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Articles from 2014 In December


EPA seeking nominations for ag committee

EPA seeking nominations for ag committee

The Environmental Protection Agency (EPA) is accepting nominations for the EPA Science Advisory Board (SAB) Agriculture Science Committee. Nominees should have expertise in agricultural economics, agricultural chemistry, agricultural engineering, soil science, biotech, crop science and environmental chemistry.

The EPA is to consult with the Secretary of Agriculture before making the appointments. Nominations are due by Jan. 30. The 2014 farm bill required the establishment of the committee. For more information, click here

Lower food inflation in 2014

Lower food inflation in 2014

Food inflation will be lower in 2014 according to the U.S. Department of Agriculture’s Economic Research Service (ERS). Food prices will be 2.25% to 3.25% higher this year compared to 2013.

ERS said that commodity prices, animal inventories and ongoing export trends were the reasons for lower inflation estimates. The latest estimates saw an increase in inflation for pork and eggs but lower for vegetables and cereal and bakery products.

Pork prices are estimated to be 9.9% higher than last year and eggs are 6.2% higher. Food inflation has averaged 2.6% over the last 20 years. 

Hubbard Feeds

For more full-value pigs, managing gut health is an ‘all-the-time deal’

hubbard-pig-carousel-final.jpg

When you think about swine nutrition, it’s easy to picture it as just pushing feed through pigs.

But, according to swine nutrition experts at Hubbard Feeds, there’s much more to it. A pig’s intestinal system does far more than simply deliver nutrients and hydration. It also plays an essential role in building a strong barrier that protects it from invasive pathogens and environmental pressures, helping the pig thrive through every phase of production.

“Pigs are so valuable that you’ve got to have the gut working properly all the time,” says Stewart Galloway, Ph.D., Senior Swine Nutritionist for Hubbard Feeds.  “Even three days of scour early in the weaning phase slows the performance, creates more variation and, potentially, fewer full-value pigs.”

From a profitability standpoint, less-than-robust gut health can mean more fall-back pigs that must be sold in the less-profitable cull market or, worse, end up as a death-loss statistic.

“The goal from start to finish is to get the pig through to a primary market at optimal value,” says Jamie Pietig, Hubbard Feeds Field Nutritionist. “Even a 1- to 2-percent death loss can be a huge financial burden on the farmer.”

Managing for Stress

As pigs move through the production system, they encounter situations which open them up to potential gut distress. Times of transition are especially stressful and can have a longer-term impact on the animal’s ability to thrive.

“Health in general plays an integral role in production and your bottom line,” Pietig says. “Regardless of the health challenge, a healthy gut is necessary to protect the pig’s ability to fight off disease and grow to its genetic potential.”

During the pre-weaning phase, a pig’s immune system is just beginning to develop and its only protection is the residual maternal immunity imparted by the sow, leaving the pig vulnerable to dangerous pathogens.

As the pig moves through to the nursery, the change from an all-milk to a solid diet often results in gut distress, impacting the ability to successfully adapt to a new environment and the crop of new health challenges that come with it.

Then, during the grow-finish phase, pigs are constantly exposed to any number of pathogenic, environmental and seasonal pressures that can limit feed and water intake, resulting in slower growth and a weakened immune system which can make them more susceptible to chronic, acute and even fatal illnesses, such as hemorrhagic bowel syndrome (HBS).

A Program Approach

Just as a pig’s gut does more than simply deliver nutrients and hydration, a protocol for optimal gut health requires more than one solution.

“People often want a ‘silver bullet’,” Galloway says. “We believe the reality is that it takes a whole program approach to grow full-value pigs.

“Gut health is a top research priority for Hubbard Feeds, and has been all along,” he adds. “We’ve probably been at this longer than anyone, enlisting expertise from our Hubbard Feeds team as well as industry experts.”  

Key to Hubbard Feeds’ gut-health program is ensuring the animal is consistently provided a high-quality, balanced ration supplemented with all-natural products proven to help the pig develop and maintain a healthy gut.

