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Articles from 2008 In December


Pork Board Commends Hormel For Its Commitment to Quality

The National Pork Board congratulates Hormel Foods for its commitment to the Pork Quality Assurance Plus (PQA Plus) and Transport Quality Assurance (TQA) programs.

Hormel Foods has announced that all hog purchases by Dec. 31, 2009 will come from producers and their employees who are certified in PQA Plus, have completed well-being assessments on their farms and are TQA-certified.

“This action reaffirms pork producers’ commitment to the U.S. pork industry and its customers,” remarks Tim Bierman, Larabee, IA, PQA Plus-certified pork producer and vice president of the National Pork Board. “We are extremely pleased that Hormel Foods has joined in the pork industry’s effort to focus on the ‘We Care’ pork industry responsible pork initiative by requiring PQA Plus certification and site status.”

PQA Plus is a three-part process, comprising an educational and training session and an on-farm site evaluation to achieve PQA Plus site status. A third part is a random, statistically valid, third-party evaluation of program implementation. Those evaluations will determine whether the industry is improving its overall animal care practices. To date, more than 20,000 pork producers have been certified in PQA Plus.

PQA Plus is a major enhancement to the previous PQA program initiated about 20 years ago, adds Erik Risa, education program manager for the Pork Board. PQA Level 3 made sure every hog was accounted for but certification was only required for the owner, even though that owner may not be touching or interacting with the pigs on a daily basis.

“What Hormel has said is important, and what PQA Plus does, is require that the daily caretakers have that training as well, and so Hormel is going a bit deeper by asking that the producers have all of their employees certified in both PQA Plus and TQA,” he says.

Hormel also believes in the Pork Board’s new We Care Initiative.

“We are honored to fully support the pork industry’s new responsible pork initiative called ‘We Care,’” says Brian Stevens, director of pork procurement, Hormel Foods. “Pork producers do care about retaining the public trust and they demonstrate this by doing things right through their ethical principles. We are encouraging all pork producers to support this great pork industry initiative supported by the National Pork Producers Council and the National Pork Board.”

We Care embraces three critical initiatives designed to improve the trust and image of the pork industry, says Risa. Establish clear principles, good production practices (PQA Plus program) and provide trust through proof.

“Programs like this can demonstrate to others that we do in fact care,” says Risa.

Hormel Foods joins Hatfield Quality Meats and Salmon Creek Farms Marketing Association and Independent Meat Company of Twin Falls, ID, in requiring PQA Plus.

Recession May Help Pork Producers Survive

The recession may actually help pork producers because of feed costs are ratcheting down, says Purdue University Extension Marketing Specialist Chris Hurt.

“Lower costs in combination with smaller pork supplies in 2009 could be the combination that puts the industry back into profitability,” he says. “Hog prices may actually increase a few dollars in 2009, as the pork industry in both the United States and Canada reduces breeding herds due to this year’s losses. However, many uncertainties continue for the pork industry.”

Notably, hog prices collapsed, along with all other farm commodities. From a high of $52.56/cwt. average in August, live hog prices plummeted to about $39/cwt. for November. The last time prices dropped this much from their summer highs was in 1998, when live prices dropped by more than $25/cwt.

“Surprisingly, most of the decline is attributable to demand factors,” Hurt says. “Pork exports were flying high this past spring and summer as a result of a weak U.S. dollar and aggressive buying by China prior to hosting the August Olympics.

“In the period from April through July, exports represented 24% of U.S. production, compared to 13% for the same period in 2007,” he says.

But since mid-summer, several factors led to reduced pork trade.

China greatly reduced U.S. pork purchases after the Olympics. “In the first half of 2008, China accounted for 50% of the growth in U.S. pork exports. Their peak activity came in the second quarter when Chinese purchases reached about 7% of all U.S. production. Chinese purchases then collapsed in the third quarter, dropping by more than 60% to about 2.5% of U.S. production,” says Hurt.

