National Hog Farmer is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Take a stand, before you fall for anything

Fall is a wonderful time of the year with harvest, baseball’s World Series, football season and our youth are back at school K-PhD.

I don’t miss high school or college, but I do yearn for those days, and all that the college experience brought with it. U.S. colleges and universities offer wonderful opportunities for the exchange of knowledge and information.

Land-grant universities are some of the best sources for groundbreaking research, much of which you will find in issues of the National Hog Farmer. We rely on the professors and researchers to provide great information for our readers on the ever-changing swine industry when it comes to nutrition, genetics, reproduction and biosecurity, just to name a few. As an example, check out the October Blueprint edition of National Hog Farmer as researchers present various projects concerning the lifetime productivity of the sow herd.

U.S. colleges and universities are indeed avenues of high learning, but sadly they also provide a breeding ground for a higher level of misinformation and misleading information.

A family friend’s son is attending a Minnesota university, and he recently posted on social media images from a pamphlet that he had received. He shared two pictures from the handout, one of a sickly piglet, and the other of a sow that appears to be in a cramped farrowing crate.

Fortunately, this young man knows the truth, as he has worked in hog barns. He shared on social media a picture of himself holding a very healthy looking piglet. This young man has the luxury of knowing the drivel that the pamphlet and the organization behind it is peddling. Unfortunately, too many of the masses attending our colleges and universities suffer severe agriculture disconnect.

I fear that the majority receiving such pamphlets actually kindly accepted them, perused them, and quite possibly started to believe what they read and saw.

As for our friends’ son — he kindly accepted the pamphlet and promptly placed it in File 13. He opted to accept the nonsense-in-ink rather than deny it, lest some other less-informed student receive it and get sucked into the anti-animal agriculture propaganda.

His actions were one small stand against such propaganda, and we need more voices to carry on against what seems like a larger and louder chorus attempting to derail our efforts to feed the world. Hog producers have been doing a great job opening up their barn worlds to the outside world in an effort to educate and inform the general public and consumers about real life issues faced in livestock production.

But, there needs to be a voice on the collegiate level, and the National Pork Board has possibly come up with just the perfect vehicle. On the heels of naming Brad Greenway of South Dakota as America’s Pig Farmer of the Year earlier this month, the NPB has now announced the search for Pig Farmers of Tomorrow.

Farm leaders between the ages of 18-29 are encouraged to apply by Nov. 22 for the program that intends to recognize, inspire and connect the next generation of American pig farmers. Applicants should intend to make pig farming their life’s work, and should be committed to the U.S. pork industry and to raising pigs using the We Care ethical principles. Current college students are encouraged to apply at PigFarmersofTomorrow.com.

This inaugural year for the award will have up to three award recipients, and they will have the opportunity to speak at NPB events, but I think more importantly they will be responsible for providing social media content via #RealPigFarming.

Networking is a big part of adult life, but the seeds are planted long before we hit the working world. Yes, college students are prone to hang in groups of people with similar likes and dislikes. But diversity makes for a whole person, and farm-based youth more than likely have befriended someone or many others from the opposite end of the career spectrum. These relationships can be fruitful for a well-spoken, confident young person looking to be Pig Farmers of Tomorrow.

All industries bring with them peripheral tasks that aren’t mentioned in a job description. Industry spokesperson has become a big part of pork production. What better way to win over young consumers, or maybe even gain a few new pork consumers, than hearing from peers all the wonderful benefits the U.S. pork industry provides.

Stand up for the pork industry, or fall behind. 

U.S. pork industry seeks the Pig Farmers of Tomorrow

U.S. pork industry seeks the Pig Farmers of Tomorrow

As National Pork Month draws to a close, the Pork Checkoff is launching a new national awards program to recognize, inspire and connect the next generation of American pig farmers. Through Nov. 22, the National Pork Board is seeking applications from young producers to become one of the 2017 Pig Farmers of Tomorrow at www.pigfarmersoftomorrow.com.

