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Articles from 2009 In November


Hard Lessons for Hog Industry Economists

Why are we analysts more mushy-mouthed than usual about the hog price and profit forecast? Well, maybe the old adage about laying all of the economists in the world end to end and never reaching a conclusion contains a great deal of truth. Actually, there are several reasons – none of which are probably good enough for those of you seeking our hopefully wise council – but consider:

• The world has changed. Sure, sure – blame the world around you when you can’t get it right! Yes, it is somewhat flimsy, but it’s nonetheless true. When new policies regarding biofuels and gasoline oxygenate took effect in 2005, everything changed in the U.S. corn market. A quantum increase in corn demand could not be matched by a quantum increase in corn supply year after year. In fact, corn supply has yet to catch up with corn demand at prices anywhere near the pre-ethanol levels. And when corn prices changed, so did the cost structures of every livestock species, setting off the adjustments that are still underway. Economists and analysts had not dealt with a permanent change in costs since the early 1970s. There were a few of us in the business at that time, but I was in high school and my interests were far more focused on FFA and girls, not necessarily in that order. I did not learn much about either markets or girls in those days, it seems.

•The world has changed again. Just when we were getting a bit of a handle on the dramatic production cost increases and, thus, long run supply decreases, along comes the economic crisis and the novel H1N1influenza virus to screw things up on the demand side. It is true that neither factor has damaged domestic pork demand badly, but the soft economy has reduced demand for both chicken and beef and various export difficulties have contributed to pork demand that is nearly 5% lower than one year ago through October. The export situation is complicated by last year’s pork exports being off the charts through July – masking a supply-demand situation that would (or should) have resulted in lower prices and much larger losses had it not been for extraordinary trade impacts.

•And, pork producers are just not behaving according to our models and assumptions. Now I realize that this factor is much more our fault than it is yours. Besides, you are the economic agents and we are the observers. It is our responsibility to use our observations to model you. It is not your job to conform to our prior notions, but cumulative losses of the magnitude we are now seeing should have caused a greater response – right? Apparently not. Again, this is a different world – in terms of industry structure, production facilities, financial expertise and management, and a host of other factors. Add them all up and the old response hypotheses are out the window as well.

•The futures market continues to hold a profit carrot in front of what would otherwise be a very reluctant industry. That profit carrot has been more than just an enticement over the past few years as many producers have actually caught the carrot by using packer contracts and hedges. Some are no doubt doing the same today and the carrot got sweeter last week as summer futures reached the mid- to upper-$70s. It appears that commodities in general and agricultural commodities in particular are again attracting investment money looking for a hedge against inflation. Outside money taking long positions provides great opportunities for sellers – and further deteriorates the incentive for the output reductions that I still think are necessary to return cash markets to profitable levels. The obvious response to that situation is: “And the problem is????” My answer would be: “Nothing, as long as you actually catch the carrot!” Merely following the carrot as it dangles in your path will not pay bills.

So, as usual, we economists and analysts are begging for you patience while we try to match the real world to theory. When the relationships that have underlain your models and decisions for years change, it takes a while to figure out the new relationships and develop new models that mimic a new world. There is a lot of “news” in that sentence. We’re trying to catch up to them and become better help as soon as we can.

In the meantime, you will have to put up with something even worse than the two-armed economists once detested by President Harry S. Truman who famously asked for a “one-armed economist” because he was tired of hearing “on the other hand”. I fear we may more closely resemble the many-armed Hindu goddess Kali or Kalika who is called in Wikipedia the “goddess of time and change.” Isn’t that a coincidence?

Sorry, No Tables this Week
The data for our weekly Price and Production Summaries were not available this week due to the U.S. Thanksgiving holiday. The summaries will return next week.

Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com

Liquidation is a Slow Process

At the risk of sounding like a broken record – the U.S. pork industry has sustained two years of losses totaling over $5 billion. Current economics show costs very close to $130 to $135/market hog, with revenue lingering around $100-$105/head. It seems that we have been averaging over $25/head losses forever. The industry continues to downsize, but we still have plenty of supply in the pork chain that we need to work through to get to a level of profitability. Most producers do not have a lot of liquidity left to help manage through sustained losses. The industry must get to a profitable level soon.