Developed in collaboration with industry leaders, the program can be integrated with other initiatives for developing optimal value, such as Elanco® Animal Health’s Full Value Pigs™ approach.

First Things First

For any program to work effectively, anything that might negatively impact the outcome must be addressed.

“The first thing you always want to do is to make sure the pigs have a proper environment with good ventilation, feeders that are properly adjusted and plenty of fresh water,” Pietig says. “We also want to minimize out-of-feed events. Lack of feed for even a short period creates stress for the pig and can easily cause gut distress.

“Secondarily, we use products to improve the population of natural beneficial bacteria in the gut,” he explains. “We want to set up conditions for encouraging the growth of good bacteria and maintaining a healthy mucosal layer so the pig can get through those times of stress.”

Hubbard Feeds has done extensive research to develop or identify supporting products that are safe, efficacious and cost-effective in improving gut health in pigs, adding two to its program:

  • Grazix Porcine- F and Porcine -W™, two all-natural water products with fast-acting anti-inflammatory and antimicrobial properties, which use beneficial plant extracts to address serious gut distress in the pre-weaning and nursery phases;1 and
  • Assist™, a yeast-based, gut-health support product given during the grow-finish phase, employing a two-phase action shown to reduce the incidence of HBS by as much as 50 percent in herds affected by it.2

“For pre-weaned and nursery pigs suffering scours, we need to decrease inflammation in the gut, lower the pathogen load and prevent excessive water loss. Grazix does all three,” Galloway says.

But finding solutions meant re-thinking some established approaches to the gut-health problem.

“Initially, it was believed that decreasing the pathogen load was more important than decreasing inflammation, but we’ve found that it’s actually the opposite,” he explains. “Inflammation creates gaps between the cells lining the gut, which allows gut material to seep through to the underlying tissue, carrying bacterial pathogens and their toxins, resulting in continued or worsening inflammation.

Grazix binds to those toxins, helping to quickly reduce inflammation, creating a tighter barrier in the gut and decreasing water loss,” he says. “At the same time, it lowers the pathogen load in the pig’s gut, reducing the production of bacterial toxins.

“We’ve been using Grazix in farrowing for about three years now and it has proven to be very effective in stopping scours in the first week3,” he adds. “It seems the worse the problem, the better Grazix works, in most cases, even overnight.”

Unlike the immediate action provided by Grazix, the mode of action employed by Assist builds the protective mucosal layer over a period of 20 to 28 days, then supports it through the remainder of the grow-finish phase.

Assist helps to rebuild and maintain the mucosal layer protecting the gut tissue from the causes of HBS and other challenges,” Galloway says. “It also contains copper chloride, which acts as a natural anti-microbial, making it a nice two-pronged approach.”

 “It’s kind of like eating yogurt,” Pietig explains. “It takes a little time to change the microflora that make up the mucosal layer.”

Summing it up

When it comes to getting more full-value pigs out the door, optimizing gut health should be high on the list of priorities through every phase of production.

“Gut health is an ‘all-the-time deal’,” Pietig says. “Problems at any age can have a negative impact on the pig’s ability to survive and grow to its full potential.”

“We can’t exactly know when challenges may occur, but we do know they will happen. We’re not always going to have perfectly managed environments or consistent feed intakes,” he explains.

“What we can have, though, is a gut-health program that’s cost-effective – just a fraction of the overall per-pig cost of production4 – and enables us to have a positive influence over outcomes.”

For more information on Hubbard Feeds’ gut-health program, visit www.hubbardfeeds.com

USDA appoints Meat & Poultry Inspection Advisory Committee

Getty Images/Mark Wilson U.S. Capitol at dusk

The U.S. Department of Agriculture (USDA) announced the appointment of members to the National Advisory Committee on Meat and Poultry Inspection (NACMPI) for the 2014-16 term. Secretary of Agriculture Tom Vilsack said, “the diverse perspectives on food safety that the advisory members bring are invaluable to our success in ensuring the safety of the foods we eat.”

