Study on Swine Catastrophic Disease

Final Report for

Acquisition Services Directorate

and

Risk Management Agency

July 10, 2015

Agralytica

333 North Fairfax Street, Suite 202

Alexandria, VA 22314 USA

Tel: (703) 739-9090

Fax: (703) 739-9098

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Study on Swine Catastrophic Disease

A report for

Acquisition Services Directorate

And

Risk Management Agency

TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ............................................................. 1

1.1. Background................................................................. 1

1.2. Conclusions regarding feasibility .......................................... 3

2. THE OBJECTIVE OF THIS STUDY.................................................. 6

3. THE SWINE AND PORK SECTORS.................................................. 8

3.1. Swine industry scale and impact .......................................... 8

3.2. Swine production........................................................... 9

3.2.1. Production geography and farm types............................ 9

3.2.2. Production stages ................................................11

3.2.3. Marketing.........................................................12

3.2.4. Slaughter and processing ........................................14

3.3. Industry economics........................................................17

3.3.1. Production costs..................................................17

3.3.2. Supply-demand overview ........................................17

3.3.3. Domestic demand................................................19

3.3.4. International markets............................................20

3.3.5. International competition .......................................21

4. IMPACT AND MANAGEMENT OF SWINE DISEASES .............................. 22

4.1. Diseases potentially affecting the US industry...........................22

4.1.1. Significant swine diseases endemic to US.......................22

4.1.2. Significant transboundary pathogens that would not interrupt 

exports ....................................................................26

4.1.3. Significant transboundary pathogens that would interrupt 

exports ....................................................................27

4.2. Current geographic distribution and recent outbreaks of FADs .........29

4.3. Costs associated with disease outbreaks, for FMD, CSF, ASF and SVD..30
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4.3.1. Losses related to regulatory response to disease outbreaks ...30

4.3.2. Review of published economic impact estimates...............31

4.4. Disease management......................................................33

4.4.1. Good animal husbandry practices ...............................33

4.4.2. Biosecurity arrangements........................................34

4.4.3. Preparedness and response plans ...............................37

5. GENERAL AGRICULTURAL POLICY SUPPORT FOR THE PORK SECTOR........ 39

5.1. Market oriented grain and oilseed prices ................................39

5.2. Export promotion .........................................................39

5.3. Animal and Plant Health Inspection Service .............................39

5.4. Disaster assistance........................................................40

6. RISK MANAGEMENT TOOLS...................................................... 41

6.1. Non-Insurance risk management tools ...................................41

6.1.2. Contracting.......................................................43

6.2. Insurance plans............................................................44

6.2.1. FCIC insurance products .........................................44

6.2.2. FCIC insurance product experience .............................46

6.2.3. Private insurance products ......................................52

7. FEASIBILITY OF DEVELOPING AN INSURANCE PLAN........................... 53

7.1. The risks...................................................................53

7.2. Defining the insured ......................................................55

7.3. Defining the guarantee and trigger for a loss ............................55

7.4. Rating analysis ............................................................56

7.4.1. Comparison between LRP and Options ..........................56

7.4.2. Catastrophic coverage discussion................................58

7.4.3. Endorsement Concept............................................58

7.5. Producer willingness to pay...............................................60

7.5.1. Potential outline of plan design.................................61

7.5.2. Impact analysis ...................................................61

7.5.3. AIP acceptance of a CSDE endorsement.........................63

7.6. Market impacts............................................................63

7.7. Conclusions on feasibility .................................................63

7.7.1. Statutory cap on expenditure ...................................63

7.7.2. Many hog operations have no insurable interest................64

7.7.3. Only current inventory could be covered .......................64

7.7.4. There is no data on which to base actuarially sound rates.....64

7.7.5. Existing mechanisms for risk management are available.......65

7.7.6. Producers currently appear unwilling to pay the cost to 

participate ................................................................65

APPENDIX 1: SECTION 508 DATA ....................................................... 66
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List of Figures

Figure 1: Share of pork supply that is exported...............................................................................1

Figure 2: Slaughter by market type...............................................................................................2

Figure 3: Geographic distribution of hog production ........................................................................9

Figure 4: Farrow to wean.......................................................................................................... 11

Figure 5: Farrow to feeder........................................................................................................ 11

Figure 6: Farrow to finish.......................................................................................................... 12

Figure 7: Finish only ................................................................................................................ 12

Figure 8: Slaughter by market type............................................................................................. 13

Figure 9: Hog slaughter in the United States................................................................................. 14

Figure 10: Exports as a percent of total supply ............................................................................. 18

Figure 11: US pork consumption per capita, 2005-2014................................................................... 19

Figure 12: US meat retail prices for beef, pork, & poultry, 1980-2104............................................... 20

Figure 13: Policies earning premium, all species........................................................................... 47

Figure 14: Policies earning premium, swine only........................................................................... 47

Figure 15: Insured liability, all species........................................................................................ 48

Figure 16: Insured liability, swine only........................................................................................ 48

Figure 17: Premium paid, all species........................................................................................... 49

Figure 18: Premium paid, swine only .......................................................................................... 49

Figure 19: Insured head, all species............................................................................................ 50

Figure 20: Insured head, swine only............................................................................................ 50

Figure 21: Loss ratios, all species............................................................................................... 51

Figure 22: Loss ratios, swine only............................................................................................... 51

List of Tables

Table 1: Economic impact of the swine sector................................................................................8

Table 2: Swine growers by state................................................................................................. 10

Table 3: Hog slaughter by state, 2009-2014.................................................................................. 15

Table 4: Pork production by state, 2009-2014............................................................................... 16

Table 5: Swine production costs, farrow-to-finish.......................................................................... 17

Table 6: US pork production, trade, and consumption, 2005-2014 .................................................... 18

Table 7: US per capita meat consumption projections, by type, 2013-2024 ........................................ 19

Table 8: Top US pork export markets, 2005-2014 .......................................................................... 20

Table 9: USDA baseline pork projections...................................................................................... 21

Table 10: Futures contract terminology....................................................................................... 41

Table 11: Examples of futures transactions.................................................................................. 42

Table 12: Examples of options transactions.................................................................................. 43

Table 13: Examples of LRP and LGM coverage for swine ................................................................. 45

Table 14: Comparison of risk management strategies..................................................................... 46

Table 15: Swine Sector Risks ..................................................................................................... 53

Table 16: Comparison of terms .................................................................................................. 57

Table 17: Comparison of rates between RMA and Put Options.......................................................... 57

Table 18: LRP payment factors .................................................................................................. 59

Table 19: CSDE enhancement payment factors ............................................................................. 59

Table 20: Combined payment factors.......................................................................................... 60

Table 21: Impact analysis ......................................................................................................... 62
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1. EXECUTIVE SUMMARY

1.1. Background

The US hog industry is an $18 billion enterprise that constitutes a major component of US agriculture. It 

generates an estimated 231,400 direct and indirect jobs, provides over $8 billion in wage earnings and 

contributes $46.7 billion to national economic activity. 

Given the importance of the sector, the economic threat of the introduction of serious foreign swine 

diseases is considerable. If introduced, such diseases would result in immediate closure of some of the 

export markets that currently take 20% of the total US supply (Figure 1). Even without any impact on 

demand in the domestic market, hog prices would fall dramatically, causing a multi-year contraction in 

the industry that would be painful for everyone involved.

Figure 1: Share of pork supply that is exported

Source: USDA PSD database

USDA’s Animal and Plant Health Inspection Service (APHIS) has developed a Foreign Animal Disease 

Preparedness and Response Plan (FAD PReP) that would help coordinate practical responses to a 

catastrophic swine disease event (CSDE). However, current plans would be incapable of ameliorating the 

severe negative economic impacts that will ensue. 

Since Federal crop insurance plans have become such a major component of the support system for 

producers of field and specialty crops, the pork industry asked the Congress to require a study of whether 

a Federal insurance plan could play a role in managing this disease risk faced by a major livestock

industry. The Agricultural Act of 2014 amended the Federal Crop Insurance Act to direct the Federal Crop 

Insurance Corporation (FCIC) to commission a study to determine the feasibility of developing an 

appropriate insurance program for swine producers to provide protection against a CSDE.

The feasibility of such a program is strongly influenced by the industry structure that has evolved over 

recent decades. There has been a significant degree of industry concentration and vertical integration 

that has redefined how price and production risks are managed. The 2012 Census of Agriculture indicates 

that ownership of the hog inventory has become fairly concentrated: 

• 145 producers owned 60% of the country’s inventory; and

• The 685 producers with 10,000 or more hogs owned 76% of total inventory. 
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The hog market has changed significantly in the last 20 years. Historically, growers would either sell their 

hogs on the spot cash market or deliver under a marketing contract to a packer. However, spot market 

purchases by packers, which represented only 15% of sales in 2004, have since shrunk to under 4% of 

animals delivered.

More importantly, the structure of hog ownership has changed as hog production has followed the path of 

poultry, becoming more vertically integrated. The packers that own slaughter facilities now raise more of 

the hogs they slaughter, and they use production contracts with growers to raise other packer-owned 

hogs. Independent contractors also use production contracts with growers, providing both the young pigs 

and the feed. In both cases the grower does not own the hogs and is responsible only for having made the 

investment in the hog barn and then feeding, caring for, and delivering an animal of marketable weight. 

Based on the 2009 Agricultural Resource Management Survey of the hog industry, USDA’s Economic 

Research Service reported that 71% of hogs were grown under such production contracts that year.

Independent growers and contractors still own a majority of the hogs slaughtered each year, and sell 

them to packers or intermediaries primarily through marketing contracts that can take a variety of forms. 

There do not appear to be any definitive estimates of the current breakdown of hog ownership among 

different segments. Based on Agricultural Marketing Service data, the U.S. International Trade 

Commission concluded that “...the total share of slaughtered barrows and gilts owned by packers 

(including sales for slaughter by packers) increased slightly, from 30.6 percent in 2008 to 32.3 percent in 

2012 and 33.4 percent in 2013.” Our own calculations shown in Figure 2 put it slightly lower in 2012 at 

about 27 percent.

Figure 2: Slaughter by market type

Source: See sources for Figure 8

The Statement of Work for this study included the formal criteria that any new insurance plan must 

satisfy in order to be approved by the FCIC Board. These criteria are reviewed in Section 2. The research 

and analysis for this report was performed between February and July of 2015. We held listening sessions 

for swine producers, insurance agents, pork industry representatives, insurance company staff, and 

university specialists between March 24 and April 2 in four states: North Carolina, Indiana, Minnesota, and 

Iowa. We also received industry input by phone and email. The listening session and other input is 

reflected throughout the study.
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1.2. Conclusions regarding feasibility

National Pork Producers Council representatives and our listening session participants said their primary 

concern is over the potential economic impacts on the industry of a disease outbreak that would cause 

other countries to stop importing pork from the United States. Industry experts identified the four 

foreign animal diseases that would result in loss of export markets as Foot and Mouth Disease, African

Swine Fever, Classical Swine Fever, and Swine Vesicular Disease. We explored insurance approaches to 

managing the market risks of an outbreak in the United States of one of these diseases. In Section 7 we 

discuss the risks, who would have an insurable interest in swine, how one would define the guarantee and 

triggering event, and how one might establish the rates to charge for such coverage. We explore how an 

endorsement to the existing Livestock Revenue Protection plan might work as an insurance solution to a 

CSDE.

Our overall conclusion from our research and analysis is that it is not currently feasible to develop an 

appropriate insurance program for swine producers to provide protection against a catastrophic swine 

disease event. We can envision a feasible program design but it is not an insurance plan that meets the 

definition of “actuarially sound,” that swine producers would likely purchase in significant volume, or 

that successfully addresses the economic challenges stemming from a catastrophic swine disease event. 

The six main reasons for our overall conclusion are elaborated below.

Statutory cap on expenditure

The 2000 Agricultural Risk Protection Act (ARPA) required the Risk Management Agency to develop the 

two existing programs for livestock, LRP and LGM, but it established a limit on total expenditures for 

premium subsidies, Administrative and Operating expenses so that, to the maximum extent practicable, 

all costs associated with conducting the livestock programs (other than research and development costs 

covered by Section 522) are not expected to exceed $20,000,000. The existing programs usually exhaust 

the available funding. 

Any new coverage for a CSDE would involve considerable Federal outlays. Our example of an 

endorsement described in Section 7 involves estimated subsidy costs of $18.2 million. Congressional 

action would be required to increase or remove the expenditure cap. The Congressional Budget Office’s 

March 2015 baseline projections of outlays on farm programs included an annual average of $8.4 billion 

for the Federal Crop Insurance Corporation for fiscal years 2015-2019. The negative impact of a CSDE on 

the $18 billion swine industry would be in the billions of dollars, and government costs for indemnities 

under an insurance plan could also be in the billions of dollars. Whether the Congress would choose to 

take on the additional costs of a new insurance plan for a CSDE is unknown.

Many hog operations have no insurable interest

The US swine industry is increasingly defined by contracts with growers to manage hogs provided and 

owned by the contractor. This gives the contractor control over the genetics and provides some 

geographic and management diversification of production risk. The precise share of total hogs currently 

grown under such contracts is not known but had reached 71% in 2009. Contract growers who do not own 

the animals have no significant insurable interest. The contactor or packer would have to purchase the 

insurance, and input we received at the listening sessions suggested that they have been more likely to 

use futures and options to manage at least a portion of the risk of a CSDE. If the industry begins to assign 

a higher probability to occurrence of a CSDE, packers, contractors and large independent producers may 

develop greater interest in an insurance product, especially if the cost is subsidized. However, the many 

growers who do not own the hogs they are raising would remain vulnerable to loss of access to hogs to 

raise and to contractor insolvencies.
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Only current inventory could be covered

Regulations governing FCIC insurance plans dictate that only current inventory can be insured. If a corn 

producer experiences a drought, it is only the current crop that is insured, not crops in subsequent years. 

Those subsequent crops each require payment of a new premium. In the case of livestock, one can only 

insure what exists. Annual slaughter of market hogs is approximately twice the inventory of market pigs 

and hogs at any point in the year. Thus under existing FCIC regulations an insurance plan could only be 

covering approximately half a year’s production at the time of a CSDE. 

While the threat of a CSDE with adverse financial impacts is real, most producers would not be covered 

under a plan providing CSDE coverage for swine. Even producers that would purchase the CSDE 

endorsement concept we describe in Section 7 would most likely not be nearly compensated for their loss. 

The losses many producers would face would result from their inability to obtain pigs in periods following 

a CSDE. They would be stuck with fixed costs associated with their investment in hog barns and 

equipment, yet could be unable to obtain a contract for animal production, either because integrators 

and packers do not wish to contract with them due to disease at or near their facilities, or due to lack of 

packer demand generally.

What the swine industry was hoping for is an insurance plan that would provide indemnities over the 

multi-year period of adjustment of the sector to a loss of export markets. This is not feasible under 

current regulations.

There is no data on which to base actuarially sound rates

There have been no outbreaks of the four critical diseases since the United States became a net exporter 

of pork in 1995. Indeed, neither African Swine Fever nor Swine Vesicular Disease has ever been present in 

this country. The last US case of Classical Swine Fever in the United States was in 1978 and the last Foot 

and Mouth Disease case was in 1929.

During the first decade in which US pork exports gained ground, net exports averaged only 2.6% of 

production. However, in the most recent decade, 2005-14, net exports averaged almost 15% of 

production and are now near 20%. The total lack of any CSDE experience, coupled with the recent 

increase in vulnerability to a loss of export markets, makes it very difficult to rate any potential insurance 

coverage. There has been some econometric modeling of the potential effects of a CSDE, as reviewed in 

Section 4.3.2, but the results are very dependent on the assumptions made in each case about the 

location and duration of the event, the species affected, containment measures, and consumer behavior.

Existing mechanisms for risk management are available 

Integrators and producers can and do use futures and options to manage price risk. It appears that most 

of the demand for these financial products is limited to the current inventory (since the volume for 

contracts greater than six months ahead is limited). USDA has also been implementing a Secure Pork 

Supply plan to allow business continuity where there is no disease present.

Growers focus on bioexclusion procedures (particularly given the experience with recent diseases). Also, 

some growers can self-insure over time on their own, as was specifically mentioned by one grower at our 

North Carolina listening session. Some producers have also diversified in order to limit the risk from 

production of any one commodity. However, with the increase in specialization within the hog sector, 

growers as a group are probably less diversified today than they were twenty or thirty years ago.
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Producers currently appear unwilling to pay the cost to participate

Equally serious is the lack of producer interest in buying insurance coverage. Participation in the existing 

LRP and LGM plans is negligible – only 43 policies in 2015 covering a total of 100,000 head, i.e. one tenth 

of a percent of annual slaughter. Through contracting and the use of futures and options the industry 

seems to be able to successfully manage its near-term price risk. The existing RMA livestock insurance 

plans are apparently viewed as too expensive for what they provide. 

In the listening sessions, producers who owned their own hogs said they would not want to pay even one 

dollar per animal for insurance. Some said it would have to be less than the pork checkoff amount, which 

is 0.40% or about $0.67 per hog. Our estimate in Section 7.5.2 of the producer cost of an LRP-Swine 

policy with a CSDE endorsement is 2.5 times that amount. However, one participant commented that it 

will actually be the producer’s banker who decides whether to buy coverage. On the face of it, a 

producer cost of insurance equal to one percent of the value of the hogs should not be a major obstacle 

to purchasing the coverage if it appears to be needed.

Finally, some in the countryside believe that if there is a big enough problem in the industry, the 

Congress will approve ad hoc disaster payments to deal with it, in which case there is no point in paying 

for insurance.
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2. THE OBJECTIVE OF THIS STUDY

The economic threat of the introduction of serious swine diseases is considerable. If introduced, diseases 

such as Foot and Mouth Disease, African Swine Fever, Classical Swine Fever, or Swine Vesicular Disease

would result in immediate closure of some of the export markets that currently take more than 20% of 

total US production. Even without any impact on demand in the domestic market, hog prices would fall 

dramatically. Domestic consumption could also be impacted, hastening contraction in domestic demand. 

In response to this and other swine disease threats, the pork industry asked the Congress to require a 

study of whether a Federal insurance plan could play a role in managing this risk faced by the industry. 

Consequently, the Agricultural Act of 2014 amended the Federal Crop Insurance Act to direct the Federal 

Crop Insurance Corporation to commission a study to determine the feasibility of developing an 

appropriate insurance program for swine producers to provide protection against a catastrophic swine 

disease event. It did not define “catastrophic” but industry representatives made it clear that their main 

concern was the potential impact of other countries banning pork imports from the United States.

The objective was to undertake research and develop a report that assesses the likelihood of successfully 

developing an insurance program for a swine catastrophic disease event. Specifically to: 

• obtain information that would determine if providing swine catastrophic disease coverage 

would benefit agricultural producers; 

• help swine producers and Congress understand how these risks are being, or could be 

addressed by the crop insurance system; 

• evaluate any existing policies or plans of insurance that provide coverage for a swine 

catastrophic disease event; and 

• determine what practical challenges are present that need to be overcome in order to 

create actuarially sound products related to a swine catastrophic disease event. 

The Statement of Work also posed the following questions:

• What existing policies are available that cover losses due to a catastrophic swine disease?

• What data is available on swine catastrophic disease events?

• Can the available data be used to create an actuarially sound insurance program for swine 

catastrophic disease events or risks?

• Would this program be beneficial to swine producers?

• What practical challenges prevent the Federal Crop Insurance Corporation from developing 

an insurance program to cover swine for catastrophic disease events?

• How can these practical challenges to developing an insurance program be overcome?

Finally, the Statement of Work specified that the criteria for plan development must meet the following 

RMA standards:

• Conform to RMA’s enabling legislation, regulations, and procedures that cannot be changed;

• Charge a premium that the insureds must be willing to pay for the insurance;

• Be effective, meaningful and reflect the actual risks of producers;

• Have best management practices that can be defined, required of insureds and monitored;
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• Identify and appropriately categorize perils affecting production and/or revenue as insurable 

and non-insurable;

• Be ratable and operable in an actuarially sound manner;

• Contain underwriting, rating, pricing, loss measurement, and insurance contract terms and 

conditions;

• Be an appropriate geographic distribution of production to ensure a sound financial 

insurance program;

• Produce enough interest for the risk to be spread over an acceptable pool of insureds;

• Not allow insureds to select insurance only when conditions are adverse;

• Avoid or control moral hazards; and

• Not allow a change in market behavior or market distortions that change the quantity 

supplied or shift the supply curve.

This report was prepared by the staff of Agralytica and the staff of our actuarial partner, Milliman Inc. In 

addition, two swine industry experts contributed research and analysis on swine diseases and disease 

management: Dr. Derald Holtkamp and Dr. Randy Jones. Dr. Holtkamp is an Associate Professor in the 

Department of Veterinary Diagnostics and Production Animal Medicine (VDPAM) in the College of 

Veterinary Medicine at Iowa State University (http://vetmed.iastate.edu/users/holtkamp). Dr. Jones is a 

principal of Livestock Veterinary Services, a large veterinary practice in Kinston, North Carolina, serving 

the large non-integrated swine producers in the Carolinas, Georgia, and Alabama 

(http://www.livestockvet.com/). Section 4 is largely their work.

The research and analysis for this report was performed between February and July of 2015. We held 

listening sessions for swine producers, insurance agents, pork industry representatives, insurance 

company staff, and university specialists between March 24 and April 2 in four states: North Carolina, 

Indiana, Minnesota, and Iowa. We also received industry input by phone and email. This input is 

reflected throughout this report, but principally in Sections 6 and 7.
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3. THE SWINE AND PORK SECTORS

3.1. Swine industry scale and impact

The United States slaughtered 107 million market hogs in 2014, producing 30.4 billion pounds (live weight) 

of pork. The United States is the world’s third largest pork producer after China and the European Union. 

It is also the world’s largest exporter. Exports have become critical to the industry: in the past ten years, 

they have grown from 12% to 20% of production.

The impact of the hog and pig industry is substantial. With normal production of 110 million hogs, and a 

price of $80 per hundredweight of carcass, the value of swine production is approximately $18 billion. 

This generates an estimated 231,400 direct and indirect jobs, provides over $8 billion in wage earnings 

and contributes $46.7 billion to national economic activity. These estimates are obtained by applying the 

latest (2013) US Department of Commerce RIMS II input/out multipliers to 2014 production data from 

USDA’s National Agricultural Statistics Service (NASS).

Table 1: Economic impact of the swine sector

Concern has grown within the industry that introduction of a foreign animal disease could lead to major 

disruption of the sector due to loss of export markets and a plunge in market prices. The threat of an 

outbreak of a catastrophic swine disease is ever present. The global swine sector fights a continuous 

battle to prevent outbreaks of catastrophic diseases such as Foot and Mouth Disease, African Swine Fever, 

Classical Swine Fever, and Swine Vesicular disease. 

These fears came to a head in 2013 and 2014 as the United States experienced an outbreak of swine

diseases caused by novel viruses (swine enteric coronavirus diseases (SECD) caused by Porcine Epidemic 

Diarrhea Virus (PEDV) and Porcine deltacoronavirus (PDCoV)). PEDV appeared in the United States in April 

2013 and was joined by an additional related virus, PDCoV in early 2014. The resulting disease outbreaks

had a major impact on piglets resulting in significant morbidity and mortality. More recently, the 2015 

outbreaks of Highly Pathogenic Avian Influenza that have devastated US turkey and egg layer flocks 

signaled the animal product industries’ ongoing vulnerability to disease episodes.

Other diseases with much more serious implications will continue to threaten the United States swine 

sector with substantial economic impact. Various government and industry funded institutions have 

worked together to prepare for novel swine diseases and to identify potential responses. An example of 

this preparation is the Swine Industry Manual prepared as part of the Foreign Animal Disease Preparedness 

and Response Plan, an integral part of the national Animal Health Emergency Management System. 

This manual identifies lessons learned from past foreign animal disease outbreaks and the challenges of 

dealing with any new events. This suggests that the United States has invested appropriately to combat a 

potential novel swine disease, including reference to plans for appraisal of losses and compensation. 

