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Articles from 2003 In January


Phytase sources: Is there a difference?

One phytase product claims an advantage in heat processing; the other claims an advantage in efficacy. Is one better than the other?

Unit for unit, the spelling is different, but the two most popular phytase products base enzyme activity on the same standard of measurement.

Natuphos, marketed by BASF Animal Nutrition, is measured in FTUs. The product is made from Aspergillus niger fungi and is a 3-phytase, meaning the phosphates are released from the phytate beginning at the carbon-3 of the inositol ring. The product is active over a wide range of pH from 6.5 to 5.5.

Ronozyme P, marketed by Roche Vitamins Inc., is measured in FYTs, after the Danish spelling of phytase. It is produced using the organism Peniophora lycii and is a 6-phytase product. Ronozyme is active over a narrower pH range, with an optimum of 4.5.

Regardless of the source, phytase research shows optimum supplementation of 227 units of phytase per pound of feed replaces about 0.1% available phosphorus in a corn-soybean meal ration.

Phytase lowers the phosphorus excreted in manure by releasing the phytate-bound phosphorus found naturally in grains and soybeans. Like poultry, swine lack sufficient intestinal phytase. By adding the enzyme to the diet, more phosphorus becomes available to the animal, which lowers the amount of supplemental phosphorus required and the amount that goes undigested. About 11 to 12 lb. of inorganic phosphorus can be substituted with 0.4 lb. of phytase product per ton of feed.

Phytase interest growing

The interest in phytase is growing quickly with the trend towards phosphorus-based manure management. An early adopter, Heartland Pork Enterprises has been adding phytase in their late nursery through grow-finish rations for almost two years.

“As a company, we take environmental stewardship seriously,” says Keith Haydon, director of nutritional programs for Heartland in Alden, IA. “We are phosphorus-based, company-wide, even though it is not mandated by the state. Last year we showed a 23% reduction in manure phosphorus, which means we have decreased the acreage we need by a quarter.”

Heartland uses phytase on a least-cost basis, formulating diets according to available phosphorus. They use Natuphos 5000L, adding 0.2 lb./ton in a post-pelleting liquid application system. The high temperatures used in pelleting can denature the phytase enzyme, so the company uses a spray-on liquid form. According to Haydon, most degradation occurs at temperatures of 180° F. or above.

Roche spokesman Jon Wilson, technical marketing director, says heat stability is one area where Ronozyme may have an advantage over other phytase products. Kansas State University trials showed 88% of the phytase from granular Ronozyme survived 194° F. temperatures.

The CT form of Ronozyme is coated with a wax to protect it from heat during pelleting. Chemically thermal tolerant, this dry form of phytase has been on the market about five months in the United States. On a price per unit of activity, Wilson says, the cost is less than $1/ton to replace 0.1% available phosphorus.

Phytase comparison

A University of Nebraska study looked at differences in performance between the two dry phytase sources in a corn-soybean meal diet added pre-pelleting. Temperature of the pellets ranged from 150° to 160° F., cooler than most mills, notes University of Nebraska researcher Mike Brumm.

Phytase recovery following pelleting ranged from 74% to 100% for the two products. There was no effect of phytase source on daily gain, feed intake, carcass lean, bone ash or the more sensitive measure of bone-breaking strength, indicating adequate phosphorus in the diet. Pigs fed Ronozyme had improved feed conversion over pigs fed Natuphos.

Phytase awareness is coming fast, says swine specialist Brumm. New federal regulations are expected this winter governing soil phosphorus. Some states are already implementing regulations of their own.

Maryland requires the use of phytase in livestock feed. Iowa recently passed legislation requiring any animal operation with more than 500 animal units to have a phosphorus-based manure management plan.

Nebraska requires manure plans for all approved sites with 300 or more animal units, which includes mandatory phosphorus reporting. Samples must be taken on 40-acre grids and if soil phosphorus in the 6-in. sample is above 150 parts per million (ppm), results must be reported to the state. “They do a case by case judgment on whether manure can be applied to that grid,” says Brumm.

