The New Year promises more change.
As 2007 — the Year of the Pig on the Chinese calendar — draws to a close, several factors appear to be converging on the North American pork industry that could make production and marketing ever more challenging in the years to come.
On one hand, it is encouraging to see U.S. packers are able to handle the record numbers of hogs marketed this fall. On the other hand, shackle space in Canada is shrinking.
Wheat and barley — staples in Canadian hog rations — are demanding record high prices.
Canadians who sell weaned pigs or market hogs in the States face lower prices, paid in deflated U.S. dollars. Distressed pork producers are rethinking their production plans.
Truckloads of Canadian sows are being sent to slaughter. Some breeding-gestation barns in Alberta, Ontario and Quebec are reportedly sitting dark and empty. Fewer Canadian pigs will be placed in U.S. finishing barns.
In Ontario, the provincial pork producer group trimmed programs and services and downsized their staff in an effort to trim over a million dollars from their budget.
U.S. mandatory country-of-origin labeling requirements, set to go into effect next September, will impact producers in both countries as packers decide how to handle hogs and pigs born in Canada.
U.S. Packers Step Up
Record numbers of market hogs and sows have arrived at the packers' doors almost weekly. Slaughter supplies were up 11% in October, up 7-8% in November, which means USDA missed sow farrowing projections and pig inventories last spring by 4-8%.
Per-head losses of $20-30 on market hogs are not unusual and could hold into the middle of next year.
Some economists project $4 corn and $300 soybean meal next summer, putting breakevens in the high $40s.
The hog market seems jittery, responding to rumors of big pork purchases by foreign buyers.
Just before Thanksgiving, hog prices jumped when rumors of China buying more U.S. pork surfaced. An outbreak of PRRS, which they call Blue Ear, supposedly killed over a million Chinese hogs.
Pork is a staple in China. Notable shortfalls in production push domestic pork prices higher and fuel speculation that the Chinese are in a pork-buying mood.
And, although the declining value of the U.S. dollar is distressing, the good news is — foreign buyers can now buy more pork.
Our 15 years of consecutive growth in pork exports sometimes jangles my nerves. Imagine what would happen if a major importer quit buying our pork or tightened their market requirements. A foreign animal disease could sneak in or the Chinese might simply tire of U.S. restrictions on Chinese-made or grown products and decide to retaliate. Realistically, either or both could occur.
Case in point — China's restrictions on ractopamine-fed pork. I seriously doubt that this pressure originates with Chinese consumers. Rather, it is a response by suppliers of other goods and/or the Chinese government. Either way, it's part of the trade game and we might as well get used to it.
We have every right to be proud that foreign buyers see U.S. pork as a good, wholesome buy. However, as our export fortunes grow, our commitment to ward off any possibility of losing these valuable markets must redouble.
Don't be surprised when valued buyers of U.S. pork demand to know where the pork was raised, how the pigs were handled or what they were fed.
Much as we have the right to test and require toys to be free of any traces of lead, our foreign counterparts can require reassurances that the pork they buy meets their particular standards.
We must have a quick, effective program to deal with any foreign disease threat that, God forbid, lands on our shores.
The premises registration program, which serves as the foundation of the National Animal Identification System, provides a “first alert” means of identifying, containing and eradicating a disease outbreak.
Currently, less than one-third of premises with livestock or poultry have been voluntarily registered.
If you have not registered your premises, go to animalid.aphis.usda.gov/nais and do so today. Traceability is not optional in the export business.
New Challenges, Opportunities
As we bid farewell to the “Year of the Pig,” a new round of production efficiency targets will be set.
Higher feed costs will require better feed conversions.
Concerns about the use of anti-biotics in swine rations will nudge researchers to learn more about the genetics of disease resistance.
Sow herd reductions will push reproductive goals higher.
The challenges for 2008 and beyond are many, but I've never known this industry to shy away from a challenge.
My wish for you is for good health, happiness and higher hog prices in the New Year.