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Articles from 1998 In March


The End Of Anonymous Production

My Dad has been out of the hog business for about 10 years now. He and Mom still live on the farm, rent the cropland and a few acres of pastureland to a neighbor.

Dad recently got a letter from county officials asking him to complete an application form to register his feedlot, pinpointing waterways, tile outlets, the well, etc. A county feedlot ordinance requires the registration.

Not a big deal in this day and age. But, for a retired pork producer/dairyman who had raised and educated four kids on 160 acres, it was bothersome.

"What ever happened to the right to farm?" he asked. Shaking his head, he added: "It sure isn't like it used to be."

It sure isn't.

Accountability is the operative word here. And, to be sure, it's not limited to concerns on the environmental front.

In fact, I sense we're edging ever closer to what I refer to as "the end of anonymous production" in this industry.

The day is fast approaching when you will not be allowed to drop a load of hogs at your packer's receiving pens, simply leave without a second thought, and wait for the check to arrive.

The public won't allow it. Pretty soon, your packer won't either. Some already don't.

And why would consumers be sensitive about the safety of their abundant food supply? Turn on a TV or open a newspaper and the answer will be obvious. Like it or not, in the race to greater accountability, food safety will be outpacing the environmental concerns. And, like it or not, you're about to be drafted into the food safety corps.

Major packers felt the heat turned up a notch on January 26 when they were required to initiate a new meat and poultry inspection program called HACCP (Hazard Analysis & Critical Control Points). Many already had comparable programs in place, but it's no coincidence that on the heels of the federal government's efforts to prevent contamination of meat products, packers are telling producers they intend to add another layer of accountability.

This is not shocking news. Packers have been encouraging producers for several years to enroll in the Pork Quality Assurance program. Some have even paid premiums for hogs from PQA Level III certified herds.

And, in recent months, we've been hearing more and more about producers signing packer contracts. Some estimate half of the hogs are committed to packer contracts. The number is expected to grow beyond 60% by year's end. Often, those contracts contain some verbiage that makes PQA Level III certification a prerequisite to the contract.

Let's see - initiation of HACCP, a push for PQA Level III, more packer-producer contracts. Coincidence? I don't think so. The packer wants to know who he's dealing with and what he's buying.

Some packers have drafted a "letter of guarantee" for producers to sign, guaranteeing their hogs are not in violation of the Food, Drug & Cosmetic Act. Again, not a big deal if you're following the Pork Quality Assurance guidelines.

Not so many years ago, packers were paying premiums to producers achieving PQA Level III status. That will change as PQA Level III becomes the minimum for doing business, for securing a market for your hogs. Soon, non-qualifiers will likely experience discounts.

In January of next year, the HACCP program extends to the next tier of packers - probably encompassing pretty much everybody you're likely to sell hogs to. What are the odds that they too will establish PQA level III as a minimum standard? Such accountability signals the end of anonymous production.

"But, they can't identify each and every hog carcass as it progresses through the processing system," you argue. True enough. The slap-tattoo identification system works pretty well, but as processing advances, individual identification - and traceback ability - is lost. But, considering the huge economic burden of a product recall on a supplier, you can bet they're working on it.

It's the next logical step to taking American pork to the next level. Most packers with some type of quality buying program already have a kill sheet file on your hogs. For those holding a packer contract, I'd bet the packer has already reviewed your genetics, production methods, feeding programs and your recordkeeping system.

Sure, it will be a few years before every pig has a bar-coded eartag, an implanted identification chip, or a computer chip attached to the gambrel hook identifying him through the processing chain. But it's coming. The technology already exists that will help find your lost Fido or FiFi if you've implanted your pet with an identification chip.

Can we justify the cost? Will the American or the World customer even bother to ask you to? More likely, they'll expect you to make the right choice, the choice that will reduce risk to as near zero as you can get.

Progress? Food safety is not a debatable issue.

The responsibility for a safe, wholesome pork product doesn't end with your shift. It holds from the point of conception to the point the consumer places those pork chops on the dinner table. No one gets off easy. No one can remain anonymous.

Less Protein Cuts Odor Compounds

The key to less odor is using amino acids to balance pig diets.

Odors from pork operations have become one of the major issues in the hog industry. In response, researchers are looking at many ways to reduce odor, including diets.

Recent studies conducted jointly at Purdue University and Pennsylvania State University have focused on the role of diet and hog odors. Since most odors come from the manure excreted by the pig, changing the diet may reduce odor-causing agents in the manure. Diet changes could be a relatively easy and cost-effective way to reduce odors.

Overall, research shows that manipulating crude protein in pig diets will reduce odors. The researchers found manipulating crude protein in pig diets will reduce nitrogen excretion, pH, volatile fatty acids and some other volatile organic compounds in the air.

However, changing the diets came with a cost. Researchers found certain synthetic amino acids increase feed costs $1-2 per pig marketed.