Although both products proved effective, producers have been slower to adopt Ronozyme, he adds. Natuphos comes in a 50-lb. bag and currently is easier to add in a ton of feed on the farm. Ronozyme must be preblended, although large users have been able to incorporate it into their systems.

Differences in pH

Because of its wider pH range, BASF spokesman Mike Coehlo says Natuphos releases 1.5 times more phosphorus than its competitor. This is because Natuphos is more active over the pH range found in the digestive tract, he explains. And the increased bioactivity means more phytate is released into the digestive tract.

Does pH range make a difference? “We don't know,” says Purdue swine nutritionist Scott Radcliffe. “An enzyme with an optimal pH closest to that found in the stomach should have an increased efficacy, since the stomach is the major site of activity for dietary phytase. However, little research has been conducted to determine phytase activity in the stomach, and the pH of stomach contents during the time the enzyme is active. Therefore, most measures of phytase efficacy in comparison trials rely on indirect measurements of activity, such as growth performance and bone mineralization.”

Radcliffe says the majority of phytase comparison trials have studied phytase sources in broilers. While broilers may give an indication of the relative efficacies of phytase products, it should not be assumed that this data can be directly extrapolated to the pig, he says.

“Some research, including some from our laboratory, has suggested that there is a difference in the efficacy of commercially available phytase products. However, this difference is small enough to require that economics — the cost per ton of feed — be figured into the decision,” he says. “The good news is that the competition has helped keep phytase prices down. In fact, the enzyme is cheaper than it was a year ago.”

From a practical/production standpoint, the relative efficacy of phytase products on a per unit basis is not that important, continues Radcliffe. What is important is the cost of each product per ton of feed to achieve similar results and performance.

Radcliffe also feels the degree of over-formulation of phytase products needs to be scrutinized. A company might have 30-60% overage in the hot summer months to make up for instability due to heat, he says. The excess supplementation can skew any performance differences in the field, making up for differences in efficacy.

According to BASF's Coelho, director of marketing in the animal nutrition division, that's not a fair game to play. “The phosphorus safety margin formulated in diets by industry nutritionists should not be used by phytase suppliers to make up for the lack of bioefficacy.”

Product differences

Natuphos G is offered in a wide range of concentrations. There are five potency levels — 600, 1,200, 2,400, 5,000 and 10,000 FTU/g. Adding 1 lb. of 600 FTU/g. to 0.1 lb. of 10,000 will provide the recommended level of phytase.

Ronozyme P (CT) is less concentrated at 2,500 FYT/g. and is added at 225 FYT/lb. for a mash (0.4 lb./ton) and 340 FYT/lb. (0.6 lb./ton) for pellets, to ensure 227 FYT is provided to the pig.

A third phytase, Allzyme, is made by fermentation using Aspergillus niger fungi. The 3-phytase product isn't as pure as Natuphos and Ronozyme, but contains additional activities which may be beneficial, particularly in non-corn-soybean meal based diets, according to Radcliffe. Similar to Natuphos, it has a wide range of pH activity. Manufactured by Alltech, Allzyme is not widely used in the United States.

“Up to this point,” says Radcliffe, “the data out there is a mixed bag. Hopefully more swine data will be available in the future.”

product news

Portable Transfer Data System

Weigh-Tronix, Inc. introduces the Transfer Data System (TDS). Developed to help producers analyze scale information and create reports without the errors and effort of manual data entry, the TDS offers a simple and convenient method to capture and transfer scale data from any RS-232 serial port-equipped Weigh-Tronix scale indicator to a Windows-based PC. The TDS features a compact, durable Transfer Data Module with 64K of memory that captures and stores up to 1,600 different lines of scale information. It is virtually maintenance-free since the internal power source recharges while the module is connected to the scale indicator and no batteries are required.
(Circle Reply Card No. 101)

Organic Selenium Approved

The Food and Drug Administration (FDA) has approved a food additive petition for Alltech's Sel-Plex selenium yeast for use in pig feeds. Sel-Plex is the only organic selenium source that has been through FDA review. Selenium, often limiting in animal diets, is an essential part of the body's antioxidant defense and is needed for normal growth and reproduction. Sel-Plex moves selenium supplementation forward because it provides the mineral in the easily metabolized form in which it appears in grains and forages.
(Circle Reply Card No. 102)

