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Transport Law Raises Issues for Pork Board

USDA applies animal welfare law to livestock hauled by trucks.

The recent decision by the U.S. Department of Agriculture (USDA) to apply the nation's oldest animal welfare law — when farm animals were shipped solely by rail — to the modern transport of farm animals by truck has raised a few eyebrows at the National Pork Board.

The 1873 law, revised in 1906 and again in 1994, includes all rail, express or common carriers of farm animals, except by air or by water. It specifies that no animal species may be transported over 28 consecutive hours before being offloaded for at least five hours to eat, drink and rest, explains Sherrie Niekamp, director of animal welfare, National Pork Board.

The ruling marks the first time that USDA has officially recognized that the 28-hour law applies to the transport of animals by truck, says the Humane Society of the United States (HSUS).

The move by USDA came in response to a legal petition submitted in October 2005 by HSUS and other humane organizations.

There are concerns about the ruling, but not because it will greatly impact the pork industry, says Niekamp, since very few pigs are transported longer than 28 hours.

“It is a little bit of a worry to extrapolate the time limit for rail cars into the time limit for all current forms of transport of farm animals, because conditions in a rail car are much different than conditions of modern truck transport over the interstate highways that we have today,” points out Niekamp.

Market hogs are seldom hauled more than a few hours, but weaned pigs and breeding stock are hauled longer distances across the United States.

There needs to be more research into the effects on the well-being of livestock hauled long distances under North American conditions. That represents a developing research priority for the Pork Board, she says.

USDA has developed a list of rest stops, with provisions for food and water, for trucks hauling livestock throughout the country.

Unloading hogs for five hours and then reloading them, however, could create a level of stress in itself that has not been well defined, says Niekamp.

That process could also raise a biosecurity risk if hogs were unloaded into a common containment area, and then reloaded and transported to their destination.

Proper handling and transport of pigs is covered under the Pork Board's Trucker Quality Assurance program which is revised every three years, says Niekamp.

Walking the Pens

Individual Pig Care — It's The Right Thing To Do

Individual pig care is about doing the right thing for the pig, the pork production system and the pork industry. Finding and treating individual sick pigs early is better for the operation, as every pig that misses the target premium creates a missed opportunity. Equally important, individual pig care is about our responsibility to the well-being of every pig. It's about producing safe and wholesome pork for consumers. It's about keeping the pork industry strong.

It takes practiced skill to scan 1,000 pigs during a barn walk-through, spotting the animals that need treatment. The attached poster is designed to help.

To remove the poster, carefully peel it away from the glue and unfold it to see photos and guidelines to help identify pigs that need individual care. For the convenience of the entire pork industry workforce, the poster is published in English on one side, Spanish on the other.

For additional information on how you can learn more about identifying and treating sick pigs, contact your veterinarian, your Pfizer Animal Health representative, or visit www.pfizerpork.com or call 1-800-366-5288.

Defining Finishing Health Parameters

Changes in the health of finishing pigs have been impacted by a variety of industry changes.

Finishing health has been defined many different ways, but most agree that the first sign of problems in the finishing phase of production is a rise in the mortality rate.

Across the industry, mortality rates vary widely between systems and even between sites or groups of pigs within a system.

Two decades ago, it was uncommon for a producer to report more than 3% mortality in finishing; 1-2% was the target.

Of course, there were some bad bugs in those days that would escalate death loss. Actinobacillus pleuropneumonia (APP), for example, was known to wreak havoc, and could cause mortality rates to soar into double digits. Now severe APP outbreaks are rare.

Disease Dynamics

Changes in the health of finishing pigs have been impacted over the years by a variety of industry changes in genetics, nutrition, environment, weaning age, pig flows, group size, stocking density, market weights, biosecurity practices, diagnostic tests, backfat, percent lean, vaccines and antibiotics.

Of course, the real changes that have taken place have been in the diseases we fight. We've added totally new diseases to North American pork production, such as porcine reproductive and respiratory syndrome (PRRS) and porcine circovirus-associated disease (PCVAD), which were unheard of 20 years ago.

The reason mortality rates are higher, in some cases much higher than 20 years ago, is because rarely does it turn out that disease outbreaks are caused by a single disease entity.

