Introduction
The hog farming industry is a worldwide industry. It concerns itself with the production of pork and other pig products. Hog farming is usually the production or raising of pigs on a large scale basis. There are other producers around the world who raise pigs on a small scale basis. This kind of farming is referred to as a pigsty. China and the United States are the largest producers of pork products from the hog farming industry.
Hog farming requires that the pigs are raised indoors in clean atmospheres to reduce production costs. Taking an example of the United States, a modern average hog farm usually has an average of around 2000 pigs. On the other side, large-scale producers like Smithfield foods may have up to 10,000 pigs at a single factory. In the United States, the hog farming industry is very important, with annual revenue of almost $15 billion.
Hog farming involves six main stages of production. These stages are; breeding, the second is gestation, thirdly there is farrowing (birthing), fourthly there is weaning, weaning is followed by the nursery and grow finishing. The grow-finishing stage is the stage at which the hogs are ready to be harvested.
The demand for pork is usually driven by two major factors. These are; the domestic demand for pork products and, secondly, the international demand for the same products. Due to the presence of many firms competing in the industry, the profitability of a single firm depends on how efficiently the firm can carry out its operations.
Analysis
The hog farming industry is a global industry. As a result, there are many ways in which the economy can affect the success of the industry either positively or negatively. However, it is important to note that a strong economic performance compounded by higher per capita incomes goes a long way in increasing the demand for pork products.
Despite the rivalry between the firms within the hog farming industry, the industry also faces stiff competition from companies that produce other meat products. Such industries include poultry farming, fish farming, and livestock farming. Due to stiff competition within the industry, some firms prefer to specialize in certain stages of the production line. These may include from farrow to finish, wean to finish, or breeding.
Taking an example of the United States hog farming industry, it is important to note that it is not the economy of the United States that matters but also the global economy. This is due to the fact that the United States is a major exporter of pork products. This means that the country is an exporter. It requires for the economies of the importing nations also to be flourishing.
The economy, whether it is the domestic or the foreign economy, will impact the hog farming industry in the following ways. Firstly the production costs existent within the economy will affect the success of the industry in various ways. In one case, the production costs are very high as compared to other economies, then the cost of production will lead to a decline in the performance of the industry. To rectify this, the government could possibly lower tariffs on the acquisition of farming or processing equipment. Additionally, the government could offer incentives to producers who wish to specialize their operations to lower operational costs.
On the other side, if production and operational costs are lower in the domestic country as compared to others, then the industry will flourish since the industry will be able to produce the products more cheaply. This will make the prices both in the domestic market and abroad cheap, attracting more demand for the products.
The governments’ fiscal and monetary policies can also influence the performance of the industry in different ways.
Monetary and fiscal policies
In order to promote the industry, many governments have adopted different monetary and fiscal policies. There is no single policy that has been adapted to cater to the entire industry. To improve the sector, the government can choose to have an expansionary monetary policy. This would help to keep in line with the expectations of the industry. In addition, the government could consider offering deficit financing facilities for firms within the industry.
To make things even better, the government should also consider introducing a contractionary fiscal policy. By reducing taxation levels, the government will be giving an incentive to the firms within the industry to make super-profits. These profits would later be re-invested in modernizing, research and development as well as increasing the size of the firms.
Generally, for the development of this sector, there is a need to have an expansionary monetary policy regime that should be compounded by a contractionary fiscal policy regardless of the geographical location of the specific firm.
The elasticity of goods and market share
The responsiveness of consumers to a price change is measured by the product’s price elasticity of demand.
Some products are highly responsive to price changes. Modest price changes cause very large changes in the quantity purchased. Economists say that the demand for such products is relatively elastic or simply elastic. For other products, substantial price changes caused only small changes in the amount purchased. The demand for such products is relatively inelastic or simply inelastic.
The elasticity of the industry’s goods in the market will also affect the success of the industry. If the prices of pork products are relatively inelastic, then the industry can raise the prices of their products and still make profits. On the other hand, if the industry’s products are relatively elastic in the market, then it would be important for the industry to adopt cheaper production means in order to stay competitive.
Economic influences that can affect the industry in a negative way
There are many economic influences that can affect the industry negatively. These may include either inflation or hyperinflation. Hyperinflation in economics is used to refer to a condition whereby there is inflation that is out of control. Under this condition, the prices of goods increase rapidly while at the same time the currency of the country loses value in comparison to other currencies. Under such a condition, the industry would be unable to sustain productivity, and the industry would eventually collapse.
Additionally, there would be a problem if the currency was to appreciate against the currency of the major importing countries. If this was to happen, then the international demand for our products would subsequently decline since the prices of our products abroad would become more expensive.
Conclusion
The hog farming industry is a very important industry. Whether it is domestic or foreign, we have to realize that the way the industry is managed will affect the global economy in different ways. Pig farming can lead to some environmental externalities if not well managed. An externality is a cost or benefit borne out of an economic transaction to parties not directly involved in the transaction.
In the hog farming industry, it is important to note that pigs can eat all plants in an enclosure to the point that there is no plant cover left that can control soil erosion. In cases where the farms are not well managed, and there results in an erosion of the soil, then this will become an environmental externality.
In the same context, there has been an increase in negative externalities, including noise pollution, and water pollution, as a result of the noises made by the pigs as well as industrial waste from the processing activities, among others.
References
Costantino Bresciani. The Economics of Inflation. London: George Allen & Unwin, 1937.
Mankiw, N. G. (2004), Principles of economics (3rd Ed.), Chicago, ILLIOIS: Thomson South-Western.
Philip Hardwick (1982), an Introduction to Modern Economics, Longman, U.K
Weatherford, Jack. The History of Money. Three Rivers Press, 1997.