However, in practice, compensation for the effects of livestock diseases is not always readily available, 

especially when the costs are substantial. The government resources for preventing and responding to 

livestock disease outbreaks are further described below in Section 4.

US Output 

($1,000)

Earnings 

($1,000)

Employment 

(jobs)

Hogs & pigs $ 46,694,612 $ 8,059,811 231,408
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3.2. Swine production

3.2.1. Production geography and farm types

US swine production takes place on over 63,000 farms across the country according to the 2012 US Census 

of Agriculture. All states had swine farms, and twenty of them had over 1,000 farms. Nevertheless, 

production volume is particularly concentrated in the Corn Belt states plus North Carolina, as illustrated 

in Figure 3. 

Figure 3: Geographic distribution of hog production

A few words on terminology. Swine refers to the broad category encompassing hogs, pigs, wild boars, 

etc. In the United States, “pig” generally refers to animals at weights of 120 pounds or less. Above that 

it is a “hog”. Some other countries just call all animals pigs. The breeding stock includes boars (male) 

and sows (female). Market hogs raised for slaughter include barrows (castrated males) and gilts (females 

that have not had a litter).

Swine growers are classified into independent grower farms (55,566 units), contractor/integrator farms 

(558), and contract grower farms (7,122). These are listed by state in Table 2.

Independent farms are found throughout the country. Most states have multiple contractor/integrator 

farms. The two states with the most contractor/integrator farms were Iowa (66, 12% of such farms) and 

North Carolina (61, 11%). 

Contract grower production, by contrast, is fairly concentrated. It was most common in Iowa (2,602 

farms), Minnesota (912), North Carolina (875), Indiana (499), and Ohio (482). These five states accounted 

for 75% of contract grower farms.
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Table 2: Swine growers by state

Source: 2012 US Census of Agriculture

Despite the fact that swine are raised nationwide, the 2012 Census of Agriculture indicates that 

ownership of the inventory has become fairly concentrated: 

• 145 producers owned 60% of the country’s inventory; and

• The 685 producers with 10,000 or more hogs owned 76% of total inventory.

State

Independent 

grower Farms

Contractor/ 

integrator 

Farms

Contract 

grower 

Farms

Alabama 671 18

Alaska 35 2

Arizona 506 3

Arkansas 685 2 65

California 1,411 24 2

Colorado 982 13 6

Connecticut 315 3

Delaware 59

Florida 1,599 43

Georgia 839 3 24

Hawaii 231

Idaho 676 4

Illinois 1,681 18 346

Indiana 2,244 14 499

Iowa 3,598 66 2,602

Kansas 951 15 44

Kentucky 1,248 14 22

Louisiana 658

Maine 748 4

Maryland 332 1

Massachusetts 477 1

Michigan 2,062 8 128

Minnesota 2,414 29 912

Mississippi 503 2 35

Missouri 1,923 14 191

Montana 399 7

Nebraska 1,192 9 275

Nevada 81

New Hampshire 357 2

New Jersey 293 5

New Mexico 209 2

New York 1,881 18 13

North Carolina 1,281 61 875

North Dakota 215 3

Ohio 2,998 14 482

Oklahoma 1,896 3 48

Oregon 1,110 14

Pennsylvania 2,742 29 326

Rhode Island 77

South Carolina 790 7 41

South Dakota 595 86

Tennessee 1,255 18 24

Texas 4,902 3

Utah 651 14 4

Vermont 437 13

Virginia 1,231 12 22

Washington 913 21

West Virginia 719 6

Wisconsin 2,224 15 31

Wyoming 270

United States 55,566 558 7,122

Total 63,246

number of farms
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3.2.2. Production stages

The production chain for swine begins with a small number of companies specializing in animal genetics. 

One participant at our listening sessions reported that there are only around 20 purebred swine breeding 

groups supplying the US industry

Swine production has four stages: breeding and gestation, farrowing and weaning, nursery, and finishing. 

After farrowing, a piglet is weaned at approximately 3 weeks and will be moved to a temperature 

controlled nursery where it grows to 30-80 pounds at 6-10 weeks of age. From there they are moved to a 

finishing operation where they grow to be 250-275 pound market hogs by 5-6 months of age.1

Some producers handle the whole production process (farrow to finish), while others specialize in part of 

the process such as farrowing to wean, farrow to feeder, or finishing only.

The different types of operations are shown in the graphs that follow, based on the size of the operation: 

small (<1,000 animals), medium (1,000-4,999), and large (5,000+). On the basis of these size groupings, 

the different farm types are shown in terms of farm numbers, as well as the overall number of animals 

managed in operations of that size.

Figure 4: Farrow to wean

Source: US 2012 Census of Agriculture

Figure 5: Farrow to feeder

Source: US 2012 Census of Agriculture

 

1 http://www.epa.gov/agriculture/ag101/porkphases.htmland McBride, William and Nigel Key, “Economic and 

Structural Relationships in U.S. Hog Production,” Economic Research Service, USDA, AER 818, 2003 
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Figure 6: Farrow to finish

Source: US 2012 Census of Agriculture

Figure 7: Finish only

Source: US 2012 Census of Agriculture

In all four cases, the majority of swine farms are small, but the majority of animals are raised in 

operations marketing 5,000 or more hogs.

After the finishing phase, pigs are ultimately sent to a packer for slaughter. The packer is often an 

“integrator” that has contracted with growers to sell the packer their finished hogs or to raise hogs owned 

by the packer to market weight. Frequently there is a contractor in between the grower and packer that 

serves as the integrator. Contractors often have production contracts with growers and marketing 

contracts with their packer customers that specify pricing and other terms.

US swine production continues to transition to fewer, larger farms due to increased economies of scale 

afforded by the larger more vertically integrated operations. The percentage of hogs purchased by the 

packers in the United States through marketing or production agreements has been stable at around 60% 

while the production of hogs owned and raised by the packer has increased to close to 30% of the total 

purchases (Figure 8).

3.2.3. Marketing

The hog market has changed significantly in the last 20 years. Historically, growers would either sell their 

hogs on the spot cash market or deliver under a marketing contract to a packer. However, spot market 

purchases by packers, which represented only 15% of sales in 2004,2 have since shrunk to under 4% of 

animals delivered.3

 

2 Harper, Allen. “Hog Production Contracts: The Grower-Integrator Relationship.” Virginia Tech, 2009. 3 United States International Trade Commission. “Pork and Swine: Industry & Trade Summary,” p.34. October 2014.
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More importantly, the structure of hog ownership has changed as hog production has followed the path of 

poultry, becoming more vertically integrated. The packers that own slaughter facilities now raise more of 

the hogs they slaughter, and they use production contracts with growers to raise other packer-owned 

hogs. Independent contractors also use production contracts with growers. In both cases the grower does 

not own the hogs and is responsible only for having made the investment in the hog barn and then 

feeding, caring for, and delivering an animal of marketable weight. Based on the 2009 Agricultural 

Resource Management Survey of the hog industry, USDA’s Economic Research Service reported that 71% of 

hogs were grown under such production contracts that year.4

Production contracts typically spell out not only the length of the contract, terms for its renewal, and 

circumstances that would result in termination, but also specific terms regarding which party is 

responsible for inputs like equipment, facilities, feeder pigs, feed, and other services.

Nevertheless, independent growers still own a majority of the hogs slaughtered each year, and sell them 

to packers or intermediaries primarily through marketing contracts that can take a variety of forms. The 

most common contract is a finishing contract, whereby the grower raises the animals from feeder weight 

to market weight (typically from 45 pounds to 250+ pounds).

There do not appear to be any definitive estimates of the current breakdown of hog ownership. Based on 

Agricultural Marketing Service data, the U.S. International Trade Commission concluded that “...the total 

share of slaughtered barrows and gilts owned by packers (including sales for slaughter by packers) 

increased slightly, from 30.6 percent in 2008 to 32.3 percent in 2012 and 33.4 percent in 2013.”5 Our 

own calculations shown in Figure 8 put it slightly lower in 2012 at about 27 percent.

Figure 8: Slaughter by market type

Sources: Grimes, G., and R. Plain. U.S. Hog Marketing Contract Study. Columbia, MO: University of 

Missouri Department of Agricultural Economics, 2005; Grimes, G., and R. Plain. U.S. Hog Marketing 

Contract Study. Columbia, MO: University of Missouri Department of Agricultural Economics, 2007; 

R. Plain. U.S. Market Hog Sales, 2002-2012. Columbia, MO: University of Missouri Department of 

Agricultural Economics, 2013.

 

4 McBride, William D., and Nigel Key. U.S. Hog Production From 1992 to 2009: Technology, Restructuring, and 

Productivity Growth, ERR-158. U.S. Department of Agriculture, Economic Research Service, October 2013, p. 14. 5 United States International Trade Commission, op. cit., page 25
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The price paid for slaughter-ready hogs is determined by the specific contract type. Prices may be 

defined using the spot market, the futures market or as otherwise specified in the contract. The fact 

that such a small percentage of hogs are sold in the spot market raises questions as to the validity of 

using spot cash values as a basis for contract prices.

3.2.4. Slaughter and processing

After finishing, swine are sent to packers for slaughter and processing. 

US pork production has generally been rising. Although there are some cyclical periods of growth and 

contraction, pork production has grown by 10% over the last ten years, an average of 1% per year. Annual 

slaughter is shown in Figure 9. Since 2007, production has fluctuated around 110 million head, dropping 

to 107 million head in 2014 as a result of piglet mortality from the PEDV outbreak. 

Figure 9: Hog slaughter in the United States

Source: USDA NASS

Hog slaughter, as with hog production, takes place nationwide. Nevertheless, it is more concentrated 

than hog farming. Table 3 shows slaughter volume (live weight) by state.
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Table 3: Hog slaughter by state, 2009-2014

Source: USDA NASS

The top five states account for 61% of slaughter: Iowa (8.2 billion pounds, 27%), Illinois (3.0 billion, 10%), 

Minnesota (2.7 billion, 9%), Missouri (2.5 billion, 8%), and Indiana (2.3 billion, 8%). Pork production, 

shown in Table 4, is even more concentrated than slaughter.

State 2009 2010 2011 2012 2013 2014

Alabama 34,974 33,409 30,382 14,216 10,917 8,618

Alaska 240 241 (D) 173 219 264

Arizona 377 369 360 393 406 458

Arkansas 82,177 70,868 58,436 62,797 19,404 2,382

California 643,816 607,334 602,678 591,853 577,875 586,816

Colorado 2,599 2,350 2,481 3,429 3,829 3,902

DE-MD 4,454 4,500 4,535 4,421 4,331 4,612

Florida 11,809 10,212 11,563 9,176 9,589 6,617

Georgia 18,642 18,004 18,788 20,318 19,481 17,196

Hawaii 3,757 3,865 3,744 3,472 3,322 3,327

Idaho 30,723 27,673 31,220 35,551 35,122 33,902

Illinois 2,674,385 2,582,000 2,700,986 2,988,384 3,025,416 3,008,036

Indiana 2,256,328 2,265,202 2,280,616 2,288,547 2,299,170 2,301,137

Iowa 8,682,322 8,144,471 8,177,329 8,291,508 8,185,368 8,197,146

Kansas (D) (D) (D) (D) (D) (D)

Kentucky (D) (D) (D) (D) (D) (D)

Louisiana 2,515 2,182 2,193 2,246 2,234 2,436

Michigan 45,705 41,903 50,516 50,615 60,395 72,603

Minnesota 2,592,322 2,691,772 2,781,851 2,879,567 2,786,846 2,670,789

Mississippi 36,058 32,715 36,014 36,925 18,548 7,974

Missouri 2,228,686 2,195,631 2,270,487 2,295,431 2,385,686 2,450,372

Montana 3,227 3,327 3,271 3,668 3,588 3,117

Nebraska 2,067,922 2,063,582 2,104,923 2,155,431 2,076,000 2,014,836

Nevada (D) (D) 138 151 151 201

New England 1/ 4,546 5,027 5,772 6,420 6,875 7,275

New Jersey 9,676 10,123 10,700 10,644 10,866 9,858

New Mexico 419 412 345 490 541 569

New York 5,002 5,008 5,603 7,246 7,860 8,376

North Carolina 3,218,592 3,069,404 2,997,190 3,097,925 3,226,084 (D)

North Dakota 27,041 30,329 12,609 1,303 1,159 1,104

Ohio 293,736 283,290 279,364 266,464 261,061 257,744

Oklahoma 1,472,745 1,496,690 1,553,171 1,502,169 1,491,095 1,362,893

Oregon 40,490 41,753 44,446 43,325 42,861 43,253

Pennsylvania 774,417 755,972 729,297 753,523 745,736 760,167

South Carolina (D) (D) (D) (D) (D) (D)

South Dakota 1,135,646 1,185,554 1,255,427 1,264,017 1,278,320 (D)

Tennessee 320,370 318,250 311,520 323,119 327,467 321,773

Texas 105,276 104,158 122,341 114,644 103,356 65,780

Utah 10,815 7,204 9,416 9,328 10,485 7,873

Virginia 600,419 629,327 631,029 676,192 676,504 (D)

Washington 5,242 (D) (D) (D) (D) (D)

West Virginia 1,784 1,590 1,887 2,084 1,875 1,864

Wisconsin 228,925 228,813 250,979 250,420 270,284 274,959

Wyoming 1,063 1,045 1,094 1,101 1,080 1,033

United States 30,723,264 30,004,639 30,422,112 31,092,083 30,964,311 30,431,080

(D) Withheld to avoid disclosing data for individual operations.

(1,000 pounds)

1/ New England includes Connecticut, Maine, Massachusetts

 New Hampshire, Rhode Island, and Vermont.
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Table 4: Pork production by state, 2009-2014

Source: USDA NASS

The top five states (Iowa, North Carolina, Minnesota, Illinois, and Indiana) account for 70% of pork 

production (the top three represent 59%). Iowa alone accounts for over one-third of the nation’s pork 

processing. The processing industry ownership is likewise concentrated, with the top 4 firms holding a 

77% market share, based on slaughter estimates.6 The top 5 firms account for 88%.

 

6 “Leading pig processors, producers from around the world.” Pig International. Vol 47, No. 7 (Nov-Dec 2014), p.8. 

Processor shares derived by comparing firm slaughter estimates with the 112 million swine slaughter figure for 2013.

State 2009 2010 2011 2012 2013 2014

Alabama 95,566 65,815 53,621 50,277 60,293 45,565

Alaska 604 622 606 414 374 504

Arizona 76,521 80,582 92,934 84,118 83,730 66,385

Arkansas 109,831 86,432 85,946 86,430 101,110 71,066

California 53,886 56,575 49,542 48,031 47,708 39,304

Colorado 265,861 297,691 300,949 278,891 259,063 246,115

Connecticut 831 1,121 689 730 1,276 984

Delaware 4,241 4,466 2,810 2,722 4,124 1,129

Florida 7,879 4,173 4,251 3,633 3,489 4,119

Georgia 98,080 75,405 88,359 98,272 81,609 70,760

Hawaii 3,319 4,032 4,021 4,330 4,062 4,201

Idaho 25,984 (D) (D) (D) (D)

Illinois 1,838,925 1,926,414 1,911,353 1,962,779 2,001,164 1,949,324

Indiana 1,738,802 1,753,822 1,762,434 1,753,128 1,643,591 1,639,654

Iowa 9,608,305 9,244,147 9,816,139 10,345,144 11,170,460 11,548,962

Kansas 914,694 883,829 930,878 912,876 838,461 773,202

Kentucky 174,705 185,534 176,560 168,777 175,863 170,721

Louisiana 2,757 3,212 4,275 1,337 1,520 1,621

Maine 2,135 2,305 3,130 2,842 2,211 2,075

Maryland 15,250 14,409 12,392 11,341 11,590 11,519

Massachusetts 1,813 3,539 3,029 2,561 4,265 3,016

Michigan 606,284 619,869 618,558 548,754 561,091 524,658

Minnesota 3,678,035 3,699,102 3,702,918 3,938,732 3,912,363 3,785,444

Mississippi 179,790 152,173 161,738 155,865 181,330 144,323

Missouri 1,694,338 1,288,014 1,321,770 1,313,879 1,308,522 1,481,513

Montana 78,601 79,932 77,175 81,659 84,479 83,619

Nebraska 1,359,740 1,366,535 1,317,634 1,250,968 1,176,855 1,188,096

Nevada 2,650 1,821 992 1,497 1,803 1,667

New Hampshire 1,235 1,011 783 1,382 1,168 1,420

New Jersey 1,814 1,650 1,644 1,516 1,664 1,414

New Mexico 780 553 400 375 693 744

New York 25,347 23,813 28,259 26,235 24,581 28,016

North Carolina 4,070,849 3,767,088 3,662,862 3,921,079 4,056,602 3,558,499

North Dakota 60,908 59,729 70,182 53,514 51,642 52,281

Ohio 999,093 1,049,889 1,065,596 1,080,269 1,093,003 1,046,439

Oklahoma 1,255,841 1,294,142 1,350,272 1,331,382 1,374,298 1,262,803

Oregon 9,484 8,610 7,493 5,170 3,034 2,420

Pennsylvania 414,382 504,219 479,159 505,852 490,700 516,772

Rhode Island 452 561 575 599 562 704

South Carolina 49,908 53,178 48,966 47,924 47,207 50,136

South Dakota 671,593 741,125 779,501 797,188 697,249 606,351

Tennessee 92,354 99,106 93,672 85,466 90,541 94,251

Texas 302,578 154,540 203,312 267,523 285,822 309,408

Utah 324,227 303,829 305,154 285,920 287,097 267,002

Vermont 1,285 1,177 1,230 1,367 1,304 1,316

Virginia 110,902 113,738 73,830 68,800 71,287 64,875

Washington 11,453 (D) (D) (D) (D)

West Virginia 2,263 1,312 1,938 2,325 1,682 1,266

Wisconsin 190,346 173,255 175,156 171,854 167,000 143,196

Wyoming 122,787 136,550 165,446 144,125 105,066 101,832

ID & WA 46,729 45,770 50,939 45,656 40,997

United States 31,359,308 30,437,375 31,065,903 31,960,791 32,620,264 32,011,688

(D) Withheld to avoid disclosing data for individual operations.

(1,000 pounds)
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3.3. Industry economics

3.3.1. Production costs

Hog production costs in the United States have been about $50-60 per hundredweight (cwt) of gain for the 

last six years, according to ERS production cost estimates for farrow-to-finish operators. Feed costs are 

the single largest expense in hog production, accounting for roughly 60% of total costs; other operating 

costs add another 10% share. Overhead represents about 30% of the cost of production.

Table 5: Swine production costs, farrow-to-finish

Source: USDA ERS Cost of production estimates

Sunk capital costs – those incurred regardless of whether hogs are grown - are substantial. They account 

for 15-20% of the total costs, usually around $10-11 per hundredweight of gain. These include capital 

recovery costs for machinery, equipment, buildings and the breeding herd, plus taxes, insurance and 

general farm overhead. Paid and unpaid labor represents 10-15% of costs.

Although 2009 was a year during which hogs were produced at a slight loss, in the five years since, 

margins have been strong, typically $0.15 per pound ($15 per hundredweight). However, in 2015 hog 

prices have declined significantly and are projected by USDA to remain at a similar level through 2016.

3.3.2. Supply-demand overview

Market supply, demand, trade and disappearance are shown in Table 6. Production has risen from 20.7 

billion pounds (carcass weight) in 2015 to 22.9 billion pounds in 2014.

US pork imports have typically ranged from 800 million to 1 billion pounds over the past decade. This 

volume remains stead and accounts for less than 5% of the total pork supply. 

Exports, by contrast, are larger and have been growing, rising from 12% to 20% of total supply. They grew 

rapidly in the mid to late 2000s, virtually doubling from 2.7 billion pounds in 2005 to about 5 billion 

pounds in the last few years. 

 Item 2009 2010 2011 2012 2013 2014

Total, gross value of production 47.12 62.06 75.36 73.28 76.69 87.33

Operating costs 

 Feed cost 24.26 23.24 34.67 32.66 36.72 34.07

 Other operating costs 4.76 5.17 5.73 5.79 5.86 6.04

Total operating costs 29.02 28.41 40.40 38.45 42.58 40.11

 

Allocated overhead 

 Overhead 11.77 11.73 12.05 10.16 10.37 10.83

 Labor and Opportunity cost 7.02 7.04 7.02 7.21 7.58 7.72

Total, allocated overhead 18.79 18.77 19.07 17.37 17.95 18.55

Total costs listed 47.81 47.18 59.47 55.82 60.53 58.66

Value of production minus costs -0.69 14.88 15.89 17.46 16.16 28.67

dollars per cwt gain
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Table 6: US pork production, trade, and consumption, 2005-2014

Figure 10: Exports as a percent of total supply

Total 

production Imports

Total

supply Exports

% of total 

supply 

exported

Total

disappearance

U.S. 

population 

(1,000 

persons)

Per capita 

disappearance 

(pounds)

Boneless retail 

weight

2005 20,705 1,024 22,239 2,666 12.0% 19,093 295,993 47.0

2006 21,074 990 22,543 2,995 13.3% 19,055 298,818 46.5

2007 21,962 968 23,424 3,141 13.4% 19,763 301,696 47.8

2008 23,367 832 24,717 4,651 18.8% 19,431 304,543 46.5

2009 23,020 834 24,489 4,094 16.7% 19,869 307,240 47.1

2010 22,456 859 23,840 4,223 17.7% 19,077 309,776 44.9

2011 22,775 803 24,120 5,196 21.5% 18,382 312,034 42.9

2012 23,268 802 24,612 5,380 21.9% 18,607 314,246 43.2

2013 23,200 880 24,705 4,992 20.2% 19,095 316,465 44.0

2014 22,858 1,007 24,483 4,858 19.8% 19,065 318,688 43.6

Source: USDA WASDE
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3.3.3. Domestic demand

Domestic pork consumption was 19.1 billion pounds in 2014, approximately one-quarter of total national 

red meat and poultry consumption. Beef accounts for another quarter and poultry for one-half. 

On a per capita basis, pork demand is approximately 44 pounds per person.

Figure 11: US pork consumption per capita, 2005-2014

Source: USDA WASDE

Table 7 shows USDA projections for per capita consumption over the next decade. 

Table 7: US per capita meat consumption projections, by type, 2013-2024

Source: USDA Baseline Projections

Over the next ten years, per capita beef consumption is expected to decline by about 5% while pork and 

poultry consumption are expected to grow by 10%.

A primary reason for these trends is the high price of beef relative to pork and poultry. Figure 12 shows 

retail prices for all three products from 1980 to 2014.

Per capita meat consumption, retail weight

 Item 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

 Beef 56.3 54.6 52.2 49.4 48.5 49.1 49.8 50.6 51.5 52.1 52.4 52.4

 Veal 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2

 Pork 46.8 45.3 46.6 48.5 48.8 49.1 49.3 49.4 49.4 49.4 49.4 49.5

 Lamb & mutton 0.9 0.9 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8

 Total red meat 104.4 101.1 99.9 99.0 98.4 99.3 100.1 101.0 101.9 102.4 102.8 102.9

 Broilers 81.9 83.4 85.4 86.7 88.1 89.2 90.2 91.1 91.7 92.2 92.7 93.1

 Other chicken 1.3 1.3 1.3 1.3 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4

 Turkeys 16.0 15.7 15.8 16.2 16.5 16.7 16.8 17.0 17.1 17.2 17.3 17.3

 Total poultry 99.2 100.3 102.5 104.2 106.0 107.3 108.4 109.5 110.2 110.8 111.3 111.9

Red meat & poultry 203.6 201.4 202.3 203.2 204.4 206.5 208.5 210.5 212.1 213.2 214.1 214.8

Pork share of total 23% 23% 23% 24% 24% 24% 24% 23% 23% 23% 23% 23%

Pork share of red meat 45% 45% 47% 49% 50% 49% 49% 49% 48% 48% 48% 48%

pounds
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Figure 12: US meat retail prices for beef, pork, & poultry, 1980-2104

Source: USDA ERS, USDA AMS

Beef and pork prices have risen at a faster rate than prices for poultry. While broiler prices doubled 

between 1980 and 2014, those for pork and beef have almost tripled. The divergence in prices has been 

most pronounced since 2000.