The new award will recognize future farm leaders, ages 18-29, who intend to make pig farming their life’s work and are committed to the U.S. pork industry and to raising pigs using the We Care ethical principles.

“One of the National Pork Board’s primary responsibilities is to train and motivate future pork industry leaders,” says NPB President Jan Archer, a pig farmer from Goldsboro, N.C. “The award is designed to recognize and inspire youth who are investing their time and energy into responsible pig farming.”

Up to three award recipients will be selected in the program’s inaugural year. Winners will be invited to speak at NPB events, including the March 2017 National Pork Industry Forum in Atlanta. They also will be responsible for providing content via the pork industry’s social media program #RealPigFarming. To apply, applicants must be actively involved in raising pigs in the United States on a full- or part-time basis and be between the ages of 18-29 as of Jan. 1, 2017. Students currently enrolled in a college program also are encouraged to apply. 

Applicants must have a completed Common Industry Audit or be willing to have one conducted and paid for by the NPB. Applicants also must submit social media content defining a “day in the life” on their farm and upload up to 10 photos with 140-character descriptions. The NPB selection committee will name up to eight semi-finalists who will be interviewed by a panel of judges to select the finalists. Three winners will be chosen based on a combination of all application materials.

“It is important for youth in our industry to make the right connections at the right time as they build a career in agriculture,” Archer says. “As the winners share their personal stories, the program will not only recognize these future leaders, but will introduce them to experienced producers and networking opportunities.”

It takes a team to keep FADs at bay

World map showing swine disease pathogens of respective regions
<p>This map shows the main pathogens of concern to the swine industries in the respective regions&nbsp;of the world.</p>

Any disease can have U.S. swine producers on the edge of their collective seat, but the importation of a foreign animal disease could be just the thing that brings the industry to a screeching halt. With that in mind, keeping FADs out of our country is a big first step. Knowing the risks that are out there is key to keeping FADs from reaching our shores, and potentially infecting the U.S. swine herd.

The Swine Health Information Center was founded in the summer of 2015 with the mission “to protect and enhance the health of the U.S. swine herd through coordinated global disease monitoring, targeted research investments that minimize the impact of future disease threats and analysis of swine health data.”

Paul Sundberg, SHIC executive director, says monitoring the global pig pathogen picture was a task SHIC, or more specifically the organization’s Swine Health Monitoring and Analysis Working Group, took on to discover just what risks exist. Part of what that group is charged with is “assessing foreign, transboundary production disease risk using information from a variety of sources. The outcome of this assessment is the ongoing prioritization of the Swine Disease Matrix.” That matrix includes a list of the viruses that are known to be able to infect swine, most of them affecting health and production.

Knowing what risks are present, and taking precautions is better than getting caught flat-footed and having to react once a pathogen hits our shores. “We know there was PED [porcine epidemic diarrhea] in China in 2012-13 that was circulating, but we didn’t pay attention to it. We don’t want to repeat that mistake,” Sundberg says.

The expertise and reach of the 20-some volunteers in this working group were used to gather opinions from around the world as to what pathogens exist to potentially threaten the U.S. pork industry. This working group is made up of producers, university researchers, veterinarians, staff from veterinary diagnostic laboratories, and USDA staff, as well as staff members from the National Pork Board, National Pork Producers Council and the American Association of Swine Veterinarians.

Sundberg says a simple survey was developed where “people on the ground, on the farms in the various countries were asked to identify up to the top five diseases that you’re dealing with in your country or area, how are you managing those things, and what other diseases, though they may not be on the top five list, are still on your radar of ones that could present problems in the future.”

Completed surveys were then tabulated by Sundberg to get a clearer picture of what is going on in the world in the name of pig pathogens.