Over time, we've created healthier, leaner, faster-growing, larger groups of pigs that have mostly come from healthier sow farms than ever before. To use a sports car analogy, we are now feeding Porsches and Lamborghinis vs. the Fords and Chevys of the past.

Not only do these pigs require premium fuel, they are also more sensitive. You had better “baby” these high-performance models or they will break down and leave you stranded!

In short, today's pigs are less likely to have been exposed to bugs that we considered normal flora years ago, and thus are more prone to get sick if infected.

These pigs leave the nursery without having had an opportunity to build immunity. Since they are often considered high health, they enter the finisher without being vaccinated and so are vulnerable to disease challenges.

Performance Parameters

Of course, there are other ways to define health than merely an increase in mortality. Health affects performance, namely average daily gain, feed conversion, days to market and the number of culls or undervalued pigs.

While none of these performance parameters alone are indicative of health issues, together they may point to a health challenge in spite of low mortality.

Industry standards, targets and benchmarks provide a good place to begin a comparison. But they do not take into account differences or idiosyncrasies of a particular farm or system.

Use farm-specific records to analyze the effects of disease and the value of health. Records are vital to differentiate between groups of pigs, caretakers, sites, seasons and genetics.

Steps to Healthy Finishers

Regardless of current health status, follow these three basic steps to reduce health problems in the finisher:

  1. Determine what disease organisms or health issues exist within the population (diagnose).

  2. Provide appropriate therapy and supportive care for pigs that are clinically ill (treat), and

  3. Design a preventative program to keep the problem from reoccurring (prevent).

Most experienced pig caretakers intuitively perform these three steps every day as they go about their daily barn walks. Lets take a closer look at these three vital steps:

Step 1: Diagnose

The first step to good health with any group of pigs begins the day of arrival and should continue at least daily through the entire finishing phase.

Daily observation is required to identify early signs of disease or injury. The good caregiver will perform this observation on three levels: the barn, the pen and the pig.

At the barn level, the producer ensures that environmental conditions are in balance.

At the pen level, common disease signs to look for may be as simple as hearing a cough somewhere within the pen or observing diarrheic feces on the floor. These signs can be clues to help find individual pigs with problems.

At the pig level, determine if a pig is normal or abnormal. If deemed abnormal (sick or injured), then the problem needs to be classified as to its nature or to what system (nervous system, respiratory system, etc.) is affected.

Remember that diseases can be clinical or subclinical. Clinical disease is where signs of illness are evident. For subclinical disease, the illness may be very early in its course, and has yet to produce the typical, full-blown symptoms that would be obvious to even the casual observer.

Keys to disease resolution are early detection and subsequent proper treatment.

Observation and treatment varies with the production stage, size and number of pigs requiring individual attention. For a 1,000-head finishing barn with conventional-sized pens, it should take an experienced caregiver 30 to 45 minutes to individually observe and treat 10 pigs.

As a proper incentive to identify every pig needing attention, it is a good practice to attempt to identify at least 1% of the pigs in any given barn or room as those that need some form of attention.

Even in what may appear to be a healthy, normal barn of 1,000 pigs, there will nearly always be at least 10 pigs that could be deemed “abnormal” each day. Setting this as a daily, personal goal will provide a proactive course for maintaining health.

Good chores and observation of every pig, every day and acting on these observations will lead to proactive behavior of the caregiver. Being proactive will lead to good pig health.

Necropsy Examination

Often the most valuable animal in the barn is the first one to die! That is only true, however, if the animal can aid in the diagnosis of potential problems by revealing what caused its death.

Without performing a postmortem examination, it is often difficult to determine the cause of death. Swine veterinarians are the experts at conducting necropsies or autopsies on the cause of death, not only because of their training, but most importantly, because their experience enables them to recognize what is normal and what is abnormal.

Veterinarians also know which tissues to collect, how to preserve them and which diagnostic laboratory to submit them to.

Producers should never pass up an opportunity to observe lesions when their veterinarian necropsies a pig, and they should be ready to ask questions.

Producers should obtain the tools necessary (primarily a sharp knife) and begin by examining pig mortalities. A digital camera is a valuable tool to preserve images that can later be e-mailed and shared with your veterinarian if he/she cannot visit the production site when a health challenge occurs.

