If someone were to mention what industry in Minnesota generates nearly $2 billion/year in direct sales, and contributes approximately $7 billion to the state’s economy, very few people would guess the pork industry. However, those are the most recent estimates of the impact that Minnesota swine producers have on the state’s economy. Minnesota ranks third in the nation in hog production, producing over 15 million hogs/year. The pork industry is extremely important to the economy of south-central Minnesota. Blue Earth, Nicollet, Martin and Brown counties are in the top five hog production counties in the state. In fact Martin County is in the top 10 hog producing counties in the U.S., producing over 1.5 million hogs/year. Blue Earth County produces just under 1 million hogs annually, while both Nicollet and Brown County produce about 650,000 hogs/year.

The Minnesota pork industry supports approximately 22,500 jobs in Minnesota, including a significant amount of employment in the south-central region of the state. These jobs include hog management and care, meat processing, building construction and equipment manufacture, feed processing, trucking, veterinarians, etc. In our region we have some of the state’s major producers and integrators in the swine industry, several major feed processors and equipment manufacturers and some of the largest veterinarian clinics in the upper Midwest. Two of the largest soybean-processing plants in the U.S. are located in Mankato – ADM and CHS – both of which have a large employment base. The primary product produced at these plants is soybean meal, of which 95% is fed to livestock. And in south-central Minnesota, a large percentage of the soybean meal is fed to hogs. Approximately half of the corn and one-third of the soybeans raised in Minnesota each year are fed to livestock.

A person might wonder, why has south-central Minnesota become a focal point for expansion and growth of the pork industry in the past 10-15 years? There are several competitive advantages that this region has compared to other areas in Minnesota or the U.S., which include:

  • Abundant corn and soybean production and supply.
  • Innovative and experienced swine producers, which are some of the best in the U.S.
  • Excellent industry-support resources, such as veterinarians, feed consultants, ag lenders, facility contractors, etc.
  • Top-notch producer education programs and research efforts through the Minnesota Pork Board and Pork Producers Association and the University of Minnesota.
  • Large amounts of cropland to utilize the swine manure as a valuable fertilizer resource.

The manure generated by swine facilities has become a valuable resource to south-central Minnesota crop producers. Fertilizer costs for corn production in 2009 are expected to be $250-300/acre. A crop producer with some well-managed hog finishing facilities to provide liquid swine manure for fertilizer can provide a large percentage of the annual fertilizer needs for crop production. The availability of high-quality swine manure has become an important part of crop economics in the region. This is why there are still a large amount of crop producers willing to invest in swine finishing facilities on their farms. Most of the liquid swine manure is injected into the soil in the fall or early spring, in order to take full advantage of the crop nutrients. This method of application is very environmentally friendly and poses very minimal risk of nutrient runoff into rivers and streams, especially on the heavier soils that exist in most parts of the region.

The area swine industry has faced some economic and low profitability challenges in the past year, primarily resulting from skyrocketing feed costs and other input costs. Corn prices above $6/bu. and soybean prices above $13/bu. earlier this summer caused feed costs for hog producers to double compared to a year ago. The cost of fuel, transportation and most other inputs has also risen dramatically in the past year. The result has been significant financial losses for many swine producers during the first half of 2008. More recently, some improved hog market prices, and a slight easing of feed costs, have helped to somewhat improve the profit margins in hog production. Longer-term challenges for swine producers include concerns over corn supply as a result of the increasing corn usage for ethanol production, increasing environmental regulations that add more production costs, U.S. export policies and the lack of public support for the swine industry.

Summary
The swine industry in south-central Minnesota is alive and well, and it will likely be that way for a long time to come. Even though pork producers are facing some current economic challenges, as well as some long-term issues, the primary players in the swine industry have shown a strong resilience to overcome the economic challenges and industry issues that have existed in the past. There is no reason to suspect that things will be any different now or in the future, and the pork industry is likely to continue to be a major economic factor in south-central Minnesota.

Editor’s note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.