“Keep in mind that these are opinions from the people on the ground in these countries, but if a number of respondents shared common concerns of pathogens in their countries, then we had a pretty good idea of the concern in that country,” he says. For example, mycoplasma was rated high by individual respondents from South America, but it also appeared on numerous other South American respondents’ replies, though maybe not a top concern. “So, yes, we looked at the individual concerns, but if others from the same country or region shared the same concerns, then it painted a better picture of what that country is facing,” he says. Sundberg says pathogens were given a weighted average, based on the priority of the pathogens from the respondents and the number of responses within a region.

The Monitoring and Analysis Working Group sought to create a pathogen picture from China/Southeast Asia, Europe/Russia, South America and North America (Canada and Mexico).

As an example of the numerical weighted average given to pathogens, porcine reproductive and respiratory syndrome topped the concern for Europe/Russia with a weighted average of 6.00. PRRS was far and away the main concern in that region as Actinobacilus pleuropneumoniae was the second-ranked pathogen of concern there, but was a distant second with a 0.80 weighted average.

“Even though PRRS is of major concern in Europe/Russia, so are other pathogens that were listed on the surveys,” he says. “Swine influenza, for example, was ranked third on the pathogens of concern for Europe/ Russia [0.70 weighted average], but it is still a concern.”

As mentioned before, respondents were asked to rank their top five pathogens of concern, in addition to other pathogens they are watching, so Sundberg says that shows countries around the world are dealing with a laundry list of pathogens. “We need to be conscious of that because the U.S. is not only at risk for the highest rated pathogens in these countries,” he says. “Whether a pathogen is happening in only one area or in every country, we need to take a look at it, because the U.S. swine industry is at risk from all of these pathogens.”

Sundberg says the survey results did not reveal any surprises as in new pathogens that have surfaced around the world, but rather, “we’ve heard about these concerns, we know what’s going on around the world.” Sundberg did say the “ah-ha” moment came “that in my opinion, we’ve got a fairly good handle of what’s going on in the world — at this moment. I have no delusion that there aren’t other things going on in the pig populations around the world that did not show up on this list, but that we have to be on the lookout for. So the survey can’t be taken to mean that we know everything. The survey did not point out big surprises; it pointed out ongoing risks and ongoing concerns.”

Though Sundberg is confident the U.S. swine industry is cognizant of risks out there, we cannot get lackadaisical in our efforts. “We can’t let our guard down. … we can’t be so tunnel-visioned that we lose track of the all the risks that are out there.”

Battling worldwide swine pathogens is a team effort, and the USDA Animal and Plant Health Inspection Service Veterinary Services is formulating an Emerging Animal Disease Preparedness and Response Plan that is still in the developmental stages. A draft of the plan can be read at aphis.usda.gov/animal_health/downloads/emerging-dis-framework-plan.pdf.

According to the USDA, the “purpose of this plan is to define the processes by which the Veterinary Services unit of the USDA’s APHIS will identify, evaluate and respond to emerging diseases in animal populations, and the implementation of these processes as a VS core business practice. This plan will help VS respond effectively to emerging animal diseases by outlining processes to be used to determine appropriate response activities. The framework for this plan was outlined in 2014 in the APHIS concept paper, “Veterinary Services Proposed Framework for Response to Emerging Animal Diseases in the United States.”

Sundberg says the USDA’s efforts do not appear to be a duplication of the industry’s efforts. “There may be some things that SHIC will be able to respond to more quickly than what the USDA is able to, and there may be some things that the USDA can go a little more in-depth on than the center. We are working together to at least minimize duplication, and make both programs as synergistic as possible.”

USDA’s Veterinary Services is seeking comments on the plan by Nov. 1.

SHIC has been in existence a little over a year, and Sundberg looks at the success of the organization from the aspect of how it has been received in the U.S. swine industry.

“One of the biggest successes of SHIC so far has been the collaborative efforts of the entire industry. Everyone has been working together. Almost without exception when I contact someone, give them a call, send them an email, and ask them for help, tell them that the Center needs this or the U.S. pork industry needs this in order to help answer these questions, people have been more than willing to help. It’s been very gratifying to see the collaboration and cooperation and getting behind the efforts of the center.”