Remember, to understand what abnormal looks like, you must first know what normal looks like. The primary goal of a necropsy is to determine the cause of death, but always consider a necropsy as a chance to gain valuable knowledge or clues about what is going on in your pigs.

Serology Value

Serologic testing, performed on live pigs to check for health status, can be a valuable diagnostic tool. A blood sample is easily obtained, and there are many tests that can be run on the serum or blood of a pig.

Some serological tests, such as enzyme-linked immunosorbent assay (ELISA), measure a pig's immune response to a disease challenge. But it can take several weeks for the pig's immune system to mount a response to a disease before it would be detectable in the serum.

Other tests, such as polymerase chain reaction (PCR), detect the presence of some of the common viruses in the blood, such as the PRRS virus.

Both types of tests can provide valuable insight into a population's disease status. But because of their complex nature, always consult your veterinarian for help with diagnostic goals and interpretation of results.

If used alone and interpreted improperly, serology may lead to faulty health assumptions. Always consider serology (and other diagnostic tools) in the proper perspective, and know that they merely provide pieces of the larger health picture. Factors such as clinical signs of disease and history of the population must also be considered.

After determining health status, assign a classification of the diagnosis. It is best to keep this process as simple as possible, such as grouping by the dominant clinical symptom.

A simple system would be to classify the abnormal pigs into three primary groups — respiratory (lungs); enteric (gut); and other (lame, injury, etc.). You can't always wait for lab results before starting treatment, so this simple classification system will aid in choosing the initial treatments.

Step 2: Treatment

Once a preliminary diagnosis has been made, choose the therapy that best addresses the health concern diagnosed. At the same time, if underlying problems were discovered during the observation phase, it is imperative to correct these issues before starting treatment.

Before initiating any treatment protocol, besides determining the preliminary diagnosis, the caregiver must first consider many other factors:

  • How many pigs in the barn are showing the same clinical signs?

  • How fast was the onset of clinical signs?

  • If left untreated, would pigs die?

  • Are the clinical signs primarily respiratory or enteric?

  • How close is the group to market? Is withdrawal period a concern?

  • How much time is available for treatment and followup?

  • What is the health history of prior groups?

  • Are there obvious underlying problems that could have triggered this event?

Based on the answers to these questions, the caregiver will determine the type and route of the treatment that best fits the health issues occurring in the barn.

A respiratory health challenge will likely require a different treatment regimen than an enteric problem.

A challenge that suddenly affects the entire barn may require the use of mass medication via feed or water.

Some veterinarians promote the concept of “trigger” levels of affected animals required to initiate mass medication of any kind. This “trigger” level may be 3-5% or higher, depending on the situation.

There are a number of educational tools to aid in choosing the right medications. Always work with your veterinarian to set up treatment protocols that can aid in the decision-making process. Veterinarians are knowledgeable in prescribing the proper medicine at the proper dosage, route and withdrawal periods. They are also familiar with withdrawal periods and potential interactions and contra-indications that may exist with a particular set of pigs.

Your veterinarian can apply the “Judicious Antimicrobial Use Principles for Swine Veterinarians” through the normal course of his or her practice. These principles and guidelines were developed in cooperation with the American Association of Swine Veterinarians, the American Veterinary Medical Association and the Food and Drug Administration's Center for Veterinary Medicine to aid in the proper use of antimicrobials and the reduction of antibiotic resistance.

The National Pork Board's Pork Quality Assurance Level III and Take Care — Use Antibiotics Responsibly programs are excellent educational initiatives that promote proper swine care through “good production practices.” Everyone responsible for the day-to-day care of pigs should be familiar with and implement these principles and practices.

Evaluating Response

The final step with any treatment protocol is to evaluate its success and be ready to change the course of therapy if the pigs do not respond positively. A lack of response may be due to one of two factors: either an inaccurate disease diagnosis, or antibiotic sensitivity testing may reveal that the diagnosis was correct, but the choice of treatment medication was inadequate for this particular case.

For example, in a case of an uncomplicated viral infection, such as swine influenza virus (SIV) or porcine circovirus, you would not expect antibiotic therapy to be successful because antibiotics don't work against viral agents.