There is significant correlation among these prices over time, particularly as chicken and pork serve as 

substitutes for beef during lean economic times. Other events, such as excess supply or consumer scares, 

can also trigger price changes or product substitution.

3.3.4. International markets

US exports of pork (HTS code 0203, “meat of swine, fresh, chilled or frozen”) totaled almost 1.5 million 

tons in 2014, up from 820,000 MT in 2005 – an expansion of 80%. The largest export markets for US pork 

are Mexico and Japan, which account for more than half of US shipments. Next are South Korea, China, 

and Canada, bringing the top five markets to 80% of all exports. Of these five, demand from Mexico, 

China, and South Korea has doubled or more over the past decade; growth in exports to Japan and Canada 

has been less significant. 

Table 8: Top US pork export markets, 2005-2014

Source: USITC, TradeMap

Importers 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 % of total

Mexico 170,155 179,167 142,130 228,631 274,601 283,898 286,111 410,113 429,071 480,486 32.5%

Japan 338,642 325,831 346,434 419,107 392,152 391,228 464,614 421,669 402,323 368,749 24.9%

S. Korea 60,230 91,208 82,764 94,939 83,993 69,502 148,626 132,513 87,235 119,334 8.1%

China 32,669 27,652 62,860 108,164 20,838 46,834 219,216 199,376 153,596 108,109 7.3%

Canada 80,049 90,223 108,173 125,167 112,849 112,632 122,611 130,821 112,042 104,839 7.1%

Australia 18,033 20,170 23,774 30,685 38,492 44,483 55,992 59,668 48,647 44,981 3.0%

Colombia 3,224 3,419 3,475 2,831 3,745 7,371 9,676 16,247 29,795 41,449 2.8%

Hong Kong 5,863 13,111 37,260 155,081 91,472 59,738 36,779 38,609 45,885 40,279 2.7%

Other 110,708 156,582 159,257 302,996 236,531 225,093 204,758 237,989 181,796 169,988 11.5%

World 819,573 907,363 966,127 1,467,601 1,254,673 1,240,779 1,548,383 1,647,005 1,490,390 1,478,214 100.0%
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3.3.5. International competition

World trade in pork was approximately 6.6 billion pounds in 2014, of which the US accounted for 35%. The 

EU is a close second as a global supplier.

USDA baseline projections show the US retaining a 34-35% share of world pork trade through 2024. Global 

trade is expected to grow by approximately 20% over the next decade. These projections assume no 

major supply shocks, trade disruptions, or changes in market access for major importers. 

Table 9: USDA baseline pork projections

Source: USDA

Exporters 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Exports, thousand metric tons, carcass weight

 United States 2,264 2,298 2,381 2,438 2,495 2,540 2,574 2,608 2,642 2,676 2,710 2,744

 European Union 2,236 2,150 2,200 2,213 2,257 2,293 2,354 2,400 2,450 2,498 2,547 2,595

 Canada 1,245 1,180 1,180 1,195 1,217 1,235 1,245 1,253 1,262 1,271 1,280 1,290

 Brazil 585 585 700 770 795 799 810 820 825 830 835 840

 China 244 275 300 308 309 313 316 319 322 327 330 333

 Mexico 111 120 125 128 132 136 140 145 150 155 160 165

 Major exporters 6,685 6,608 6,886 7,052 7,205 7,316 7,438 7,546 7,651 7,757 7,863 7,967

 US share 34% 35% 35% 35% 35% 35% 35% 35% 35% 35% 34% 34%

USDA baseline pork trade projections
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4. IMPACT AND MANAGEMENT OF SWINE DISEASES

In this section we first describe the various swine diseases and how they are viewed in the US and world 

regulatory frameworks. Section 4.2 reviews the geographic incidence of disease outbreaks, and Section 

4.3 discusses estimates that have been made of their economic impact. Section 4.4 describes best 

management practices for preventing and dealing with disease outbreaks.

For the most significant swine diseases, international and national reporting requirements and whether 

they are regulated by the United States Department of Agriculture (USDA) are noted. The World 

Organization for Animal Health, referred to as the OIE as it was formerly known as the Office 

International des Epizooties, maintains a list of diseases reportable at the international level. The OIE 

sets reporting standards for animal diseases affecting international trade. Most nations, including the US, 

are OIE members. Member countries submit routine reports on the disease status on the OIE listed 

diseases. Any change in the disease status of a country that is recognized as free of an OIE listed disease 

must be reported immediately.

The USDA’s Animal and Plant Health Inspection Service (APHIS) maintains a list of diseases that are 

reportable at the national level. Reportable diseases include important transboundary, (or foreign 

animal) diseases, USDA Program diseases, zoonotic diseases and bioterrorism disease agents. States may 

have additional diseases of interest that they monitor, and thatare reportable at the state level.

The USDA-established Program Diseases have been defined when the need arises to jointly work with 

states and industry to control or eradicate specific animal diseases or pests. 

Recently, in response to a need for more standardized reporting at the national and state levels, a 

National List of Reportable Animal Diseases (NLRAD) was proposed and is currently in the evaluation phase 

(USDA, APHIS, 2014). The NLRAD is divided into two categories: monitored diseases and notifiable diseases 

and conditions. The notifiable diseases section is subdivided into emergency incidents, emerging disease 

incidents, and regulated disease incidents. Notifiable diseases and conditions must be brought to the 

attention of the veterinary authority promptly, in accordance with national and State regulations.

Monitored diseases are routinely tracked and data are used to monitor changes in a given population and 

its environment, or to report on disease occurrence.

4.1. Diseases potentially affecting the US industry

We discuss these in three groups. The first group includes those diseases that are already well 

established in the United States. Most can be either controlled or eliminated without completely 

depopulating and repopulating with uninfected animals (abbreviated as CDR in the following discussion). 

The next two groups are variously referred to as the transboundary pathogens or foreign animal diseases

(FADs) that are not present in the United States. The first group includes those that are not so serious 

that if introduced here they would affect US pork exports. But the second group of four diseases would 

result in embargoes that would reduce foreign purchases of US pork and have a serious impact on the pork 

sector.

4.1.1. Significant swine diseases endemic to US

Porcine reproductive and respiratory virus (PRRSV) is the most economically significant endemic swine 

pathogen in the US. It causes annual productivity losses valued at $664 million dollars (Holtkamp et al., 

2013). The PRRS disease is on the list of diseases reportable to USDA and to the World Organization for 

Animal Health. Under the USDA’s newly proposed reporting structure it is designated a monitored 
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disease. It is not a USDA program disease nor is it considered a zoonotic disease, i.e. one that can be 

transmitted from animals to humans. PRRSV is a systemic virus that is manifest as reproductive disease in 

older animals and respiratory disease in younger animals. The reproductive disease in older animals leads 

to late-term abortions, an increase in pigs born stillborn and in pre-weaning mortality. In young pigs it 

leads to variable levels of mortality, reduced growth and poorer conversion of feed to gain. While 

methods to control and even eliminate the virus from herds, without completely depopulating and 

repopulating with naïve animals (CDR) have been developed, preventing outbreaks when different strains 

of the virus infect herds has proven to be challenging. Within herds, immunity to different strains of the 

virus is variable and unpredictable. PRRS outbreaks are seasonal with most occurring in cold-weather 

months. PRRSV is shed in nearly every secretion and excretion of swine. It can be transmitted vertically 

from dam to fetuses and also to piglets after birth. It is transmitted between herds by infected pigs and 

contaminated semen. The PRRSV is relatively fragile in the environment but it has been demonstrated 

that aerosolized particles, contaminated livestock trailers, people, fresh pork and many other carrying 

agents can transmit the virus from one herd to another, especially in colder temperatures where the virus 

is more stable (Perez et al., 2015). 

Swine influenza virus (SIV) type A is a widespread, difficult to control pathogen that causes respiratory 

disease in all ages of pigs during every season of the year. Mortality is generally low but productivity 

losses due to reduced growth and poorer conversion of feed to gain in growing pigs can be relatively 

severe. Multiple subtypes (H1N1, H1N2, and H3N2) of type A influenza viruses are present in the US swine 

herd and immunity to different subtypes of the virus is poor. Swine influenza is not on the list of 

reportable diseases for the USDA or OIE. It is not a USDA program disease. Genetic reassortment among 

swine, human and avian influenza viruses has been frequently demonstrated. Although infrequent, it is a 

potential zoonotic disease. Movement of pigs is the primary route of transmission between herds but 

aerosol, people and other carrying agents also likely play a role.

Porcine epidemic diarrhea virus (PEDV) was introduced into the US in 2013. How the virus entered the 

US will likely never be known but the strains of the virus now present most closely match strains of a virus 

found in China. Because the US swine population was naïve to the virus, it caused severe losses. PEDV is 

an enteric virus that infects only pigs. It affects all ages of pigs but is predominantly characterized by 

severe diarrhea and high mortality in very young piglets. As of June 2014 it is on the list of reportable 

diseases for the USDA but is not reportable to the OIE. Under the USDA’s newly proposed reporting 

structure it is designated a notifiable disease. It is not a USDA program disease nor is it considered to be 

zoonotic. Methods to eliminate the virus from herds without CDR have been developed but the duration 

of immunity to prevent future outbreaks is uncertain. PED outbreaks are seasonal with most occurring in 

cold-weather months. PEDV is relatively fragile in the environment but feed, contaminated livestock 

trailers, people and many other carrying agents that may come in contact with feces from infected pigs 

can transmit the virus from one herd to another, especially in colder temperatures where the virus is 

more stable.

Porcine deltacorona virus (PDCoV) is very similar to PEDV. It was introduced into the US in 2014. Like 

PEDV, how the virus entered the US will likely never be known but the strains of the virus now present 

also most closely match strains of a virus found in China. Clinically, disease caused by PDCoV is very 

similar to PED but typically less severe. PDCoV is an enteric virus that infects only pigs. It affects all ages 

of pigs but is predominantly characterized by severe diarrhea and high mortality in very young piglets. As 

of June 2014 it is on the list of reportable diseases for the USDA but is not reportable to the OIE. Under 

the USDA’s newly proposed reporting structure it is designated a notifiable disease. It is not a USDA 

program disease nor is it considered to be zoonotic. Like PEDV, methods to eliminate the virus from herds 

without CDR have been developed but the duration of immunity to prevent future outbreaks is uncertain.

Outbreaks are seasonal with most occurring in cold-weather months. PDCoV is relatively fragile in the 

environment but feed, contaminated livestock trailers, people and many other carrying agents that may 
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come in contact with feces from infected pigs can transmit the virus from one herd to another, especially 

in colder temperatures where the virus is more stable.

Transmissible gastroenteritis virus (TGEV) is an enteric virus that, like PEDV, infects only pigs. It affects 

all ages of pigs but is predominantly characterized by severe diarrhea and high mortality in very young 

piglets. TGE is on the list of reportable diseases for the USDA and the OIE. Under the USDA’s newly 

proposed reporting structure it is designated a monitored disease. It is not a USDA program disease nor is 

it considered a zoonotic disease. Methods to eliminate the virus from herds without CDR have been 

developed. TGE outbreaks in US swine herds are infrequent and seasonal with most occurring in coldweather months. TGEV is relatively fragile in the environment but feed, contaminated livestock trailers, 

people and many other carrying agents that may come in contact with feces from infected pigs can 

transmit the virus from one herd to another, especially in colder temperatures where the virus is more 

stable.

Porcine circovirus type 2 (PCV2) emerged in the US as a major cause of porcine circovirus-associated 

disease (PCVAD) in the mid-2000s. It is a systemic virus that only infects pigs. The disease, which occurs 

in every season of the year, is most prominently characterized by a post-weaning, multisystemic wasting 

in growing pigs. The disease causes variable levels of mortality, reduced growth and poorer conversion of 

feed to gain. PCV2 is ubiquitous in the US swine population but the disease, and productivity losses 

associated with it, are well controlled by several commercially available vaccines. PCV2 is not on the list 

of reportable diseases for the USDA or OIE. It is not a USDA program disease nor is it considered to be 

zoonotic. Methods to eliminate the virus from herds have not been developed. 

Mycoplasma hyopneumoniae (Mhyo) is a respiratory mycoplasma that causes enzootic pneumonia in 

swine only. It plays a primary role in porcine respiratory disease complex (PRDC) along with PRRSV, SIV, 

PCV2 and multiple bacterial pathogens. Mhyo causes variable levels of mortality, reduced growth and 

poor conversion of feed to gain. Mhyo is not on the list of reportable diseases for the USDA or OIE. It is 

not a USDA program disease nor is it considered to be zoonotic. Methods to eliminate Mhyo from herds 

without CDR have been developed but it remains ubiquitous in the US swine population. Movement of 

pigs is the primary route of between herd transmission but aerosol, people and other carrying agents also 

likely play a role.

Lawsonia intracellularis (L. intracellularis) is an enteric bacteria that causes multiple forms of 

proliferative enteropathy (PE). L. intracellularis can infect other domestic animal species, including 

horses and rabbits, and cause a similar disease to that observed in swine. L. intracellularis primarily 

causes reduced growth and poorer conversion of feed to gain in growing pigs with low levels of mortality. 

L. intracellularis is not on the list of reportable diseases for the USDA or OIE. It is not a USDA program

disease nor is it considered to be zoonotic. The pathogen is present in nearly all swine farms and disease 

occurs commonly in the US. Methods of eliminating the pathogen from farms without CDR have not been 

developed. 

Actinobacillus pleuropneumoniae (APP) is a respiratory bacteria that causes severe pneumonia in swine 

only. Multiple strains exist with varying levels of virulence. Virulent strains of APP cause high levels of 

mortality as well as reduced growth and poorer conversion of feed to gain. APP is not on the list of 

reportable diseases for the USDA or OIE. It is not a USDA program disease nor is it considered to be 

zoonotic. Methods of eliminating the pathogen from farms without CDR have been developed. 

Brachyspira spp. are enteric bacteria that cause disease characterized by bloody diarrhea. Several 

species of Brachyspira have been implicated, including hyodysenteriae, hampsonii, murdochii and 

pilosicoli. Brachyspira primarily cause reduced growth and poorer conversion of feed in growing pigs with 

rare occurrences of mortality. Brachyspira spp. are not on the list of reportable diseases for the USDA or 
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OIE. They are not USDA program diseases. B. pilosicoli is capable of infecting and causing disease in 

immunocompromised people. Methods to eliminate the bacteria from herds without CDR have been 

developed. Movement of pigs is the primary route of transmission between herds but feed, contaminated 

livestock trailers, people and many other carrying agents that may come in contact with feces from 

infected pigs can transmit the virus from one herd to another.

Erysipelothrix rhusiopathiae is a systemic bacteria that causes erysipelas in swine. Mortality is variable 

in growing and adult swine, and growing pigs may have reduced growth and poorer conversion of feed to 

gain. Erysipelas is on the list of reportable diseases for the USDA but not OIE. Under the USDA’s newly 

proposed reporting structure it is designated a monitored disease. It is not a USDA program disease but is 

zoonotic. Erysipelas is controlled with commercially available vaccines and antibiotics.

Leptospira spp. are bacteria that cause leptospirosis which is predominantly characterized by 

reproductive losses in breeding swine. Several species of Leptospira have been implicated, including 

pomona, kennewicki, bratislava, canicola, grippotyphosa, hardjo and others. Swine are not the only host 

of some species of Leptospira. Leptospirosis is not on the list of reportable diseases for the USDA or OIE.

It is not a USDA program disease but is zoonotic. Methods to eliminate the bacteria from herds without 

CDR have not been developed but it is well controlled with vaccines.

Vesicular stomatitis (VS) primarily affects horses and cattle and occasionally swine, sheep and other 

small ruminants. VS does not generally cause mortality or significant productivity losses in swine. VS is 

significant because clinical signs are similar to those of foot-and-mouth disease (FMD) and swine vesicular 

disease (SVD), both transboundary diseases that would interrupt exports. Diagnostic testing is required to 

distinguish among these vesicular diseases. VS is on the list of reportable diseases for the USDA and the 

OIE. Under the USDA’s newly proposed reporting structure it is designated a notifiable disease. It is not a 

USDA program disease but is zoonotic.

Bacillus anthracis is a bacteria that causes anthrax in most animals including swine and humans. It is 

frequently fatal in affected animals. The geographic distribution of anthrax is global but the incidence of 

cases in the US is low. Anthrax is on the list of reportable diseases for the USDA and the OIE. Under the 

USDA’s newly proposed reporting structure it is designated a notifiable disease. It is not a USDA program 

disease.

Rabies virus (RV) is primarily a zoonotic concern because it is highly fatal in humans; however, there are 

few documented cases of transmission from swine to humans. It is currently present in the US. Rabies is 

on the list of reportable diseases for the USDA and the OIE. Under the USDA’s newly proposed reporting 

structure it is designated a notifiable disease. It is not a USDA program disease.

Francisella tularensis is a bacteria that causes tularemia and is primarily a zoonotic concern related to 

the hunting and consumption of feral pigs in the US. Tularemia is on the list of reportable diseases for 

the USDA and the OIE. Under the USDA’s newly proposed reporting structure it is designated a monitored 

disease. It is not a USDA program disease for swine.

Other less important, but occasionally significant, pathogens listed below are widely present on swine 

farms in the United States. Their contribution to disease is generally sporadic and related to 

management, environmental or nutritional stressors, or the presence of other infectious cofactors. None 

are on the list of reportable diseases for the USDA and OIE or on the list of USDA program diseases. A 

description of parasitic diseases of swine was not included. 

Porcine parvovirus (PPV) causes reproductive losses characterized by stillborns, mummies, embryonic 

death and infertility (SMEDI).
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Rotavirus is an enteric virus that causes severe diarrhea and mortality in neonatal pigs. 

Mycoplasma hyorhinis is a systemic mycoplasma characterized by infections of the joints and ears. 

Mortality is rare but affected pigs may have reduced growth and poorer conversion of feed to gain.

Mycoplasma hyosynoviae is characterized by infections of the joints. Mortality is rare but affected pigs 

may have reduced growth and poorer conversion of feed to gain.

Actinobacillus suis is a systemic pathogen that is characterized by a wide variety of clinical signs. 

Mortality is variable and affected growing pigs may have reduced growth and poorer conversion of feed to 

gain. The bacteria can cause abortions in breeding animals. 

Bordatella bronchiseptica is a respiratory pathogen that causes pneumonia and, together with 

Pasteurella multocida, atrophic rhinitis that is characterized by asymmetrical growth of the snout, 

reduced growth and poorer conversion of feed to gain in affected pigs. 

Clostridium perfringens Type A and C and Clostridium difficile are enteric pathogens that cause severe 

diarrhea and mortality in neonatal pigs. 

E. coli are systemic bacteria that cause diarrhea and edema disease in growing pigs as well as mastitis 

and urinary tract infections in breeding animals. Multiple serotypes with varying manifestation of disease 

and levels of virulence have been characterized. The magnitude of reproductive losses, mortality and 

reductions in growth is highly variable. 

Haemophilus parasuis is a systemic bacteria that causes Glasser’s disease in growing pigs. Mortality is 

variable and growing pigs may have reduced growth and poorer conversion of feed to gain.

Pasteurella multocida is a respiratory bacteria that causes pneumonia and, together with Bordatella 

bronchiseptica, atrophic rhinitis that is characterized by asymmetrical growth of the snout, reduced 

growth and poorer conversion of feed to gain in affected pigs. 

Salmonella choleraesus is a systemic bacteria that causes poor growth performance and occasional 

mortality in growing pigs. 

Salmonella typhimurium is an enteric bacteria that causes diarrhea and poor growth performance in 

growing pigs.

Staphylococcus hyicus is a bacteria of the skin that causes exudative epidermitis (or “greasy pig 

disease”) in pigs. Low levels of mortality can occur in young pigs. Affected growing pigs may have 

reduced growth and poorer conversion of feed to gain. 

Staphylococcus aureus is a systemic bacteria that can cause skin infections and is capable of infecting 

other organs as well. It is not a significant cause of productivity losses in pigs.

Streptococcus suis is a systemic bacteria that leads to variable levels of mortality, reduced growth and 

poorer conversion of feed to gain in affected pigs.

4.1.2. Significant transboundary pathogens that would not interrupt exports

Pseudorabies virus (PRV), the cause of Aujeszky’s disease, was eradicated from the US domestic swine 

population in 2004. Eradication was accomplished by testing and removing positive animals with the aid 

of a very effective vaccine and diagnostic tests that were able to differentiate antibody from exposure to 
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wild-type virus with antibody from exposure to vaccine. PRV can infect many species but swine is the 

only species that survives an infection. The disease is characterized by neurological signs that lead to 

reproductive losses in breeding animals and high levels of mortality, especially in young pigs, and by

reduced growth and poorer conversion of feed to gain in growing pigs. Pseudorabies is on the list of 

reportable diseases for the USDA but not the OIE. Under the USDA’s newly proposed reporting structure it 

is designated a notifiable disease. It is a USDA program disease but it is not considered a zoonotic 

disease.

Brucella suis (B. suis), is the cause of swine brucellosis. As of February 2015, every state in the United 

States is classified as free of B. suis but it is still present in feral pig populations. Brucellosis is 

characterized by abortions and infertility leading to significant reproductive losses in breeding animals. 

B. suis is on the list of reportable diseases for the USDA but not the OIE. Under the USDA’s newly 

proposed reporting structure it is designated a notifiable disease. It is a USDA program disease and is 

zoonotic. 

Rinderpest virus (RV) is the first animal pathogen to have been eradicated globally. Due to efforts of the 

Global Rinderpest Eradication Program, the disease is believed to have been eradicated in 2011. 

Rinderpest is on the list of reportable diseases for the USDA and the OIE. Under the USDA’s newly 

proposed reporting structure it is designated a notifiable disease. It is not a USDA program disease and is 

not considered a zoonotic disease.

Nipah virus (NV) causes a relatively mild disease in pigs, but is a very serious zoonotic disease. An 

outbreak in Malaysia and Singapore led to nearly 300 human cases with over 100 deaths. More than a 

million pigs were euthanized to stop the outbreak. It is currently not present in the United States. NV is 

on the list of reportable diseases for the USDA and the OIE. Under the USDA’s newly proposed reporting 

structure it is designated a notifiable disease. It is not a USDA program disease.

Vesicular exanthema of swine virus (VESV) is a virus that produces a disease in pigs that is clinically 

indistinguishable from foot and mouth disease (FMD) and swine vesicular disease (SVD) that only affects 

pigs. It is considered to have been eradicated from the United States in 1959. Under the USDA’s newly 

proposed reporting structure it is designated a notifiable disease. It is not on the list of reportable 

diseases to the OIE nor is it a USDA program disease.

Ebola virus (EV) is a zoonotic concern but the role of swine in recent human outbreaks is still being 

studied. It is currently not present in the US. EV is not on the list of reportable diseases for the USDA 

and the OIE. It is not a USDA program disease.

Japanese encephalitis virus (JEV) is primarily a zoonotic concern as the virus causes a severe 

encephalitis in humans. Pigs act as important amplifiers of the virus, producing high levels of virus in 

their blood which infects mosquito vectors. It is currently not present in the US. Japanese encephalitis is 

on the list of reportable diseases for the USDA and the OIE. Under the USDA’s newly proposed reporting 

structure it is designated a notifiable disease. It is not a USDA program disease.

4.1.3. Significant transboundary pathogens that would interrupt exports

Foot and mouth disease virus (FMDV) was last present in the United States over 85 years ago. The US 

has had nine FMD outbreaks since it was first recognized on the northeastern coast in 1870. It was 

eradicated each time, the last eradication occurring in 1929. Pigs and many other domestic and wild 

animals, primarily cloven hooved animals, are susceptible to the virus. FMD is a systemic disease 

characterized by high fevers and the formation of vesicles on the mouth and feet. Mortality associated 

with the disease is generally low in older animals but can be high in younger growing pigs. Growing pigs 

will also have reduced growth and poorer conversion of feed to gain. Reproductive losses due to 
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abortions can occur in breeding animals. FMD is on the list of reportable diseases for the USDA and the 

OIE. Under the USDA’s newly proposed reporting structure it is designated a notifiable disease. It is not a 

USDA program disease. FMDV is zoonotic but humans are rarely infected. 