SHIC’s website — swinehealth.org — also has more information on the Swine Disease Matrix, with fact sheets available on many of these pathogens and other SHIC programs and projects.

How do they get here?

Knowing that a laundry list of pathogens of potential risks exists is one thing. Knowing how to prevent them from coming to the U.S. is another thing completely.

Scott Dee, a veterinarian with Pipestone Applied Research, Pipestone Veterinary Services in Pipestone, Minn., is fervently searching for answers to how FAD pathogens may come into our country.

Building on previous research where he and researchers at the Animal Disease Research and Diagnostic Laboratory at South Dakota State University in Brookings proved that porcine epidemic diarrhea virus can survive in contaminated feedstuffs, new research is looking to see if the same is true with FAD pathogens.

Background research

Scott Dee has led a number of research projects looking at, and proving, the viability of porcine epidemic diarrhea virus in feed and feed ingredients. All of these projects have lead up to the current four-phase project investigating if foreign animal disease viral loads may also survive in feed ingredients.

Can PEDV ride the wave with feed ingredients?

PEDV viability in feed ingredients researched

Proof of concept: Feed can carry PEDV

In the PEDV research, Dee and scientists of South Dakota State University used PEDV to contaminate multiple feedstuffs during the simulated shipment of the feedstuffs from China to the United States. This latest project — funded by SHIC, AASV, Kemin and Kansas State University — enlists surrogate viruses to mirror actual FADs under the guidance of Dee, Eric Nelson and Diego Diel. For example, Seneca Valley virus was used as a surrogate of foot-and-mouth disease, which would cripple the U.S. swine industry if it actually infected the swine herd. The other two FAD surrogates included in this phase of research were bovine viral diarrhea virus in place of classical swine fever virus and bovine herpesvirus-1 in place of pseudorabies virus.

Through all four phases of this current project, a total of 10 different viruses are being put through the simulated oceanic voyage. Phase 2 was set to start Oct. 24.

Dee went into this research with the hypothesis that survival will depend on the correct combination of pathogen and ingredient. Having the knowledge that the previous PEDV research presented, Dee says Phase 1 of this latest research has shown some consistency, but also some variability across the different viruses being tested. “I thought that strengthens the validity of the model, when you start to see variations across the viruses and the ingredients with some consistencies,” Dee says.

“I was a little surprised by the stability of the Seneca Valley virus. It’s not enveloped, so I knew it was going to be a little bit more resistant, but the fact that we found it in all but a couple samples, that was intriguing.”

An enveloped virus, such as BVDV, showing up negative across the board of all the shipped ingredients was not a surprise to Dee. “That is probably a good indication why we have not had hog cholera come here,” he says. “This suggests that it cannot survive the journey through feedstuffs.”

Researchers test FADV surrogates

This latest research project intends to find if foreign animal disease viruses can be transmitted on a global scale in feed ingredients. Due to biosecurity concerns, researchers choose not to use viral doses of the FADs themselves, but rather a surrogate virus that has properties similar to the actual FAD. The surrogates used for the FAD are in parentheses. Vesicular stomatitis virus and circovirus will be used in their current form.

The test on the first three viruses has already been completed, with the remaining seven to be completed over the next few months.

1. Foot-and-mouth disease virus (Seneca Valley virus)

2. Classical swine fever virus (bovine viral diarrhea virus)

3. Pseudorabies virus (bovine herpesvirus-1)

4. Nipah virus (canine distemper virus)

5. Swine vesicular disease virus (enterovirus)

6. Vesicular exanthema virus (feline calici virus)

7. Vesicular stomatitis virus

8. Circovirus

9. PRRS virus (174)

10. African swine fever virus (vaccinia virus)

In looking at ingredients that FAD viruses may latch on to, Dee looked at ingredients that would typically be on a voyage from Beijing — most common, some unusual. Included in the research were conventional and organic soybean meal, soy oil cake, distillers dried grain with solubles, lysine, choline, vitamin D, moist dog and cat food, dry dog food, pork sausage casings, complete feed (positive control), complete feed (negative control) and a stock virus (positive control).