Evaluation of success or failure of treatment also requires good records. Document which pigs were treated and by whom, the medications administered, dosage, route, duration of treatment and the expected withdrawal period, results and the prescribing veterinarian in cases of extra-label drug use.

Evaluation of the treatment choice is also important for future decisions on preventative programs. If treatment success is limited (as with uncomplicated viral infections), then the focus should be turned to the final step in our approach to health issues in the finishing phase — prevention.

Step 3: Prevention

Disease can occur when pigs are exposed to an infectious agent in dosages sufficient to overcome the pigs' immunity level. Often, infectious agents can be present without causing disease, because the immune system provides adequate protection.

On the other hand, the infectious dose (the dose required to cause disease) may be quite low if the pig has little or no immunity to that disease agent.

Pigs can only express clinical disease when their immune systems don't provide adequate protection to a given amount of exposure. Stress of any kind, but especially environmental stressors such as extreme temperature swings, drafts or overcrowding, reduce the pig's ability to ward off a disease challenge.

The pig's immune system produces antibodies against infectious agents such as bacteria, viruses and even some parasites. Antibodies are proteins produced by the immune system in response to exposure from either the actual disease agent, or a vaccine made from such a disease agent. This type of immunity is called “active” immunity as opposed to “passive” immunity, which the pigs receive from their mother's milk via colostrum shortly after birth (See Figure 1 on page 18).

Pigs are born with little or no immunity, so it is very important for them to receive this passive immunity from the sow in order to provide protection until their immune systems mature and provide active immunity.

By the time the pig reaches the finishing phase of its life, most or all of the passive immunity has waned. The pig has begun to develop its own active immunity in response to exposure to bugs in its environment or to vaccines administered in the nursery phase.

In some instances, the presence of passive immunity actually blocks the pig's own system from producing active immunity. This is called “passive antibody interference,” and with certain disease agents such as SIV, it can last until the pig is well into the nursery or early grower phase (40-80 lb.).

The principle of passive antibody interference, coupled with the age at which pigs are first exposed to the disease agent, are paramount in deciding the age at which vaccination efficacy is optimized. Most vaccines need to be administered two to four weeks ahead of the anticipated disease challenge or exposure to the infectious agent.

Other factors to consider for preventive treatment effectiveness include the type of vaccine used; the health and nutritional status of the pigs at the time of vaccination; the presence of environmental stressors; and, with some of the newer modified-live-virus vaccines, whether the pigs are currently being treated with antibiotics.

It is important to remember that vaccines rarely confer 100% protection against any given disease. As you might imagine, there are multiple pitfalls that can occur along the path to producing a protective immunity in the pigs besides proper timing of vaccination. In addition, some vaccines are better than others at overcoming these pitfalls.

As with any animal population, we must never forget the normal variation that exists within any group or flow of pigs. Population dynamics interact with this biological variation to produce the normal distribution of whatever trait you may wish to measure.

This normal variation within a population accounts for the fact that while the average pig in the group may be well protected from a disease challenge with the vaccination, a small percentage of the group fails to mount an adequate response.

If a few pigs in the group develop clinical signs of the disease after being vaccinated, it does not necessarily mean that the vaccine failed across the population. Normally, for every pig in a group that failed to mount a protective immunity, there was also a pig that produced much more immunity than was needed for protection.

Development of a vaccination protocol and schedule requires that you first know what health challenges exist in the population, and an estimate of the economic effect they make on production. A working knowledge of the available immune management tools, as well as the approximate cost of vaccination, is required to estimate the cost: benefit ratio of any given program. Rely on your veterinarian to drive adoption of any vaccination protocol in your herd.

Biosecurity

The ultimate tool for disease prevention is to never allow the introduction of new infectious agents. The finishing phase of most operations is often considered to be at the bottom of the health pyramid, and thus, the safeguards are fewer and less stringent than at the sow sites and nurseries.

The primary objective of any biosecurity protocol is to prevent the entry of new bugs, regardless of the stage of production.

While location of the site and proximity to other pigs are important biosecurity risks, there is usually little that can be done on these issues once a barn is sited.

We can, however, work to reduce the risk associated with many other practices, vectors and fomites that present biosecurity challenges.

If you are bringing in healthy pigs with good protective immunity, it just makes good sense to enforce similar biosecurity protocols and take similar precautions as you would in the sow sites or nurseries that supply the pigs.

