Dealing with Increased Prices in the Hog MarketThe last decade has been a rollercoaster of profits and losses for the hog producer.  Historically, a low cost hog producer could count on their expertise and skill to insulate them from the worst of the down cycles, and they expected very strong profits in the up cycles.  The most recent down cycle generated large losses for even the low cost producers erasing too much of their equity.  So what has changed and what can hog producers do about it?

Economic and commodity price volatility have increased for any number of reasons: globalization, speculation, government fiscal and monetary policies, and the new linkage between agriculture and energy via biofuels.  None of these factors appear to be getting less volatile going forward.  In fact, it could be argued that they will stay highly volatile for the foreseeable future.  If that is the case, all agricultural producers and agribusinesses will need to change how they structure and manage their businesses.  While it’s everybody’s right to complain about this situation, it’s owner/operator’s responsibility to do something about it.