One result made Dee smile — none of the three stock viruses survived the journey by itself, similar to the previous study that showed PEDV also did not survive the trip. “In the absence of a feed matrix, the virus doesn’t live,” he says. He is curious to see if this trend of stock virus non-survival will hold true for the remaining seven viruses yet to be tested.

Just as in the PEDV study, 5 grams of each ingredient was inoculated with 100 microliters of virus. There were four batches of each ingredient (Day 2 post inoculation, Day 8 PI, Day 25 PI and Day 37 PI), so researchers can test for viral presence at various points in the “journey” or the completion of the journey. Samples were placed in an environmental chamber at the SDSU lab, with historical data of temperature and relative humidity programmed to mimic the variations of an actual oceanic trip.

A few pathogens will undergo the research, without the use of a surrogate: vesicular stomatis virus, circovirus and PRRS virus strain 174.

Phase 2 will put Nipah virus, vesicular exanthema virus, African swine fever and vesicular stomatitis virus to the test, to be followed by Phase 3 with PRRSV, PCV2 and SVDV.

The final phase of this research will seek to provide solutions to handling certain viruses that survive the simulated oceanic journey. Dee says after all 10 viruses have been tested, mitigation strategies will be applied to select high-risk ingredients and surrogates. Such strategies to be applied will be Sal CURB (a Kemin product that is a blend of aqueous formaldehyde and organic acids) and a medium chain fatty acid blend from Kansas State University, among possible other strategies.

Phase 4, and the complete study, is not expected to be done until next spring.

What to do in worse case

Close communication between a hog producer and the herd veterinarian in imperative for the health of the hogs. That communication is even more important when something goes wrong in the herd.

In a serious enough situation, veterinary diagnostic laboratories get involved, and quick diagnosis and exchange of information can prevent the presence of a new disease from becoming an even bigger issue.

Rodger Main, with the VDL at Iowa State University, stresses the need for standardization of data and messaging from VDLs, and that is the goal of the Swine Diagnostic Data Standardization Project, a highly collaborative project that started July 1 and will conclude next fall.

The objective of the $700,000, 15-month project funded by SHIC and USDA is to establish and adopt universally recognized diagnostic data standards and systems of electronic messaging necessary for transcending inter-laboratory connectivity and the next generation of web-based swine health information management tools for both non-program disease and program disease applications.

“Our primary focus is to create a common set of standards so that data looks the same regardless of its source. There is no level of standardization right now,” Main says.

Main says such standardization has been used in human medicine, but not in veterinary medicine. “Once it gets standardized, maintenance is relatively minimal. But we haven’t done the up-front project.”

This project’s primary goal is to enhance utility of information for any of the number of database applications currently being used, and it can be evolved for those in the future. Standardization of the data and analysis will be integral if a new disease, say an FAD, surfaces within a swine herd, when immediate response is critical.

“Fruits of this will be harvested for years to come,” Main says. “Going forward in the information age, it’s really going to be imperative that we can move and organize the data seamlessly and do it electronically. One of the challenges of diagnostics labs in particular is that the only way to get data from multiple sources into a common location is you have to map through a web service, and by lab, by test, and then any time that lab may change something, you may not know it. So you have to go back and remap it. So that’s a big reason to standardize data for continuity.”

Sundberg, Dee and Main offered presentations on these topics at the Allen D. Leman Swine Conference in St. Paul, Minn., in September.

Coulson joins Merck Animal Health’s Food Animal Marketing team

Merck Animal Health is pleased to announce that Kelly Coulson has joined the company as swine marketing manager in U.S. Food Animal Marketing. With nearly two decades of sales and retail experience and 15 years of diverse livestock production knowledge, Coulson brings an extensive background in solution selling, husbandry training and customer service.