There are multiple serotypes of the virus, which complicates vaccination strategies used to eradicate the 

virus. Serotypes O and A are widely distributed, SAT serotypes occur mainly in Africa (with periodic 

incursions into the Middle East), and Asia 1 is currently found only in Asia. FMDV is a systemic virus and is 

shed in nearly all secretions and excretions from swine. Large amounts of virus are respired from 

infected pigs and therefore, the aerosol route of transmission from pigs is likely. Unlike in some ruminant 

species, the virus does not persist in swine and is typically cleared by 28 days. The virus is relatively 

stable in the environment and may survive in the environment for weeks depending on the conditions. 

The virus is typically inactivated by the lower pH levels reached in meat after slaughter but because the 

pH varies there is a risk that the virus will survive in refrigerated or frozen pork meat for long periods of 

time. It is also relatively resistant to many disinfectants, but acidic or alkaline disinfectants are 

effective. 

Classical swine fever virus (CSFV) was last present in the US over 37 years ago. It was eradicated in 1978 

after a 16-year effort. This was the first and only successful eradication of CSFV in the US. The disease is 

native to the US and was first recognized by the federal government in 1860. Swine is the only species 

susceptible to the virus. CSF is a systemic disease characterized by high fevers, conjunctivitis, respiratory 

signs and diarrhea. Infected pigs generally stop eating and are very lethargic. Mortality is variable and 

depends on the strain of virus and the pig’s age. Growing pigs will also have reduced growth and poorer 

conversion of feed to gain. Reproductive losses due to abortions can occur in breeding animals. Piglets 

infected in utero can become persistently infected. Persistently infected pigs may shed virus for months 

and they can become long term carriers of the virus. Modified live and subunit (marker) vaccines are 

available that make it possible to determine if exposure was to vaccine only or wild-type virus. CSF is on 

the list of reportable diseases for the USDA and the OIE. Under the USDA’s newly proposed reporting 

structure it is designated a notifiable disease. It is not a USDA program disease. CSF is not considered a 

zoonotic disease. Direct contact with pigs is the primary route of transmission. Exposure to uncooked pig 

products is also thought to be an important route of transmission. CSFV is moderately stable in the 

environment. Contaminated livestock trailers, people and many other carrying agents can transmit the 

virus as well, especially in cold, moist and protein rich environments. It can survive in urine and feces for 

at least 2 weeks, depending on strain and conditions. The virus may also be transmitted by aerosol.

African swine fever virus (ASFV) has never been recognized in the US. Swine is the only species 

susceptible to the virus. In domestic pigs, ASFV is a systemic virus that causes disease characterized by 

high fevers and hemorrhaging in multiple organs. Mortality can range from 0 to 100 percent in a 

population depending on the strain of the virus. Growing pigs will also have reduced growth and poorer 

conversion of feed to gain. Reproductive losses due to abortions can occur in breeding animals. There 

are not effective treatment options or vaccines available for ASFV. The virus’s natural hosts are wild 

African pigs, such as warthogs and bushpigs, which can be persistently infected with the virus with no 

clinical signs. A number of species of soft ticks in the genus Ornithodoros serve as reservoirs and a 

biological vector of the virus. Several species of these ticks that are capable of harboring and 

transmitting ASFV are found in North America. ASF is on the list of reportable diseases for the USDA and 

the OIE. Under the USDA’s newly proposed reporting structure it is designated a notifiable disease. It is 

not a USDA program disease. ASF is not considered a zoonotic disease. Direct contact with pigs is the 

primary route of transmission. Uncooked pig products, contaminated livestock trailers, people and many 

other carrying agents can transmit the virus as well. ASFV is shed at high levels in all secretions and 

excretions of domestic pigs and surviving pigs may harbor virus for weeks or months. ASFV is very stable in 

the environment and may persist for months in frozen or uncooked meat. 
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Swine vesicular disease virus (SVDV) is significant because of fears that the presence of SVD could mask 

an FMD outbreak. The clinical signs of SVD closely resemble those for FMD and historically, differentiating 

SVDV from FMDV diagnostically was challenging. Diagnostic tests that are now available make this much 

easier but trading partners remain reluctant to accept pork from countries that are seropositive for SVD. 

SVDV has never been recognized in the US. Like FMD, SVD is a systemic disease characterized by fever 

and the formation of vesicles on the mouth and feet. Unlike most other vesicular diseases, swine is the 

only species susceptible to SVDV. Mortality is not a feature of SVD but growing pigs may have reduced 

growth and poorer conversion of feed to gain. There are no vaccines available for SVDV. SVD is on the 

list of reportable diseases for the USDA but was removed from the list of disease reportable to OIE in 

2015. Under the USDA’s newly proposed reporting structure it is designated a notifiable disease. It is not 

a USDA program disease. SVD is not considered a zoonotic disease. Direct contact with pigs is the primary 

route of transmission. SVDV is exceptionally stable in the environment, and therefore, contaminated 

livestock trailers, people and many other carrying agents, can transmit the virus as well. The virus also 

remains viable for months in carcasses and processed meats. Airborne transmission of this virus is 

unlikely. SVDV is even more resistant to most disinfectants than FMDV. Sodium hydroxide and 

formaldehyde disinfectants make up a very short list of disinfectants that are effective. 

4.2. Current geographic distribution and recent outbreaks of FADs

The OIE World Animal Health Information System (WAHIS) publishes current information on recent 

outbreaks, maps and lists of current status by country, and other useful information for OIE reportable 

diseases. (http://www.oie.int/wahis_2/public/wahid.php/Diseaseinformation/Diseasehome; accessed 

April 25, 2015). 

The current FMD status of OIE member countries is published in the following categories; 1) country or 

zone(s) within country is FMD free where vaccination is not practiced, 2) country or zone(s) within 

country is FMD free where vaccination is practiced, 3) Suspension of the FMD free status in country or 

zone(s) within a country where vaccination is not practiced and 4) Suspension of the FMD free status in 

country or zone(s) within a country where vaccination is practiced (http://www.oie.int/animal-health-inthe-world/official-disease-status/fmd/list-of-fmd-free-members/; accessed April 25, 2015). 

FMDV is present or endemic in parts of Africa, Asia, Eastern Europe, the Middle East, and South America. 

Areas that are free of FMDV include North America (United States, Canada, Mexico and the Caribbean), 

Central America, Western Europe, Australia, and New Zealand. FMDV was last reported in North America 

over 60 years ago. The last outbreak in the U.S. occurred in 1929. Canada has been FMD-free since 1952 

and Mexico since 1954 (USDA APHIS Foot-and-Mouth Disease (FMD) Response Plan: The Red Book 

(September 2014)). Recent outbreaks, between January 2015 and April 2015, have occurred in Algeria, 

Botswana, Zimbabwe, Namibia, China, Mongolia, South Korea and Russia:

(http://www.oie.int/wahis_2/public/wahid.php/Diseaseinformation/Diseaseoutbreakmaps; accessed 

April 25, 2015).

CSFV is present in parts of Asia, South America, Central America, Caribbean, Eastern Europe and parts of 

the former Soviet Union. Areas that are free of CSFV include North America excluding the Caribbean 

(United States, Canada, and Mexico), Western Europe, Australia, and New Zealand (Ji et al., 2015). CSFV 

was last present in the US over 37 years ago. It was eradicated in 1978 after a 16-year effort. Canada 

has been free of CSFV since 1963 and Mexico since 2009:

(http://www.oie.int/wahis_2/public/wahid.php/Diseaseinformation/statuslist; accessed April 25, 2015). 

ASFV is endemic in most of sub-Saharan Africa, including the island of Madagascar and in feral pigs in 

Sardinia, Italy. It is also now present in Eastern Europe including Poland, Ukraine, Belarus, Estonia, Latvia 

and Lithuania. All other areas of the world are free of ASFV:
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(http://www.oie.int/wahis_2/public/wahid.php/Diseaseinformation/statuslist ; accessed April 25, 2015). 

The virus has never been recognized in North America (United States, Canada, and Mexico) except in the 

Caribbean where it was eradicated in the 1980’s. 

SVDV has been eradicated from all areas in Europe except southern Italy. Occasional outbreaks still occur 

throughout Europe. SVDV is thought to be endemic in Asia as well (CFSPH).

4.3. Costs associated with disease outbreaks, for FMD, CSF, ASF and SVD

4.3.1. Losses related to regulatory response to disease outbreaks

Regulatory responses to FMD, CSF, ASF and SVD may include quarantine, depopulation, euthanasia and 

animal movement restrictions. Economic losses would include the value of the animals destroyed, the 

cost of animal disposal, cleanup, and interruption of business. The most significant economic loss to the 

producer would be due to the interruption of business. The reproductive cycle, from mating-to-weaning, 

for swine is approximately 20 weeks. Therefore, at a minimum 20 weeks of production would be lost and 

when time for cleanup and downtime were factored in the losses would be even higher. The producer 

may be indemnified for some of the losses by USDA through APHIS or FSA programs discussed later, but 

very likely not all. For farms that were not depopulated, but on which movement restrictions were 

placed, the losses would depend on the duration of time the farm was closed. Most farms would have 

some flexibility to deal with movement restrictions for a few days to weeks; however, movement 

restrictions for longer periods of time would mean that the capacity of farms would be exceeded and that 

some animals would have to be euthanized. 

The regulatory responses to FMD, CSF, ASF and SVD may also include vaccination and other control 

measures. The direct economic impact on the affected herds would be much lower than those created by 

quarantine, depopulation, euthanasia and animal movement restrictions. The impact would be limited to 

the cost of the vaccines, veterinary fees, diagnostic testing, biosecurity measures and other costs for 

controlling the spread of the disease. 

Productivity losses

Productivity losses attributed to FMD, CSF, ASF and SVD would only be relevant in herds infected with 

the viruses that were not quarantined and depopulated. Losses would be dependent on whether a 

vaccine was used. 

Market impacts

Reduced demand due to lost access to export markets would be the most serious impact of an outbreak 

of FMD, CSF, ASF or SVD in the United States. All four diseases would lead to a major disruption of 

international trade of pork meat and livestock. In 2014, 21.3 percent of the pork produced in the US was 

exported. An outbreak of FMD, CSF, ASF or SVD would restrict access to all or a significant portion of the 

export markets resulting in a significantly increased domestic supply of pork in a very short period of time 

and lead to a sharp drop in the price of market hogs and pork at the wholesale and retail levels. 

Reduced demand due to perceived risks of consuming pork would occur if domestic consumers 

perceived that eating pork would put them at risk. FMDV is considered zoonotic but it rarely infects 

humans. CSF, ASF and SVD are all not considered to be zoonotic diseases. Therefore, it is less likely that 

outbreaks of FMD, CSF, ASF or SVD would lead to a reduction in domestic demand due to food safety 

issues or fear of contracting the viruses from eating pork meat. However, the press coverage that such an 
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event would likely garner may propagate consumer fear that would reduce domestic demand and lead to 

a further drop in the price of market hogs and pork at the wholesale and retail levels. 

Reduced domestic supply due to lost production would occur depending upon the response to contain 

the outbreak, the spread of the disease, and the clinical impact of the disease on infected herds. To the 

extent that the response to outbreaks of FMD, CSF, ASF or SVD results in quarantine, depopulation, 

euthanasia and movement restrictions, these measures would lead to a loss of pigs and breeding animals 

in or near infected herds. Productivity losses would occur in herds not depopulated in response to the 

outbreak. These losses, including reproductive losses in breeding animals as well as mortality and 

reduced productivity of growing pigs, would be potentially high in herds infected with FMD, CSF or ASF 

but much less for herds infected with SVD. The impact of productivity losses on the supply of pork would 

only be significant if the outbreak were not contained to a relatively small number of farms. The losses 

would decrease the domestic supply of pork in a very short period of time which would drive prices of 

market hogs and pork at the wholesale and retail levels higher, partially offsetting the effect of the lost 

export markets and reduced domestic demand. 

Impact on the regional and national economies

Economic losses would also extend beyond the producers immediately affected to upstream and 

downstream industries. Employees of the depopulated farms or farms driven out of business by low prices 

may be terminated. Owners of facilities that are contracted to raise the pigs from closed farms would 

lose revenue as pigs were no longer available to be placed in their facilities. Packers, wholesalers and 

retailers will be impacted by a reduced supply of pigs and by shifts in gross profit margins on pigs 

slaughtered and on pork meat. Vendors supplying feed, genetics, animal health products, supplies and 

other products would lose business. Lenders would also suffer if affected producers were no longer able 

to service their debt. Net farm income would decline due to the loss of export markets, lost productivity, 

consumer fears, and the losses related to the regulatory response to the disease outbreaks. Regional 

business, such as grocery stores and gas stations would also suffer as economic activity of the owners, 

employees and vendors of affected farms slowed.

4.3.2. Review of published economic impact estimates 

FMD

In 2002, Paarlberg et al estimated the economic impact of an FMD outbreak in the United States similar to 

the one that occurred in the United Kingdom (UK) in 2001. In the UK outbreak, it was estimated that 1.7% 

of swine, 4.3% of cattle and 7.9% of sheep were destroyed in an attempt to control the outbreak. These 

values, along with other assumptions, were used to estimate productivity losses associated with a 

hypothetical outbreak in the United States. A complete elimination of exports was assumed, consistent 

with what occurred for the UK outbreak. It is important to note that in 2002 when this estimate was 

made, less than 10% of US pork production was exported compared to approximately 20% currently. 

Paarlberg also assumed that ten percent of US consumers would stop eating red meat and dairy products 

because of perceived health risks. Paarlberg noted that while there was no basis for this perception, 

most consumers in the United Kingdom indicated confusion about the difference between FMD and Bovine 

Spongiform Encephalopathy (BSE) which did pose a serious health risk to humans. The resulting economic 

impact of an FMD outbreak in the US was a decline in gross revenues of 34 and 24 percent in the live hog 

and pork meat sectors respectively. US farm income declined in his scenario by US$14 billion (9.5% 

reduction) (Paarlberg et al., 2002). 

In a later study conducted in 2008, Paarlberg et al used an integrated economic and disease spread model 

to estimate the cost of a hypothetical outbreak of FMD in the US (Paarlberg et al., 2008). Three 

alternative control strategies and three levels of disease-outbreak intensity were examined. All three 
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strategies included destruction of “direct-contact” herds. The first was destruction of “direct-contact” 

only, the second added destruction of “indirect-contact” herds and the third added slaughter of all 

animals within a 1-km ring. Paarlberg assumed exports of beef, pork, lamb meat, cattle, hogs, lambs, 

and sheep were halted, with restrictions continuing for one quarter beyond the slaughter of the last 

confirmed case. The total loss of net returns to capital and management in agriculture and agribusiness, 

which included both the livestock and crop sectors in the US, ranged from US$2.8 billion to US$4.1 billion. 

US consumers benefited from lower prices while US exports were assumed to be halted. 

In an analysis done by Ekboir in 1999, the potential losses from an FMD outbreak in California were 

estimated to range between $8.5 and $13.5 billion with the largest share of the losses attributed to an 

embargo on trade. Losses other than those associated with lost trade that were included in the total 

were the value of destroyed animals, costs associated with quarantining, cleaning and disinfection of 

depopulated sites, the value of lost production from depopulated and quarantined sites, and the indirect 

and induced losses in the economy of California (Ekboir et al., 1999). 

CSF

Paarlberg et al, in a study conducted in 2009, estimated the economic impact in the US of a CSF outbreak 

similar to the 1997 outbreak in the Netherlands which lasted for 5 quarters (Paarlberg et al., 2009). In 

the Dutch outbreak, 8.43 million breeding animals and pigs were destroyed to contain the outbreak. They 

estimated that total losses to pork producers, including the value of destroyed animals, during an 

outbreak of CSF in the US ranged from US$2.6 to US$4.1 billion. The reduction in total returns to capital 

and management for all commodities, including crops and other livestock, were estimated to be US$5.8 to 

US$7.7 billion. The losses evaluated included the destruction of swine in infected herds, the loss of 

exports of pork and live swine and a reduction in domestic demand resulting from an adverse reaction by 

domestic consumers. Alternative supply responses of pig producers in response to expectations about the 

impact of the outbreak and changes in the price of market hogs and other commodities were also 

modeled. 

References

Holtkamp D.J., Kliebenstein J.B., Neumann E.J., Zimmerman J.J., Rotto H., Yoder T.K., Wang C., Yeske 

P., Mowrer C. Haley C. 2013. Assessment of the economic impact of porcine reproductive and respiratory 

syndrome virus on United States pork producers. J. Swine Health Prod. 21:2 72-84.

Center for Food Safety and Public Health (CFSPH). 2007. Swine vesicular disease. 

http://www.cfsph.iastate.edu/DiseaseInfo/disease.php?name=swine-vesicular-disease ; last 

accessed April 25, 2015.

Ekboir, J.M. Potential impact of foot-and-mouth D=disease in California: The role and contribution of 

animal health surveillance and monitoring services. 1999. Agricultural Issues Center, Division of 

Agriculture and Natural Resources, University of California.

Ji W., Guo Z., Ding N. He C. 2015. Studying classical swine fever virus: making the best of a bad virus. 

Virus Research. 197: 35-47.

Paarlberg P.L., Lee J.G., Seitzinger A.H. 2002. Potential revenue impact of an outbreak of foot-andmouth disease in the United States. JAVMA. 220(7): 988-992.

Paarlberg P.L., Seitzinger A.H., Lee J.G., Mathews K.H. 2008. Economic Impacts of Foreign Animal 

Disease. Washington, D.C: United States Department of Agriculture, Economic Research Service. Research 

Report Number 57.

Paarlberg P.L., Killberg Seitzinger A., Lee J.G., et al. 2009. Supply reductions, export restrictions, and 

expectations for hog returns in a potential classical swine fever outbreak in the United States. J Swine 

Health Prod. 17(3): 155-162.

Perez A., Davies P., Goodell C., Holtkamp D., Mondaca E., Poljak Z., Tousignant S., Valdes-Donoso P.,

Zimmerman J., Morrison R. 2015. Review of literature for epidemiology and control of Porcine 
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Reproductive and Respiratory Syndrome virus (PRRS) in North America: lessons learned and knowledge 

gaps. J. Am. Vet. Med (Accepted 11/3/2014).

USDA APHIS. 2014. Foot-and-Mouth Disease (FMD) Response Plan: The Red Book (September 2014)

USDA APHIS. 2014. Proposal for a U.S. National List of Reportable Animal Diseases (NLRAD): Concept Paper 

(July 2014).

4.4. Disease management

4.4.1. Good animal husbandry practices

Introduction

Every production system or farm has a set of management practices and protocols in place to obtain the 

best possible production results. These procedures also address the risk of disease introduction and the 

management of that disease once in the farm or system. Whether this is a domestic or foreign animal 

disease can determine what happens after the infection occurs. The management practices after a 

foreign animal disease appears either in this country or on this farm can have an impact on whether this

farm or system can continue to maintain its business. 

The management of disease risk can be divided into both external and internal risks. External risk 

management is about preventing the introduction of a new pathogen into a farm or production system. 

Internal risk management would be aimed more at preventing disease movement within the system or 

farm. A major management decision is the design of the health and production pyramid. It determines 

how breeding stock are produced and introduced into a farm or production system. This also allows the 

system to manage the health of the pigs down and through the production system. Being able to introduce 

healthy animals into a farm and maintain that health is imperative to the profitability of the producer. 

This also allows for a surveillance system to monitor for diseases prior to the animals being moved at any 

point in the production cycle. The faster a disease problem is identified the more likely it can be 

minimized in the downstream pigs. 

Health pyramid

The structure of a health pyramid can help the producer then establish the proper flow of people and pigs 

through the production system. The pyramid by nature allows animals and people to flow down the 

pyramid and gives production people guidance on how to flow pigs, manage people, deliver feed and 

attend to all other management decisions. Location of farms high in the pyramid should be away from 

other farms and kept healthy.

All-in-all-out pig flow

The pig flow preference is to be all-in-all-out as much as possible by site, building or air space. This 

allows for disruption in disease cycles. It also allows for proper cleaning and disinfection between groups 

and minimizes the buildup of pathogen loads within a population. It has a huge impact on pig to pig 

transmission which is probably the most important means of disease transmission. Pig flow management 

allows for better traceability and tracking of groups of animals and for monitoring their health status on a 

continuous basis. 

Segregated production

Another major management technique that producers have adopted in the last 20 years is the decision to 

separate the different stages of production by location or site. So called segregated production separates 

pigs by age groups and minimizes transmission of pathogens from sows to pigs or from young pigs to older 
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pigs. It also allows the producer to focus management on those specific age groups and can allow for 

easier depopulation of each phase, medication of each phase or vaccination of each phase. It has 

probably had more of an effect on bacterial pathogens than on viral infections. 

People flow

The flow of people through a system can also be managed by the structure of the production pyramid 

both between and within production sites. Personnel would either be restricted to certain sites or not 

allowed to go to multiple sites or they would flow by health status and production status down the 

pyramid. Monitoring health status at the various sites allows the production team to make these decisions 

when they are different from what would normally be the expected flow through a system.

These decisions and the surveillance to make these decisions can be a very important part of maintaining 

the health of a farm or production system. 

Feed quality assurance

As we have seen recently with the emergence of PEDV in the United States, the feed and feed ingredients 

can be a risk factor for the introduction and spread of a disease pathogen. The quality, formulation and 

manufacturing of feedstuffs also speak to the health of the pig and the ability of that animal to fend off

disease pathogens and also eliminate them after infection. Contamination of a feed or ingredient with a 

pathogen or mycotoxin can disrupt the health of the pigs. Mycotoxins are known to affect the immune 

system of the pig and affect the animal’s ability to fight off disease and or deal with it after infection. 

The quality of certain vitamins and minerals would also have a similar impact on immunity. Therefore 

having a feedstuff quality control program is a much needed process that impacts the health and 

productivity of the animal both individually and as part of a population. 

Environment design and management

The pig’s environment also has a huge impact on the health of the pig and its ability to handle the 

introduction of a disease pathogen or fight off the introduction of a disease. In the case of ventilation,

the air quality when defined by temperature, humidity and dust particle load can determine whether a 

pathogen is able to be introduced by aerosol or whether the pathogen can survive the pig’s innate 

immune systems to gain access to the pig’s respiratory tract. Dust particles can carry bacteria and viruses 

and increase the transmission of disease. Dust particle reduction can be accomplished by adding fat to 

the feed. Controlling the humidity levels can reduce the water droplets available for pathogens to be 

transmitted in. The factors impacting air quality can include population density, temperature in the 

building, concentration of gasses, ventilation rate and dust levels. 

The filtration of air into buildings is a fairly new technology that has been introduced into the swine 

industry. The success rate of these facilities has been good and mostly aimed at the PRRS virus. But 

certainly other pathogens are being excluded as well. It has become an extremely important 

management tool for farms in dense swine population areas to fight off transmission by aerosol means. 

4.4.2. Biosecurity arrangements

Management of biologic risk is essential to any swine operation. This is without regard to their size, 

location or type of operation. Eliminating the risk of disease introduction is nearly impossible, but having 

an awareness of the risk factors involved can help the producer reduce the chance that a domestic or 

foreign pathogen could get introduced. 
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Healthy animals are more productive as we all know. But a healthy and disease free industry is also very 

important. The introduction of a Foreign Animal Disease could have disastrous effects on a producer that 

never gets infected. The steps taken by the Federal and State governments to minimize and control 

spread of disease can impact all producers and most importantly the markets. Loss of export markets

would add a tremendous amount of pork to the US market and lower prices dramatically. 

The previous discussion has centered on how the industry has structured itself to prevent, manage and 

control domestic disease pathogens and most of these measures would help with foreign animal disease 

pathogens as well. Biosecurity has always centered on a particular site or system of sites. We examine 

their risks and almost all have the same risk of an external pathogen entering a population. The industry 

is now beginning to realize that to effectively stop spread of a disease pathogen in a swine dense area, all 

producers in that area need to be engaged and working together to minimize transmission routes for 

disease. 