Who is liquidating and why aren’t sow slaughter numbers higher? I get this question everyday from producers and others who are watching our industry. Liquidation is occurring. Producers are downsizing or getting out of the business, but as I’ve said many times, this will be a slow process. We will need to average 60,000 to 70,000 sows per week for an extended period of time – probably through March of 2010 – to get sow numbers down to a level where pork supply is in line with demand. The issue for many producers is to maximize value for their business even if they are liquidating. Producers will not sell all of their sows in a short period of time. If sows are confirmed pregnant or close to farrowing, they will want to capture the value of the weaned pigs. The decision to liquidate, whether by the producer or the lender, is never quick or easy.

Parity in the sow herd and gilt retention – This is something that the industry does not have a good handle on. Genetic companies report that gilt sales are very slow. Other reports indicate that sow parity averages are increasing. Instead of taking the time to isolate and acclimate gilts for the breeding herd, they are selling gilts as market animals, then breeding aging sows one more time. This will eventually show up in the marketplace. We have seen sow productivity continue to improve, but if we are increasing the average age of the sow herd, productivity will eventually decrease. This is something to watch as we go into 2010. Maybe the mold/mycotoxin issues in the corn crop and an aging sow herd will reduce supply further.

What level of supply will return the industry to profitability? It my best guess that we will see market hog slaughter numbers get down to 109-110 million head in 2010, which is a reduction of at least 3%. The pork industry needs to average over $70/cwt., carcass, to be profitable, with current breakevens at $66-68/cwt., carcass. Will this reduction in supply get us to that level? We don’t know, but we certainly hope so. Demand overall has been good and exports have actually been better than anticipated. We have summer 2010 hog prices pegged at a level where most producers can make over $10/head. The question is what could happen between now and then? There are many factors that can affect prices, of course. We saw what the novel H1N1 influenza virus did to the market earlier this year. As I noted earlier, many producers do not have the liquidity to do a significant amount of risk management and they are hoping that the cash market will be better next year.

Thanks – I have had many people ask me how I am doing during these difficult times and I wish to thank them for their concern. This is great industry with a lot of good people, so it is especially hard to see so many good people struggling. We are at a time of year when many of us reflect and give thanks. It is my privilege to work with many good people, including an office staff that has worked countless hours on trying to help people during these difficult times. All of us hope that 2010 is a much better year – and the sooner the better. I’ll close, then, wishing you all a belated Happy Thanksgiving.

Mark Greenwood
Swine Industry Consultant
Contact Greenwood at mgreenw@agstar.com

Ag Trade and Cuba

The issue of the Cuban embargo and agricultural trade to Cuba is beginning to gain congressional attention. Indications are that Congressmen Jerry Moran (R-KS), Collin Peterson (D-MN), chairman of the House Agriculture Committee, Rosa DeLauro (D-CT), chairwoman of the House Agriculture Appropriations subcommittee, and Jo Ann Emerson (R-MO) will be advocating for legislation to expand agricultural trade to Cuba. According to reports, the bill would: 1) eliminate the need to go through banks in other countries to conduct agricultural trades; 2) require agricultural exports to Cuba to meet the same payment requirements as exports to other countries by requiring payment when the title of the shipment changes hands; and 3) allow U.S. citizens to travel to Cuba, reducing the bureaucratic red tape required for agricultural association, agribusinesses, and others to make agricultural sales. Former President Bill Clinton signed legislation in 2000 to allow some agricultural and medical shipments to Cuba. Total exports have grown from $7 million in 2000 to $711.5 million in 2008. Agricultural exports to Cuba in 2008 were: corn, 27%; meat, poultry and fish, 21.5%; wheat, 19%; soybeans, 9.4%; animal feed, 8.4%; and other agricultural goods, 11.2%. Agriculture has been one of the strongest proponents to end the Cuban embargo.

Food Insecurity Highest Since 1995 — According to the USDA’s Economic Research Service (ERS) latest report on Household Food Security, 14.6% of the American public (17 million households) in 2008 were food insecure and families had difficulty putting enough food on the table at times during the year. This represents an 11.1% increase compared to 2007. The 2008 results represent the highest level of food insecurity since the surveys were established in 1995.

Emergency Influenza Containment Act — Congressman George Miller (D-CA), chairman of the House Education and Labor Committee, has introduced H.R. 3991, the “Emergency Influenza Containment Act.” The legislation would guarantee up to five paid sick days for workers sent home or directed to stay home by an employer for a contagious illness. The bill sponsors focus on the novel H1N1 influenza virus as the reason for the bill, although this legislation would cover all contagious illnesses.

