A new program announced at World Pork Expo will attempt to reduce the U.S. sow herd. Developed by a group of U.S. pork producers, the Producer Retirement Program is a voluntary, self-funded program for producers who own sow herds.
According to Chuck Wirtz, a producer from Whittemore, Iowa, PRP is organized as a corporation in the state of Iowa. He chairs a board of directors that involves pork producers from seven states. "PRP is a new initiative sponsored by, controlled by and paid for by U.S. pork producers," he said. "It is designed to provide an opportunity for producers to retire their entire farrowing operation, or parts of their operation, via retiring individual sow units."
The program will supplement the cull price that the participants would otherwise receive for the sows to be retired. To participate, a producer would have to pay into the PRP in the amount of $20 per sow. The PRP will use those "membership" payments to create a fund that will be used to help compensate producers for sows that they commit to cull.
Under the program, producers would have to submit bids outlining their herd retirement proposal, which must include leaving the sow facilities empty for two years.
"We have an administrative team to oversee the program," noted Wirtz. "Once a bid is accepted, there will be an on-farm assessment." The selected producers would receive 70 percent of their payment upon liquidation of the sows, they would receive 15 percent of the value one year later, and the last 15 percent at the end of the second year.
The group hopes to raise $50 million for the program, "I don't know how many sows that will 'buy'," he added. "This is a one-time effort. We've gotten a lot of verbal support."
While the group does not have a target number of sows, Wirtz's personal hope is to see 5 percent of the U.S. sow herd retire. That would be in the neighborhood of 250,000 to 290,000 head.
"We've reached a point in the U.S. swine industry over the past 20 months, that on-going losses have resulted in at least $3.5 billion of lost equity in the industry," according to Mark Greenwood, vice president of Agri Business Capital at AgStar Financial Services. "That trend just cannot be sustained."
A Webinar explaining the program in more detail will be held on June 9. Producers must register prior to the event.