Porcine Circovirus-Associated Disease: Emerging Threat to Grow-Finish Health

The U.S. swine industry is experiencing an emerging health challenge the likes of which haven't been seen since the early years of porcine reproductive and respiratory syndrome (PRRS).

This “new” syndrome was originally named postweaning multi-systemic wasting syndrome (PMWS), to reflect the wasting condition that characterizes this disease.

Recently, scientists and swine practitioners have coined a new term for this problem: porcine circovirus-associated disease or PCVAD. This name reflects growing evidence that porcine circovirus type 2 (PCV2) is the primary player in this disease complex.

PCVAD is a growing problem and generally hasn't affected pigs until they reached the grower stage of production.

There is no doubt that concurrent infections or stressors may make this disease worse, especially PRRS virus, swine influenza virus, Mycoplasmal pneumonia and Salmonella cholerasuis.

Disease Severity Grows

Circovirus and clinical signs of wasting have been present in U.S. swine herds since the late 1990s.

But a new, more severe form of the disease has been reported in eastern Canada since late 2004, and has gradually spread to the United States in 2005 and 2006.

These more severe clinical signs may be associated with a new or altered strain of the disease. This strain causes mortality rates to double in late nursery, but more often in early finisher flows. In a few cases, mortality rates have topped 40%.

Adding to the confusion surrounding PCVAD is the fact that porcine circovirus has existed on most hog farms in North America for many years without causing noticeable problems.

If you suspect PCVAD has infected a group of pigs, first contact your veterinarian to obtain an accurate diagnosis. Other pathogens and syndromes can produce similar clinical signs.

Essential for a confirmed diagnosis is the presence of clinical signs producing substantial mortality, plus laboratory confirmation of microscopic lesions and the presence of PCV2 in the tissues.

Besides animals off feed and experiencing very rapid weight loss, the other most common clinical observation is a respiratory problem such as thumping and labored breathing.

Controlling PCVAD

After confirmation of PCVAD, your veterinarian can outline management changes to reduce disease severity and prevention steps, which may include vaccination.

It may be necessary to identify and control any concurrent infections such as PRRS, mycoplasma, SIV or salmonella.

Implement management changes to reduce disease severity. Strictly adhere to all-in, all-out (AIAO) pig flow, avoid mixing and resorting of animals, reduce stocking density and take steps to improve the environment.

Good hygiene and disinfection of facilities are also essential to minimizing the impact.

Early removal of the affected pigs from the group or site appears to have helped reduce mortality in some cases.

The most encouraging news regarding PCVAD is that there are several commercial vaccines under development. Early field reports indicate they appear to be very effective when administered to weaned pigs ahead of the expected disease challenge.

Many aspects of this disease remain unknown, any one of which could help control the spread and reduce the economic severity of PCVAD.

Make Treatment Chores Convenient

Daily health checks and chores can be simplified if you can take all of your supplies with you during the walk-through.

For example, a fly fishing vest is lightweight, durable and has numerous pockets and places to safely carry supplies and equipment.

If this vest saves one trip back to the office for a forgotten treatment medicine, etc., it eventually adds up to a lot of valuable time that is better spent diagnosing and treating pigs.

Be it a fishing vest or a customized tote tray, make sure you pack it with enough supplies and equipment to last the entire walk-through.

Some suggestions for what to always carry include:

  • An assortment of treatment medicines;

  • Syringes (disposable and otherwise);

  • Hypodermic needles (always use the correct gauge and length and never straighten a bent needle);

  • Marking crayon or spray (assorted colors);

  • Examination gloves;

  • Wound spray;

  • Safety scalpel for castrations and other minor surgery procedures;

  • An inexpensive digital thermometer;

  • Pen and notepad; and

  • Basic tools such as locking pliers, an adjustable wrench and screwdrivers.

The more time spent with the pigs vs. walking back and forth for supplies and tools, the better the overall health of the pigs.

Packer Praises TQA Program

The National Pork Board's Trucker Quality Assurance (TQA) program's focus on the proper handling, loading and transport of pigs optimizes quality pork products for consumers.

“TQA has benefited the pork industry tremendously, and we support it 100%,” says Dave Murray, vice president of livestock procurement with Indiana Packers, Delphi, IN.