December – a Busy Month for Congress — Health care will be the focus of the Senate for the remainder of the year. The Senate bill under consideration would expand Medicaid coverage, create state-run insurance exchanges, establish a public health care option to compete with private insurers, and cost an estimated $848 billion over 10 years. Health care is the priority for the White House and Senate Majority Leader Harry Reid (D-NV) for the rest of year. Congress will be working on appropriation bills that have not been completed. And, there are a number of tax provisions, including the biodiesel tax credit, that expire at the end of the year that Congress plans to consider.

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.

Consider Locking in Futures Prices to Survive in 2010

Pork producers facing the prospects of a third year in a row of losses might want to consider locking in prices for 2010 given current hog futures prices, according to Purdue University Extension Economist Chris Hurt.

Hurt predicts hog prices will average about $46 to $47 per hundredweight next year, starting at $44 in the first quarter, moving to near $50 in the second and third quarters and back to the mid-$40s in the final quarter.

“Given the assumption of $50 costs, this would still leave $10 of loss per head, the third year in a row of losses,” Hurt says. However, the current financial realities could mean the herd will decline, demand will improve and hog prices will track higher than the current forecast.

Futures traders believe hog prices will be higher, the economist says. Based on lean hog futures at the close on Nov. 20 and the average eastern Corn Belt basis level over the last five years, the futures market is predicting $50.50 for a farm level price next year, meaning 2010 would average out to be a breakeven price for producers.

“If there is an unfortunate side to these higher prices, it is that it may increase producer/lender optimism,” Hurt warns, “resulting in a smaller than needed reduction of the breeding herd.

“If so, selling lean futures now will be positive. As bleak as the outlook seems, it is ironic that the futures market provides a way to at least get through 2010.”

National Hog Farmer

Novus International Receives 2009 Top 50 Award

St. Louis, Missouri, November 20, 2009 — Novus International has been recognized by the St. Louis Regional Chamber and Growth Association (RCGA) and RubinBrown LLP as a recipient of the 2009 Top 50 Award. The award, presented annually since 1996, recognizes businesses, entrepreneurs and organizations in all industry sectors throughout the St. Louis region.

“Novus is honored to be given this distinction from among the many firms making up the region’s thriving business community,” says Thad Simons, President and CEO, Novus International. “We are proud to call the St. Louis area our corporate home.”

Founded in 1991, Novus International, Inc. is a leader in animal health and nutrition, providing services to more than 2,000 nutritionists, producers, veterinarians and feed manufacturers in more than 90 countries. Novus is a leading developer of products and programs for the poultry, pork, beef, dairy, aquaculture and companion animal industries. Earlier this month, Novus announced the launch of its new human nutrition division, Stratum Nutrition.

In the last year, Novus International completed the construction of a $20 million global headquarters at Missouri Research Park in St. Charles County which earned LEED Platinum certification, the highest energy and environmental designation available and only one of four in the State of Missouri and of about 100 in the US. The company’s commitment to providing a sustainable work environment recently earned it the prestigious 2009 St. Louis Business Journal “Heroes of the Planet Award,” recognizing area companies with exceptional sustainability practices benefiting employees.

Novus has an extensive program of bringing industry leaders in the livestock industry to St Louis. As an example, Novus supported the organization of the 2009 World Agricultural Forum Congress. Novus is also committed to supporting the development of the next generation of agriculture leaders through internships and scholarship programs. Novus contributes to the Missouri College Funds and has extensive research collaborations with research institutions around the world and locally in particular with the Universities of Missouri at Columbia, Rolla and St. Louis. Novus is a generous contributor to the St. Louis United Way, the St. Louis Arts and Education Council, the Japan America Society, the St. Louis Zoo, the Missouri Botanical Gardens, the World Affairs Council and various other organizations and charities throughout the world, including contributions made through the Novus Employee Matching Gift Fund.

“At Novus, we have strived to reflect our commitment to sustainable practices in both our product offerings as well as our business operations,” says Simons. “We appreciate the recognition and, like our commitment to global responsibility, consider it to be one shared by all our employees, customers and stakeholders.”

The award was presented at a gala awards program and dinner on Wednesday, Nov. 18, at the Marriott St. Louis Union Station.