“Given his industry knowledge and strong ability to build and sustain relationships, we are confident Kelly will be a strong asset to our team and be able to make immediate contributions to our business,” says Todd Firkins, executive director, U.S. Food Animal Marketing, Merck Animal Health. “In this role, Kelly will help us shape and drive our swine marketing strategies, as well as help lead our efforts to make Merck Animal Health our customers’ first call for business solutions – creating value for them well beyond our science and products.”

Coulson, who joins Merck from Zoetis, most recently served as a territory business manager for the company’s pork business. He also has considerable experience educating and training producers and caregivers about early disease recognition and intervention, treatment protocols and responsible use of antibiotics.

“I am truly excited to be joining Merck Animal Health,” Coulson says. “There are many changes occurring in the swine industry – and with change comes opportunities. I am looking forward to working with a great team of professionals as we navigate these changes and find ways to differentiate Merck Animal Health, our people and our products.”

A graduate of Kansas State University, Coulson holds numerous industry certifications.

Lean hog futures: Searching for something positive

NHF_Thomas_finishers

These days it’s real easy to list and identify bearish factors facing the hog market. Record large production this year and next, record large poultry production this year and next year, rising beef production, slaughter capacity challenges in the weeks ahead, the fact that producers are still expanding their productive capacity, the recent upside break out in the U.S. dollar … so on and so on.

If you focus hard enough on these factors you begin to wonder why hog prices aren’t even lower than they are. During times like these, while not willing to abandon positions established with the trend, especially hedge positions that are protecting hogs, I like to open my mind to the positive fundamentals facing the market.

The first and most obvious long-term bullish fundamental facing the hog market is the planned expansion of slaughter capacity slated for next year. Did you ever ask yourself; why the expansion? First and foremost is the theory of expected profit. Second, the packers and producers engineering this expansion must have firsthand knowledge of powerfully strong pork demand coming down the pipe.

The last sentence leads to the second long-term bullish fundamental — the expectation among the packers that they will be facing record large demand for U.S. pork. We are talking world pork demand more so than domestic demand. Millions of dollars being spent on expanding slaughter capacity would not be in the works if such demand was not already being felt by the packer. Narrowing the scope of this last statement, in consideration of current cash hog prices, one must be wondering why cash bids have not cratered, why the pork cutout value has not dropped like a stone in the face of record weekly slaughter totals? In the short term, meaning in the next few weeks, a crash in both could occur if butcher hogs have to be slotted. Beyond that, it appears that demand for high-quality and dependable U.S. pork will rise to the occasion.

From a world demand standpoint, the United States has been beaten by the European Union for the lion’s share of Chinese pork demand. Recent data shows the EU has captured nearly 70% of the Chinese pork trade. This leaves 30% of the pie to divide between the United States, Canada and Brazil. The job of U.S. producers, pork associations and politicians is to expand the percentage of U.S. pork going to China.

I’m not an expert on these trade issues, but this is the crux of the demand situation that will make the difference between profits and losses for producers over the next several years. I’m attempting to highlight this in an effort to stimulate discussion, conversation and leadership in these critical trade issues.

Taking this a step further, given that producers are the likely audience here, I urge you to contact your National Pork Producers Council representative and demand answers to these types of questions. We need leadership in the export arena. U.S. producers can’t allow the EU to be the dominate provider of pork to China.

Domestically, pork is in a good position to compete with both beef and poultry. Beef is at a clear disadvantage due to the very slow process of lowering retail meat prices in the U.S. market. The strength and/or weakness of the U.S. economy is important in clearing premium meats at the restaurant level. Again, sluggishness here likely hurts the beef boys more so than the pork producers. Beef, frankly, has way more problems in the domestic market than does pork.

In conclusion, if the United States can edge the percentage of total pork production exported from the current 23% to 24% toward 28% to 30%, it will mean the difference between handsome profits for the industry or widespread losses at the end of the current expansion.

I present this column to stimulate conversation and focus on the positive fundamentals facing the U.S. hog market and away from the negatives. 