A second factor has been the exchange rate of the U.S. dollar, which has increased in value about 20% since July lows, making pork more expensive for foreign buyers. As a result, USDA has lowered export projections by 7% for 2008 and by 12% for 2009.

“The financial crisis has had severe impacts on hog prices as well,” he continues. “Since Sept.26, when the crisis began to unfold, December lean hog futures have fallen by about $9/cwt., carcass, or about 14%. The impact on meat consumption is related to concerns about the depth of the recession.

“Generally, the negative impacts are greater for beef than for pork. Pork is generally a lower-cost retail product relative to beef, and is somewhat favored when consumers become more value conscious. Retail pork prices so far this year have averaged $2.92/lb., compared to $4.31 for retail beef.”

All of this may translate into higher prices and lower feed costs in 2009.

“Pork production is expected to drop by 2-3% in 2009,” says Hurt. “This may help hog prices average a few dollars per hundredweight higher than the $48 live price in 2008.”

Slightly higher hog prices will be good news to producers, but lower feed prices may be more welcome news.

For 2008, estimated cost of production was near $53, but recent lower futures prices suggest production costs could dip to $46-48 for 2009. Cash corn prices are projected to average $3.50/bu. in the coming year, vs. about $4.60/bu. in 2008. Soybean meal has declined to about $260/ton (at Decatur, IL, recently), compared to about $330/ton for this year.

“Farrow-to-finish pork producers operated under losses for much of 2008, losing about $14/hog,” Hurt says. “For 2009, the current price relationship could return the industry to about $5/cwt. of profits as prices move from the mid-to-upper $40s in the first quarter to the lower-to-mid $50s in the second and third quarters and finish the year in the very high $40s.”

But many uncertainties lie ahead, including the extent of the recession’s impact on domestic consumption and trade.

“In addition, feed prices, while more moderate now, will remain a key to a profitable 2009,” Hurt says. “Opportunities to both hedge lower feed prices and profitable lean hog futures prices for 2009 are now available.

“All producers will welcome these improved prospects, and high-risk producers will especially want to consider taking some of these positive margins,” he suggests.

Research Scientists Track Human Spread of Trichinae Parasite

Pseudorabies Discovered In Colorado Feral Swine

Fourteen of 16 feral hogs seized by Colorado state wildlife and agriculture officials have been diagnosed with pseudorabies (PRV). None of the wild swine came into contact with domestic hogs in the state.

The hogs were seized, along with 20 exotic sheep, in a trailer bound for Little Creek Ranch in Mesa County, Co. The animals were diverted to an isolated location and the ranch has now been quarantined.

The Little Creek Ranch is located in western Colorado near the Utah border. Inspection of the farm turned up numerous holes in the perimeter fencing and other regulatory deficiencies.

The Little Creek Ranch, which has a wild-boar-hunting operation, is licensed by the state as a commercial wildlife park. The ranch existed before state regulations banning the importation or possession of wild boar and feral hogs and was grandfathered in to allow it to have a limited number of wild boar on the site.

Kansas Site Selected for Federal Disease Laboratory

The Department of Homeland Security (DHS) has recommended Kansas State University at Manhattan as the site of a $451 million lab designed to study foreign animal diseases.

DHS officials have not confirmed the recent announcement made by Sen. Pat Roberts (R-KS), pending public release of an environmental impact statement.

Construction of the facility in Manhattan would mark the most significant economic development in the city since the founding of Kansas State University, according to Lyle Butler, president of the Manhattan Area Chamber of Commerce.

However, a New York lawmaker, whose district includes the Plum Island animal research facility off eastern Long Island, has protested the decision. Rep. Tim Bishop has indicated he will ask the incoming Obama administration to reconsider spending half-a-billion dollars to create a research facility that would duplicate many of the functions currently served by Plum Island.

USDA Renews Funding For PRRS Initiative

The U.S. Department of Agriculture Cooperative (USDA) State Research, Education and Extension Service’s National Research Initiative has renewed funding of the Porcine Reproductive and Respiratory Syndrome (PRRS) Coordinated Agricultural Project (CAP).