RCGA President and Chief Executive Officer Richard C.D. Fleming describes this year’s Top 50 as “a rich cross section of entrepreneurs, mid-cap companies, long-established headquarter companies and civic institutions that provide the backbone to St. Louis’ economy and enhance the region’s quality of life.”

“We are delighted to serve as title sponsor of the 2009 Greater St. Louis Top 50 Awards,” adds RubinBrown LLP Chairman James Castellano. “This year’s Top 50 winners were selected based on a variety of common denominators of high achievement. In addition to their overall civic commitment, many have demonstrated growth in the number of employees. Many boast strong revenue growth, while others have become stronger with noteworthy acquisitions or expansion and development of facilities.”

Castellano says that while a widely diverse group of businesses and organizations were honored at the Top 50 Awards Gala on Nov. 18, all of the companies share a focused commitment to the region’s quality of life and economic development.

###

About Novus International, Inc.

Novus International, Inc. is headquartered in metro St. Louis, Missouri, U.S.A. and serves customers in more than 90 countries around the world. An industry leader in animal nutrition and health, Novus’s products include ALIMET® and MHA® feed supplements, ACTIVATE® nutritional feed acid, ACIDOMIX® preservative premixture, ADVENT® coccidiosis control, MINTREX® organic trace minerals, SANTOQUIN® feed preservative, MERA™MET aquaculture feed additive, AGRADO® feed ingredient and many other specialty ingredients. Arenus (www.arenus.com) is a division of Novus Nutrition Brands, LLC (a subsidiary of Novus International, Inc.), that focuses on developing health and dietary supplements for the equine and companion animal markets.

Novus is privately owned by Mitsui & Co. (U.S.A.), Inc. and Nippon Soda Co., Ltd. For more information visit www.novusint.com.

® ALIMET is a trademark of Novus International, Inc., and is registered in the United States and other countries.

® MHA is a trademark of Novus International, Inc., and is registered in the United States and other countries.

® ACTIVATE is a trademark of Novus International, Inc., and is registered in the United States and other countries.

® ACIDOMIX is a trademark of Novus Deutschland GmbH and is registered in Germany and other countries.

® ADVENT is a trademark of Viridus Animal Health, LLC, and is registered in the United States and other countries.

® MINTREX is a trademark of Novus International, Inc., and is registered in the United States and other countries.

® SANTOQUIN is a trademark of Novus International, Inc., and is registered in the United States and other countries

™MERA is a trademark of Novus International, Inc.

® AGRADO is a trademark if Novus International, Inc., and is registered in the United States and other countries.

®ARENUS is a trademark of Novus Nutrition Brands, LLC.

Jeremy Lutgen

Public Relations

Novus International, Inc.

20 Research Park Drive

St. Charles, MO. 63304

O: 314.453.7705

C: 314-541-9792

F: 314-576-2148

www.novusint.com

jeremy.lutgen@novusint.com

Iowa State Researcher Releases Novel H1N1 Vaccine

The only swine vaccine available to treat the H1N1 Flu Outbreak Virus has been sent to vaccinate a swine herd infected with the novel virus. It marks the first time vaccine has been sent to a swine herd diagnosed with the pandemic flu.

Iowa State University’s D.L. “Hank” Harris, DVM, professor of animal science, developed the vaccine this summer and has been shipping preventive doses to swine producers in Iowa, Kansas and Illinois for several weeks.

The latest vaccines were shipped to a swine producer in Indiana who had the novel H1N1 virus diagnosed in his herd.

“This is the first time we’ve had a confirmed diagnosis and the farmer wanted to vaccinate,” Harris says. “We shipped about 20,000 with about another 11,000 doses to go out to them later.”

Harris says vaccinating a herd that has already been infected should have some effect on the spread of the virus, but he isn’t sure how much.

“It isn’t uncommon for vaccinations to be used in what we call ‘the face of an outbreak,’ he says. “They (producers) may think the virus is spreading slowly in the herd, and they want to vaccinate the entire herd.”

Harris thinks the request for vaccine may indicate that hog farmers around the country are eager to vaccinate.

“Since these pigs got sick and had a confirmed diagnosis, I think more farmers are going to want to vaccinate,” he says.

The vaccine is being manufactured through Iowa State University and Harris’ startup company Harrisvaccines, Inc., d/b/a/ SirrahBios, Inc.

Harris speculates that the novel H1N1 virus may have gotten into the Indiana swine herd from humans who had flu-like symptoms while working with the pigs.