New members of the committee are: Dr. Michael Crupain, Consumer Product Safety and Sustainability; George Wilson, Wilson & Associates LLC; Dr. Tanya Roberts, Center for Foodborne Illness Research and Prevention; Kurt Brandt, United Food and Commercial Workers International Union; Dr. Dustin Oedekoven, South Dakota Animal Industry Board; Dr. Krzysztof Mazurczak, Illinois Department of Agriculture; Michael Frances Link Jr., Ohio Department of Agriculture; Dr. Manpreet Singh, Purdue University; Dr. Randall K. Phebus, Kansas State University; Dr. Patricia Curtis, Auburn University; Brian Sapp, White Oak Pastures Inc.; Sherri Jenkins, JBS USA LLC; Dr. Betsy Booren, American Meat Institute; Dr. Alice Johnson, Butterball LLC.

Returning members are: Sherika Harvey, Mississippi Department of Agriculture; Dr. Carol L. Lorenzen, University of Missouri; Dr. Michael L. Rybolt, Hillshire Brands Co.; Dr. John A. Marcy, University of Arkansas; and Christopher A. Waldrop, Consumer Federation of America. The NACMPI committee was established in 1971 to advise the USDA on matters affecting federal and state inspection program activities. 

Markets to require PIN tags in cull breeding stock

Effective Jan. 1, the majority of packers processing cull breeding stock will begin requiring official premises identification number (PIN) tags as a condition of sale. Specifically, the following packers have indicated their plan to participate in the PIN tag requirement: Johnsonville, Hillshire Brands, Calihan Pork Processors, Bob Evans Farms, Wampler’s Farm Sausage, Pine Ridge Farms, Pioneer Packing Co., Pork King Packing and Abbyland Pork Pack. Some have indicated that they will either no longer accept cull breeding stock or may discount the price paid.

The National Pork Board (NPB), the National Pork Producers Council (NPPC) and the American Association of Swine Veterinarians have supported producer adoption of the official premises ID number tags for use in breeding swine entering harvest channels. In 2013, the NPB’s Pork Act delegates unanimously passed an advisement asking packers to require the official PIN tags as a condition of sale by Jan. 1, 2015. A similar resolution was passed by the NPPC delegate body.

The Pork Checkoff has published an informative FAQ brochure that addresses the implementation of this program. Remind your clients that market cull breeding stock of the impending deadline in order to avoid any delays in market access or potentially discounted prices.

Pork producers serve military families at Snowball Express

Pork producers serve military families at Snowball Express

Twenty-one pork producers from Illinois, Iowa, Texas and Georgia served hundreds of military families by distributing pork meals during the 2014 Snowball Express, a charity for the children of America’s fallen military heroes.

“We appreciate the sacrifice these parents and children have made,” said Glen Walters, a pork producer from Barnesville, Ga., and a member of the National Pork Board. “It was an honor to serve the family members of our fallen military servicemen and women at Snowball Express.”

More than 1,800 children and military family members from across the country traveled to Texas for Snowball Express, which was held in the Dallas-Fort Worth area. Snowball Express connects military families to one another, and creates opportunities for friendship and communal healing during the holidays.

Following a parade in downtown Fort Worth, the pork producers were on hand to greet and serve families and volunteers at a nearby ranch. In a little over an hour, producers served more than 1,000 hot dogs, 1,000 brat burgers and 750 boneless loin chops.

Pork producers also distributed Pork Checkoff stuffed toy pigs, coloring books and pig erasers to the children. The opportunity reflects the pork industry’s “We Care” initiative, which demonstrates pork producers’ commitment to established ethical principles that promote a better quality of life in local communities.

“As pork producers, we want to build stronger communities, and we appreciate the opportunity to be part of worthwhile events like this that are much bigger than the pork industry, says Walters, who is also an active member of the Georgia National Guard.

Johnsonville Foods donated the brat burgers that were served to the families. 