The TQA program was launched in 2002 to help alleviate improper pig handling techniques that can lead to fatigued pigs, and millions of dollars a year in losses.

If a fatigued pig arrives at a packing plant, the producer may receive a 50% discount for that pig. At Indiana Packers, every fatigued pig causes at least five minutes of downtime that backs up the entire system.

“As a producer, you can spend a lot of time nurturing a pig to market weight, but you can undo all that hard work if animals aren't loaded and transported properly,” Murray says. “By creating accountability among producers and the people transporting the animals, TQA benefits the entire pork production chain.”

Everyone who works in Indiana Packers' hog procurement department is required to be TQA-certified and must complete an internal livestock handling program as well.

“I believe our biggest risk is the mishandling of livestock at the plant, since it's the fastest way for us to be shut down. TQA has helped our relationship with USDA inspectors, because we can show them animals are being handled humanely.”

Language Guide CD Offered

A new compact disc series helps bridge language barriers.

A compact disc (CD) series to help eliminate language barriers on swine farms and increase production has been released by Carthage Veterinary Service, Ltd. The “Swine Farm Language Guide” provides both English-to-Spanish and Spanish-to-English audio translations for words and phrases commonly used in swine production. About 450 swine farm vocabulary words are translated. A tear-free, durable flip-book gives written translations of all information on the CDs. The CDs also include translations for frequently asked questions and phrases. The series' six CDs plus the flip-book are available for $300. For more information, call (217) 357-2811 or visit www.hogvet.com.

Pressure Washer Nozzle

The Revolution rotary nozzle uses proven technology to increase impact pressure by more than 10 times that of conventional high-pressure spray nozzles. The Revolution attaches to the wand of most hot- or cold-water pressure washers, and blasts surfaces with a spinning spray action that is designed to clean deep and fast. It is rated for up to 4,350 psi. at 185 °F. The nozzle spins at 4,000 rpms to combine the fast-cleaning action of a wide-coverage, fan-spray nozzle with the deep-cleaning impact of a pencil-jet or zero-degree nozzle. It has a wear-resistant ceramic head and bearing ring to provide durability and is shrouded by an extra-resilient housing protector. The Revolution is sold by Legacy, which supplies parts and accessories for pressure washers. For more information, call (877) 283-2412 or visit www.c-techindustries.com.

Farm Accounting Software

The most requested features from users have been included in the most significant improvement to Farm Works Software in a decade. Farm Works version 12 (code name X2) includes more than 60 all new features to both the office suite programs (Farm Trac, Farm Site, Farm Funds and Site Pro) and field suite programs. Highlights include editing farm accounting transactions, prescription map generator tool, printing detailed equipment reports, viewing past crop zones, print preview of maps, recording field records without a map and importing yield or application maps to create field records. For a complete list of details, visit www.farmworks.com and click on “60 Features in 60 Days.”

Ultrasound Device Pouch

E.I. Medical Imaging has introduced a soft carrying pouch designed specifically for the Bantam ultrasound device. The new pouch is designed for quality and durability. It comes with wide, padded, adjustable waist straps to evenly distribute the weight of the Bantam scanner to provide comfort for the user. Coolmax temperature management materials have been used throughout the pouch to further ensure user comfort. The pouch features “Delta” closure straps, so the user can use all E.I. Medical Imaging Bantam scanners with the same pouch. A weather-resistant, clear vinyl top panel permits viewing and using the controls without opening the pouch. For more information, call toll-free (866) 365-6596 or visit www.eimedical.com.

Feed Program

Land O' Lakes has launched a new EcoCare feed program. It provides optimal nutrient and feed additive delivery in every phase, and incorporates appropriate assessment tools for optimum ecological care. EcoCare feed provides a dedicated and affordable feed program that addresses manure management, odor emissions and nutrient utilization, while offering top pig performance in grow-finish production. EcoCare provides the best possible care for your pigs, soil and people. For more information, visit www.lolfeed.com.