Where is the swine industry headed in 2017?

Enterprise Farm

Looking at the hog industry and the level of growth we have experienced in 2016, we’re pushing packing capacity this fall. Unfortunately, for hog producers, getting cash bids has been difficult.

Two weeks ago we exceeded 2.4 million hogs processed. This number has dropped to just over 2.3 million hogs last week due to Hurricane Matthew, and the subsequent closing of Smithfield’s Tar Heel, Clinton and Virginia plants. It is estimated that 150,000 hogs did not get processed last week due to the plant closures.

This would have put production at 2.45 million hogs. As an industry, we can continue to process these large numbers over a short period of time, but it will put extreme pressure on the packers to maintain the pace necessary to alleviate the capacity issues.

As employees for the packers will be feeling the pressures of working six days a week to keep up this pace, getting to 2.4 million hogs processed this early in the year looks troublesome. I think we can all agree that the timing of increased production is too far in advance of the new plants, and this will keep pressure on cash bids through the fourth quarter this year.

Exports
Exports year-to-date have been 3% higher in pounds but slightly lower in value versus 2015. For 2016 and 2017, we will be looking at a 4.5% increase in production in the United States. This will be a challenge for the United States to increase their market presence abroad and move the additional pork.

Typically all of the recent increases in production have needed to be exported, and this increase will not be any different. For the past year, it seems there has been euphoria around the additional packing plants that are under construction. Yes, this industry does need to continue to invest in new infrastructure to remain competitive in the world market. However, U.S. consumption of pork has been stagnate over the past several years and with anticipated growth at 4.5% coming online we will need to continue to develop additional markets.

China imported $4.5 billion of pork in the first half of 2016, and only 7% of that amount was from the United States. The largest beneficiaries of the additional exports were the European Union and Brazil. With the EU being the No. 1 exporter of pork in the world, they are our primary competition. The EU was experiencing losses over an extended period of time, but they have scaled their production back and are marginally profitable again. Under that scenario, typically U.S. pork would become more competitive for export into China. This hasn’t been the case, as U.S. pork is exported based on the cutout value, not cash. Currently the spread from cutout-to-cash is over $50 per head.

This has kept EU pork competitive in China (a market they were able to penetrate when Russia stopped importing pork from the EU). It is good that the cutout remains strong across the United States, but it will take the completion of the new plants for the momentum and margins to shift back in favor for the producers.

Protecting your bottom line
Looking at the forecast for the next 12 months, the only opportunity to lock-in small profits in 2017 is during the summer months. It looks like on average, U.S. producers will lose $20 per head.

As a lender, I would make this recommendation to all producers: prepare a budget for 2017 that takes your operation’s market conditions into consideration. Take into account any of your contractual arrangements with packers and any risk management strategies you have already implemented.

Lastly, prepare a budget that reflects market conditions against the balance of your production. Then, test your loan covenants to your projected balance sheet, and if it appears you might violate a covenant, start having conversations with your lender today. We have been through high and low cycles; it’s the unknown surprises that concern a lender. So, have the conversations with your lender up front.

Malakowsky has more than 19 years of experience with AgStar Financial Services. For more insights from Malakowsky and the AgStar swine team, including their weekly video Hog Blog, visit AgStar.com. If you’d like more information on AgStar’s Margin Manager Tool check it out at AgStar.com/MarginManager.

USDA moves forward on GIPSA rules

Hogs in the barn

USDA is moving forward on the “Farmers Fair Practices Rules” regarding contracting practices for livestock and poultry. The department has sent to the White House Office of Management and Budget an interim final rule on competitive injury. 

This would eliminate the need for producers to provide proof of competitive injury to the entire industry in order to file a complaint. This overturns eight federal court rulings. There are also two proposed rules to address unfair practices and undue preference in violation of the Packers and Stockyards Act and poultry grower ranking systems.