Understanding what these risk factors are and being able to effectively control them is the current 

challenge. State, regional and national barriers need to be established and maintained. Without them 

disease will continue to spread within and throughout the swine industry. This discussion will focus on 

what routes of transmission we know about and what can be done by individual producers to protect 

themselves from external risks. But we also review what regional biosecurity measures could be 

implemented. 

Risk assessment can be difficult unless you know what the risks are and how important they are to your 

situation. The Production Animal Disease Risk Assessment Program (PADRAP) was established for PRRS and 

has been helpful in allowing producers to complete the questionnaire and having the analysis show them 

the things that are of the greatest risk to them and their production system. Having this for other 

pathogens would be a tremendous help. Most risk management is based on analyzing the different routes 

of transmission and then looking to mitigate the risk that each imposes. Therefore this discussion will 

focus on the major routes of disease transmission that would put a farm or the swine industry at risk for a 

FAD.

Location is probably the single most important risk factor for the introduction of new disease into a farm 

site. This risk is from aerosol transmission but also transmission by “local spread”. These indirect 

methods of disease spread can be multiple and not always well defined. Changing location is not always 

feasible. However, planning for a new site should take location into consideration. 

Aerosol transmission of swine disease has been researched for many different pathogens. Factors that 

influence whether a pathogen can be aerosol or not include survival time in air, air conditions, air speed, 

topography, cloud cover, size of the virus or bacteria and the amount of the pathogen available for 

dispersal. Research studies have confirmed transmission of PRRS, PRV, FMDV, SIV and many others.

Factors to help mitigate aerosol transmission include air filtration of swine facilities, vaccination of 

animals to reduce shedding of organisms, and optimization of herd health to prevent animals from getting 

sick.

Oral transmission of pathogens can be direct via contact with infected pigs or indirect via water, feed, 

feces or any item in the environment that would contact the pig’s mouth. The amount of virus on objects 

and its survival time both play a role in whether the items can be involved in transmission of the 

pathogen. One feedstuff to be concerned about with foreign animal disease is food waste or garbage. 

Most states require this product to be cooked prior to it being fed to pigs. Pathogens known to be 

transmitted this way are CSV, FMDV, ASV, SVDV, Salmonella, Trichinella and Toxoplasmosis.
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Spray dried plasma gained attention with the PCV2 disease outbreaks as well as with PEDV. The spray dry 

process should eliminate concern for the presence of the virus. A concern is always whether every batch 

gets properly treated. Producers should be sure to acquire their spray-dried plasma from a reputable 

supplier that they trust.

Water can be a concern when it is possible for it to be contaminated by wild animals, birds, or other 

processes. Deep wells and water from treatment plants are probably the safest. If using water from a 

stream pond or other open source, testing would be indicated and chlorination would also be a good idea. 

Direct pig to pig contact is one of the most effective methods to spread disease. The industry maintains 

most endemic infections by this method. New introductions to herds can also be from farms that buy 

infected breeding stock. Failing to isolate and test these animals can be disastrous depending on the 

level of the health pyramid into which the animals are introduced. The previously mentioned 

management practice of all-in-all-out pig flow, offsite production, early weaning, herd closure and parity 

segregation can all help prevent direct pig contact and exposure.

Semen is also a route of transmission that requires producers to have isolated boar studs with filtered 

incoming air, and constant testing of boars and semen for the presence of pathogens that can be 

transmitted downstream to sow farms and then to pigs. PRRS is the ideal example of how this has 

happened in the swine industry. Foreign animal disease pathogens could be transmitted the same way.

Disease can also be spread by inanimate objects (fomites) such as feeders, boots, clothing, sorting 

boards, and a multitude of other objects. Good sanitation of facilities, and all the equipment used to 

move, treat, breed, etc., animals is needed to prevent these objects from spreading disease to animals. 

Requiring people to shower and change clothes prior to entry to a facility is also an effective way to keep 

them from being a fomite.

Transport vehicles enter and exit production sites many times during a week. They deliver feed, pigs and 

supplies to farms. The interaction between these vehicles and people on the farm always creates a risk 

of disease introduction if not handled properly. Dedication of trucks to different phases of production 

can reduce the risk of disease introduction. An example of this would be having trucks and trailers 

dedicated to internal movements of weaned pigs and feeder pigs. These trucks would never visit a 

market or slaughter facility and this reduces the amount of pathogens that could be present on these 

vehicles. The PED virus highlighted the ease with which trucks could transport a virus from a market or 

slaughter facility back to the farm.

The ability to clean a truck of all the dirt and fecal material is far easier than being sure all the disease 

pathogens on that truck are gone. A lot of research has been done on how to properly clean and disinfect 

a truck and trailer. Much emphasis has been placed on the type of disinfectant, drying time and many 

other factors. This lead to the development of thermo-assisted drying and disinfection of trailers (TADD). 

Facilities are constructed that allow trailers to be heated to temperatures >140 degrees Fahrenheit. The 

high temperature is maintained for 10 minutes and the vehicle is then allowed to cool. This has proven to 

eliminate many pathogens and stop disease transmission. The cost is very high, however, and not many 

are available at this time. 

Educating farm personnel on how to load and unload trucks at the farms without introducing a disease 

pathogen is a high priority task. The truck almost always represents a risk and there should be no 

crossing of paths by farm personnel and the truck driver. The load out chutes should then be washed and 

disinfected once the truck leaves the farm.
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Visitors to the farm are also a risk for disease introduction to that site. Previous exposure to pigs from 

another farm can be a problem if that person does not have a shower, change of clothes and downtime 

between sites. Research has shown that if people are properly cleaned the downtime needs are minimal. 

But this can differ according to the pathogen. A lot of inconsistency still exists in the industry due to 

confusion and fear of infection. 

United States citizens visiting other countries and foreign citizens visiting this country can pose a risk 

depending on whether they had contact with livestock while in that country and what diseases are 

present in those counties, Food brought back from those countries can contain diseases such as Foot and 

Mouth disease. The U.S. Customs and Border Protection and USDA inspectors expend a lot of energy and 

money trying to prevent these food products from entering this country and to be sure that people that 

have been around livestock stay away from livestock for an appropriate period of time. 

Vectors such as rodents, feral animals, birds, pets and insects can also be significant carriers and in some 

cases revivers of disease pathogens. Control programs need to be in place for each of these vectors and 

these programs need to be monitored on a daily basis. 

4.4.3. Preparedness and response plans

Foreign animal disease response plan

USDA APHIS established FAD PReP to provide a framework for FAD preparedness and response. FAD PReP 

was developed to meet the recommendation of many stakeholders that FAD preparedness and response

capabilities needed improvement. It is intended to integrate and synchronize the principles and applied 

systems of the National Response Framework (NRF) and the National Incident Management System (NIMS) 

by providing outbreak response goals, guidelines, strategies, and procedures for local, State, Federal, and

Tribal responders. FAD PReP is intended to raise awareness of response activities and veterinary

countermeasures, identify gaps or shortcomings in current preparedness planning, and provide a 

framework for States, Tribes, and other stakeholders to use in developing their own response plans. The 

link below provides a detailed account of how the federal government plans to respond to a foreign 

animal disease.

http://www.aphis.usda.gov/animal_health/emergency_management/downloads/intro_fadprep.pdf

Planning and trials of the system are ongoing. In cooperation with the animal industry stakeholders, 

veterinarians, and state regulatory people, extensive planning and preparation is done on all the known 

diseases. One aspect of a Federal response that has changed in recent years is the replacement of 

massive herd depopulations with vaccination and testing to eliminate the disease. While vaccine and 

testing technology for some diseases may be lacking at this time, work is being done now to develop that 

technology. Testing capacity has been increased in various state laboratories and a new national lab is 

planned and being built in Kansas. Regulators recognize the challenge of euthanizing millions of animals 

and the bigger challenge associated with their proper disposal. 

The scope of any disease outbreak will most likely dictate the initial response. If the outbreak is deemed 

to have been found early and is containable, depopulation could be the best course of action. If the 

scope of the outbreak is already too large, then vaccination could be used to control the spread of the 

disease and allow the animals to be cleared in a timelier manner. 

One part of the USDA response is to have a program in place that would allow business continuity in 

places where there is no disease present. The Secure Pork Supply (SPS) plan would provide a business 

continuity plan for commercial pork producers that is credible to State and Federal health officials and 

provides a safe supply of pork to the consumer. This plan is being developed and should be in place prior 
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to an FAD break. It will require producer participation, and those that participate will be certified to be 

able to move animals under permit when no evidence of infection is present. It requires surveillance and

traceability programs that give authorities assurance that the animals in question are healthy. 

Traceability allows regulators to know where pigs originate and the status of the site of origination and 

where the animals are going. Biosecurity of the sites and systems is also crucial to their being able to 

maintain participation in the program. The above discussion on biosecurity and management practices is 

very relevant to this business continuity plan. Disease surveillance will be the backbone of the program;

the ability to test a large number of animals and prove their status to regulators will also be a necessity 

of participating in the SPS plan. This also include observational surveillance for clinical disease as well as 

the testing component.

Packers and processors will also be key participants in the program as they will have traceability 

capabilities to their customers and communication with regulators. Their feedback will assist in 

determining where the disease is and where it is not. Biosecurity at these collection points is crucial to 

preventing the spread of the disease to areas where it is not currently present.

State animal health officials are important to the plan as they issue the premises identification numbers, 

approve movement to and from their state and are involved in the Controlled Movement Component of 

the plan. They will communicate with laboratories, producers and packers. They also will communicate 

with other state officials.

USDA-APHIS will be the main coordinating agency in the plan. They will analyze and communicate lab 

results and disease status of various areas, and will integrate all the data needed to implement the plan. 

They will have geospatial data to help determine what areas are free of disease and what areas are 

infected. The National Animal Health Lab Network is essential to provide the data on samples submitted 

by accredited veterinarians and producers. The timely testing and validation of these tests are the real 

backbone of being able to determine which areas can continue business and function as normal. 

This plan is being developed in conjunction with producers, veterinarians, Federal and State health 

officials and individuals in academia and industry. The Center for Food Security and Public Health at Iowa 

State University is coordinating the activities. This plan represents the industry's best effort at 

maintaining some business continuity in the case of a FAD outbreak and hopefully mitigating the economic 

devastation that could result from such an event.

References:

“Swine Biological Risk management” Ramirez A., Zaabel P. Center for Food Security and Public Health 

www.cfsph.iastate.edu

Secure Pork Supply Plan: http://www.cfsph.iastate.edu/Secure-Food-Supply/pork-supply.php

http://www.aphis.usda.gov/animal_health/emergency_management/downloads/intro_fadprep.pdf
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5. GENERAL AGRICULTURAL POLICY SUPPORT FOR THE PORK SECTOR

While there are no explicit support programs for livestock producers that are similar to support programs 

for the major field crops (corn, soybeans, wheat, cotton, etc.), there are a number of ways, other than 

the insurance plans discussed in the next section, through which the Federal government provides support 

and assistance to the hog and pork industries. These include avoiding undue levels of market price 

support for crops used for animal feed, assistance with promotion of pork exports, and assistance with 

animal disease outbreaks and weather-related disaster payments. While payments from the government 

as compensation for losses from weather or disease play a role in producers’ risk management decisions, 

we include them here as longstanding elements of Federal agricultural policy.

5.1. Market oriented grain and oilseed prices

For the most part, federal crop support policies in recent years have adhered to a philosophy of market 

orientation, i.e. not distorting normal market prices by either promoting excessive production or trying to 

put a floor under prices that is higher than the market-clearing level. The rationale for this approach has 

had both offensive and defensive components. Since the United States is a leading agricultural producer 

with comparatively modest production costs, allowing the marketplace to direct supplies to their highest 

uses benefits domestic producers of livestock and poultry, enabling them to be competitive in world 

export markets. From the defensive perspective, it also means that the United States is following world 

trade rules by not operating farm programs that provide excessive support to farmers.

That being said, the livestock industry has been quite critical of US renewable fuel policies that have 

diverted a large part of the corn supply to production of fuel ethanol, and caused corn prices to be higher 

than those that would otherwise have prevailed.

5.2. Export promotion

USDA has two main foreign market development programs that benefit the pork sector. The Market 

Access Program (MAP) supplements market development funds raised by the private sector to develop 

commercial export markets for US crop, livestock and fiber products. Total MAP funding in the 2015 fiscal 

year is $173.2 million. The Foreign Market Development Program (FMD) focuses on generic promotion of 

US commodities through reduction in foreign import constraints and other means. Total FY15 funding is 

$26.7 million. A smaller Emerging Markets Program (EMP) provides funding for technical assistance 

activities.

The U.S. Meat Export Federation (USMEF) promotes beef, pork and lamb exports and will receive $10.7 

million in MAP funds and $1.4 million in FMD funds in fiscal year 2015 for these purposes. USMEF receives 

16% of its funding from the Pork Checkoff and 38% from USDA programs (MAP, FMD, and FAS).

5.3. Animal and Plant Health Inspection Service

As discussed above, APHIS plays the lead role in managing major animal disease outbreaks such as the 

2015 highly pathogenic avian influenza outbreak that has resulted in death or destruction of millions of 

turkeys and layers. When depopulation of an infected flock is required under the National Animal Health 

Emergency Management System (NAHEMS), USDA provides compensation to the grower for the destroyed 

animals and assistance with cleaning up and disinfecting the facility.
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5.4. Disaster assistance

USDA has historically provided various types of disaster assistance to crop and livestock producers. 

Currently there are two programs applicable to swine producers: the Livestock Indemnity Program (LIP) 

and the Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish Program (ELAP). Both were 

reauthorized by the 2014 Farm Bill, retroactive to October 2011. A third type of assistance is provided in 

cases of drought through the Livestock Forage Program (LFP). However, swine are generally not grazed in 

the United States.

The LIP provides benefits to livestock producers for animal deaths in excess of normal mortality caused by 

adverse weather, with payments equal to 75% of the market value of the animal. To be eligible for LIP, a 

contract grower must have had the following on the day the livestock died:

• Possession and control of the eligible livestock and

• A written agreement with the eligible livestock owner setting the specific terms, conditions 

and obligations of the parties involved regarding the production of livestock.

In addition to the requirements listed for livestock owners above, the only eligible livestock of contract 

growers under LIP are poultry and swine.

For swine, the ELAP program covers death losses (including from disease), feed and grazing losses that are 

not due to drought or wildfires on federally managed lands, and the cost of transporting water to 

livestock due to an eligible drought. 

For 2012 and subsequent program years, no person or legal entity, excluding a joint venture or general 

partnership, may receive directly or indirectly, more than $125,000 total in payments under LFP, ELAP, 

and LIP combined. There are also additional limitations regarding the Supplemental Revenue Assistance 

Payments (SURE) program as well as Adjusted Gross Income (AGI) limitations. 

Based on historic experience, however, many swine producers probably believe that in the event of a 

major disease problem, the Congress would provide some type of special disaster assistance to cushion 

the impact on the industry. This was a comment we heard in our listening sessions. To the degree that 

this belief is widely held, it undermines producer willingness to pay for insurance.
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6. RISK MANAGEMENT TOOLS

National Pork Producers Council representatives and our listening session participants said their primary 

concern is over the potential economic impacts on the industry of a disease outbreak that would cause 

other countries to stop importing pork from the United States. Industry experts identified the four 

foreign animal diseases that would result in loss of export markets as Foot and Mouth Disease, African

Swine Fever, Classical Swine Fever, and Swine Vesicular Disease. As noted elsewhere in this report, the 

insurance solution that is being considered would provide coverage in the event of a decline in market 

prices due to a catastrophic disease event. The following sections discuss five risk management tools that 

swine producers can use to manage price risk:

• Futures or options products;

• Contract with buyer;

• Diversification;

• Livestock Gross Margin (LGM) insurance program with RMA; and

• Livestock Revenue Protection (LRP) insurance program with RMA.

Each of these risk management tools is reviewed below with a discussion of how they could be used or 

modified to cover a catastrophic swine disease event(CSDE). Here we define a CSDE as an outbreak that 

will close export markets. 

6.1. Non-Insurance risk management tools

6.1.1. Futures and options forward contracts

Lean hog futures are traded on the global electronic trading market, and via open outcry on trading floors 

in New York and Chicago until it ended on July 2, 2015 after 167 years. The electronic futures are 

abbreviated as “HE” with the contract month and year added at the end. For example:

Table 10: Futures contract terminology

Month Symbol Year

Ticker Symbol CME 

Globex

May K 2015 HEK15

June M 2015 HEM15

July N 2015 HEN15

August Q 2015 HEQ15

October V 2015 HEV15

December Z 2015 HEZ15

February G 2016 HEG16

April J 2016 HEJ16

The latest futures contract available is currently August 2016, which is approximately sixteen months in 

the future. There is typically little volume traded in futures contracts with an expiration date later than 

six months (or the time from piglet to maturity). A CSDE would likely impact market prices for longer 

than six months. 

For Lean Hog futures contracts, all outstanding contracts that remain open after the last trading day will 

be automatically closed out at a price set equal to the CME Lean Hog Index on the last trading day. There 

is no physical delivery requirement for lean hogs. 
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Each futures contract size is 40,000 pounds (or 400 hundredweight, abbreviated as “cwt”) of carcass. 

Using an example of the CME Live Hog Index, the average live weight is 277 lbs. while the average carcass 

weight is 209 lbs. (or approximately 75% of live weight). Dividing the 400 cwt by the average carcass 

weight gives about 190 hogs per futures contract. 

 

A swine producer has two simple mechanisms to hedge against declining prices using futures contracts:

• Shorting a futures contract or

• Buying a put option on a futures contract.

We will illustrate these simple methods in order to further discuss the possibility of using these to hedge 

against price declines resulting from a CSDE. More complicated hedging can be used depending on what 

the producer (or buyer) is trying to accomplish. The following table shows a simple hedging strategy by 

shorting a futures contract. For convenience we set the target and actual prices equal to the futures 

price. As noted below, a disconnect between the futures and market prices is referred to as basis risk, 

which can reduce the effectiveness of the strategy.

Table 11: Examples of futures transactions

Transaction Example 1 Example 2 Notes

(A) Target Price @8/15 on 3/15 $75 $75

(B) Sell HEQ Futures on 3/15 $75 $75

(C) Buy HEQ Futures on 8/15 $70 $80

(D) Futures Gain/Loss $5 ($5) (B) – (C)

(E) Actual Price @ 8/15 $70 $80

(F) Difference from Target ($5) $5 (E) – (A)

(G) Overall hedge profit/loss $0 $0 (D) + (F)

In both examples above, at 3/15 the producer is looking to hedge against the price of lean hogs falling 

below $75/cwt (Target Price) at the time of sale (expected to be 8/15). The producer can sell a futures 

contract (HEQ) on 3/15 that is currently valued at $75. On 8/15, the HEQ futures has dropped to $70. 

Since the producer is in a short position he/she can now buy the $70 HEQ, yielding a profit of $5. The 

producer can sell his swine at only $70/cwt so he/she “loses” $5/cwt from the target price on 3/15. 

Overall, the producer breaks even from the hedge (excluding transactional costs).

Example 2 shows the opposite situation, when prices rise. In this case, the producer receives $80/cwt for 

the swine, but loses $5 on the futures contract.

There are two significant issues that should be understood when considering futures:

• There will be costs associated with the futures transactions (commission, margin, etc.) and

• There is additional basis risk associated with an actual hedge.

Basis risk refers to the difference between the measuring index and the actual price received. The actual 

price received by the producer at the local market level will differ from the futures price. The hedge will 

work as long as the price difference between the local market and the futures remains constant. In the 

event the local price drops more than the futures price, the producer would have an adverse effect. A 

complication would arise in the event of a CSDE that is regionalized. For example if one region is 

quarantined due to a CSDE, the price in the region may drop significantly. Prices in other regions may 

increase if demand remains the same or decrease if the CSDE impacts global demand. In both cases the 

basis relative to the futures price would change.
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The second type of hedging a producer can use is to buy a put option. A put option provides the right to 

sell the underlying futures contract at a certain (strike) price. A producer must pay a premium for the 

put option, but this gives the producer an opportunity to make returns if the selling price is greater than 

expected. In the following examples, the premium is simply an estimate for illustration purposes.

Table 12: Examples of options transactions

Transaction Example 

1

Example 2 Example 3 Notes

(A) Target Price on 3/15 $75 $75 $75

(B) Put Strike Price $75 $75 $75

(C) Put Premium @ 3/15 $2 $2 $2

(D) Ending Futures @ 8/15 $70 $90 $50

(E) Option Gain/Loss $3 ($2) $23 IF (D) < (B) then (B) –

(D) – (C)

(F) Actual Price @ 8/15 $70 $90 $50

(G) Difference from Target ($5) $15 ($25) (F) – (A)

(H) Overall hedge profit/loss ($2) $13 ($2) (E) +(G)

As shown in Examples 1 and 3, the producer can lock in a price by paying the premium for the put option. 

Thus, as with the futures contract, when the price declines the difference (from target) is offset by the 

reduction in the futures price. However in Example 2, where the price is greater than the target, unlike 

the futures contract the producer gets the benefit of the higher price. Similar to the futures contract, an 

additional cost for commission will also need to be considered (but not the margin costs). Basis risk 

would also exist in the put option strategy. 

Currently these hedging strategies are used mainly for current inventory, judging from the volume of the 

various forward contracts. If producers are truly concerned about price risk running longer than six 

months (as in a CSDE) we would expect more activity in the later futures/options. However there are 

some reasons why there is light demand for these, including the following:

• Price volatility for both inputs (corn) and outputs (hogs) is high, causing the premiums for 

longer term futures to be perceived as too expensive;

• There may be little demand for the offsetting futures or option to make a market for longer 

term futures/options;

• The producer may have other needs for any available capital that could be used for longerterm hedging; and

• Producers are subject to margin calls on their futures positions as market prices change.

6.1.2. Contracting 

Contracting in the swine sector takes a number of forms, as discussed earlier in Section 3. Marketing 

contracts provide price certainty. Production or management agreements can also provide a degree of 

certainty on volume of livestock handled, or total revenue for the year.

A producer who has his own sows or buys feeder pigs and raises the pigs to market weight may have a 

marketing contract with a slaughter facility. Prices in such a contract would typically be linked to futures 

prices. Alternatively, the swine may be owned by an integrator who contracts with producers to manage 

the care and feeding of the animals. During our research and at the listening sessions, many different 

kinds of contracts were reported to be used. For certain growers, the hogs are never owned by the 

producers. In other cases the feed is also supplied by the buyer. In North Carolina, contracts usually 
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provide a fixed fee per animal with bonuses for high feed conversion rates and lower than normal 

mortality. In Minnesota, the contract amounts are not linked to the number of animals that go through 

the house. The barns and their management are in effect leased.

It was our understanding that these contracts could run three to five years or more into the future. It was 

not clear what would happen if a CSDE occurred that would stop further production. The producers would 

clearly have fixed cost expenses such as mortgages and maintenance. In the listening sessions, being able 

to cover such expenses while the industry adjusts to a CSDE was a major concern of producers.

6.1.3. Diversification 

Section 4.4 discussed the disease management activities that swine producers use to mitigate risks from 

disease. Swine producers can also use diversification as an economic risk management tool. This can 

include investing in production of other agricultural products or in other industries. Some of the main 

diversification opportunities are the following:

• Produce other livestock with differing disease risks;

• Produce feed inputs (corn, soybeans, etc.);

• Geographic diversification to reduce chances that disease will affect all owned animals; and

• Maintain operations or off-farm employment in a completely separate industry.

The success of these diversification techniques can depend on the correlation between the price of swine 

and the prices of the other products or services. For example, a CSDE may cause the demand for poultry 

to increase as it is substituted for pork, or alternatively all meat prices could be depressed by 

overhanging supplies of pork that cannot be exported. A severe drought may increase the price of corn

and the swine producer’s feed costs; however if the drought is located in the same area as the producer, 

the producer would likely suffer similar yield losses on corn that he is producing. 

6.2. Insurance plans

6.2.1. FCIC insurance products

RMA has offered two main insurance plans for livestock producers (Cattle, Swine, Lamb, and Dairy-LGM 

only) since 2003:

• Livestock Revenue Protection (LRP) and

• Livestock Gross Margin (LGM).