Hogs & Pigs Report Foreshadows Expansion on Horizon

Hogs & Pigs Report Foreshadows Expansion on Horizon

The inventory of all hogs and pigs in the United States on Dec. 1, 2014, was 66.1 million head, according to the Dec. 23, 2014, U.S. Department of Agriculture Quarterly Hogs & Pigs Report. Inventory was up 2% from Dec. 1, 2013, and up 1% from Sept. 1, 2014.

In a Pork Checkoff-sponsored news conference following the report’s release, a panel of agricultural economists noted that productivity is improving as the industry moves toward recovery from the porcine epidemic diarrhea virus (PEDV) outbreak that began in 2013.

Breeding inventory, at 5.97 million head, was up 4% from last year, and up 1% from the previous quarter.

Market hog inventory, at 60.1 million head, was up 2% from last year, and up 1% from last quarter.

The September-November 2014 pig crop, at 29.4 million head, was up 4% from 2013. Sows farrowing during this period totaled 2.87 million head, up 3% from 2013. The sows farrowed during this quarter represented 48% of the breeding herd.

The average pigs saved per litter was a record high 10.23 for the September-November period, compared to 10.16 last year. Pigs saved per litter by size of operation ranged from 8.10 for operations with 1-99 hogs and pigs to 10.30 for operations with more than 5,000 hogs and pigs.

“One thing I wanted to highlight is what the report indicates for supplies further down the road in late summer, fall and then 2016,” said Altin Kalo, Steiner Consulting Group, Manchester, NH. “We’ve had a pretty significant increase in the breeding herd over the last couple of quarters. For the previous quarter the breeding herd increased 1.8% from the previous year. For this quarter as of Dec. 1, the breeding herd was pegged at 3.7% higher than a year ago. You have to go back 15 years or so to see that kind of increase in the breeding herd.”

Kalo continued, “There’s a reason why the breeding herd in the U.S. hasn’t been increasing over the years. It’s because improving productivity in terms of pigs per litter meant you didn’t have to do that. The last year we had a pretty devastating impact from PEDV and pretty strong margins for producers so the incentive is there not only to improve production through productivity, but also by bringing more sows into production and it looks like producers are doing that.”

Lee Schulz, assistant professor in the Department of Agricultural Economics, Iowa State University, Ames, IA, said given the reported farrowing intentions moving forward, it seems the industry is signaling growth. “No matter what number you are using for commensurate pigs per litter, even a conservative estimate puts us at or above record pig crops in these next two quarters,” he explained. “I want to highlight the real impetus of growth we’ve seen. We’ve seen historic returns in 2014 and if you project out returns into 2015, it looks to be in the black. I think that’s really been that trigger for expansion. In the last two quarters we’ve added about 100,000 hogs. We’re really on that pending growth.”

Kalo sounded a note of caution in the event that pork industry growth continues at the projected rate. “In our view it is somewhat of a warning for the industry that the current growth in the breeding herd, coupled with the improvement in productivity, might lead to an oversupply in hogs in late 2015, and more likely in 2016. At some point we might actually start bumping against the slaughter capacity that’s in place. It takes years to develop slaughter capacity and this thing is growing a lot faster than we can bring slaughter capacity online.”

Read more about the Hogs & Pigs Report numbers in a PDF form at the USDA website here.

Pre-report survey confirms most are expecting growth in hog numbers in report

Pre-report survey confirms most are expecting growth in hog numbers in report

Please accept our best wishes for a Merry Christmas! We hope you have a great holiday with family and friends and take time to reflect on the true meaning of the season.

The U.S. Department of Agriculture’s (USDA) quarterly Hogs and Pigs report will be released Dec. 23 at 2 p.m. CT. This is the first time in memory that the report has been released before Christmas. The December report has hardly ever been released on a Friday as customarily are the other three quarterly reports. The USDA has normally timed the December report to leave at least one full trading day before the end of the year so market participants can adjust positions per the report before the end of the calendar year. This year’s early release doesn’t seem to me to harm that goal and it certainly leaves the USDA personnel free to enjoy the holiday knowing they don’t have to return and finish the report next week.

Urner Barry’s pre-report survey of market analysts confirms that most are expecting growth in hog numbers in this report. The results of the survey appear in Figure 1.