Send product submissions to Dale Miller, Editor (952) 851-4661; [email protected]

Skyrocketing Corn Prices

My lamentations over the future of feed costs in an "ethanol or bust" world probably have gotten on a few people's nerves -- until the past two weeks. Chicago Board of Trade (CBOT) December corn futures closed on Thursday 27¢/bu. higher than last Friday, 36¢/bu. higher than the Friday prior to that, and 61¢/bu. higher than on Sept. 14 when the current rally began.
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Cash corn skyrocketed as well. The weekly average price for #2 yellow corn at Omaha averaged $1.97/bu. the week ending Sept. 15. That same price closed on Thursday at $2.79/bu.
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The driver on Thursday was USDA's Crop Production report that was a shocker, to say the least. The report confirms our concern over feed costs and puts them squarely in the spotlight as a dominant factor for feeder-animal prices for the next few years. That includes both feeder cattle and feeder pigs.
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The report included a lower estimate of U.S. corn production, down 2% from the Sept. 1 report on a reduction of both estimated yield and harvested acres. 2006/07 ending stocks are now pegged at just less than 1 billion bu. The result is USDA raised its 06/07 marketing year average corn price by 25&#162;/bu. That puts its latest forecast more than 60&#162;/bu. (the mid-point of USDA's range) higher than that of 2005/06.
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The other big driver of corn prices has been the huge rally in wheat prices. CBOT December wheat futures closed today at $5.155/bu., down 15.5&#162;/bu. Meanwhile, March and May 2007 wheat futures were down nearly 20&#162;/bu. But December wheat futures are still nearly $1.50/bu. higher than they were as recently as Sept. 1. Wheat is used as a feed ingredient much more in other countries than in the U.S., thus making the corn for wheat trade-off a driver of the corn market.
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Of course, developments in the ethanol business will be the major factor in the corn market beginning in late 2007. Curiously, USDA changed neither ethanol nor export usage of corn from the levels it published in September in today's World Agriculture Supply and Demand Estimates.
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USDA also increased its estimates of soybean acres to be harvested (from 73.9 to 74.5 million acres) and soybean yield (41.8 to 42.8 bu./acre). That increased the estimated 2006 crop by nearly 100 million bu., to 3.189 billion. And CBOT soybean futures for the 2006/07 crop year closed today 14-18&#162;/bu. higher, which pulled meal prices up about $6/ton.
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The net effect of these price changes can be seen in Figure 1, which shows the actual and predicted (from CBOT futures and historic basis for Omaha corn and Decatur 48% soybean meal) cost of the corn and bean meal to make a 16% crude protein hog diet. As of Thursday, the forecasted feed costs exceed the levels of July 11 when markets were still under the threat of dry weather. Thursday's forecast feed costs were roughly $17/ton higher than just one month ago. That figure would mean hog-production costs would be about $5 to $7/cwt. live higher than just one month ago.
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Will the string of profitable months be able to withstand this run-up in feed prices? We doubt it. While cash-hog prices have been hanging in at around $63, we normally see a $3 to $5/cwt. carcass decline from mid-October to December. Adding $5 to $7/cwt. live to costs and taking hog price down to around $60/cwt. carcass ($45/cwt. live) will probably cause red ink in either November or December.
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That would still mean we've just witnessed the longest string of profitable months in history. The string stands at 32 and October will almost certainly remain in the black on the ISU Estimated Costs and Returns -- tying the record of 33.
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<b>Plans for Packing Plant Cancelled</b>
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Maple Leaf Foods announced Thursday its cancellation of plans to build a new packing plant in Saskatoon, Saskatchewan. It cited estimated costs much higher than expected and the continuing difficulties the strong Canadian dollar is causing for the Canadian pork industry.
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We had expected an announcement such as this from the Canadian pork-packing sector and won't be surprised to see more of the same. Though Canadian slaughter for the week ending Sept. 30 was 2.2% higher than last year, YTD slaughter north of the border is down 2.5% from one year ago and the sector is operating far below estimated capacity (see Figure 2).

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<a href="http://nationalhogfarmer.com/images/1013mkt.doc" target="_new"><img align="left" valign="top" src="http://images.industryclick.com/files/17/graphlogo.jpg" vspace="0" border="0" hspace="3"></a><br><br> Click to view graphs.<br><br>
<font color="red">Steve R. Meyer, Ph.D.<br>
Paragon Economics, Inc.<br>
e-mail: <a href="mailto:[email protected]">[email protected]</a></font>

Pork Pod Provides Fast News Updates

For pork producers who want to make sure their news is up-to-date while they’re “on the go,” the National Pork Board introduces Pork Pod. Pork Pod is an audio file that is available online through a computer, iPod or MP3 player.

