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Bush Signs Terrorism Bill

President George Bush has signed the “Animal Enterprise Terrorism Act” into law. The bill expands criminal acts involving the use of force, violence or threats against animal operations and boosts penalties for violations.

The bill covers commercial and academic enterprises that use or sell animals or animal products for profit, food, agriculture, education, research and testing.

Sponsors were Sen. James Inhofe (R-OK) and Sen. Dianne Feinstein (D-CA). The bill amended the Animal Enterprise Act of 1992.

The National Pork Producers Council was part of a broad coalition of animal agriculture groups that supported the legislation. More than 130 animal-rights groups, led by the Humane Society of the United States, opposed the measure.

Iowa Pork Congress Set for Jan. 24-25

The 2007 Iowa Pork Congress is set for the Hy-Vee Hall in the Iowa Events Center in Des Moines Jan. 24-25.

The theme of the 35th annual conference is “It’s All Here!” The nation’s largest winter swine show will feature nearly 300 companies, including several new exhibitors, 20 educational opportunities and a variety of other events and activities.

Close to 500 booths will cover the trade show floor from accounting firms, animal health companies and waste management equipment to feed-related companies and more. The exhibit hall is open 9 a.m. to 5 p.m. on Jan. 24 and 9 a.m. to 4 p.m. on Jan. 25.

Educational sessions will provide new insights into porcine circovirus-associated disease and animal disease, animal well-being, sow culling, regulations, ethanol, dried distiller’s grains with solubles and specialty pork marketing.

Company representatives will discuss new products, systems and practices at Pork University seminars.

Activities start Jan. 22 with the Taste of Elegance at the downtown Des Moines Marriott Hotel.

The IPPA Annual Meeting and the Iowa Pork Congress Kickoff Reception and Auction will be held Jan. 23.

The Winter Pork Picnic to benefit the Food Bank of Iowa and the Iowa Pork Congress Banquet take place Jan. 24.

Preregistration costs $4 and is available at www.iowaporkcongress.org www.iowaporkcongress.org. For more information, call IPPA at (800) 372-7675 or visit www.iowaporkcongress.org

Minnesota Pork Congress Set for Jan. 16-18

The Minnesota Pork Congress at the Minneapolis Convention Center kicks off Jan. 16 with the Taste of Elegance Culinary Judging at 2:30 p.m., followed by the Taste of Elegance Culinary Awards at 6:30 p.m. at the Minneapolis Hilton.

At the show Jan. 17, an all-morning Custom Manure Applicators Workshop covering nitrate testing, manure value, business economics, business insurance and labor issues will be offered.

Morning sessions also include how to become a successful supervisor and a market outlook by John Lawrence of Iowa State University.

Afternoon program features “The Corn Conundrum: A Mini-Conference on the Use of Corn in the Pork Industry.” Topics include:

  • New & Old Ideas for Corn Procurement & Risk Management, Brian Buhr, University of Minnesota;
  • DDGS Use in Sow Diets, Sam Baidoo, University of Minnesota;
  • DDGS in Grow-Finish Systems, Jerry Shurson, University of Minnesota; and
  • Flowability Issues with DDGS, Lee Johnston, University of Minnesota.
  • On Jan. 18, Jay Harmon of Iowa State University addresses improving energy efficiency by cutting back power costs.

    A morning forum on porcine circovirus-associated disease (PCVAD) includes:

  • Background and Disease Transmission, Jerry Torrison, DVM, University of Minnesota Veterinary Diagnostic Laboratory;
  • Diagnosis…Then What? Kurt Rossow, DVM, University of Minnesota Veterinary Diagnostic Laboratory; and
  • Economic Considerations of PCVAD, Tom Gillespie, DVM, Rensselaer Swine Services, Rensselaer, IN.
  • Also that morning is a talk on reducing hog losses in transit by Mike Ellis of the University of Illinois. Scott Dee, DVM, University of Minnesota, provides new information and initiatives on porcine reproductive and respiratory syndrome.

    For more information, contact the Minnesota Pork Producers Council at (507) 345-8814 or [email protected].

Two Iowans Honored In Separate Ceremonies

A college professor and a swine veterinarian were recognized at separate events this fall for their noteworthy achievements.

James Kliebenstein, economics professor in Iowa State University’s College of Agriculture, has been awarded the U.S. Department of Agriculture’s Food and Agricultural Sciences Excellence in Teaching Award.

Kliebenstein was one of six regional winners to receive the award at a ceremony in November in Houston, TX.