Some highlights and implications of the numbers are:

  • The breeding herd is expected to grow by 3% relative to last year. If accurate, that would be the largest year-on-year growth for this key number since March 1998. Does that send a chill down your spine? That growth rate would fit sow slaughter prior to Dec. 1 pretty well, but would not fit the University of Missouri’s gilt slaughter percentage data which has run higher than one year ago so far this year and was a full 2% of slaughter higher in October. These three data series have been difficult to reconcile all year as producers saw extra value in immune sows and gilt supplies were impacted by porcine epidemic diarrhea virus (PEDV) losses.
  • Farrowing intentions for the September-to-November quarter are expected to come in 3.8% higher than last year. That is in line with the numbers we saw in September and with the historical productivity levels of the Sept. 1 breeding herd. Intentions for December-to-February are +3.8% from one year ago and would imply the highest farrowing rate on record for the Dec. 1 breeding herd. The +3.8% for the March-to-May intentions would imply litters per Dec. 1 breeding animal slightly higher than the past two years but still below the levels of 2009 through 2012. Sow productivity is a lingering concern from the PEDV epidemic as a number of farms are reporting disappointing farrowing rates post-PEDV.
  • The September-to-November pig crop is pegged at 3.3% higher than one year ago which would imply 29.185 million pigs save during the quarter. That number is still slightly smaller than the September-to-November 2013 pig crop of 29.319 million. It would imply March-to-May farrowings over 3% larger than last year. We had pegged that quarter at +4.2% after the September report so this might represent a slight reduction in our supply forecasts if the average estimate turns out to be accurate. We expect weights to be reducing pork supplies relative to one year earlier by that time as stocking rates increase and thus push pigs to market faster.
  • The 99.9% average estimate for litter size would put the September-to-November figure at 10.15, down 0.01 pigs per litter from one year ago and even with the figure for September-to-November 2013. In other words, a return to “normal” litter sizes. Those, of course, were growing at a rate of roughly 2% per year prior to that time, of course, so even steady litter sizes represent a significant slowing of productivity growth. This number would be back to familiar levels after being severely impacted by PEDV. I still think the USDA has over-estimated litter sizes this past year due to its practice of revising past pig crops to match slaughter and revising past farrowings by the same percentage. Those might be OK under normal circumstances but in the face of a disease that kills pre-weaned pigs, it strikes us as overestimating litter sizes. It wasn’t farrowings that dropped; it was pigs weaned per litter.

I will summarize the report and its implications in my next column.

Merry Christmas!

Ohio Pork Council increases consumer comfort with cooking pork

Ohio Pork Council increases consumer comfort with cooking pork

In an effort to build consumers’ comfort with cooking pork, the Ohio Pork Council (OPC) partnered with four other state pork associations to create 16 videos featuring step-by-step instructions for cooking pork recipes.

When the modern consumer has questions about food or cooking, they often turn to the internet for answers. With that in mind, coupled with the fact that YouTube is the second largest search engine in the world, the OPC has made an increased effort to create video content designed to help increase the demand for pork, by providing useful online resources related to cooking.

“Research shows that the internet is a primary source of information for many food purchasers,” says Jennifer Keller, director of Marketing and Education, Ohio Pork Council. “When people search the internet for information they use key phrases like “how to …” we want helpful and accurate information to be ranked higher in these searches.”

The OPC, in partnership with the Iowa Pork Producers Association; Missouri Pork Producers Association; Illinois Pork Producers Association and Kansas Pork Association, has taken advantage of the opportunity to create short “How to Cook Pork” videos; creating videos such as “How to Make a Pork Roast,” “How to Make Carmel Apple Pork Chops,” “How to Make Quick Pork Fajitas,” and “How to Make Candied Bacon.”