The USDA will invest $4.8 million over the next four years, according to Raymond Rowland, PRRS CAP director and faculty member in the Department of Diagnostic Medicine/Pathology at Kansas State University.

The funds will be used to achieve CAP’s goal of developing the tools and knowledge through integrated strategies to reduce animal suffering, decrease economic losses to producers, and support stakeholder efforts to control and eliminate the PRRS virus.

PRRS CAP began in 2004 and was coordinated by the University of Minnesota. The effort brought together scientists, veterinarians, pork producers and industry to develop innovative strategies to lessen the impact of PRRS and work toward eradication.

CAP activities are divided into research, extension, education and outreach.

Research efforts include the development of vaccines, understanding how the virus spreads, the development of successful biosecurity practices to control infection and reinfection, and how genes influence virus replication.

Extension is targeted at developing innovative approaches to on-farm control and elimination efforts and novel approaches to virus removal on a regional scale, led by Robert Morrison, DVM, at the University of Minnesota.

Education’s focus is providing support and opportunities for students and veterinarians to receive training by PRRS researchers, explains Rowland.

The principal outreach activity of the CAP is in support of the annual International PRRS Symposium (www.prrssymposium.org), held Dec. 5-6, 2008 in Chicago. This year’s meeting featured 87 presentations representing more than 15 countries.

Revised Standard on Fans Will Boost Energy Savings

The American Society of Agricultural and Biological Engineers (ASABE) has revised an existing standard on selecting energy-efficient ventilation fans for agricultural use.

Information in the new document, ASABE EP566.1, Guidelines for Selection of Energy Efficient Agricultural Ventilation Fans, will help lower production costs by increasing fan efficiency.

The data used to improve the effectiveness of the scope of this standard was obtained from the University of Illinois Bioenvironmental and Structural Systems Laboratory and other sources.

For a copy of the document, contact ASABE headquarters at martin@asabe.org. A free electronic copy of the standard can also be obtained by ASABE members and those with site-license privileges to the ASABE online technical library at www.asabe.org.

Farm Bureau Opposes Greenhouse Gases Tax

The American Farm Bureau Federation (AFBF) has voiced its opposition to an Environmental Protection Agency (EPA) proposal to regulate greenhouse gases under the Clean Water Act, alleging it would basically mean new taxes on livestock operations.

“Most livestock and dairy farmers would not be able to pass along the costs incurred under this plan,” says Mark Maslyn, AFBF executive director of public policy. “Steep fees associated with this action would force many producers out of business. The net result would likely be higher consumer costs for milk, beef and pork,” Maslyn says in comments submitted to EPA.

Based on Agriculture Department data, any farm or ranch with more than 25 dairy cows, 50 beef cattle or 200 hogs emits more than 100 tons of carbon-equivalent per year, requiring a permit under the proposed rules. More than 90% of U.S. dairy, beef and pork production would be affected.

The current rate of $43.75/ton of emitted greenhouse gases would translate into annual assessments of $175 for each dairy cow, $87.50 for each head of beef cattle and $20 for each hog.

Maslyn says the proposed rules wouldn’t be effective because of the global nature of greenhouse gases. “Reduction of a ton of greenhouse gases anywhere will make a difference, but if a ton is removed in Iowa and replaced by a ton in China, then no net effect occurred,” he explains. “A livestock tax and regulation of greenhouse gases under the Clean Water Act will impose restrictions and added costs on the U.S. economy without reducing greenhouse gases in the atmosphere.”

Think COOL, Exports and Pork Quality

U.S. livestock producers should not be surprised that Canada’s beef and pork producers are trying to make lemonade out of the lemons that the U.S. mandatory country-of-origin labeling (COOL) law sent their way. Figure 1 shows an ad that is running in meat trade publications. It features Canadian beef, but the referenced website (meatcool.info) makes it plain that Canada’s pork industry is heavily involved in this effort.