In addition, livestock can be covered to some degree under the Whole Farm Revenue Protection Plan 

(WFRP) included in the 2014 farm bill. On the plus side, in most cases the government pays 80% of the 

premium for the WFRP insurance coverage. However, no more than 35% of expected revenue can be from 

animals and animal products and that amount is capped at $1 million. With those two constraints it does 

not meet the needs of most commercial swine producers.

LRP is designed to insure against declining market prices. LRP works much like buying a put option where 

the producer pays a premium for coverage against declining prices. The swine producer can choose 

certain coverage prices ranging from 70 to 100 percent of the expected ending value. The prices are 

typically shown in $2/cwt increments and there are up to five options for a given ending date. The length 

of insurance coverage is for 13, 17, 21, or 26 weeks. If the actual ending value is below the coverage 
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price, the producer receives an indemnity payment for the difference between the coverage price and 

the actual ending value.

For LRP, a producer may insure as many as 32,000 hogs per year with up to 10,000 hogs for each specific 

coverage endorsement. (As will be discussed below, this is one feature of the program that would need 

to be changed if the LRP were to be used for protection against a CSDE). There is a 13% subsidy to 

partially offset the producer’s premium. An additional 22.2% of premium is paid as A&O expense subsidy 

to the Approved Insurance Provider (AIP). 

LGM is similar to LRP but includes the cost of feed as another component of the equation. LGM only 

covers the margin between the swine price and feed price. The expected gross margin is based on the 

future swine price less the feed costs using CME futures prices. The feed equations are based on an 

optimal feeding ration developed through Iowa State University.

LGM is offered twelve times per year and insures over a six month insurance period. Producers can 

allocate swine to the upcoming five months. LGM is sold on the last business day Friday of each month. 

The sales period begins as soon as RMA reviews data submitted by the developer after the close of 

markets on the last day of the price discovery period. The sales period ends at 8pm Central Time the 

following day (Saturday). (This timing has reportedly reduced the incentive for agents to market the 

product.)

For LGM, a producer may insure as many as 30,000 hogs per year with up to 15,000 hogs for any 6-month 

insurance period. There is a 3% surcharge added to the producer’s premium. An additional 22.2% of 

premium is paid as A&O expense subsidy to the AIP. 

Table 13 displays various scenarios for the LRP and LGM programs for Swine. The premium shown is just 

for illustration purposes. 

Table 13: Examples of LRP and LGM coverage for swine

LRP 

Scenario 

1

LGM 

Scenario 

1

LRP 

Scenario 

2

LGM 

Scenario 

2 Notes

(A) Expected End Value $75 $75 $75 $75

(B) Coverage Price $70 N/A $70 N/A

(C) Feed Costs 7 N/A $50 N/A $50

(D) Gross Margin N/A $25 N/A $25

(E) LGM Deductible N/A $5 N/A $5

(F) Premium $3 $4 $3 $4

(G) Final End Value $65 $65 $80 $80

(H) Final Feed Costs N/A $55 N/A $40

(I) Final Gross Margin N/A $10 N/A $40 = (G) – (H)

(J) Indemnity $5 $10 $0 $0 LRP = If (G) < (B) then (B) – (G)

LGM = If (I) < [(D)-(E)] then [(D)-

(E)]-(I)

(K) Insurance Gain/Loss $2 $6 ($3) ($4) = (J) – (F)

(L) Swine or GM

Gain/Loss

($10) ($15) $5 $15 LRP = (G) – (A)

LGM = (I) – (D)

(M) Overall Gain/Loss 8 ($8) ($9) $2 $11 = (K) + (L)

 

7 Example only – based on ISU feed study.
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Both the LRP and LGM insurance products only cover the current “crop” of hogs. Theoretically the 

premium for these products should match similar costs using the futures/options markets (prior to the 

subsidies). Table 14 compares and contrasts the various risk management strategies:

Table 14: Comparison of risk management strategies

Futures Options Contracting LRP LGM

Maximum 

Length

16 Months 16 Months 3-5 years 26 weeks Six months

Basis Risk Yes Yes No Yes Yes

Downside price 

protection

Yes Yes Yes Yes Possible

Upside price 

potential

No (other than 

basis risk)

Yes Possible Yes Possible

Transactional 

Costs

Commission, 

margin

Commission None Subsidy of 13% Surcharge of 

3%

Input (feed) 

price 

protection

No – could be 

added

No – could be 

added

Possible No Yes

Flexibility Moderate Moderate Minimal Significant Significant

6.2.2. FCIC insurance product experience

This section discusses the insurance experience for both the LGM and LRP programs. A major change to 

the program was the addition of a 28% premium subsidy for Dairy Cattle in 2011. As mentioned previously 

the LRP program has a 13% premium subsidy and LGM (excluding Dairy Cattle) has a 3% premium 

surcharge. Since 2011, Cattle-Dairy has comprised most of the insured liability for the program, and it is 

our understanding that it depletes the $20 million administrative cap on an annual basis. It is difficult to 

estimate how many producers have not participated due to the endorsement limit. From the 2012 Census 

of Agriculture we found that 27% of the swine producers have an inventory of over 5,000 hogs, which 

comprises almost half of the total inventory. For the next several charts we show all livestock first and 

just swine on the second chart to better visualize the swine products.

Policies earning premium for LGM – Dairy increased significantly in 2011 when the 28% subsidy was added. 

Policies earning premium for LRP-Cattle have fluctuated between roughly 500 and 2,000 annually 

throughout the history of the program. The LRP-Lamb product was withdrawn during 2014 following an 

RMA commissioned study, but it is now available again. 

The number of policies earning premium for swine has decreased from a high of 380 in 2005 to 42 in 2013. 

As of April 20, 2015, there were 43 swine policies earning premium in 2015. The livestock insurance years 

run from July 1 of the prior year to June 30 of the current year – so 2015 was nearly complete at that 

point. We discussed the declining participation in LGM/LRP swine during the listening sessions, but no 

real reasons were offered. It should be noted that less than 1% of the total annual swine population of 

110 million head was insured in the year of highest participation. 

 

8 Excludes feed costs for LRP product.
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Figure 13: Policies earning premium, all species

Figure 14: Policies earning premium, swine only

 -

 500

 1,000

 1,500

 2,000

 2,500

 3,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Policies Earning Premium

LGM - SWINE LRP - SWINE LGM - Cattle LRP - Cattle LRP - Lamb LGM - Dairy

 -

 50

 100

 150

 200

 250

 300

 350

 400

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Policies Earning Premium

LGM - SWINE LRP - SWINE
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Figure 15 shows the insured liability for each product. LGM-Dairy has had the most insured liability since 

2011. LRP-Lamb had the most insured liability in 2008 and second most in 2012. Figure 16 shows the 

insured liability for swine by year. The insured liability decreased after 2008 to around $30 million a 

year. 

Figure 15: Insured liability, all species

Figure 16: Insured liability, swine only

 -

 200

 400

 600

 800

 1,000

 1,200

 1,400

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Insured Liability in $ Millions

LGM - SWINE LRP - SWINE LGM - Cattle LRP - Cattle LRP - Lamb LGM - Dairy

 -

 10

 20

 30

 40

 50

 60

 70

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Insured Liability in $ Millions

LGM - SWINE LRP - SWINE
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The next charts show the premium for each product associated with the liability shown in Figure 15 and 

Figure 16. 

Figure 17: Premium paid, all species

Figure 18: Premium paid, swine only

 -

 5

 10

 15

 20

 25

 30

 35

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Premium in $ Millions

LGM - SWINE LRP - SWINE LGM - Cattle LRP - Cattle LRP - Lamb LGM - Dairy

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Premium in $ Millions

LGM - SWINE LRP - SWINE
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Figure 19 and Figure 20 show the insured headcount for each product, excluding LGM-Dairy which insured 

on a pound of milk basis. LRP-Lamb had the most insured animals between 2008 and 2013. There was a 

large decline in swine since 2004. 

Figure 19: Insured head, all species

Figure 20: Insured head, swine only
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The next chart displays the loss ratio (Indemnity divided by Premium) for the plans by year. Overall, the 

loss ratio is 62% for the 2003-2015 years (although more indemnities may be payable in 2015). The LRPLamb product had very high loss ratios in most years. This may explain the higher participation for LRPLamb for these years and the subsequent change in the program. The higher participation may also be 

due to the fact that, unlike the other commodities insured under LRP and LGM there is no futures market

for lamb. The overall loss ratio for LGM-Dairy has been only 6%; however it has been the most popular 

product by far. For both swine products the overall loss ratio is 95%, with significant volatility by year.

Figure 21: Loss ratios, all species

Figure 22: Loss ratios, swine only
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Overall, the insurance experience shows a lack of demand for any of the LRP/LGM products except LGMDairy. It should be noted that the 2014 Farm Bill introduced a Margin Protection Program (MPP) similar to 

LGM-Dairy. Even with the MPP, the participation in LGM-Dairy increased for the 2015 year. The low loss 

ratios and relatively higher participation rates for LGM-Dairy seem counterintuitive compared to the 

LRP/LGM–Swine products. 

The following are possible reasons for low participation rates in the LRP/LGM swine insurance products:

• Many producers have production or marketing contracts that negate the need to hedge price 

risk.

• Number of head limitations by insurance period or by year may discourage participation by

large producers.

• Prices for coverage may appear high.

• The one month lag between sale and coverage for LGM may be viewed as risky. If the gross 

margin increases during the month, then the premium could be too high (although the 

opposite could happen).

• Comparison to options or futures hedges is difficult.

• While one could buy LRP any business day, one would first need to fill out an application and 

then buy a specific coverage endorsement. With futures/options prices changing constantly, 

this may make it difficult for the producer to decide whether it makes sense. 

• Sales limitations due to the high Cattle-Dairy interest and the cap on total FCIC expenditure 

on livestock insurance products may discourage any interest in the swine products.

• Some livestock producers do not want to be reliant on government programs.

• Based on past experience, other livestock producers expect the Congress to provide 

emergency assistance when there is a major problem due to weather or other factors.

6.2.3. Private insurance products

Private insurance products are available to cover mortality and liability risks for swine producers. These 

coverages are typically included in a Farm Owner’s policy. However, these products are limited to 

certain perils that cause the death of the swine such as a fire or tornado. Liability due to the actions of 

the livestock may be covered as well (such as swine escaping and digging up a neighbor’s field). We 

found no instances of disease being covered in any private products and no coverage for price changes.

From our detailed search, we found no private insurance program to cover a CSDE.
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7. FEASIBILITY OF DEVELOPING AN INSURANCE PLAN

As part of the research on the feasibility of developing an insurance plan, we held four listening sessions 

for swine producers and the insurance industry in late March and early April. They were held in North 

Carolina, Indiana, Minnesota and Iowa, all of which are leading swine producing states. We also received 

input by phone from a number of producers and industry representatives.

The main themes that emerged from this industry feedback were the following:

• There is a sense that the probability of introduction of foreign animal diseases has increased 

and that this is now a more significant risk for the industry.

• With the share of pork production exported having grown to 20%, there is concern that a 

foreign ban on imports of pork from the United States due to a disease outbreak would 

sharply lower prices.

• The negative effects on the industry could last one to three years or more, and drive many 

producers into bankruptcy.

• An insurance plan should cover only the four most serious diseases and provide indemnities 

over an extended period, i.e. more than one production cycle.

• Existing insurance plans and other risk management tools are not able to address this risk.

• However, willingness to pay for additional insurance coverage appears to be very limited.

Below we discuss the risks that the swine industry faces, how to define the insured, the guarantee, and 

the trigger for a loss, what one would have to charge for the insurance, producer willingness to pay, 

potential market impacts, and our conclusions about the feasibility of developing an appropriate plan.

7.1. The risks

There are many financial risks in producing swine. For this report we have considered both risks to an 

individual farm and risks to the industry. An individual producer is exposed to both sets of risks.

Table 15: Swine Sector Risks

Individual Risk Industry Risk

• Property damage causing death to inventory • Price decline due to over production

• Localized disease causing mortality, 

reducing efficiency or making inventory 

unmarketable

• Price decline due to closure of export 

market due to a CSDE

• Price basis risk (when hedging strategies are 

used)

• Increase of input (feed) costs 

• Inability to obtain pigs to feed • Demand reduction and price decline 

due to negative news scare 

• Buyer/contractor insolvency • Exit of firms due to lack of profitability

Specifically for this report we focus on a CSDE (Catastrophic Swine Disease Event). According to research 

and evidence from our listening sessions, it is believed that a CSDE could close exports markets for a year 

or more. On a short term basis, this could decrease prices by as much as 50%. According to one study, 
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prices might remain under 70% of the study baseline for over two years.9 Once inventory is cleared, 

producers would limit or stop production until a future expectation of a positive margin appeared. It 

also should be noted that the farms where the disease is found would be cleaned and not allowed to 

resume production again until all signs of the disease are gone. The number of farms that would be 

affected would depend on how the disease is transmitted. It is also unclear how the domestic market 

would react. While it would depend on the disease itself, domestic demand may fall due to consumer 

fear of disease whether warranted or not. 

An individual producer without the disease being detected on their farm would still have to market the 

hogs at significantly lower prices. These prices could vary from those on the futures market due to basis 

risk and regionalization of the disease outbreak. Thus, use of futures contracts or put options might not 

fully indemnify the producer in the event of a price decline.

Additional risk beyond that on the current inventory relates to the loss associated with continued 

expenses without offsetting revenue. This is commonly referred to as Business Interruption (BI) Insurance 

in the commercial insurance marketplace. BI can be added to the business’ property insurance policy or 

package policy such as a Business Owner’s Policy (BOP) or a Commercial Multi-Peril (CMP) policy. BI can 

provide the following coverages:

• Lost income;

• Fixed costs;

• Temporary moving expenses; and

• Extra rental expenses.

BI is typically only triggered when an insured event causes property damage to the place of business. 

Generally, there is a waiting period and time limit (such as one-year) for coverage. BI coverages vary 

significantly depending on the size and complexity of the business. 

For swine producers there is considerable BI risk in case of a CSDE that significantly reduces demand. The 

impacts would be different depending on the producer type:

• A sow/farrowing/nursery operation would likely have an overstock of supply initially. 

Decisions would need to be made regarding the current inventory and whether to continue 

to breed. Gestation takes about 16 weeks and growing to the feeder pig stage takes another 

8 to 10 weeks. Projecting future demand in six months would be difficult given a CSDE. The 

producers would still incur many costs such as feeding if they decide to stop or reduce 

breeding. Decisions would also be made about the sows, which would have a very low value 

in the marketplace during a low demand period.

• A grow/finish operation would also suffer in the event of a catastrophic swine disease 

outbreak. For these producers the financial impact would depend on the ownership of the 

swine and the contract wording. Regardless, these producers would still have many fixed 

costs during the period of industry adjustment.

There is considerable risk associated with a CSDE to swine producers, both with the current inventory and 

the business interruption effects. The next section discusses insurable interest and the current 

regulations and guidelines from RMA.

 

9

 Hayes, Dermot et al, “Economy Wide Impacts of a Foreign Animal Disease in the United States” – Center for 

Agricultural and Rural Development; Iowa State University; Working Paper 11-WP 525, November 2011. See also Hayes, 

Dermot, “Preparing the US Livestock Industry for Low Probability Catastrophic Events”, December 2011
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7.2. Defining the insured 

Insurable interest is defined in the Code of Federal Regulations section 7 CFR 400.561 as:

“The value of the producer's interest in the crop that is at risk from an insurable cause of loss 

during the insurance period. The maximum indemnity payable to the producer may not exceed 

the indemnity due on the producer's insurable interest at the time of loss.”

Under a document released by RMA - General Guidelines, Considerations, and Criteria for Feasibility of 

Insurance Product Development March 2012 – it states:

“The party to be insured must have an ‘insurable interest’ in the commodity. This means some 

portion of the commodity at risk must be ‘owned’ by the insured party. (For example: Contract 

growers of livestock often provide labor and housing but have no ownership of the actual 

animals so do not have an insurable interest.)”

Based on the definition above, it would be difficult to conclude that contract growers managing packerowned hogs would be eligible to any significant degree for any insurance program administered by RMA. 

While contracts may offer bonuses for achieving high feed conversion rates, an indemnity based on the 

incremental payment of a few dollars per animal would not significantly address the problems arising 

from a CSDE.

A swine producer or contractee who owns the animals clearly has an insurable interest. However, 

according to the regulations, the indemnity may not exceed the current inventory value. Therefore 

designing a product with Business Interruption coverage does not appear to be feasible under the current 

regulations. RMA staff have given some thought to whether a livestock BI coverage could be modeled on 

the Citrus Tree Policy’s Comprehensive Tree Value Endorsement. The endorsement indemnifies the net 

present value of the tree based on the value of the fruit a mature tree would have produced while a new 

tree is getting back into production. This could work as an insurance plan for sows that might have 

produced three or four litters of pigs, but it would be challenging to apply the concept to market hogs.

Some RMA insurance plans base guarantees on inventory values that are periodically reassessed during the 

insurance year based on numbers of insured items and their stage of growth. This is the case for the 

Nursery plan and the Cultivated Clam Pilot. However, in both cases the guarantee is reset at the 

beginning of each insurance year. It does not appear to us that this approach would overcome the barrier 

to providing coverage for more than the inventory value during the current insurance year.

7.3. Defining the guarantee and trigger for a loss

Most insurance policy language includes a trigger or cause of loss that needs to occur during the insurance 

period before any indemnity is made. For example, the causes of loss listed for the Coarse Grains Crop 

Provisions are as follows: 

a) Adverse weather conditions; 

b) Fire; 

c) Insects, but not damage due to insufficient or improper application of pest control measures;

d) Wildlife;

e) Earthquake; 

f) Volcanic eruption; 

g) Failure of the irrigation water supply due to a cause of loss specified in sections 8(a) through (g) 

that also occurs during the insurance period; or 

h) For Revenue Protection, a change in the harvest price from the projected price, unless FCIC can 

prove the price change was the direct result of an uninsured cause of loss specified in section 

12(a) of the Basic Provisions. 
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For the LRP program, the trigger is simply whether the actual ending value is less than the coverage 

price. Both of these values are clearly defined in the policy. It is an important insurance principle to 

have clear triggers in order to avoid disputes between the insurer and insured. Therefore any insurance 

program to protect against a CSDE should have a clear cause of loss. Clear definitions would need to be 

made in the policy.

One approach could be to add an endorsement for a CSDE. Endorsements typically add coverage to the 

existing policy. As discussed in the previous section, it appears that RMA guidelines prohibit insurance 

above the current inventory, so an endorsement with additional coverage for a CSDE may not be 

available. There could be an endorsement that limits the LRP indemnity to a CSDE. An indemnity would 

only be paid in the event a CSDE is declared and the price declines below the coverage amount. The 

endorsement would need to be carefully worded to ensure understanding of the terms for both the 

insured and insurer.

7.4. Rating analysis

As stated in the RFP, any possible insurance program should be “ratable and operable in an actuarially 

sound manner”. In the statement of work describing this project, RMA provided the following definition:

“Actuarially sound – For the purpose of the Federal Crop Insurance Program, a classification and premium 

rate determination system, where risk premium collected is sufficient to cover expected future losses and 

to build a reasonable amount of reserve.”

The Casualty Actuarial Society provides the following principles with respect to insurance rates:10

• A rate is an estimate of the expected value of future costs;

• A rate provides for all costs associated with the transfer of risk;

• A rate provides for the costs associated with an individual risk transfer; and

• A rate is reasonable and not excessive, inadequate, or unfairly discriminatory if it is an 

actuarially sound estimate of the expected value of all future costs associated with an 

individual risk transfer.

Under RMA sponsored programs, the expenses are provided under the Administrative and Operating (A&O)

subsidy, which is out of the scope of this project. The RMA definition of actuarially sound as discussed 

above implies that the long-term loss ratio should be close to but less than 100%.

The overall loss ratio for the LRP and LGM program is 71% through 2014 which may imply that the current 

methodology used in the LRP and LGM rating is not unreasonable. 

However, in developing an insurance plan to cover a CSDE, one important obstacle is that there is no 

historical data on which to base rates. The future frequency and scale of potential CSDE events is 

unknown, and this makes it challenging to determine how much to charge for the insurance coverage.

7.4.1. Comparison between LRP and Options

We compared the rates from the LRP-Swine plan to comparable put options on a given date. We needed 

to make several adjustments to make sure the comparisons were similar. For example, the LRP-Swine 

rates are based on the insured value which is defined as:

 

10 Casualty Actuarial Society, Statement of Principles Regarding Property and Casualty Insurance Ratemaking (1988).
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IIIIIIIIIIIIII VVVVVV = NN NNNN oooo HH × TT TT TT WW WW h × CC CC PP PP × SSh

Target Weight is the expected lean market weight in hundred pounds (cwt). A Lean Weight Conversion 

Factor of 0.74 converts live weight to lean weight. The Target Weight should fall between 1.50 and 2.25

cwt. The coverage price is the amount shown in the actuarial documents and is a percentage of the 

expected ending value amount. The implied coverage level is the coverage price divided by the expected 

ending value amount. The rates for each coverage price and endorsement length (13, 17, 21, or 26 

weeks) change each day due to changing prices and volatilities. These are stored on the RMA ADM 

database which is publicly available.

Using the options market we converted the following terms from the LRP as follows:

Table 16: Comparison of terms

LRP – Swine Put Options Notes

(A) Expected Ending Value Amount Current Futures Amount

(B) Coverage Price Strike Price

(C) Coverage level Coverage Level = (B) / (A)

We then needed to calculate a comparable insured value amount for the options. This was calculated as:

IIIIIIIIIIIIII VVVVVV = 400 cc XX CC FF AA × CC CC LL

The comparable rate for options was calculated as:

OOOO RR = QQ PP ÷ IIIIIIIIIIIIII VVVVVV

We used similar lengths of time to expiration to compare to the 13, 17 and 26 week endorsements. For 

example, the July 15 futures expires on July 17, 2015 so we compared options prices on April 17th, which 

is 13 weeks before expiration. We also needed to interpolate rates between strike prices in order to 

compare with the exact same LRP-Swine coverage level. Table 17 displays the outcome of our analysis. 

Table 17: Comparison of rates between RMA and Put Options

Weeks to Expiration RMA Coverage Level ADM Rate Options Rate Options Price Difference

13 97.5% 0.05603 0.03827 -31.7%

13 87.2% 0.01678 0.01245 -25.8%

13 82.1% 0.00873 0.00655 -25.0%

17 97.5% 0.05309 0.04634 -12.7%

17 87.3% 0.01822 0.01664 -8.7%

17 82.1% 0.01036 0.00923 -10.9%

26 99.4% 0.08272 0.06356 -23.2%

26 96.6% 0.06877 0.05240 -23.8%

26 85.4% 0.02808 0.02048 -27.1%

26 79.8% 0.01744 0.01321 -24.3%

Our simplified analysis found the put option rates to be approximately 20% to 30% lower than the 

comparable LRP-Swine rates. We would expect the opposite due to the ability of the put option being 

exercised before expiration (American versus European options). One explanation may be that RMA 

products typically include a risk load of 13.6%. However this does not fully explain the difference. In our 
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listening sessions, it was mentioned that a risk load of 30% is included in the LRP-Swine rates, but we have 

no way of verifying this comment. 

7.4.2. Catastrophic coverage discussion

We reviewed a 2011 Iowa State University working paper 11 that estimates the impact of a CSDE in the 

United States. Using December lean hog futures the paper calculated a 2.38% probability of a price 

reduction in excess of 40% and a 0.76% probability of a price reduction of 50% or more. This working 

paper projected that the price of swine would fall to 50% of the study’s baseline price soon after the CSDE 

as a result of other countries not accepting pork imports from the United States. The paper predicted the 

price would stay more than 30% below the baseline for two years. 

The paper suggested adding the Catastrophic Risk Protection Endorsement, known as CAT coverage, to 

livestock policies to address the CSDE risk. One issue of offering a CAT type policy similar to other 

commodities is that production volume has to decline more than 50%, and then indemnification is based 

on only 55% of the projected price. There also would be no compensation for the duration of the major 

price decline caused by the CSDE. It is also unclear if this risk can be covered under the current Federal 

Crop Insurance Act (FCIA). Current CAT policies insure yield loss only. The FCIA states:

Except as provided in subparagraph (B), the Corporation shall offer a catastrophic risk protection

plan to indemnify producers for crop loss due to loss of yield or prevented planting, if provided by the 

Corporation,when the producer is unable, because of drought,flood, or other natural disaster (as 

determined by the Secretary),to plant other crops for harvest on the acreage for the crop year.