ID Tag

Allflex USA has introduced Producer's Choice Custom identification tags. The tag features high-contrast, Allflex Laser-Ink marking now available on management numbers larger than ½ in. Underneath this dark ink overlay is the matching laser number etched permanently into the surface of the tag. The new line of tags includes 38 of Allflex's most popular marking templates available on premium quality Allflex Global and Tamperproof Tags.
(Circle Reply Card No. 103)

Swine Flu Vaccine

Intervet, Inc. has received extended clearance from the Agriculture Department for End-FLUence, its bivalent swine influenza virus vaccine. The new claim establishes an eight-week duration of immunity (DOI) following vaccination for SIV subtype H1N2 to aid in prevention of SIV. End-FLUence is also approved for reducing clinical signs, lung lesions and viral shedding following challenge and up to 10 weeks for SIV subtypes H3N2 and up to 11 weeks for H1N1 subtype. The 2-ml. dose of End-FLUence is given intramuscularly to healthy swine 3 weeks of age or older and should be followed by a booster three weeks later. The vaccine comes in 50-dose and 250-dose bottles.
(Circle Reply Card No. 104)

Trailer Brake Actuator

Carlisle Industrial Brake and Friction has introduced a trailer-mounted brake actuator specifically designed to provide safe, smooth stopping for trailers equipped with electric brakes. The actuator is a self-contained unit that is powered off of a battery also mounted on the trailer. It utilizes a microprocessor and decelerometer to sense the amount of braking being generated by the towing vehicle, and then automatically adjusts its output so that the amount of trailer braking is in direct proportion to the braking generated by the vehicle.
(Circle Reply Card No. 105)

New Pig Starters

SAV-R-IZED TechStart 12-17 Nuggets, TechStart 17-25 and TechStart 25-40 are the newest additions to Kent Feeds' lineup of pig starting products. The products were developed to market to intensively managed swine operations accustomed to feeding several stages in the nursery. These swine operations will see feed performance advantages and feed cost savings with the new TechStart program, says the company.
(Circle Reply Card No. 106)

Ceiling Ventilation

The TJ4200 is the new, four-direction TopJet fresh air ceiling inlet in the jet ventilation line from Double L Group Ltd. Designed to outflow tradition inlets, the TJ4200 directs incoming fresh air upwards to the ceiling for better air mixing. Air is distributed more evenly and is mixed with warm air. Lost heat at the ceiling level is brought down to the animal level. Animals perform better with reduced loss of body heat because direct cold air chill has been eliminated. The TJ4200 snaps together quickly and features an insulated bottom panel and attic sleeve.
(Circle Reply Card No. 107)

Fly Bait

QuickBayt Fly Bait is the new, ready-to-use dry scatter bait from Bayer. The bait contains a new class of insecticides for housefly control that is fast, effective and has no resistance problems, says Bayer. QuickBayt contains 0.5% imidacloprid, an active ingredient that controls hard-to-kill flies resistant to organophosphates and carbamates. It also contains a unique combination of two fly attractants.
(Circle Reply Card No. 108)

Ventilation Workshops

A series of four-state workshops, “Managing Your Unseen Employee: The Ventilation System,” will be held in early 2003.

Hands-on demonstrations will review setting fan controllers, adjusting inlets and the effects of static pressure and dirty fans. The demonstrations will use a mobile ventilation room and 3-4 demonstration boards featuring various brands of ventilation controllers wired to small fans and lights to simulate heating systems.

The classroom sessions will cover the basics of ventilation systems, effective temperature requirements and troubleshooting tools and techniques.

