If you question the value of transportation biosecurity in protecting your hog enterprise, then listen to what agricultural economist Steve Meyer had to say at the Transportation Biosecurity Summit in mid-July in Kansas City, MO.
“The animals you are working with today are way more valuable than they were two years ago,” says Meyer, president of Paragon Economics.
“That 280-lb. market hog was worth $101 in 2006, compared with $155 today — that's a 50% increase in value.”
Using the $155/market hog value and an estimated loss of 1% in transit for dead on arrival and crippled hogs, Meyer estimates the industry is absorbing about 50¢/head in transport losses for every hog marketed — or $50 million!
Transport biosecurity is also critical when it comes to the threat of foreign animal diseases, says Meyer, who tracks the wide movement of weaners, feeder pigs and market hogs that move daily across the United States.
“We have a chance of regionalizing any kind of disease if we do a good job of managing live hog biosecurity and transport and if we do a good job of identification at the start,” he says.
If the pace of exports recorded in May extends throughout the year, U.S. pork exports will total 4.7 billion lb., 52% higher than a year ago, Meyer says.
That would put pork exports right at 20% of total pork production, increasing the return to pork producers' pockets, but also escalating the consequences should disease or other issues disrupt that trade flow.
“If we had to take that 20% of our production and put it back on the U.S. retail market, retail prices would fall by about 27%,” Meyer says. The average retail pork price in 2007 was $2.88/lb. Take 27% off that price, and the average retail price for pork drops to $2.10/lb.
With the average farm-to-retail price spread last year at $2.10, that means if retail prices drop to $2.10/lb. and the price spread stays the same, the value of those pigs at the farm gate essentially drops to zero, Meyer warns.
And that per-market-hog value may advance to $186/hog sold by May 2009, if mid-July futures market prices hold up, he notes.
“The point is, it is so critical to manage biosecurity now because we are at much more risk than we were a couple of years ago,” he emphasizes.