Secretary of Agriculture Tom Vilsack said the USDA is leaving out a number of provisions that were proposed in the Grain Inspection, Packers & Stockyards Administration rule of 2010. These include proposals that would have prevented meatpackers from buying livestock from other packers, banned packers from entering into exclusive agreements with certain livestock dealers, and required packers and live poultry dealers to submit sample contracts to USDA for public review.

The reaction from producers and industry was immediate. The North American Meat Institute says, “It is irresponsible for USDA to advance this stale six-year-old rulemaking. The interim final rule as described will open a floodgate of litigation, up-end the established system for marketing cattle, pork, and poultry in the United States, and add costs at every step along the process from producers to consumers.”

Sen. Pat Roberts (R-KS), chairman of the Senate Agriculture Committee, says, “While the impact of these rules is not fully known, if they are in any way similar to the 2010 GIPSA proposal, I have serious concerns that the U.S. livestock, poultry and meat sectors will be tremendously burdened and experience irreparable harm during already difficult economic times.” However, the National Farmers Union, a strong proponent of the rules, says, “Livestock producers and poultry growers have been waiting too long for much-needed protections against the fraudulent, anti-competitive practices they fall victim to in the marketplace.”

In 2010 when the first GIPSA rules were proposed, they met strong opposition from producers, industry and Congress because of the lack of significant economic analysis and they went beyond the intent of Congress as authorized in the 2008 farm bill. An Informa Economics study found that the 2010 proposed rules would have cost the pork industry $330 million annually.

Administration eases Cuba trading
As Congress refuses to consider lifting the Cuba embargo, President Obama continues his efforts to open relations between the two countries.

The administration announced a number of new rules regarding trade. Americans traveling to Cuba may return with cigars and rum for their personal use under new regulations put forward by the Obama administration. The new rules will also make it easier to export farm equipment to Cuba.

Also, the U.S. poultry industry should benefit from the lifting transportation restriction on ships delivering products to Cuba. Currently ships that deliver products to Cuba cannot return to the United States for 180 days. The new rules eliminate this 180-day restriction.

USDA makes grants to relieve veterinary shortages
USDA is making $2.3 million available in 10 states to help relieve shortages of veterinary services through education, extension, training and support for new and existing veterinary practices in designated rural shortage areas.

USDA says, “The new Veterinary Services Grant Program will enable training and retention initiatives to support veterinarians and veterinary technicians so they can continue to provide quality services in rural areas. It also supports the expansion of existing veterinary educational programs and facilities, including mobile services.”

According to USDA’s National Institute of Food and Agriculture, “VSGP grants fund work by universities, veterinary associations, and state, local or tribal agencies to help relieve veterinary workforce shortages in the U.S. food and agriculture sector. Funds may also be used to support the establishment or expansion of veterinary services in eligible rural areas.” Fiscal year 2016 grants include:
♦ American Association of Bovine Practitioners, Opelika, Ala., $224,136
♦ Colorado State University, Fort Collins, Colo., $238,251
♦ University of Georgia, Athens, Ga., $236,243
♦ Kansas State University, Manhattan, Kan., $239,656
♦ University of Minnesota, St. Paul, Minn., $238,346
♦ Betsy the Vet Inc., Hardin, Mont., $124,462
♦ Lewistown Veterinary Service, Lewistown, Mont., $116,036
♦ Town and Country Veterinary Clinic, Auburn, Neb., $124,760
♦ Utah State University, Logan, Utah, $236,619
♦ University of Wisconsin, Madison, Wis., $237,32
♦ Wisconsin Veterinary Medical Association, Madison, Wis., $238,429
♦ Squared Circle Veterinary, Evanston, Wyo., $104,000

USDA’s 2016 competitive grants are made available through the new VSGP that was authorized in the 2014 farm bill. 

This Week in Agribusiness - October 22, 2016


FFA Chapter Tribute - October 22, 2016: Seneca FFA, Seneca, Ill


Samuelson Sez - October 22, 2016: Let's Get Back to Science