The National Pork Producers Council is urging USDA to intervene in a federal court ruling that it says will dramatically reduce hog farmers’ market power and undermine meatpacker competition.

The March 31 ruling by the U.S. District Court for the District of Minnesota found USDA violated the Administrative Procedures Act when it failed to consider whether increasing line speeds at pork processing plants would harm workers.

The court ruling will eliminate the ability for hog harvest facilities to operate at maximum line speeds under a USDA rule implemented in 2019.

Five of the six plants affected have been running at higher line speeds for more than 20 years under a pilot program to modernize USDA’s swine inspection system. The other plant adopted higher line speeds under the industry-wide USDA approval in 2019.

Unless reversed, the ruling will go into effect as early as July 1 with disastrous consequences for U.S. hog farmers, according to an analysis by Dermot Hayes, an economist at Iowa State University.

His analysis found the ruling would result in a 2.5% reduction in pork processing capacity and cost hog farmers $82.3 million this year alone.

“Smaller producers who lack negotiating power, especially those located near the impacted processing facilities, will incur a disproportionate amount of these losses,” he said

Plant operators will implement mandatory overtime at impacted and non-impacted plants only if they have a financial incentive, which will come about through lower spot market prices, he said.

“When plants are at or near capacity, packers have the upper hand and will only operate additional shifts if there is a clear economic reason to do so. This reduces competition and the spot price of hogs,” he said.

In addition, hog farmers might be forced to transport market-ready hogs longer distances to be processed, forcing them to incur significantly higher transportation costs, he said.

The 2.5% reduction in capacity factors in steps plants might take to increase capacity, such as mandatory overtime and operating on Saturdays.

He also pointed out that mandatory overtime could be counterproductive if carried out for a sustained period.

“Employees required to work longer days or all day on Saturday are more likely to resign, a challenge compounded by the industry’s labor shortage. More importantly, worker safety risks could be elevated with long shifts,” he said.

In addition, packers will likely use force majeure provisions to declare their pricing contract null and void, forcing farmers to sell their hogs on the spot market, he said.

“Packers are obviously wary of upsetting their largest suppliers. Therefore, the burden of the spot price reduction and the enforcement of force majeure will fall on the smaller, non-integrated producers,” he said.

“With the stroke of a judge’s pen, the lives of many hog farmers will be upended if this misguided ruling takes effect,” said Jen Sorenson, NPPC president and communications director for Iowa Select Farms.

“The lost revenue projected by Dr. Hayes is not theoretical. It is based on breeding decisions made several months ago and pigs already in the production cycle that will go to market in a few months,” she said.