Faculty from South Dakota State University, Iowa State University, University of Minnesota and University of Nebraska will provide instruction. Dates and locations are:

Jan. 23 — Community Center, Irene, SD;

Jan. 24 — Armory, Sioux Empire Fair, Sioux Falls, SD;

Jan. 30-31 — Minnesota Pork Congress, Minneapolis, MN;

Feb. 5-6 — Nebraska Pork Expo, Columbus, NE;

Feb. 18 — Ortmeier Building, West Point, NE;

Feb. 19 — Gage County Extension Office, Beatrice, NE;

Feb. 20 — Ag Park, Columbus, NE;

Feb. 21 — Ag Park, Columbus, NE;

Feb. 28 — Western Iowa Tech, Sioux City, IA;

March 4 — Iowa State University Northwest Research Farm, Calumet, IA;

March 5 — Iowa State Bank, Sac City, IA;

March 11 — University of Minnesota Southern Research and Outreach Center, Waseca, MN;

March 12 — University of Minnesota West Central Research and Outreach Center, Morris, MN; and

March 13 — University of Minnesota Southwest Research and Outreach Center, Lamberton, MN.

Registration costs $40 and includes handouts, lunch and refreshments. To register, call 1-800-767-5287.

Animal Welfare Conference

The American Meat Institute (AMI) is hosting its Fifth Annual Animal Care and Handling Conference, Feb. 27-28, 2003, Hyatt Regency Crown Center, Kansas City, MO.

The program will explore animal welfare, including the latest in animal handling and slaughtering practices; auditing teams and consulting services; product quality; and livestock and poultry production practices.

The National Pork Board will offer its “train the trainer” Trucker Quality Assurance Program the day before the main conference.

To register, log on to MeatAMI.com.

EPA Rule Dropped

The Environmental Protection Agency (EPA) is proposing to pull the July 2000 final rule which revised EPA's total maximum daily load (TMDL) program under the Clean Water Act.

The 2000 rule was deemed unworkable based on thousands of comments and court challenges.

EPA plans to continue improving the TMDL program. The number of TMDLs approved or established jumped from 500 in 1999 to nearly 3,000 last year.

New Feedlot Rules Released

The Environmental Protection Agency (EPA) has released the long-awaited environmental rules governing the nation's largest agricultural feedlots.

The agency received more than 14,000 comments for its new Concentrated Animal Feeding Operation (CAFO) rule that was two years in the making.

The rules mainly govern beef, dairy, poultry and swine.

CAFO will mandate added environmental protection for hog operations including beefed up manure handling, nutrient management planning and recordkeeping and reporting.

“The new CAFO rule will add significant compliance costs, new responsibilities and additional public oversight risks to pork production,” charges National Pork Producers Council (NPPC) President Dave Roper, Kimberley, ID, producer. “Although EPA and the Bush Administration have worked hard to develop a rule that is affordable, achievable, sustainable and science-based in nature,” he adds, “the rule will present many challenges to pork producers over the next 15 to 20 years.”

States will be required to upgrade existing environmental regulatory programs to meet these tough new federal standards under the Clean Water Act (CWA).

In general, the EPA rule will apply to pork producers who feed at least 2,500 mature animals in confinement for more than 45 days per year, although in some instances smaller operations will also be affected.

A top concern for pork producers, says Roper, was the proposed plan to require all permitted hog facilities to meet a “zero discharge” standard even under severe rainfall conditions, while not applying that rule to most other livestock sectors.

NPPC succeeded in having this provision withdrawn for existing operations and modified considerably for new operations.

Overall, the chief concern is that this rule will burden pork producers with many new costs that could threaten their existence.

“NPPC will focus its efforts on helping producers secure the technical and financial assistance they will need to upgrade the environmental performance of their facilities,” Roper notes. That will include help with accessing funds from the Environmental Quality Incentives Program that provides substantial technical and cost-share assistance to qualifying producers.

The EPA rule can be viewed online at: http://cfpub.epa.gov/npdes/afo/cafofinalrule.cfm.

USDA Report Highlights Breeding, Manure Handling, Feeding Practices

The U.S. Department of Agriculture (USDA) has released the third part of its Swine 2000 report.

USDA's National Animal Health Monitoring System (NAHMS) surveyed producers in 17 states in 2000. Small sites were less than 2,000 head; medium sites, 2,000 to 9,999 head; and large sites, 10,000 or more pigs.