“Pork Pod is another tool that the Pork Board can utilize to communicate news to producers that they can use on their farms,” says Teresa Roof, manager of public relations for the Pork Board. “This will be an easy and convenient way for producers to hear from experts in the industry on current issues and hot topics in pork production.”

Producers can listen to Pork Pod while driving a tractor, a truck or doing the chores. Podcasts typically last about 7-10 minutes. More information about Pork Pod can be found at www.pork.org under the spotlight section.

Veterinarian Explains Maximum Residue Limits

Japan imposed maximum residue limits (MRLs) on May 29 for agricultural chemicals, antibiotics and feed additives for imported meat and meat products.

James McKean, Iowa State University Extension swine veterinarian, explains there are similarities and differences between residue monitoring programs in the United States and Japan.

“There are some differences between withdrawal times in the United States and Japan based on the new MRLs, but under most conditions, strict observance of the U.S. withdrawal times also will meet the Japanese MRLs.

“However, there are systematic differences. U.S. MRLs are based on ‘target’ tissue levels, like in the kidney, liver, muscle and fat, while Japan has established MRLs for many tissues and for processed meats. Japan is more likely to specifically test observed injection sites for residues than the United States, which would require a longer withdrawal time for various products,” says McKean.

The new MRLs apply to all food species, including all fresh, frozen and processed products, and by-products imported into Japan. The requirements also apply to domestic Japanese products.

McKean warns a lot is at stake if violations occur.

“On imported products, a first violation found within a one-year period may trigger a 50% inspection of all shipments from that species, country and/or production type,” he says.

“A second violation may cause 100% inspection and increased testing. Also, the product is held until results are known, and importers may be required to pay for the testing and costs of holding the products until cleared. These consequences make finding even one violation an issue for all producers,” stresses McKean.

The National Pork Board provides details for producers on a special section of their Web site. This Pork Checkoff-funded site is found at www.pork.org It features information supplied by pharmaceutical manufacturers for U.S. and Japanese MRLs and withdrawal times.

Smithfield-Premium Standard Farms Merger Announced

The boards of directors of Smithfield Foods, Inc. and Premium Standard Farms, Inc. (PSF) have announced the merger of the two companies. Under the agreement announced last month, Smithfield will acquire all of the outstanding shares of PSF for $810 million, including assumption of PSF’s approximately $117 million of net debt.

The transaction is expected to be approved by PSF’s shareholders, and is projected to close in the first quarter of 2007. In connection with this transaction:

  • All current PSF production contracts will be honored;
  • Smithfield remains committed to purchasing significant numbers of hogs on the open market; and
  • PSF’s facilities will remain open and in operation at least at current production levels to continue to serve their customers.

“We are excited about the combination of PSF and Smithfield,” says C. Larry Pope, Smithfield’s president and chief executive officer. “This is a business we know very well and it relates directly to our core competence. We have strong expertise in both live hog production and in fresh pork processing. Strategically, this is a very good long-term fit, and near-term, this combination should generate benefits for both organizations and our customers.”

PSF President and Chief Executive Officer John Meyer adds: “Our agreement to merger with Smithfield enables PSF’s shareholders to receive an immediate premium for their shares and continue to participate in the growth of Smithfield, a well-capitalized company with one of the best records of creating long-term shareholder returns of any company in any industry. As part of Smithfield, we will continue to execute our strategy and provide attractive opportunities for our employees, our customers, our hog producers and the communities in which we live and work.” Federal regulators must also approve the proposed merger between the nation’s two largest hog producers.

Sen. Charles Grassley (R-IA) has asked the Justice Department to review the proposed merger. He suggested that the merger would hurt independent farmers by increasing Smithfield’s control over hog production.

“Over the last several years, Smithfield has made it perfectly clear that it intended to purchase its competitors to assert dominance in the pork industry,” says Grassley in a letter to the Justice Department’s antitrust division.

Sen. Tom Harkin (D-IA) has also requested the department review the transaction.

The department could move to block the merger on antitrust grounds or require the companies to sell some of their assets.