This would imply that CAT coverage would only be for yield loss. However, the following states that a 

CAT policy could be designed on a uniform national basis including price and yield: 

(3) ALTERNATIVE CATASTROPHIC COVERAGE.—Beginning with the 2001 crop year, the Corporation shall 

offer producers of an agricultural commodity the option of selecting either of the following:

(A) The catastrophic risk protection coverage available under paragraph (2)(A).

(B) An alternative catastrophic risk protection coverage that—

(i) indemnifies the producer on an area yield and loss basis if such a policy or plan of insurance is 

offered for the agricultural commodity in the county in which the farm is located;

(ii) provides, on a uniform national basis, a higher combination of yield and price protection than the 

coverage available under paragraph (2)(A); and

(iii) the Corporation determines is comparable to the coverage available under paragraph (2)(A) for 

purposes of subsection (e)(2)(A).

The current CAT policies for crops only offer coverage for yields under 50% of expected levels and only 

provide 55% of the projected price. We do not believe this type of coverage would provide significant 

assistance in a CSDE. Even if the CAT coverage is defined on a revenue basis, revenue would have to fall 

more than 72.5% before any indemnity would be paid. According to the paper, the price would decline to 

about 50% of the baseline, which would provide no (or very little) indemnity under any type of CAT policy. 

7.4.3. Endorsement Concept

One way to utilize the LRP policy to provide CSDE coverage is to design an endorsement that would pay 

out an additional amount in the event of a CSDE. The endorsement would require a trigger only in the 

event of a declaration of a CSDE. The endorsement would only pay an additional amount when a CSDE is 

 

11 Hayes, Dermot et al, Op cit
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declared. It would not provide additional coverage for a non-CSDE situation such as an oversupply event 

like the one occurring in 1998 that reduced prices by more than 50%. 

Under this endorsement concept a separate coverage level would be included for the CSDE. In this 

example we are using 75%. If a CSDE occurs and the price declines by more than 25%, then an additional 

indemnity would be paid. The producer would also be paid under the traditional LRP-Swine policy 

purchased at whatever coverage level they selected. In order to illustrate this concept we display 

payment factors (Indemnity = Payment Factor times Insured Liability) for both a traditional price decline 

and a CSDE endorsement event in the following tables.

Table 18 shows the payment factors for the regular LRP policy. Table 19 shows an example of CSDE 

enhancement payment factors. For this example, the CSDE coverage level begins at 75%: 

PP PP FF = { MM ( 75% ,CC CC LL ) − (1 − PP PP DD ) } ÷ CC CC LL

Table 18: LRP payment factors

Price

Decline

Coverage Level

90% 85% 80% 75% 70%

25% 17% 12% 6% 0% 0%

30% 22% 18% 13% 7% 0%

35% 28% 24% 19% 13% 7%

40% 33% 29% 25% 20% 14%

45% 39% 35% 31% 27% 21%

50% 44% 41% 38% 33% 29%

55% 50% 47% 44% 40% 36%

60% 56% 53% 50% 47% 43%

65% 61% 59% 56% 53% 50%

Table 19: CSDE enhancement payment factors

Price

Decline

Coverage Level

90% 85% 80% 75% 70%

25% 0% 0% 0% 0% 0%

30% 6% 6% 6% 7% 0%

35% 11% 12% 13% 13% 7%

40% 17% 18% 19% 20% 14%

45% 22% 24% 25% 27% 21%

50% 28% 29% 31% 33% 29%

55% 33% 35% 38% 40% 36%

60% 39% 41% 44% 47% 43%

65% 44% 47% 50% 53% 50%
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Table 20 displays the sum of the two previous tables, which would be the payment factor if a CSDE is 

triggered.

Table 20: Combined payment factors

Price

Decline

Coverage Level

90% 85% 80% 75% 70%

25% 17% 12% 6% 0% 0%

30% 28% 24% 19% 13% 0%

35% 39% 35% 31% 27% 14%

40% 50% 47% 44% 40% 29%

45% 61% 59% 56% 53% 43%

50% 72% 71% 69% 67% 57%

55% 83% 82% 81% 80% 71%

60% 94% 94% 94% 93% 86%

65% 106% 106% 106% 107% 100%

In this example, the indemnity could exceed the insured value of the LRP-Swine policy. However this 

would only occur in an extreme low price scenario. This example would have several benefits compared 

to the current LRP-Swine policy regarding a CSDE:

• The insured would not be unduly compensated for a small price change;

• The insured would gain additional indemnity in the event of a CSDE, which is likely to last 

longer in duration than a “typical” price decline;

• The insured’s premium rates would be relatively lower than if the CSDE endorsement applied 

to any price change rather than a lower amount (25% in our example); and

• Increasing the indemnity in the event of a CSDE would also help deal with the expected 

duration of a CSDE price decline without compromising the “insurable interest” concept of 

RMA insurance plans.

The current LRP-Swine rates would need to be increased due to this endorsement. However, the current 

rates for coverage levels below 75% are very low. A review of current ADM rates found the rates to be 

lower than 0.010 for coverage levels around 75%. If we assume that one-half of the times the price falls

below 75% it is due to a CSDE, then the rate for this enhancement would be approximately 0.005 at the 

75% coverage level. Using an $80/cwt price, this coverage would translate to approximately $0.63 per 

hog.

The actual rates for the CSDE would need to be updated daily in the same way as for the LRP-Swine rates. 

If one changes the parameters in the CSDE endorsement (coverage level or amount of coverage), the rates 

would change as well. 

7.5. Producer willingness to pay

Developing a new insurance plan to cover the impacts of a CSDE would serve no purpose if no one is going 

to buy it. There are several indicators that point to a lack of willingness among swine producers to buy 

such coverage. First and foremost is the lack of participation in the existing swine insurance plans. The 

number of policies sold and the number of hogs covered have both been negligible, as illustrated in Figure 

13, Figure 14, Figure 19 and Figure 20 in Section 6.2.
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In our listening sessions we specifically asked producers whether they would buy such insurance and the 

response was decidedly mixed. As noted earlier, there are a number of potential reasons for this:

• Much production is under contracts in which the producer has no price risk;

• Livestock producers have historically had some degree of pride in not being dependent on 

government programs;

• Several said that the big integrators would self-insure rather than buy coverage; and

• It may be viewed as both too expensive and optional.

On the question of how much producers would be willing to pay for coverage, the most candid discussion 

occurred at the Ames, Iowa listening session. The consensus was that it would have to be less than the 

pork checkoff amount, which is 0.40% of market value. At $80/cwt for a carcass weight of 210 pounds, 

the market value is $168 and the checkoff amount is $0.67. Thus one might think of $0.50 per animal as 

the upper limit of what a producer would pay. In our CSDE endorsement concept, we estimated an 

additional cost of $0.63 per hog but this was based on fairly simple assumptions since there is no 

historical data on which to base rates.

7.5.1. Potential outline of plan design

There are many different possible elements of a plan design. Among other things, it would have to 

consider the following:

• Defining the guarantee for animals with varying functions or at different stages of growth: 

sows, boars, piglets, feeder pigs, and market hogs.

• Defining buyup coverage levels and any catastrophic coverage element.

• Defining the trigger for an indemnity, and the period of coverage.

• Defining when the coverage must be purchased.

• Developing actuarially sound rates.

Here we simply define a basic program for purposes of developing estimates of potential liability, 

indemnities, and cost to the government. It would cover those market hogs from the feeder pig stage 

onwards that would be expected to be slaughtered within one year of the date of a CSDE declaration and 

include only buyup coverage with a maximum coverage level of 75%. The total premium is assumed to be 

1.5% of the guarantee, of which 0.5% is for the additional CSDE endorsement.

7.5.2. Impact analysis

Table 21 presents estimates of the hypothetical plan’s liabilities, premiums, indemnities, and government 

costs under specified assumptions. This table assumes that the addition of a CSDE endorsement entices 

swine producers to purchase an LRP-Swine policy at a lower coverage level (75%) than what is currently 

being purchased. Annual hog slaughter is about 110 million head and average live weight at slaughter the 

past two years has been about 280 pounds, for a carcass weight of about 210 pounds. Total carcass 

weight of annual slaughter is therefore 231 million cwt. At $80/cwt the total value is $18.5 billion. One 

can easily envision the large adverse impacts on those in the swine industry and on US agriculture if there 

were a multi-billion dollar decline in the value of output due to a disease outbreak.

If we assume that 25% of production is enrolled at a coverage level of 75%, the total liability under the 

plan would be about $3.5 billion. In view of the various factors pointing to a low level of interest in such 

a product, a participation rate of 25% seems a plausible assumption. With a premium rate of 1.5%, total 
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premiums collected would be $52 million. This figure includes the 1% for a traditional LRP-Swine product 

and the CSDE endorsement of 0.5%.

Table 21: Impact analysis

Estimate of liability

Hog slaughter (millions) 110

cwt per hog carcass 2.1

Total cwt hog carcass (millions) 231

Price per cwt $80

Value of hogs ($ millions) $18,480

Coverage level 75%

Participation rate 25%

Insured value ($ millions) $3,465

Estimate of premium

Premium rate (assumed) 1.5%

Annual Premium ($ millions) $52.0

Estimate of indemnity

CSDE price decline 50%

CSDE price per cwt $40

CSDE indemnity (Millions) $2,310

Estimated government costs

Premium subsidy @13% ($ millions) $6.8

A&O subsidy ($ millions) $11.5

Total subsidy costs ($ millions) $18.3

Drawing on the analysis by Dermot Hayes et al cited in Section 7.1, we assume that there is a price 

decline of 50% to $40/cwt that results in an indemnity of $2.3 billion. This number pales in comparison to 

the $35 billion estimated by Hayes as the total economic damage caused by a CSDE.12 However, it is the 

same order of magnitude as other estimates of economic impact cited in Section 4.3.2. Due to the 

assumed limited participation in the plan, this only makes a partial contribution to the hog sector’s 

adjustment problems in the event of a CSDE. In terms of actuarial soundness, the premiums would cover 

the one-time indemnity once every 44.4 years.

The producer-paid premium would be higher than what the input from our listening sessions revealed 

producers are willing to pay. At $80/cwt for a 210 pound carcass, the value is $168. With a 75% coverage 

level and a 1.5% premium, the total premium would be $1.89. After a 13% government subsidy the 

producer would be paying $1.64 per animal, or roughly two and a half times the pork checkoff amount

Costs to the government under the specified assumptions would be significant at $18.3 million for the 

premium subsidy of 13% and the A&O subsidy of 22.2%. This is almost equal to the total $20 million cap 

on expenditure on livestock insurance programs, and could obviously not be accommodated as an addition 

to the current insurance plans without action by the Congress to lift the cap. 

With different assumptions in Table 21, one could come up with indemnity and government cost estimates 

that are within plus or minus 50% of the figures cited above, i.e. indemnities of $1.2-3.5 billion and 

government costs of $9-27 million. However, we believe that our estimates are the most plausible.

 

12 Hayes et al, Op cit
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7.5.3. AIP acceptance of a CSDE endorsement

There is a separate livestock price reinsurance agreement (LPRA) between approved insurance providers 

(AIPs) and the Federal Crop Insurance Corporation (FCIC) for livestock programs administered by RMA. 

The 2016 LPRA offers two funds where an AIP can place a policy:

• Private Market Fund – AIPs can cede between 5% and 65% of premium and liability (quota 

share) to the FCIC; and

• Commercial Fund – AIPs can cede between 0% and 65% of premium and liability (quota share) 

to the FCIC. Additionally, the FCIC provides stop-loss protection of 90% for the 350% excess 

over a 150% loss ratio and 100% over a 500% loss ratio. AIPs pay 4.5% of retained premium 

for this stop-loss coverage.

AIPs also receive a 22.2% A&O subsidy to cover administrative and commission expenses.

There are nineteen AIPs listed to provide crop insurance and fourteen AIPs listed to provide livestock 

insurance. Only one company provides livestock insurance without providing crop insurance. It appears 

there is enough demand from the AIPs to provide livestock insurance. Given that AIPs can limit their 

exposure to a CSDE through the Commercial Fund, we find no reason why AIPs would not be interested in 

providing this coverage.

7.6. Market impacts

One of the requirements for a Federal insurance program is that it “not allow a change in market behavior 

or market distortions that change the quantity supplied or shift the supply curve.” Setting aside the cap 

on expenditure on livestock insurance plans, it appears to us that the regulatory constraints on what 

could be offered imply an insurance plan that would provide only limited indemnities for a CSDE, in part 

because participation would probably be very low due to the cost and other factors cited in Section 6.2.2.

We also found no evidence that swine producers are curtailing production plans out of fear of a CSDE. 

Consequently we conclude that there would be no significant changes in market behavior.

If significant subsidies were added to the LRP-Swine program, this could impact the commodities markets 

by making the hedging strategies less attractive than insurance programs.

7.7. Conclusions on feasibility

Our overall conclusion from our research and analysis is that it is not feasible to develop an appropriate 

insurance program for swine producers to provide protection against a catastrophic swine disease event. 

We can envision a feasible program design but it is not an insurance plan that meets the definition of 

“actuarially sound,” that swine producers would purchase, or that successfully addresses the economic 

challenges stemming from a catastrophic swine disease event. The six main reasons for our overall 

conclusion are elaborated below.

7.7.1. Statutory cap on expenditure

The 2000 Agricultural Risk Protection Act (ARPA) required the Risk Management Agency to develop the 

two existing programs for livestock, LRP and LGM, but it established a limit on total expenditures for 

premium subsidies, Administrative and Operating expenses so that, to the maximum extent practicable, 

all costs associated with conducting the livestock programs (other than research and development costs 
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covered by Section 522) are not expected to exceed $20,000,000. The existing programs usually exhaust 

the available funding. 

Any new coverage for a CSDE would involve considerable Federal outlays. Our example of an 

endorsement described above involved estimated subsidy costs of $18.2 million. Congressional action 

would be required to increase or remove the expenditure cap. The Congressional Budget Office’s March 

2015 baseline projections of outlays on farm programs included an annual average of $8.4 billion for the 

Federal Crop Insurance Corporation for fiscal years 2015-2019. The negative impact of a CSDE on the $18 

billion swine industry would be in the billions of dollars, and government costs for indemnities under an 

insurance plan could also be in the billions of dollars. Whether the Congress would choose to take on the 

additional costs of a new insurance plan for a CSDE is unknown.

7.7.2. Many hog operations have no insurable interest

The US swine industry is increasingly defined by contracts with growers to manage hogs provided and 

owned by the contractor. This gives the contractor control over the genetics and provides some 

geographic and management diversification of production risk. The precise share of total hogs currently 

grown under such contracts is not known but had reached 71% in 2009. Contract growers who do not own 

the animals have no significant insurable interest. The contactor or packer would have to purchase the 

insurance, and input we received at the listening sessions suggested that they have been more likely to 

use futures and options to manage at least a portion of the risk of a CSDE. If the industry begins to assign 

a higher probability to occurrence of a CSDE, packers, contractors and large independent producers may 

develop greater interest in an insurance product, especially if the cost is subsidized. However, the many 

growers who do not own the hogs they are raising would remain vulnerable to loss of access to hogs to 

raise and to contractor insolvencies.

7.7.3. Only current inventory could be covered

Regulations governing FCIC insurance plans dictate that only current inventory can be insured. If a corn 

producer experiences a drought, it is only the current crop that is insured, not crops in subsequent years. 

Those subsequent crops each require payment of a new premium. In the case of livestock, one can only 

insure what exists. Annual slaughter of market hogs is approximately twice the inventory of market pigs 

and hogs at any point in the year. Thus under existing FCIC regulations an insurance plan could only be 

covering approximately half a year’s production at the time of a CSDE. 

While the threat of a CSDE with adverse financial impacts is real, most producers would not be covered 

under a plan providing CSDE coverage for swine. Even producers that would purchase the CSDE 

endorsement concept we describe in Section 7 would most likely not be nearly compensated for their loss. 

The losses many producers would face would result from their inability to obtain pigs in periods following 

a CSDE. They would be stuck with fixed costs associated with their investment in hog barns and 

equipment, yet could be unable to obtain a contract for animal production, either because integrators 

and packers do not wish to contract with them due to disease at or near their facilities, or due to lack of 

packer demand generally.

What the swine industry was hoping for is an insurance plan that would provide indemnities over the 

multi-year period of adjustment of the sector to a loss of export markets. This is not feasible under 

current regulations.

7.7.4. There is no data on which to base actuarially sound rates

There have been no outbreaks of the four critical diseases since the United States became a net exporter 

of pork in 1995. Indeed, neither African Swine Fever nor Swine Vesicular Disease has ever been present in 
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this country. The last US case of Classical Swine Fever in the United States was in 1978 and the last Foot 

and Mouth Disease case was in 1929.

During the first decade in which US pork exports gained ground, net exports averaged only 2.6% of 

production. However, in the most recent decade, 2005-14, net exports averaged almost 15% of 

production and are now near 20%. The total lack of any CSDE experience, coupled with the recent 

increase in vulnerability to a loss of export markets, makes it very difficult to rate any potential insurance 

coverage. There has been some econometric modeling of the potential effects of a CSDE, as reviewed in 

Section 4.3.2, but the results are very dependent on the assumptions made in each case about the 

location and duration of the event, the species affected, containment measures, and consumer behavior.

7.7.5. Existing mechanisms for risk management are available 

Integrators and producers can and do use futures and options to manage price risk. It appears that most 

of the demand for these financial products is limited to the current inventory (since the volume for 

contracts greater than six months ahead is limited). USDA has also been implementing a Secure Pork 

Supply plan, discussed in Section 4.4.3, to allow business continuity where there is no disease present.

Growers focus on bioexclusion procedures (particularly given the experience with recent diseases). Also, 

some growers can self-insure over time on their own, as was specifically mentioned by one grower at our 

North Carolina listening session. Some producers have also diversified in order to limit the risk from 

production of any one commodity. However, with the increase in specialization within the hog sector, 

growers as a group are probably less diversified today than they were twenty or thirty years ago.

7.7.6. Producers currently appear unwilling to pay the cost to participate

Equally serious is the lack of producer interest in buying insurance coverage. Participation in the existing 

LRP and LGM plans is negligible – only 43 policies in 2015 covering a total of 100,000 head, i.e. one tenth 

of a percent of annual slaughter. Through contracting and the use of futures and options the industry 

seems to be able to successfully manage its near-term price risk. The existing plans are apparently 

viewed as too expensive for what they provide. 

In the listening sessions, producers who owned their own hogs said they would not want to pay even one 

dollar per animal for insurance. Some said it would have to be less than the pork checkoff amount, which 

is 0.40% or about $0.67 per hog. Our estimate in Section 7.5.2 of the producer cost of an LRP-Swine 

policy with a CSDE endorsement is 2.5 times that amount. However, one participant commented that it 

will actually be the producer’s banker who decides whether to buy coverage. On the face of it, a 

producer cost equal to one percent of the value of the hogs should not be a major obstacle to purchasing 

the insurance if it appears to be needed.

Finally, some in the countryside believe that if there is a big enough problem in the industry, the 

Congress will approve ad hoc disaster payments to deal with it, in which case there is no point in paying 

for insurance.
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APPENDIX 1: SECTION 508 DATA

These are the data for Figure 1: Share of pork supply that is exported:

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Production 20,705 21,074 21,962 23,367 23,020 22,456 22,775 23,268 23,200 22,858

Exports 2,666 2,995 3,141 4,651 4,094 4,223 5,196 5,380 4,992 4,858

% of total supply 

exported 12.0% 13.3% 13.4% 18.8% 16.7% 17.7% 21.5% 21.9% 20.2% 19.8%

Total supply 22,239 22,543 23,424 24,717 24,489 23,840 24,120 24,612 24,705 24,483

These are the data for Figure 2: Slaughter by market type:

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

MPR carcass weight priced % of Fed. Inspected barrow & gilt slaughter

Spot market 13.8 12.6 10.4 10.4 9 8.2 8.1 6.5 4.9 4.1 3.4

Packer owned 16.4 17.8 18.1 16.4 20.7 22.3 23.1 24 25.2 26.5 26.6

Total 94.1 94.8 94.2 94.6 93.9 94.2 94.7 95.2 94.4 95.7 95.0

Contractor agreements 61.7 62.3 63.8 62.5 58.3 57.6 57.6 59.1 59 60.8 60.8

These are the data for Table 2: Swine growers by state:

State

Independent 

grower 

Farms

Contractor/ 

integrator 

Farms

Contract 

grower 

Farms

number of farms

Alabama 671 18 

Alaska 35 2 

Arizona 506 3 

Arkansas 685 2 65 

California 1,411 24 2 

Colorado 982 13 6 

Connecticut 315 3 

Delaware 59 

Florida 1,599 43 

Georgia 839 3 24 

Hawaii 231 

Idaho 676 4 

Illinois 1,681 18 346 

Indiana 2,244 14 499 

Iowa 3,598 66 2,602 

Kansas 951 15 44 

Kentucky 1,248 14 22 

Louisiana 658 

Maine 748 4 

Maryland 332 1 

Massachusetts 477 1 

Michigan 2,062 8 128 
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State

Independent 

grower 

Farms

Contractor/ 

integrator 

Farms

Contract 

grower 

Farms

number of farms

Minnesota 2,414 29 912 

Mississippi 503 2 35 

Missouri 1,923 14 191 

Montana 399 7 

Nebraska 1,192 9 275 

Nevada 81 

New 

Hampshire 357 2 

New Jersey 293 5 

New Mexico 209 2 

New York 1,881 18 13 

North Carolina 1,281 61 875 

North Dakota 215 3 

Ohio 2,998 14 482 

Oklahoma 1,896 3 48 

Oregon 1,110 14 

Pennsylvania 2,742 29 326 

Rhode Island 77 

South Carolina 790 7 41 

South Dakota 595 86 

Tennessee 1,255 18 24 

Texas 4,902 3 

Utah 651 14 4 

Vermont 437 13 

Virginia 1,231 12 22 

Washington 913 21 

West Virginia 719 6 

Wisconsin 2,224 15 31 

Wyoming 270 

United States 55,566 558 7,122 

Total 63,246 

These are the data for Figure 4: Farrow to wean: 

Farrow to wean

Farm size Farms Hogs

1 - 999 3841 189,184

1,000 - 4,999 108 286,840

5,000+ 828 47,616,575

These are the data for Figure 5: Farrow to feeder:

Farrow to feeder

Farm size Farms Hogs

1 - 999 4246 279,863

1,000 - 4,999 98 241,969

5,000+ 112 5,861,186
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These are the data for Figure 6: Farrow to finish:

Farrow to finish

Farm size Farms Hogs

1 - 999 12446 994,295

1,000 - 4,999 1004 2,274,801

5,000+ 885 37,724,298

These are the data for Figure 7: Finish only:

Finish 

only

Farm size Farms Hogs

1 - 999 16228 809,867

1,000 - 4,999 3784 10,104,483

5,000+ 3903 55,559,197

These are the data for Figure 8: Slaughter by market type:

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

MPR carcass weight priced % of Fed. Inspected barrow & gilt slaughter

Spot market 13.8 12.6 10.4 10.4 9 8.2 8.1 6.5 4.9 4.1 3.4

Packer owned 16.4 17.8 18.1 16.4 20.7 22.3 23.1 24 25.2 26.5 26.6

Total 94.1 94.8 94.2 94.6 93.9 94.2 94.7 95.2 94.4 95.7 95.0

Contractor agreements 61.7 62.3 63.8 62.5 58.3 57.6 57.6 59.1 59 60.8 60.8

These are the data for Figure 9: Hog slaughter in the United States:

Hogs, total slaughter 

(thousand head)