“It’s one of those things we’ll probably never know for sure,” he says.

Harris stresses that there is no threat of humans getting the H1N1 virus from eating pork from pigs that had the virus.

Pork Exports on the Rebound

Last week brought two more pieces of positive news for the U.S. pork industry: September exports exceeded year-earlier levels, and Oct. 31- frozen pork stocks were smaller than both year-earlier and month-earlier levels.

The September export data marked the first month since March that U.S. pork exports have exceeded year-earlier levels. September exports of 352.5 million pounds, carcass weight equivalent, were 3.8% larger than one year earlier but 46% larger than in September 2007 (Figure 1). The September total puts monthly exports above the 2004-2007 trends for the sixth time this year, again making my point that 2009 exports have been remarkably good when compared to anything but 2008 exports.

Year-to-date exports are still 17% lower than last year, but they are 4.7% higher than the 2004-2007 trend.

When we look at individual export markets, Mexico is the shining star in spite of all the H1N1-related difficulties that have been encountered there (Figure 2). September shipments to Mexico were 60% larger than last year and bring the year-to-date (YTD) total back to +38% for 2009. Exports to Mexico remained just over 12 million pounds smaller than Japan in September. That marks the second straight month that Mexico has been that close to becoming our largest export customer in terms of tonnage. Japan remains the clear leader in terms of value, however.

Shipments to Canada increased 9%, year-on-year, in September primarily due to Canada’s stronger dollar.

Exports to China-Hong Kong were 13% larger than last year, but remember that exports to China-Hong Kong had returned to earth by August and September 2008. Shipments to Taiwan were nearly 200% larger this year as well.

China’s recent announcement that they would resume imports of U.S. pork is a curious one since the data from USDA’s Foreign Agricultural Service indicate that China actually never stopped importing U.S. pork. Shipments dropped below 2 million pounds, carcass weight, in June and July, but had grown to 4.3 million and 6.6 million pounds in August and September, respectively. And these shipments are for China only. They do not include Hong Kong. We aren’t sure why the trade suspension was really not a trade suspension.

Anecdotal evidence from packers points to good export trade in October, but readers should be aware that the October data will likely show 2009 exports lower than those of October 2008. The reason: A huge spike back to over 392 million pounds last year. Whatever October exports were, they have already played a role in our market – and may well have been one of the drivers of the cutout value rally that I wrote about two weeks ago. Just don’t be surprised if the number comes in lower than last year’s total.

Cold Storage Recap
Friday’s Cold Storage report says Oct. 31 total frozen meat and poultry inventories were 11.5% lower than one year ago and 5.3% lower than on Sept. 30. The biggest contributor to the year-on-year decline was chicken, whose stocks were almost 20% smaller than last year.

Frozen pork stocks were down 1.5% from last October and 1.6% from Sept. 30. The biggest contributor to these reductions was ham inventories, which were 16% lower than last year and 13% lower than in September. Frozen pork belly stocks were sharply higher (+70.6%) than last year, but down slightly from last month, while ribs in freezers jumped 20.7% from last year and 26.1% from last month. The bellies and ribs increases are, I believe, symptoms of continued sluggishness in the U.S. foodservice sector.

While the amount of pork in cold storage is high relative to historical freezer inventory levels, it is about normal relative to production (Figure 3). Oct. 31 stocks totaled 520 million pounds or 24.9% of October U.S. pork production. That figure compares to 24.9% last year, 23.1% in 2007 and 25.2% in 2006. October usually marks the seasonal low for the stocks:production ratio, primarily because October almost always marks the year’s high for monthly pork production. The reasons is simple – lots of hogs, no holidays.

Count Your Blessings
Though the year has been difficult (there’s an understatement), there are many things for which to be thankful. Take a few minutes to “count your blessings, name them one by one.” You’ll be surprised at how long the list will be. I know I always am. Best wishes for a Happy Thanksgiving!



Click to view graphs.


Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com

Key Steps to Improve Piglet Survival

We recently spent a couple of days with a group of producers. During the discussion, this question was raised: “What are three things we can do to improve piglet survival?”

Logically, piglet survival is total pigs born/litter minus stillborns and pre-weaning mortality. In the Swine Management Services’ database, average piglet survival (%) is 79.9%. In that mix, one farm has achieved over 95% survival rate, but several farms are below 66% (see Chart 1).