Survey highlights showed:

  • The annual removal rate of breeding age females from death loss and culling was 45.9%.

  • An average of 10.9 pigs born/litter, 10.0 pigs/litter born alive, and 8.8 pigs/litter weaned.

  • A higher percentage of pigs died in grow-finish (3%) than in nurseries (2.4%).

  • Only 25% of small sites kept birds out of swine facilities, compared to more than 85% of large sites.

  • About half of sites using rodent baits outside gestation buildings placed baits more than 50 ft. apart, too far apart for effective rodent control.

  • Hog enterprises had these animals on their premises: cats, 73.1%; dogs, 70.9%; and cattle, 51.7%.

  • Nearly 60% of operations in the southern region reported having wild hogs in their county, compared to less than 6% elsewhere.

  • The three top sources of food safety information were: veterinarians, 76.1%; industry magazines, 71.9%; and industry programs, 69.7%.

  • Lagoons were used on 75.4% of southern region sites, 42.6% of west central sites and less than 20% of sites in northern and east central regions.

  • More than 90% of large sites had formal, written nutrient management plans; less than 20% of small sites did.

  • Irrigation was the most common means of manure application in the southern region.

  • Small sites most commonly applied solid manure using broadcast spreaders; medium-sized sites spread slurry by surface or subsurface injection; and large sites disposed of liquid manure by irrigation.

  • To control hog odor, 50.2% of sites used diet manipulation, 28.9% used manure management and 28.2% used air quality methods. Just 3.6% of sites used chemical additives, while 12.4% of sites used biological additives.



Feeding Practices

During grow-finish, 24.0% of sites fed two different diets, 26.2% fed three and about 40% fed four or more rations.

More large- (45.6%) and medium-sized (56.0%) sites practiced split-sex feeding than did small sites (15.2%).

While the percentage of small- and medium-sized sites using split-sex feeding has remained fairly constant since the 1995 NAHMS swine survey (14.0% and 55.4%, respectively), the percentage of large sites using this practice has plummeted from 78.2% of sites in 1995.

NAHMS analysts suggest this decrease may be due to leaner genetics, difficulty of use on large sites or lack of economic benefit.

During the six months prior to the Swine 2000 survey, antibiotics were included in 88.5% of diets for grow-finish pigs. Antibiotics treated respiratory problems on 27.4% of sites, enteric diseases on 15.2% of sites and were used for growth promotion on 63.7% of sites.

Feed-related intervention strategies can be used to reduce salmonella shedding by grow-finish pigs. Withdrawal of feed before shipping to slaughter was done on 3.2% of sites and testing feed for salmonella on 1.7% of sites.

Mating Practices

Breeding females are often mated more than once during their estrous cycle (Figure 1), according to the NAHMS report. Nearly 51% of sows and 47.3% of gilts were mated twice and a fourth three or more times.

Artificial insemination (AI) was the breeding method of choice on 91.3% of large sites, pen mating on most (84.4%) small sites (Figure 2).

Semen was purchased by 72.9% of sites that used AI, leaving only 17.1% of sites using AI actually collected and processed on-site.

Sites using AI as the main means of mating averaged 10.7 total pigs born/litter, vs. 9.9 total pigs born/litter for sites using other techniques.

For more information on the report, contact Eric Bush, DVM, at (970) 494-7000; e-mail NAHMSweb@aphis.usda.gov or log on to www.aphis.usda.gov/vs/ceah/cahm.

Nominations Open for Environmental Stewards

The pork industry has a long-standing record of environmental consciousness. Pork producers have always been pro-active in establishing solid environmental management programs, in adopting new technologies, and in building positive relationships with their rural neighbors.

National Hog Farmer and the National Pork Board jointly sponsor a program to recognize those pork producers who have built exemplary environmental management programs in their pork production systems.

Now in its ninth year, nominations are now open for the 2003 Environmental Stewards of the Pork Industry awards. We are looking for pork producers who consistently and successfully manage their pork production systems in harmony with our valuable natural resources.