Sixteen professional videos, each featuring a pork recipe and cooking tips to help the viewer succeed in preparing tender, juicy, delicious pork, have been posted to YouTube and promoted through various forms of advertising. One advertising method being utilized is purchasing ads to feature the videos on YouTube, causing the videos to be displayed higher in the search ranking. A benefit of advertising on YouTube is that the views continually accumulate and grow over time, making the video and channel more legitimate. As of mid-December the videos have been viewed over 38,000 times.

The “How to Cook Pork” videos are also being promoted with commercials on Pandora Online Radio. The ads feature both an audio and a visual component and will be targeted to women across Ohio.

In addition to how to prepare the recipe, the videos also explain how to use a meat thermometer, how to select pork in the grocery store and how to handle pork while cooking.

While producing the videos, each recipe was photographed, so that the still image may be used in the OhioPork.org recipe database and to accompany the video link in social media posts, blogs, etc.

To learn more about the Ohio Pork Council, visit www.OhioPork.org.

Margins look good heading into 2015

Margins look good heading into 2015

Although 2014 has been a profitable year for producers, continued weakness in the hog and other protein markets has taken a toll on forward margins over the last few weeks. Not only is there a seasonal tendency for prices to fall after Thanksgiving, but this year we are facing a strengthening dollar which looks to limit exports in 2015.

In the near term we’ve seen the seasonal tendency for a decline in pork cutout and cash hogs this year with increased pig numbers and continued large weights. We’re holding carcass weights around 215 pounds and harvested just over 2.25 million head the week ending Dec. 13.

Longer term I believe falling oil prices could impact protein demand as many developing countries have revenues dependent on the sale of oil. On top of this we’ve seen the Russian currency devalue considerably due to the same problem and this appears to be affecting the futures markets. Even though U.S. pork is currently banned from Russia they have historically been a large importer of all proteins, and given their consumers may not be able to afford as much protein going forward this could put downward pressure on proteins globally.

Even with these current market issues, hogs remain profitable and 2015 margins look to be better than 2014 for many producers. The key reason for this is that the average producer hedged prior to the high of the market and that same average producer was likely affected by porcine epidemic diarrhea virus (PEDV). Many producers chose to lock in a good portion of 2015 margins prior to the current downward trend and those locked-in margins are set up to be better than those realized in 2014.

As far as PEDV is concerned, the swine health monitoring project, ran by the University of Minnesota, continues to show PEDV cases below year-ago levels in those sow units associated with the project. The other health factor is of course porcine reproductive and respiratory syndrome (PRRS) which appears to be at least on the same track as last year and one wonders if, given the lower instances last year, could we see more cases this winter?

Other recent developments include avian influenza in Canada and reports that some wild birds have tested positive in Washington state along with the possibility of the Cuban market reopening. This news moved the market somewhat on Dec. 17-18 and it will be interesting to see if we can keep avian influenza out of U.S. flocks. I think the big risk would be if an already tenuous Mexican relationship could result in a block of poultry exports to Mexico quicker than what might happen normally. These types of events are the reason why risk management is so vital. Let’s hope it’s a non-issue going forward.

Margins remain strong historically in the hog sector and 2015 will likely be another historically profitable year. It’s clear that volatility remains and sometimes seems to be the only constant. I think we’ve repeated this many times in our columns, but working capital will be king going forward and maintaining that liquidity will be important to your business. In planning any expansion or investments in your business in 2015 be sure to work on structuring your financing to help maintain as much liquidity as possible. This will not only help manage the volatility in the markets but give you the ability to manage through any potential losses in the future.

It is amazing what one year’s time can bring. I looked back to a similar column I wrote in December 2013 and the theme was on the impact of PEDV and how the average producer broke even for 2013. At that time we were already looking at historically strong projected margins for 2014 but no one could have predicted just how wild that ride would end up being. I believe producers need to remain diligent in targeting what returns are acceptable to their operations because this kind of volatility can go both ways. We in the pork industry have seen it in the past and are seeing it take place in the grain industry this year.

Good times are here for now, and this Holiday Season should be a happy one indeed for those in the pork industry.

Roelofs has worked in the hog industry his entire career and has been with AgStar Financial Services since 2008. For more insights from Roelofs 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.