To save more pigs, the first priority is to reduce stillborns. These four steps could help achieve that goal:

Step #1: Make sure the farrowing crew is identifying stillborns accurately. The easiest and most accurate way to identify stillborns is to post some of the stillborn pigs, remove a piece of the lungs and drop in a glass of water. If it sinks to the bottom of the glass, the pig has not taken a full breath, so it is classified as a stillborn. If the lung sample floats, the baby pig took a breath and then died and, therefore, should not be classified as a stillborn.
Step #2: Reduce induced farrowings. A normal gestation length for sows is between 110 to 122 days. If you induce the sow on Day 114 and her normal gestation length is longer than that, you could be effectively aborting the litter.
Step #3: Identify the sows that have a history of stillborns and flag them for extra care during farrowing. Stillborns are highly repeatable; 80% of the stillborns come from 20% of the sows. Early in the farrowing process, a sow should have a pig about every 30 minutes; later in the farrowing process she should have a pig about every 20 minutes.
Step #4: Extend farrowing room attendant hours to assist sows that are finishing the farrowing process early in the morning and late in the afternoon/early evening. With attendants present for 12-15 hour periods, you should be able to attend 80+% of the farrrowings. It is important to identify when the sows are having the stillborns. Is it during the day when you are there or are there more stillborns when no one is attending farrowings? Scheduling attendants from 3:00 p.m. until 11:00 p.m., with a very simple job description of getting the pigs out of the sow, drying them off and making sure all pigs get colostrum will help save more pigs. The next priority is to reduce Day 0-2 death loss. These steps will help:

Step #1: Identify the real reason pigs are dying. Many of these losses are attributed to being “laid on,” when in reality there are underlying reasons that need to be identified. Again, post some pigs. Check their stomachs to see if they have nursed. Pigs with nothing or very little in their stomachs have no energy and are unable to get out of the way of the sow, so they get laid on. These pigs should be marked as “starve-outs.”
Step #2: Dry off pigs as soon as they are born. A wet pig can get chilled very quickly. This is especially true for the smaller pigs. Consider using a drying agent. Place it on the mats, in a pan, or make up some sprinkler cans that can be used to shake the drying agent on the pigs. The drying agent can be placed behind the sows during farrowing. When a wet pig is found, apply a generous amount of drying agent.
Step #3: Place pigs in a hot box and split suckle them in small shifts. This will help ensure that all piglets get colostrum and have the energy to compete for milk. This can be accomplished by simply placing a divider panel in the back corner of the farrowing crate, restraining 6-7 of the most robust pigs, then coming back 3-4 hours later and pulling the divider so the entire litter can nurse. Foster pigs using nurse sows and nurse decks: •Fostering is more of an art than a science, and some people have a knack for doing it well. All cross-fostering should be completed within 24-48 hours after farrowing. It is best to move only a few pigs. Move either the small pigs or the large pigs, leaving most of the pigs with their birth mom.
• Identify pigs that could be fall-back pigs. Place these disadvantaged pigs on a nurse sow or in a nurse decks with milk replacer. To help identify these pigs earlier, starting at Days 2-5, spend a few minutes each day looking for pigs that are still under the heat lamp or on the heat mat, while the rest of the litter is nursing or watch for the pigs that continue to suckle after the rest of the litter has stopped. These pigs are getting no milk. Find these pigs before their hair coat gets rough and their backbones begin to show.
Some extra attention devoted to these three primary farrowing room operating procedures can help improve piglet survival.

Key Performance Indicators
Tables 1 and 2 (below) provide 52-week and 13-week rolling averages for key performance indicators (KPI) of breeding herd performance. These tables reflect the most current quarterly data available and are presented with each column. The KPI’s can be used as general guidelines to measure the productivity of your herd compared to the top 10% and top 25% of farms, the average performance for all farms, and the bottom 25% of farms in the SMS database.

If you have questions or comments about these columns, or if you have a specific performance measurement that you would like to see benchmarked in our database, please address them to: mark.rix@swinems.com or
ron.ketchem@swinems.com.



Click to view graphs.


Mark Rix and Ron Ketchem
Swine Management Services, LLC

FDA Food Safety Reform Passes Senate Committee

The Senate Health, Education, Labor and Pensions Committee (HELP) passed unanimously S. 510, “The FDA Food Safety Modernization Act,” introduced by Senators Dick Durbin (D-IL) and Judd Gregg (R-NH). This legislation places more emphasis on prevention of food-borne illness and gives the Food and Drug Administration (FDA) new and modern authorities to address food safety issues. The bill includes:
 

• Hazard analyses and preventive controls: Requires all facilities that manufacture, process, pack or hold food to have a risk-based preventive control plan to address identified hazards and prevent adulteration; gives FDA access to these plans and relevant documentation.