The Environmental Stewards recognition program is open to pork production systems of all types and sizes. Since 1995, nominations have come from family operations as well as pork production management teams working within a larger pork production system. Nominations should be focused on a single production site, outlining the owner's and/or manager's diligence in protecting our environmental resources.

Nominations for the 2003 Environmental Stewards are due no later than March 31. A national selection committee comprised of pork producers and experts from various disciplines, including natural resources, environmental management and other pork industry professionals, will review all nominations.

The selection committee focuses on eight primary areas:

  1. General production and background of the operation.

  2. The farm's manure management systems including manure collection, transport and storage and the type of land application used. Present details about the utilization of manure nutrients, how the manure management program fits into the overall farming operation, including the financial benefits of the manure nutrient management system.

  3. Soil conservation practices used to conserve soil resources, maintain soil fertility and protect water sources. Detail weed and pest management programs used to protect the environment. Include financial benefits of the conservation and management programs.

  4. Technologies and management strategies used to reduce odors and improve air quality surrounding the farm.

  5. Farm aesthetics, neighbor and community relations.

  6. Efforts to promote and manage wildlife habitat.

  7. Innovative ideas applied to the operation's environmental management plan.

  8. A written statement, 500 words or less, addressing: “What Environmental Stewardship Means to Me.”



This information and additional questions are detailed on an easy-to-use nomination form available by contacting the sponsors: Carrie Tengman, Environmental Services Director, National Pork Board at (800) 456-7675 or through their Web site: www.porkboard.org (click on “Environmental Stewards” under the “Pork Production” heading to access nomination form). You may also call National Hog Farmer at (800) 722-5334 or visit www.nationalhogfarmer.com and click on the Environmental Stewards link.

Pork producers, swine unit managers and other pork industry professionals may submit nominations. Each of four winners will receive a special plaque, an expense-paid trip to the awards program and a $1,000 cash honorarium.

Send nominations to: Carrie Tengman, National Pork Board, P.O. Box 9114, Des Moines, IA 50306 or fax to (515) 223-2646 or e-mail: carrie.tengman@porkboard.org.

Appeals Process Progresses In Pork Checkoff Case

The appeals process in the pork checkoff matter is moving forward, fueled by one recent and two upcoming court actions.

On Dec. 20, the Department of Justice (DOJ) filed a brief with the Appellate Court. In addition, another group representing Michigan pork producers, the National Pork Producers Council (NPPC) and six state pork producer associations filed a brief with the Appellate Court.

The Campaign for Family Farms (CFF) has until Jan. 21, 2003, to file a brief responding to the DOJ and Michigan briefs, including the opportunity to argue their case as to why they believe the Appeals Court should uphold the District Court's verdict. On Nov. 15, the Sixth District Court of Appeals in Cincinnati, OH, granted a stay of a Michigan federal court ruling, declaring the pork checkoff program unconstitutional. The stay was requested by DOJ for the U.S. Department of Agriculture and the National Pork Board.

There is also a Jan. 31 deadline by which the DOJ and the Michigan groups can respond to the CFF brief and provide any summary conclusions that they would like the Court of Appeals to consider, according to court documents.

The date for oral arguments has not been set, but speculation is it could be held in the spring and the ruling handed down later in 2003.

Producer-Owned Co-op Trips in Tough Market

Pork America, a cooperative designed to change pork producer's mindset from marketing hogs to merchandising pork, has fallen on hard times.

In June 2000, Pork America had commitments for over 5 million hogs and set a goal of representing 20-25 million hogs within 3-5 years. Producers paid a $500 non-refundable membership fee, plus a registration fee of $500 for the first 5,000 hogs, $100 for each additional 1,000 hogs.

The ensuing year and a half provided a reality check for the fledgling co-op and their fees paid served as tuition for some real life lessons. Pork America board member and pork producer Linden Olson of Worthington, MN, reviewed some of those hard lessons during a National Pork Board-sponsored Whole Hog Value Conference last November.

Unfortunate Timing

“When you go from production into processing, there's a lot of things you've got to learn awful darn fast,” Olson says.

Starting with the popular premise that “there were significant margins to be captured between the retail and the farm level,” Pork America began meeting with packers in smaller markets — those that the larger packers and processors were not fully servicing, he continues.

