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Surplus Overwhelms Hog Farmers

For years, hogs have been a farmer's one sure bet -- the most profitable commodity you could take to market, until now. CBS News Correspondent Cynthia Bowers reports for Eye On America.

"We're losing $36,000 dollars a week," says farmer Rich Brauer.


The central Illinois hog producer is hanging on, even though this year he is sustaining the worst losses in five generations of family farming.

"We're in a real critical situation right now," Brauer says. "We're probably gonna lose over half-a-million dollars this year, and for one farm to lose that much, it's really tough on the balance sheet."

However, these staggering losses come at a time of record gains. The consumer demand for pork is high and so are profits for the people who pack the pork and the people who sell it - the groceries and restaurants.

Producers may be suffering from their own success. Family farms and a growing number of corporate mega-hog farms are sending a record two million pigs a week to market. Meat packing plants, overwhelmed by the supply, are able to dictate lower prices.

"I never thought hogs would get this low," says Paul Rogers.

Prices have dropped so far below "break even" that it's forcing farmers like Paul Rogers out of the hog business entirely. Last week, after more than 40 years in operation, he auctioned everything off.

"A year ago, pigs were all the way from 70 cents to a dollar forty cents a pound," Rogers says.

"Now, you can't give 'em away," he adds.

So who is making money on lower pork prices? Meat packers for one - their share of the retail price of pork has risen 38 percent, as for retailers, slow to pass their saving on to consumers - their share is up 28 percent. Meanwhile, the farmer's share is down a whopping 46 percent, to an all-time low.

"It's not going to be a very merry Christmas around here for a lot of my employees," Brauer says.

The corporate hog farms and their wealthy investors will ride out this crisis. It's the family farmer that is at the mercy of an unforgiving marketplace. People like Brauer -- who can only wait and hope that he'll still be in business -- when business turns around.

Reported By Cynthia Bowers