• Imports: Requires importers to verify the safety of foreign suppliers and imported food.

• Inspection: Requires FDA to inspect all food facilities more frequently, including inspections of high-risk facilities at least once a year and inspections of other facilities at least once every four years.

• Mandatory recall: Gives FDA the authority to order a mandatory recall of a food product if the food will cause serious adverse health consequences or death and a company had failed to voluntarily recall the product upon FDA’s request.

• Administrative detention: Gives FDA the authority to administratively detain any food that is misbranded or adulterated under the Food, Drug and Cosmetic Act.

• Increases FDA resources: Increases funding for FDA’s food safety activities through increased appropriations and targeted fees. During consideration of the bill, Sen. Jack Reed (D-RI) offered an amendment that would ban the use of antibiotics for various uses for livestock. Senator Reed withdrew the amendment and said he plans to address this issue at another time.

Justice Department-USDA Announce Competition Workshops — The Department of Justice and USDA announced the dates and locations of a series of joint public workshops that will explore competition and regulatory issues in the agriculture industry. The goals of the workshops are to “promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector.” The current schedule is:

• March 12 – Ankeny, IA: An introduction to the workshop series, but will also focus on issues facing crop producers, including seed technology, vertical integration, market transparency and buyer power.

• March 21 – Normal, AL: This workshop will focus on the poultry industry, considering production contracts, concentration and buyer power.

• June 7 – Madison, WI: The dairy industry, including concentration, marketplace transparency, and vertical integration, will be the focus of this workshop.

• Aug. 26 – Fort Collins, CO: Focus on the livestock industry and will address beef, hog and other animal sectors and enforcement of the Packers and Stockyards Act and concentration.

• Dec. 8 – Washington, DC: This workshop will look at the discrepancies between the prices received by producers and the prices paid by consumers. Discussions from previous workshops will be incorporated into the analysis of agriculture markets nationally. Each workshop is expected to feature keynote speakers, general expert panels, and break-out panels that will address more narrowly-focused issues. The public will have an opportunity to participate in each of the workshops.

USDA Announces Pork Purchases — USDA announced it intends to purchase $50 million of pork products for federal food nutrition assistance programs. According to USDA, “The pork purchase will help farmers greatly reduce their sow herd in a market where production costs continue to exceed market value.” Last September, USDA purchased $30 million in pork products.


P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.

Wet Weather Promotes Growth of Mycotoxins

This year’s cool, wet growing season and rainy fall have delayed grain harvesting and increased the risk for mold development on grain. Mold development can lead to mycotoxins, which can be toxic to humans and animals.

Grain samples submitted to the Iowa State University’s veterinary diagnostic laboratory bear out a higher than normal incidence of affected corn across Iowa and in samples received from Illinois, Kentucky, Michigan, Oklahoma, Texas and Wisconsin. Samples submitted from most regions of Iowa have tested positive for mycotoxins.

“The wet summer and harvest season have caused a greater incidence of fungi in grains typically used in livestock feeding,” reports Steve Ensley, toxicologist with the diagnostic lab. “We are receiving samples from throughout the region with elevated mycotoxin levels, particularly vomitoxin, zearalenone and some fumonsin.

“These levels can be tripled if grain is fermented at an ethanol processing plant, so it pays grain or feed producers to know what may be in the feed they are producing and feeders to know what they are getting so they can adjust rations appropriately.”

Clinical signs in animals as a result of mycotoxin-induced problems vary widely by species. For a breakdown by species, go to the diagnostic lab.

If you suspect mycotoxins are causing problems in your animals, contact your veterinarian.

Using a new rapid screening test, the Iowa State diagnostic lab can analyze feed or grains for mycotoxins and provide the producer with the content of the feed made from the crop.

Four mycotoxins typically can be present in the grain and detected in standard test panels: aflatoxin (more common in hot weather and dry conditions), fumonisins, deoxynivalenol (DON or vomitoxin) and zearalenone.

For more details on sample requirements and costs, go to the Iowa State veterinary diagnostic or contact the laboratory at (515) 294-1950.