This golden rule of the carpentry trade is a good one. So good, in fact, others often use it as a simple warning to think twice before making a final decision.
Thinking twice may be the best advice anyone could offer pork producers following 2004, which turned out to be one of the most profitable in years. As we all know, with profits come the very real temptation to add a few more sows or build another finishing barn.
In this stage of the hog cycle, pork producers, bankers and other investors will do well to measure their net worth and think twice about scratching any itch they have to expand production.
Remember those not-so-good years. Think, again, about how good it feels to recoup some losses, retire some debt, maybe buy a new pickup, and hopefully squirrel away some cash for an emergency, a vacation or retirement.
Please understand, I am not discouraging you from remodeling outdated facilities or from investing in better technology that will improve your efficiency.
As you stop and evaluate your business plan for the next few years, there are some good reasons not to make hasty decisions.
Uncertainties to Consider
The Supreme Court justices heard oral arguments about the beef checkoff on Dec. 8. Their decision will have far-reaching effects on the pork checkoff and similar self-help commodity programs. The decision will affect each industry's ability to promote their product, conduct research and educate producers and consumers.
The justices' decision is expected sometime this spring. If they rule in favor of the checkoff programs, a pork producer survey and a checkoff referendum could follow.
The Canadian anti-dumping issue remains in limbo. In January, I attended conferences in Canada and Iowa. I can assure you, producers and organizations on both sides of the border see this issue much differently. A final decision about the anti-dumping suit is anticipated from the U.S. International Trade Commission (ITC) in March.
Either way, the decision will affect pig supplies, processing capabilities and export initiatives in both countries. Hopefully, once the ITC decision is made, we can mend fences and do a better job of understanding and reporting pork production trends in North America. We all know — what happens in the U.S. or Canada doesn't necessarily stay in the U.S. or Canada.
Corn and soybean meal prices showed their vulnerability to weather, grain-in-storage reports, and projected crop estimates this past year. We went from grave concerns about whether soybean supplies would stretch until harvest, to ample supplies and more moderate protein prices. A bin-busting corn crop brought major input costs down and improved margins.
But, lest we forget, Mother Nature can be fickle. Surpluses could dwindle. And, our new administration and several states are strongly supporting ethanol production. This burgeoning alternative fuel currently utilizes about 10% of our corn crop. Some project ethanol production will claim 20%, soon. Multi-million-dollar ethanol plants will be competing with livestock producers for corn. Some economists predict corn prices will be closer to $3 than $1.50 in the future.
Air emissions regulations are inevitable. The U.S. Environmental Protection Agency recently announced a major consent agreement with agriculture to study air emissions from livestock and poultry operations. The two-year benchmarking study will provide information needed to set emissions standards and regulatory policy for the industries.
You will have an opportunity to participate in this process. Do it. The agreement provides legal protection for past emissions, but does not absolve you from complying with the new regulations. Current and long-range planning should factor in new regulations.
May I Have the Nominations, Please?
Later this month, Hollywood will celebrate as they hand out gold statues for the best-of-the-best in movies. Gold is the color for National Hog Farmer this year, too, as we celebrate our 50th Anniversary.
We'd like your help in recognizing the best-of-the-best in the pork industry. Like the Academy Awards, we are relying on producers and allied industry to nominate their peers for their outstanding contributions to the pork industry during the last 50 years. We're also compiling a list of cool and amazing places and events for a one-of-a-kind Pork Tour-A-Rama map of the U.S. Nomination forms are posted on our Web site, www.nationalhogfarmer.com, or call me at 800-722-5334 and I'll gladly mail or fax them to you.