Kudos to both groups. Legendary University of Texas football coach Darrell Royal was famous for saying one should “dance with who brung you.” Translated to normal English, that means “take advantage of your strengths.” I think it is applicable for the Canadians, even though they may not be very happy about “who brung” them to this dance. And lest U.S. producers think this will never work, go to the local grocery store and see how much New Zealand-labeled lamb is in the case. Better yet, see how much lamb you can find that does NOT carry a New Zealand label.

Exports Stay Strong
USDA released October export data last week and they again indicated stellar performance by the U.S. pork industry. See Figure 2 for monthly carcass weight shipments and Figure 3 for year-to-date product weight data.

While not the double year-ago levels we saw this past summer, October shipments were 17% higher than those of September, 30% higher than one year ago and leave year-to-date pork exports up a remarkable 61% from 2007.

China/Hong Kong is the clear leader in percentage growth at 222%. Shipments to Russia slowed in October and were only 25% higher than last year. But year-to-date shipments to Russia remain 121% larger than in 2007.

Perhaps most important, shipments to our historically largest customers, Japan and Mexico, have seen healthy increases this year as well, and that growth continued in October. October shipments to those markets were up 29% and 108%, respectively, from last October, bringing year-to-date shipments to the two markets to +23% and +50%, respectively. October shipments to Canada were 4% smaller than last year as U.S. pork prices rose with the strengthening of the U.S. dollar relative to the Canadian dollar. But shipments to Canada thus far in 2008 are still 19% larger than last year.

The total value of U.S. pork shipments stands at $3.505 billion through October, up 59% from last year. The value of pork variety meat shipments through October was $450 million, 106% larger than last year. The total of these items, $3.955 billion, amounts to $40.78 for each hog slaughtered in the U.S. through October.

The “Pork Quality” Sermon
A wonderful pastor of a wonderful church we used to attend would periodically begin a sermon with the statement: “It’s time to have one of THOSE conversations again.” The word “those” was very heavily emphasized. The sermon topic, of course, would be sex, fidelity, truthfulness, tithing, etc. You’re probably familiar with those pastors – they make you uncomfortable even if you haven’t committed that particular transgression recently or even at all!

No, I’m not going to launch into a sermon about sex. But we do need to have one of THOSE conversations.

Last week I bought a boneless pork loin from a major retailer. It came from one of our large packing companies and was not pumped. I was using it to make chili and another Mexican soup. I really prefer diced meat to ground meat in these dishes and there is no better value than boneless pork loin – virtually no waste, convenient, low-cost, etc. When I cut up my pork loin, I noticed that it was just shy of PSE – pale, soft but not really exudative. I was not a happy camper and my concern was borne out when I began preparing my dishes.

As part of the prep, I like to brown the cubed pork to caramelize the outside. Guy Fieri (pork spokesman and host of The Food Channel’s Guy’s Big Bite and Diners, Drive-ins and Dives – my favorite TV show) and other chefs on television tell me it adds flavor to the dish. I think it actually does, but regardless of whether that is really true, it makes me feel like a famous chef. So, I do it.

When I tried to brown this less-than-stellar product, I ended up with soup in my skillet. Remember that this loin was not pumped, so this liquid was not the pump releasing into my skillet. It was the meat juices that should have been staying inside the chunks. I was now an even unhappier camper. To caramelize the meat, I had to pour off the liquid.

Here is the kicker. I had several pork chops in the freezer from one of my daughter’s 4-H pigs that needed to be used. They were much better colored and firmer and when I cooked them, they caramelized perfectly. No soup before I wanted soup.

The moral of this story is this – we still have quality problems! My chili and soup turned out fine because I could use the meat juices. But had I cooked that meat on a grill, it would have been very difficult to end up with anything short of shoe leather.

I have many times lamented that we have trained consumers to only buy boneless loins at $1.98/lb. After this experience, I may have discovered why – that’s all they may be worth!

Whether this issue was caused by genetics, animal handling, DDGS or whatever, the pork industry must keep working to improve both functional and specification quality. We can’t ask for more money for our pork without delivering more value, more consistently.




Click to view graphs.

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

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