2003 101,042.7

2004 103,573.4

2005 103,690.1

2006 104,842.3

2007 109,277.5

2008 116,558.4

2009 113,732.3

2010 110,367.0 

2011 110,956.3 

2012 113,246.6 

2013 112,160.5 

2014 106,957.7 
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These are the data for Table 3: Hog slaughter by state, 2009-2014:

State 2009 2010 2011 2012 2013 2014

(1,000 pounds)

Alabama 34,974 33,409 30,382 14,216 10,917 8,618 

Alaska 240 241 (D) 173 219 264 

Arizona 377 369 360 393 406 458 

Arkansas 82,177 70,868 58,436 62,797 19,404 2,382 

California 643,816 607,334 602,678 591,853 577,875 586,816 

Colorado 2,599 2,350 2,481 3,429 3,829 3,902 

DE-MD 4,454 4,500 4,535 4,421 4,331 4,612 

Florida 11,809 10,212 11,563 9,176 9,589 6,617 

Georgia 18,642 18,004 18,788 20,318 19,481 17,196 

Hawaii 3,757 3,865 3,744 3,472 3,322 3,327 

Idaho 30,723 27,673 31,220 35,551 35,122 33,902 

Illinois 2,674,385 2,582,000 2,700,986 2,988,384 3,025,416 3,008,036 

Indiana 2,256,328 2,265,202 2,280,616 2,288,547 2,299,170 2,301,137 

Iowa 8,682,322 8,144,471 8,177,329 8,291,508 8,185,368 8,197,146 

Kansas (D) (D) (D) (D) (D) (D) 

Kentucky (D) (D) (D) (D) (D) (D) 

Louisiana 2,515 2,182 2,193 2,246 2,234 2,436 

Michigan 45,705 41,903 50,516 50,615 60,395 72,603 

Minnesota 2,592,322 2,691,772 2,781,851 2,879,567 2,786,846 2,670,789 

Mississippi 36,058 32,715 36,014 36,925 18,548 7,974 

Missouri 2,228,686 2,195,631 2,270,487 2,295,431 2,385,686 2,450,372 

Montana 3,227 3,327 3,271 3,668 3,588 3,117 

Nebraska 2,067,922 2,063,582 2,104,923 2,155,431 2,076,000 2,014,836 

Nevada (D) (D) 138 151 151 201 

New England 

1/ 4,546 5,027 5,772 6,420 6,875 7,275 

New Jersey 9,676 10,123 10,700 10,644 10,866 9,858 

New Mexico 419 412 345 490 541 569 

New York 5,002 5,008 5,603 7,246 7,860 8,376 

North 

Carolina 3,218,592 3,069,404 2,997,190 3,097,925 3,226,084 (D) 

North 

Dakota 27,041 30,329 12,609 1,303 1,159 1,104 

Ohio 293,736 283,290 279,364 266,464 261,061 257,744 

Oklahoma 1,472,745 1,496,690 1,553,171 1,502,169 1,491,095 1,362,893 

Oregon 40,490 41,753 44,446 43,325 42,861 43,253 

Pennsylvania 774,417 755,972 729,297 753,523 745,736 760,167 

South 

Carolina (D) (D) (D) (D) (D) (D) 

South 

Dakota 1,135,646 1,185,554 1,255,427 1,264,017 1,278,320 (D) 

Tennessee 320,370 318,250 311,520 323,119 327,467 321,773 

Texas 105,276 104,158 122,341 114,644 103,356 65,780 

Utah 10,815 7,204 9,416 9,328 10,485 7,873 

Virginia 600,419 629,327 631,029 676,192 676,504 (D) 

Washington 5,242 (D) (D) (D) (D) (D) 

West 

Virginia 1,784 1,590 1,887 2,084 1,875 1,864 

Wisconsin 228,925 228,813 250,979 250,420 270,284 274,959 

Wyoming 1,063 1,045 1,094 1,101 1,080 1,033 
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State 2009 2010 2011 2012 2013 2014

(1,000 pounds)

United 

States 

 

30,723,264 

 

30,004,639 

 

30,422,112 

 

31,092,083 

 

30,964,311 

 

30,431,080 

(D) Withheld to avoid disclosing data for individual operations.

1/ New England includes Connecticut, Maine, Massachusetts

New Hampshire, Rhode Island, and Vermont.

These are the data for Table 4: Pork production by state, 2009-2014:

State 2009 2010 2011 2012 2013 2014

(1,000 pounds)

Alabama 95,566 65,815 53,621 50,277 60,293 45,565 

Alaska 604 622 606 414 374 504 

Arizona 76,521 80,582 92,934 84,118 83,730 66,385 

Arkansas 109,831 86,432 85,946 86,430 101,110 71,066 

California 53,886 56,575 49,542 48,031 47,708 39,304 

Colorado 265,861 297,691 300,949 278,891 259,063 246,115 

Connecticut 831 1,121 689 730 1,276 984 

Delaware 4,241 4,466 2,810 2,722 4,124 1,129 

Florida 7,879 4,173 4,251 3,633 3,489 4,119 

Georgia 98,080 75,405 88,359 98,272 81,609 70,760 

Hawaii 3,319 4,032 4,021 4,330 4,062 4,201 

Idaho 25,984 (D) (D) (D) (D) 

Illinois 1,838,925 1,926,414 1,911,353 1,962,779 2,001,164 1,949,324 

Indiana 1,738,802 1,753,822 1,762,434 1,753,128 1,643,591 1,639,654 

Iowa 9,608,305 9,244,147 9,816,139 10,345,144 11,170,460 11,548,962 

Kansas 914,694 883,829 930,878 912,876 838,461 773,202 

Kentucky 174,705 185,534 176,560 168,777 175,863 170,721 

Louisiana 2,757 3,212 4,275 1,337 1,520 1,621 

Maine 2,135 2,305 3,130 2,842 2,211 2,075 

Maryland 15,250 14,409 12,392 11,341 11,590 11,519 

Massachusetts 1,813 3,539 3,029 2,561 4,265 3,016 

Michigan 606,284 619,869 618,558 548,754 561,091 524,658 

Minnesota 3,678,035 3,699,102 3,702,918 3,938,732 3,912,363 3,785,444 

Mississippi 179,790 152,173 161,738 155,865 181,330 144,323 

Missouri 1,694,338 1,288,014 1,321,770 1,313,879 1,308,522 1,481,513 

Montana 78,601 79,932 77,175 81,659 84,479 83,619 

Nebraska 1,359,740 1,366,535 1,317,634 1,250,968 1,176,855 1,188,096 

Nevada 2,650 1,821 992 1,497 1,803 1,667 

New Hampshire 1,235 1,011 783 1,382 1,168 1,420 

New Jersey 1,814 1,650 1,644 1,516 1,664 1,414 

New Mexico 780 553 400 375 693 744 

New York 25,347 23,813 28,259 26,235 24,581 28,016 

North Carolina 4,070,849 3,767,088 3,662,862 3,921,079 4,056,602 3,558,499 

North Dakota 60,908 59,729 70,182 53,514 51,642 52,281 

Ohio 999,093 1,049,889 1,065,596 1,080,269 1,093,003 1,046,439 

Oklahoma 1,255,841 1,294,142 1,350,272 1,331,382 1,374,298 1,262,803 

Oregon 9,484 8,610 7,493 5,170 3,034 2,420 

Pennsylvania 414,382 504,219 479,159 505,852 490,700 516,772 

Rhode Island 452 561 575 599 562 704 

South Carolina 49,908 53,178 48,966 47,924 47,207 50,136 

South Dakota 671,593 741,125 779,501 797,188 697,249 606,351 
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State 2009 2010 2011 2012 2013 2014

(1,000 pounds)

Tennessee 92,354 99,106 93,672 85,466 90,541 94,251 

Texas 302,578 154,540 203,312 267,523 285,822 309,408 

Utah 324,227 303,829 305,154 285,920 287,097 267,002 

Vermont 1,285 1,177 1,230 1,367 1,304 1,316 

Virginia 110,902 113,738 73,830 68,800 71,287 64,875 

Washington 11,453 (D) (D) (D) (D) 

West Virginia 2,263 1,312 1,938 2,325 1,682 1,266 

Wisconsin 190,346 173,255 175,156 171,854 167,000 143,196 

Wyoming 122,787 136,550 165,446 144,125 105,066 101,832 

ID & WA 46,729 45,770 50,939 45,656 40,997 

United States 31,359,308 30,437,375 31,065,903 31,960,791 32,620,264 32,011,688 

(D) Withheld to avoid disclosing data for individual operations.

These are the data for Table 5: Swine production costs, farrow-to-finish:

 Item 2009 2010 2011 2012 2013 2014

dollars per cwt gain

Total, gross value of production 47.12 62.06 75.36 73.28 76.69 87.33

Operating costs 

 Feed cost 24.26 23.24 34.67 32.66 36.72 34.07

 Other operating costs 4.76 5.17 5.73 5.79 5.86 6.04

Total operating costs 29.02 28.41 40.40 38.45 42.58 40.11

 

Allocated overhead 

 Overhead 11.77 11.73 12.05 10.16 10.37 10.83

 Labor and Opportunity cost 7.02 7.04 7.02 7.21 7.58 7.72

Total, allocated overhead 18.79 18.77 19.07 17.37 17.95 18.55

Total costs listed 47.81 47.18 59.47 55.82 60.53 58.66

Value of production minus costs -0.69 14.88 15.89 17.46 16.16 28.67

These are the data for Table 6: US pork production, trade, and consumption, 2005-2014:

Total 

production Imports

Total

supply Exports

% of total 

supply 

exported

Total

disappearance

U.S. 

population 

(1,000 

persons)

Per capita 

disappearance 

(pounds)

Boneless 

retail weight

million pounds %

2005 20,705 1,024 22,239 2,666 12.0% 19,093 295,993 47.0

2006 21,074 990 22,543 2,995 13.3% 19,055 298,818 46.5

2007 21,962 968 23,424 3,141 13.4% 19,763 301,696 47.8

2008 23,367 832 24,717 4,651 18.8% 19,431 304,543 46.5
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Total 

production Imports

Total

supply Exports

% of total 

supply 

exported

Total

disappearance

U.S. 

population 

(1,000 

persons)

Per capita 

disappearance 

(pounds)

Boneless 

retail weight

million pounds %

2009 23,020 834 24,489 4,094 16.7% 19,869 307,240 47.1

2010 22,456 859 23,840 4,223 17.7% 19,077 309,776 44.9

2011 22,775 803 24,120 5,196 21.5% 18,382 312,034 42.9

2012 23,268 802 24,612 5,380 21.9% 18,607 314,246 43.2

2013 23,200 880 24,705 4,992 20.2% 19,095 316,465 44.0

2014 22,858 1,007 24,483 4,858 19.8% 19,065 318,688 43.6

These are the data for Figure 10: Exports as a percent of total supply:

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Production 20,705 21,074 21,962 23,367 23,020 22,456 22,775 23,268 23,200 22,858

Exports 2,666 2,995 3,141 4,651 4,094 4,223 5,196 5,380 4,992 4,858

% of total supply 

exported 12.0% 13.3% 13.4% 18.8% 16.7% 17.7% 21.5% 21.9% 20.2% 19.8%

Total supply 22,239 22,543 23,424 24,717 24,489 23,840 24,120 24,612 24,705 24,483

These are the data for Figure 11: US pork consumption per capita, 2005-2014:

Per capita 

disappearance 

(pounds)

Boneless retail 

weight

2005 47.0

2006 46.5

2007 47.8

2008 46.5

2009 47.1

2010 44.9

2011 42.9

2012 43.2

2013 44.0

2014 43.6

These are the data for Table 7: US per capita meat consumption projections, by type, 2013-2024:

Per capita meat consumption, retail weight

 Item 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 

pounds

Beef 56.3 54.6 52.2 49.4 48.5 49.1 49.8 50.6 51.5 52.1 52.4 52.4 
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Per capita meat consumption, retail weight

 Item 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 

pounds

Veal 0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.2 

Pork 46.8 45.3 46.6 48.5 48.8 49.1 49.3 49.4 49.4 49.4 49.4 49.5 

Lamb & mutton 0.9 0.9 0.9 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.8 

 Total red meat 104.4 101.1 99.9 99.0 98.4 99.3 100.1 101.0 101.9 102.4 102.8 102.9 

Broilers 81.9 83.4 85.4 86.7 88.1 89.2 90.2 91.1 91.7 92.2 92.7 93.1 

Other chicken 1.3 1.3 1.3 1.3 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4 

Turkeys 16.0 15.7 15.8 16.2 16.5 16.7 16.8 17.0 17.1 17.2 17.3 17.3 

 Total poultry 99.2 100.3 102.5 104.2 106.0 107.3 108.4 109.5 110.2 110.8 111.3 111.9 

Red meat & poultry 203.6 201.4 202.3 203.2 204.4 206.5 208.5 210.5 212.1 213.2 214.1 214.8 

Pork share of total 23% 23% 23% 24% 24% 24% 24% 23% 23% 23% 23% 23%

Pork share of red meat 45% 45% 47% 49% 50% 49% 49% 49% 48% 48% 48% 48%

These are the data for Figure 12: US meat retail prices for beef, pork, & poultry, 1980-2104:

Beef retail 

value

Pork retail 

value

Broiler 

retail 

composite

1980 $2.336 $1.475 $0.970

1981 $2.347 $1.612 $1.040

1982 $2.384 $1.856 $1.032

1983 $2.341 $1.797 $1.053

1984 $2.355 $1.714 $1.193

1985 $2.286 $1.708 $1.151

1986 $2.268 $1.888 $1.279

1987 $2.384 $1.994 $1.236

1988 $2.503 $1.940 $1.341

1989 $2.657 $1.935 $1.466

1990 $2.810 $2.249 $1.455

1991 $2.883 $2.242 $1.434

1992 $2.846 $2.095 $1.418

1993 $2.934 $2.091 $1.440

1994 $2.829 $2.095 $1.450

1995 $2.843 $2.061 $1.441

1996 $2.802 $2.337 $1.505

1997 $2.795 $2.450 $1.506

1998 $2.771 $2.427 $1.537

1999 $2.878 $2.414 $1.544

2000 $3.064 $2.582 $1.553

2001 $3.377 $2.694 $1.577

2002 $3.315 $2.658 $1.618

2003 $3.746 $2.658 $1.613

2004 $4.065 $2.792 $1.728
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Beef retail 

value

Pork retail 

value

Broiler 

retail 

composite

2005 $4.091 $2.827 $1.741

2006 $3.970 $2.807 $1.571

2007 $4.158 $2.871 $1.651

2008 $4.326 $2.937 $1.746

2009 $4.258 $2.920 $1.780

2010 $4.384 $3.113 $1.753

2011 $4.807 $3.434 $1.767

2012 $4.986 $3.467 $1.893

2013 $5.289 $3.644 $1.965

2014 $5.970 $4.019 $1.963

These are the data for Table 8: Top US pork export markets, 2005-2014:

Top 8 US swine meat export markets, tons, 2005 -2014

Importers 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

% of 

total

Mexico 170,155 179,167 142,130 228,631 274,601 283,898 286,111 410,113 429,071 480,486 32.5%

Japan 338,642 325,831 346,434 419,107 392,152 391,228 464,614 421,669 402,323 368,749 24.9%

S. Korea 60,230 91,208 82,764 94,939 83,993 69,502 148,626 132,513 87,235 119,334 8.1%

China 32,669 27,652 62,860 108,164 20,838 46,834 219,216 199,376 153,596 108,109 7.3%

Canada 80,049 90,223 108,173 125,167 112,849 112,632 122,611 130,821 112,042 104,839 7.1%

Australia 18,033 20,170 23,774 30,685 38,492 44,483 55,992 59,668 48,647 44,981 3.0%

Colombia 3,224 3,419 3,475 2,831 3,745 7,371 9,676 16,247 29,795 41,449 2.8%

Hong 

Kong 5,863 13,111 37,260 155,081 91,472 59,738 36,779 38,609 45,885 40,279 2.7%

Other 110,708 156,582 159,257 302,996 236,531 225,093 204,758 237,989 181,796 169,988 11.5%

World 819,573 907,363 966,127 1,467,601 1,254,673 1,240,779 1,548,383 1,647,005 1,490,390 1,478,214 100.0%

These are the data for Table 9: USDA baseline pork projections:

USDA baseline pork trade projections

Exporters 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Exports, thousand metric tons, carcass weight

 United States 2,264 2,298 2,381 2,438 2,495 2,540 2,574 2,608 2,642 2,676 2,710 2,744 

 European Union 2,236 2,150 2,200 2,213 2,257 2,293 2,354 2,400 2,450 2,498 2,547 2,595 

 Canada 1,245 1,180 1,180 1,195 1,217 1,235 1,245 1,253 1,262 1,271 1,280 1,290 

 Brazil 585 585 700 770 795 799 810 820 825 830 835 840 

 China 244 275 300 308 309 313 316 319 322 327 330 333 

 Mexico 111 120 125 128 132 136 140 145 150 155 160 165 

 Major exporters 6,685 6,608 6,886 7,052 7,205 7,316 7,438 7,546 7,651 7,757 7,863 7,967 

 US share 34% 35% 35% 35% 35% 35% 35% 35% 35% 35% 34% 34%

These are the data for Figure 13: Policies earning premium, all species:
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LGM - SWINE LRP - SWINE LGM - Cattle LRP - Cattle

LRP -

Lamb

LGM -

Dairy

2003 108 250 - 41 - - 

2004 246 105 - 525 - - 

2005 260 120 - 950 - - 

2006 196 115 127 1,036 - - 

2007 131 64 66 479 - - 

2008 125 39 32 715 339 - 

2009 62 19 21 410 141 40 

2010 93 44 9 803 122 134 

2011 53 38 8 1,460 133 1,224 

2012 27 23 2 1,228 284 897 

2013 32 10 3 815 249 687 

2014 41 10 11 1,908 69 498 

2015 25 18 3 1,293 - 812 

These are the data for Figure 14: Policies earning premium, swine only:

LGM - SWINE LRP - SWINE

2003 108 250 

2004 246 105 

2005 260 120 

2006 196 115 

2007 131 64 

2008 125 39 

2009 62 19 

2010 93 44 

2011 53 38 

2012 27 23 

2013 32 10 

2014 41 10 

2015 25 18 

These are the data for Figure 15: Insured liability, all species:

LGM - SWINE LRP - SWINE LGM - Cattle LRP - Cattle LRP - Lamb LGM - Dairy

2003 7,712,020 13,241,615 - 2,161,803 - - 

2004 53,689,863 15,175,457 - 209,702,664 - - 

2005 51,303,923 13,130,637 - 90,978,303 - - 

2006 33,038,188 11,967,502 4,482,446 140,041,723 - - 

2007 27,071,367 7,783,355 15,105,949 59,550,393 - - 

2008 53,230,491 6,430,383 6,710,064 78,985,076 99,141,737 - 

2009 15,100,783 3,497,876 4,850,582 49,563,481 30,132,001 4,715,858 

2010 23,727,690 7,224,235 886,440 91,820,944 37,210,228 24,914,997 

2011 21,710,391 10,242,482 1,862,313 187,204,972 76,122,106 769,644,504 

2012 17,471,053 5,575,340 93,210 195,224,424 227,439,484 703,999,855 

2013 24,993,452 2,298,450 208,554 152,950,408 94,538,570 664,077,985 

2014 32,944,391 1,745,589 2,823,041 421,821,821 35,498,554 547,981,656 

2015 17,947,075 2,635,105 600,555 316,847,983 - 880,022,170 

These are the data for Figure 16: Insured liability, swine only:
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LGM - SWINE LRP - SWINE

2003 7,712,020 13,241,615 

2004 53,689,863 15,175,457 

2005 51,303,923 13,130,637 

2006 33,038,188 11,967,502 

2007 27,071,367 7,783,355 

2008 53,230,491 6,430,383 

2009 15,100,783 3,497,876 

2010 23,727,690 7,224,235 

2011 21,710,391 10,242,482 

2012 17,471,053 5,575,340 

2013 24,993,452 2,298,450 

2014 32,944,391 1,745,589 

2015 17,947,075 2,635,105 

These are the data for Figure 17: Premium paid, all species:

LGM - SWINE LRP - SWINE

LGM -

Cattle

LRP -

Cattle LRP - Lamb LGM - Dairy

2003 548,385 688,349 - 32,297 - - 

2004 3,056,051 573,339 - 5,770,857 - - 

2005 2,845,589 471,971 - 1,749,839 - - 

2006 2,057,279 403,970 547,268 1,919,284 - - 

2007 1,605,630 213,885 326,592 1,058,937 - - 

2008 2,534,208 291,896 144,343 2,209,994 2,439,003 - 

2009 847,788 138,393 198,803 1,739,002 946,171 287,201 

2010 1,093,067 379,104 20,254 2,805,459 1,150,102 781,589 

2011 929,394 514,307 75,798 5,952,704 1,643,281 25,012,757 

2012 657,733 286,540 2,835 4,820,833 4,920,700 19,143,689 

2013 856,726 73,493 4,873 3,522,376 2,374,279 16,873,156 

2014 1,132,366 68,930 51,506 8,409,042 1,549,971 11,632,184 

2015 699,563 132,819 12,645 8,049,175 - 22,004,122 

These are the data for Figure 18: Premium paid, swine only:

LGM - SWINE LRP - SWINE

2003 548,385 688,349 

2004 3,056,051 573,339 

2005 2,845,589 471,971 

2006 2,057,279 403,970 

2007 1,605,630 213,885 

2008 2,534,208 291,896 

2009 847,788 138,393 

2010 1,093,067 379,104 

2011 929,394 514,307 

2012 657,733 286,540 

2013 856,726 73,493 

2014 1,132,366 68,930 

2015 699,563 132,819 
Study on Swine Catastrophic Disease

Prepared for: AQD and RMA

77

These are the data for Figure 19: Insured head, all species:

LGM - SWINE LRP - SWINE LGM - Cattle LRP - Cattle LRP - Lamb

2003 133,423 183,076 - 3,643 - 

2004 712,267 143,904 - 270,189 - 

2005 544,217 106,095 - 127,919 - 

2006 402,774 110,927 25,655 176,354 - 

2007 354,647 68,257 13,219 79,852 - 

2008 430,764 50,173 5,517 102,645 694,184 

2009 126,539 29,672 4,561 65,650 207,096 

2010 200,190 63,264 787 115,555 246,136 

2011 139,010 66,873 1,480 209,745 294,525 

2012 105,720 33,690 65 184,472 809,806 

2013 152,055 19,471 135 138,605 499,341 

2014 183,170 9,476 1,732 327,281 140,546 

2015 105,960 15,595 303 193,557 - 

These are the data for Figure 20: Insured head, swine only:

LGM - SWINE LRP - SWINE

2003 133,423 183,076 

2004 712,267 143,904 

2005 544,217 106,095 

2006 402,774 110,927 

2007 354,647 68,257 

2008 430,764 50,173 

2009 126,539 29,672 

2010 200,190 63,264 

2011 139,010 66,873 

2012 105,720 33,690 

2013 152,055 19,471 

2014 183,170 9,476 

2015 105,960 15,595 

These are the data for Figure 21: Loss ratios, all species:

Year LGM - Swine LRP - Swine LGM - Cattle LRP - Cattle LRP - Lamb LGM - Dairy

2003 57% 3% 0%

2004 209% 4% 15%

2005 60% 27% 0%

2006 67% 31% 25% 65%

2007 96% 52% 19% 58%

2008 103% 153% 130% 162% 121%

2009 274% 365% 37% 160% 215% 250%

2010 38% 17% 0% 48% 0% 36%

2011 48% 17% 10% 17% 162% 0%

2012 172% 47% 225% 115% 612% 7%

2013 48% 18% 88% 125% 640% 16%

2014 46% 53% 0% 0% 401% 5%

2015 123% 122% 0% 51%
Study on Swine Catastrophic Disease

Prepared for: AQD and RMA

78

These are the data for Figure 22: Loss ratios, swine only:

Year LGM - Swine LRP - Swine

2003 57% 3%

2004 209% 4%

2005 60% 27%

2006 67% 31%

2007 96% 52%

2008 103% 153%

2009 274% 365%

2010 38% 17%

2011 48% 17%

2012 172% 47%

2013 48% 18%

2014 46% 53%

2015 123% 122%