• The U.S. pork industry has lost nearly $4.5 billion since September 2007, and producers have lost more than 50 percent of the equity in their operations. 
• Over the past 22 months, producers have lost an average of $21.37 on every hog marketed.
• While lean hogs, corn and soybean meal futures prices suggest losses will be under $10 per head for pigs sold in July and August, they are expected to be more than $54 per head in November.
• While our industry has been experiencing severe losses, up to this point it is not due to a collapse of the market price for hogs as was the case in 1998. Losses have occurred because of high input costs, primarily feed stuffs, over the past two years. 
• The H1N1 flu outbreak - mislabeled "swine" flu - exacerbated the pork industry's financial problems. Cash prices fell sharply in the first three weeks of the crisis. While they since have risen to near $60 per carcass hundredweight, that price is much lower than the levels predicted by lean hog futures prices on April 24, the first day the flu outbreak received wide media attention.
• Futures prices now imply lower cash hog prices through next April, suggesting lower producer income levels for some time to come.
• The sum of all actual and projected revenue reductions for the period from April 24 to the end of 2009 is $1.256 billion.

I am asking for your assistance in helping our industry deal with these severe economic circumstances. Specially, I ask that you:

•  Purchase immediately an additional $50 million of pork for various federal food programs, using fiscal 2009 funds. 
• Lift a spending cap on USDA's Section 32 program, and use $50 million of $300 million available to purchase pork for the program.
• Buy on Oct. 1 a minimum of $50 million of pork, using fiscal 2010 funds. 
• Use $100 million of the $1 billion appropriated for addressing the H1N1 virus for the swine industry. This would include $70 million for swine disease surveillance, $10 million for diagnostics and H1N1 vaccine development and $20 million for industry support.
• Work with the U.S. Trade Representative to open export markets to U.S. pork, particularly China, which continues to impose an unwarranted ban on U.S. pork, citing fears of the H1N1 flu.
• Study the economic impact on the livestock industry of an expansion of corn-ethanol production and usage. The U.S. Environmental Protection Agency has proposed raising the cap on blending ethanol into gasoline to 15 percent from its current 10 percent.

I appreciate your attention to the matters raised in this correspondence, and I welcome the opportunity to speak with you about these and other matters of importance to our industry. We stand ready to assist USDA in whatever way possible as it addresses these issues.
 
Cordially,
 
Don Butler, President
National Pork Producers Council