Several packers were willing to total process Pork America hogs. “But, when we got the costs figured in, they got all the margin and we didn't get much more than we would have if we had sold the animals directly to them in the first place.”

Next, they explored building or buying a packinghouse. A director of development was hired and charged with finding opportunities and new members. Later, a marketing director was hired to identify opportunities in specific markets.

Many potential markets were identified but all wanted to see the product before committing to purchase. Without a plant, they could not supply product.

They found and purchased a plant in an area where a lot of Pork America hogs were produced. A CEO was hired to manage the operation, put together a marketing agreement for producers, file their HACCP plans and obtain a USDA plant establishment number — all necessary details. The first hogs were delivered to the plant on April 8, 2002 — about nine months after the plant was purchased.

Their startup plan was to move combos of cut pork first, then as workers were trained, they would move into the further processing, starting with deboning hams and loins. Other further processing would follow.

The CEO hired a broker. “They understood what we were trying to do and they knew of establishments that were interested in buying products that were identity preserved and cut to their specifications,” Olson explains. “But, when it got down to contract-signing time, and we wanted to get a little bit extra when the market was low, there wasn't too much interest in paying a little bit extra for a product they wanted. So, we never did receive the premium we were trying to get.”

The spring start-up date was selected to take advantage of the normal upswing in product prices and hog prices. “We all know what happened in 2002; prices of hogs went down instead of up. We were in one of those upside-down price curves which rarely happens in the spring,” he says. “If you remember back in April and May (2002), the price of hams was below the price of hams in the fall of '98 and early '99.

“We lost a fair amount of money fairly quickly, so we made a decision in early June to shut down because we could not continue to expect the farmers to take the loss on their farm production and then continue to take an additional loss in the plant,” he adds.

The Hard Lessons Learned

Olson offers six important lessons for anyone interested in the further processing business:

  1. “You have to sell the whole hog. Most groups find that they can have a real good market for one or two products from a hog, but when they try to market the rest of the carcass, they run into trouble. It is really easy to sell ribs and boneless loins. But, when it comes to selling the other cuts and the byproducts, it's a whole different story.”

    It is critical to understand that byproduct sales usually occur by truckloads. “You have to put a heck of a lot of hogs together to get a load of kidneys or tails,” he reminds. “The trade may be there, but most all of these prices are delivered to a certain point in certain quantities. The storage and the transportation costs can kill you.”

  2. Have someone that is marketing exclusively for you. “We had a broker that was marketing for other firms, too. I suspect what happens is, you can give all the attributes of this small plant, the traceability and all that, but when they look at the price and find someone else will sell it for 2¢/lb. less, they'll do it.”

  3. Make sure you have realistic startup costs and a reserve for those times that the market doesn't act quite the way you think it will. “You'll probably have more tied up in inventory of boxes and things like that than you can imagine,” he adds.

  4. Make sure your accounting system gives you the information you need. “An accounting system for a processing plant is different than an accounting system for a farm. On a farm, you take all of the inputs and you've got one product going out — a bushel of corn or a hog. You can tell exactly what the cost of that thing is. In the processing business, you've got one hog coming in and 50 or so products going out.”

  5. Cost of freight. “Make sure that when you sell something you understand whether it's FOB or delivered.”

  6. People. “For a manager of a small plant, you have to have one person who knows all phases of the operation. And, it's extremely important to have people who can do what they say they can do in an operation the size you have.”



Pork America's Future

“Pork America will continue to look for opportunities for our members to do some processing or marketing in some way, shape or form,” says Olson. “We still think there are a number of smaller, to some extent, niche markets, that are not being served as well as they could be.”

The plant is leased with an option to buy. The new operators will custom process some Pork America hogs.

“We made the best effort to do what the membership asked us to do, but because of the timing and some other factors, we failed. That doesn't mean that the idea was wrong. We hope that the lessons we learned will be helpful to anyone else who intends to try it in the future.

“We still think we've got a very good idea. The timing was terrible. Sometimes, timing is everything,” he adds.