Your Compeer Office
Blue Earth, MN

1700 Gian Drive, PO Bbox 220
Blue Earth, MN 65013
[email protected]

Compeer Client Services

Pork Producers are Improving, Maintaining in 2023

It’s showtime again with states across the country each having their annual meetings swine trade shows. As any vendor can tell you, this time of year does weigh on you traveling across the Midwest attending each state show and talking to producers. The travel is worthwhile as it gives me an opportunity to get a pulse on what is happening in the industry and confirm what I am seeing and hearing. It’s also a great time to talk to the various vendors, as they are on the front line, about new opportunities and technologies that will shape the swine industry going forward. 


There are a couple of themes which I have as takeaways this year. The first item is continued improvement by producers. Producers continue to look for new and improved technologies to enhance their operations. Over the past few years we’ve made improvements to sow feeding systems and the supporting technology to track sow feed usage. With the evolution of pen gestation, equipment companies are continually redefining how sows are housed and fed. This leaves more time for employees to tend to what is most important: monitoring the sows and pigs in facilities. 


The second theme I noticed is the lack of new projects slated for 2023. This doesn’t surprise me as profitability in the industry remains lackluster. Stagnate growth in the sow herd leaves very little opportunities or interest in building contract grower barns. Don’t get me wrong, there is still some building going on as operations will always look for ways to grow. Part of the decision-making process is knowing when to replace worn out assets or upgrade with improved technologies. There are a couple of other reasons why projects are being put on hold, including the sheer cost of construction and a rising interest rate environment. 


So, what is the driver behind the economics of producers not wanting to expand?  In my 26-year career at Compeer, we have seen times where growth was stagnant but typically following a severe economic downturn in the industry. Looking at the profitability of the industry over the past four years, we have seen on average modest profitability. This would usually garner more discussion of new projects for the coming year. However, when we look at the dynamics involved it is understandable producers are reluctant to grow their businesses. 


First, sow numbers have fallen by 4% over the past three years. This would lead you to believe expansion would be inevitable. When looking at all the variables however, it seems there is a perfect storm building to dissuade anyone from taking on additional risk in the swine industry.  Since 2019. cost of production has risen from the upper $60’s cwt. to upper $90 cwt. 2022 appears to have been mildly profitable and there were opportunities to hedge some profits in 2023, but nothing that would persuade someone to expand.  Additionally, construction costs increased by an astounding 35% over that same timeframe.   This, along with the doubling of interest rates, put most producers on the sidelines.  Finally, with the increased cost of inventories, profits have gone back into maintaining the increased costs of inventories. In previous years producers who made money had additional capacity to either upgrade their facilities or grow their business.  That’s just not the case anymore. 


Growth in building finish barns remains suspect as well. As of December 1, 2022, the last Hogs and Pigs report shows 67 million head of market hogs in inventory compared to 70.9 million on December 1, 2019. This is down by 5.5%. Some of the 2019 growth was due to a backup on hogs when plants shut down during COVID. When looking at the sow herd over the same timeframe, sow numbers are down by 4%. This, coupled with an increase in productivity of 1.2% over that time, makes it safe to assume total finish barn today -- associated with a decrease in the sow herd -- would be 2.8%. 


The point is, based on peak inventory numbers without the backup of inventory in 2019, we are long 2.8% of finish spaces in the US. That equates to approximately 1.4 million of finish spaces of capacity that are either not being used, were taken out of production or less double stocking of existing facilities. Either way, other than making improvements to your facilities, there is little incentive to build new finish barns today.  Inevitably producers and contract growers will still continue to build new farms to either replace existing worn out assets or to take advantage of opportunities. However, the decision will hinge more on location and the cash flow requirements of the facility going forward and less on being aggressive and looking for opportunities to expand. 

For additional swine industry information, check out more at



Director Swine Lending
facebook twitter linkedin email copy clipboard phone fax pdf print checkmark