“Dr. Kliebenstein is far more than a superb teacher,” says David Acker, associate dean of academic and global programs in the College of Agriculture. “He is also the finest role model I can imagine for our students.”

Kliebenstein works to create a positive learning environment, challenging students while keeping it fun. “Creating an atmosphere where there is the desire and excitement to learn is essential. When done effectively, students will accomplish more than they ever felt possible,” says Kliebenstein.

He has authored or co-authored more than 500 publications and received more than 50 grants. This year he also received the Publication of Enduring Quality Award from the American Agricultural Economics Association.

Roy Schultz, DVM, Avoca, IA, received the Science in Practice Award for exemplary integration of science, and the art of veterinary medicine to benefit swine production and welfare.

The honor was bestowed at the 14th Annual Swine Diseases Conference at Iowa State University (ISU) in Ames, IA, on Nov. 9.

Schultz has been a swine practitioner for more than 40 years, and has provided an outstanding example of someone using science to solve swine health and welfare problems on the farm.

After practicing for over 20 years, Schultz returned to ISU to learn more about Actinobacillus pleuropneumonia (APP), a disease that was affecting clients’ herds. Upon receiving a master’s degree in veterinary microbiology and preventive medicine, he returned to his practice and developed a vaccine for APP that was licensed by the USDA.

During his years in practice, he conducted research on a number of swine health and production problems. He is a well-known lecturer before producer and veterinary audiences nationally and internationally. He has authored over 100 scientific papers.

Schultz was president of the American Association of Swine Veterinarians (AASV) in 1984 and was named Swine Practitioner of the Year in 1986. He is a founding member of the AASV and was given a life membership in 2003.

People Drive Economics

I was asked recently to make a presentation to an industry group on "The Economics of Today's Pork Industry," and it set me to thinking about what I normally do for this column as well as other work. While I do have degrees in agricultural economics, and I do use economic theory and research techniques in my work and my writings, it struck me that the "economics of today's pork industry" is really a very different topic.
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Market and price analysis certainly uses economics. I and other analysts consider demand, supply, price transmission, elasticities, etc. in much of what we do. But in most cases we deal with the "results" end of economics simply because the "results" of economics are what matters to our clients. From time to time it may be profitable, however, to deal with economics in more of an "input" or "motivator" point of view.
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In its most general form, economics is defined as:
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"The social science that deals with the allocation of scarce resources among alternative uses."
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The definition contains three key dimensions.
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<li><b>Economics is a social science.</b> Now I know that the real shock value of that statement for many of you is that economics is a science at all, and we don't have the space for that discussion in full. I mean, just because we don't wear lab coats and have test tubes and . . . sorry, we economists get real testy on this point. No, the more important aspect I think is the word "social." Regardless of those stereotypic jokes about economists' personalities or lack thereof, economics is really about people. It deals with the tastes, preferences, needs and means of consumers, and the decisions that people make in supplying goods and services through firms. Everything that we see -- supply, demand, prices, etc. -- flows from the motives and actions of people. </li>
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<li><b>Resources are scarce.</b> That doesn't mean that there aren't enough right now, but it does imply that the supply of everything is finite. That finite point may be so far from where we are right now that it doesn't matter (i.e. there is a lot of nitrogen in the air!), but it is still finite. It also doesn't mean that what is scarce today will remain so. Human ingenuity is a marvelous tool for making more of what we really need. Malthaus, an 18th century economist, observed how rabbit populations eventually declined due to food shortages, and postulated that the world would soon run out of food and other essential items and thus put a limit on population. He underestimated the power of the human mind to invent things and methods to get more out of a finite set of resources. This comes to mind frequently these days as we discuss energy -- if people are indeed left free to use their ingenuity. </li>
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<li><b>Economics involves allocation.</b> One of the forms of efficiency that economics accomplishes is allocative efficiency -- deciding how much of something to use in the production of something else which then may be allocated across uses as well. By definition, allocation is a discriminatory process unless supplies are large. One use or person will get an item, while another will not, and economics says that the use or person that can assign the higher value is the winner. That's a pretty important concept right now when we think about corn. </li></ol>

