choice but to defend NSIS.