<b>Economics Not a Perfect Science</b>
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The real question is whether "economics" are allowed to fully function in each of these three roles. History has shown us that markets work. Allowed to function freely, they will generate price signals that tell firms to produce more or less and consumers to consume more or less. They will also result in least-cost production, innovation and, in the case of an item that is no longer needed, obsolescence and failure.
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But they don't always work perfectly. Pollution is a cost to society but, if not regulated, may impose no cost on the polluting firm, and thus, not be covered by the price of the firm's output. Litter and trash are costs of consumption but may not be factored into the consumption decision unless we impose a cost to littering. Governments deal with such "externalities" by making the rules by which economics must play, and by discouraging some activities (prohibitions, regulations, taxes, etc.) and encouraging others (subsidies, tax incentives, etc.).
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Think of these as you contemplate today's economic climate for livestock and meat. What are the people (both here and abroad) saying in terms of demand and supply? What resources are scarce? Can we make more and, if so, how? What is the highest and best use of those scarce resources? How is government influencing this allocation? For whom is it good or bad? Is it the best we can do?
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We're not going to all agree on the answers to those questions, but we can likely learn more collectively than individually, unless, of course, we're more like rabbits.

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<a href="http://nationalhogfarmer.com/images/1208mkt.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>

Futures Rally Offers Opportunity

After a big rally during October and some retracement during November, Chicago Mercantile Exchange (CME) Lean Hog futures have shown some signs of life recently with the deferred contract holding very near contract life highs. The average value of CME Lean Hogs futures from December 2006 to December 2008 is just over $68.15/cwt. carcass (or about $51/cwt. live). Those prices are significantly higher than price levels for next year based on the September Hogs and Pigs report data, so we must conclude that the futures markets are factoring in something else.
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Whatever your opinion about the value of futures markets to pork producers, I believe they are an accurate gauge of "market" sentiment at any point in time, where the market is very broadly defined to include anyone who is willing to bet actual money on what the price of hogs may be. The key, in my opinion, is that there are no barriers to entry to the futures markets and, thus, they are the perfect melting pot for all views of the market. They tend to incorporate publicly available information very quickly and efficiently, but they also reflect non-public information. Many analysts share this opinion.
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One possible explanation for the recent strength of hog prices is that CME Lean Hogs futures are incorporating the higher price of corn into pork output. I think they are getting a little too quick in that judgment simply because of the time lag involved in pork production. If I'm correct, then the futures markets may be providing opportunities now that will be better than cash markets next year. Regardless, $68/cwt. carcass and $51/cwt. live are good hog prices even with higher costs!
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<b>Adjusting to Higher Feed Costs</b>
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The entire meat sector, however, is already showing signs of responding to higher feed costs. Figure 1 shows historical, current and projected levels of my hog feed index (corn and soybean meal to make a 16% crude protein diet) as of Nov. 30. Those projected levels continue to increase and are now very close to reaching the rarified levels of 1995-96. The difference is, they will not go away as quickly as before since this is driven by corn demand, not short corn supply.
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About the only encouraging thing I can see in those forecast levels is that the futures markets are now factoring in a corn acreage increase next year. Note the slight dip in prices for late 2007 that were not evident in the previous forecast lines.
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The size of the acreage increase will be critical. I have seen forecasts anywhere from 5 to 8.5 million more corn acres next year. Some private discussions set the increase as high as 10 million acres. The livestock sector will need every one of those acres even if yields are very good.
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How has this affected the various species? It's difficult to separate out the effect of higher feed costs, but a quick look at Figures 2 through 4 shows that all of the meat species are cutting back. Sow slaughter remains quite high given the level of profits, but gilt slaughter percentages from the University of Missouri have been at or above 50% for the last four weeks. That strengthens the argument that the breeding herd is being reduced and ties that reduction more directly to feed costs.
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Beef cow slaughter (Figure 3) has been high relative to last year since June when forage conditions in the southern plains began to deteriorate badly. The recent spike in numbers is really not unusual from a seasonal standpoint, but the real test may be in the remainder of this year. Will beef cow slaughter drop seasonally or stay high due to calf prices as much as $30/cwt. lower and yearling prices $15 to $20/cwt. lower?
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Finally, broiler egg sets have been declining relative to last year for some time, due to very low chicken prices. Some private sources are now saying that higher feed prices will keep those reductions in place longer. That's certainly good news for the pork industry.
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The quickest response that anyone can make to higher feed prices is an adjustment of slaughter weights and those are moderating in all three species. Hog weights have been 1-2 lb. under year-ago levels in five of the last seven weeks, and even with year-ago in the other two weeks. Broiler weights have been over 3% lower than below year-ago levels for the last three weeks. Steer and heifer weights have not gone below 2005 levels, but they have gone from 15 lb. or so higher in August to only 6 lb. higher for the week of Nov. 11.
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<a href="http://nationalhogfarmer.com/images/1201mkt.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>