Changing Protein Levels In one research study, typical corn-soybean meal diets fed to grow-finish hogs were compared to protein-deficient and protein-excess diets. The standard diet with 13% crude protein (CP) was compared to a protein deficient diet with 10% CP and the excessive diet with 18% CP. Also compared in the study was a 10% CP diet supplemented with four synthetic amino acids (lysine, methionine, threonine and tryptophan).

Researchers analyzed the fresh manure excreted from the pigs and manure stored in a simulated anaerobic pit. Also analyzed were air samples taken from the headspace. Odor-causing compounds were identified and measured.

The results are shown in Figure 1. Reducing the CP by 3% and adding the amino acids worked the best. This diet reduced nitrogen excretion and ammonium by 28% in the fresh manure and 43% in stored manure compared to the standard diet.

Volatile fatty acids were reduced 50% in the manure from the low CP-amino acid diet compared to the standard diet. Other volatile organic compounds in the air samples were also lower with the low CP-amino acid diet.

Adding Cellulose In another study, researchers added to the 10% CP-amino acid diets either 5% cellulose or 2% oligosaccharide (which was sucrose thermal oligosaccharide caramel in this study, a byproduct of the sugar industry). Pig performance was compared to a standard diet with 13% CP.

Adding the cellulose reduced the pH of fresh manure from 7.8 to 6.4, which also reduces the chances of ammonia emissions into the air. It also reduced ammonium excretion by 68%.

In stored manure, total nitrogen was reduced only 35% as shown in Figure 2, but ammonium nitrogen was reduced 73% (Figure 3).

Adding oligosaccharide to the diet reduced total nitrogen 55% and ammonium nitrogen 62%, compared to the standard diet.

Bacterial fermentation was increased in the colon of the pigs fed the cellulose diet, as shown with increased volatile fatty acid concentrations and lower ammonium nitrogen in fresh manure.

Results from diets with both cellulose and oligosaccharide show volatile fatty acids in stored manure was reduced. Other volatile organic compounds in air samples also were reduced. This results in less odors from the stored manure.

Volatile compounds containing sulfur can create odors in very small quantities. These were cut only 12% with the cellulose added to the diet.

Reducing Sulfur Odors Researchers conducted further study to reduce odors, especially the sulfur-containing odors. They used synthetic amino acids and reduced the use of sulfur-containing minerals like copper sulfate and ferrous sulfate in pig diets.

Standard diets with 13% CP were compared to 8% CP diets supplemented with lysine, threonine, trytophan and methionine to meet required dietary amino acid levels. The researchers substituted copper oxide and ferric chloride for the most of the mineral sulfates.

As in the previous studies, reducing the crude protein and supplementing with essential amino acids reduced ammonium nitrogen in fresh manure 45% and dropped pH levels by one unit. Similar responses were noted in stored manure.

Diets with the low CP-amino acid diets reduced volatile fatty acids by as much as 61%.

Overall, replacing most of the mineral sulfates in the diets across different CP levels reduced volatile sulfur compounds 49%.

Diets with the low CP-amino acids and copper oxide and ferric chloride reduced volatile organic compounds. Plus, the sulfur compounds found in the air samples dropped 63% on this diet compared to the standard diet.

It is apparent that manipulating hog diets can reduce nitrogen excretion, pH, volatile fatty acids and some other volatile organic compounds in the air. Researchers found some solutions by changing the crude protein, especially by balancing the available amino acids, and the changing the carbohydrate components with fiber ingredients.

These measures can help. Reducing the nitrogen excretion means almost 50% less land needed for manure application. Reducing the volatile organic compounds means less odorous compounds for entering the air.

The diet changes came at a cost of $1-2/pig marketed.

Contributing researchers from Purdue University: Alan Sutton, John Patterson, O. Layi Adeola, Brian Richert and Dan Kelly, Animal Sciences; Albert Hebe r and Don Jones, Agricultural and Biological Engineering.

Contributing researchers from Pennsylvania State University: Ken Kephart, Dairy and Animal Sciences, and Ralph Mumma and Ed Bogus, Entomology. This research was partially funded by the National Pork Producers Council.

University of Minnesota researchers are investigating whether manipulating pig diets can reduce hydrogen sulfide emissions.

Pigs are involved in feeding trials right now for these experiments.

The researchers are feeding a low sulfur diet instead of a typical starter diet sequence.

"We are trying to measure the effects of those diets on hydrogen sulfide gas, as well as on general overall odor," says Jerry Shurson, extension swine specialist, University of Minnesota.

"We think by paying attention to the sulfur content of ingredients, we can deliver the same amount of nutrition to support optimum performance while still minimizing sulfur excretion," Shurson explains. "This may have some influence on odor and hydrogen sulfide levels in confinement buildings."

Results of these experiments will be available in mid-to-late 1998.

Dealing With Multi-Source Nursery Pigs

Mix 'em, keep 'em warm and start 'em on gruel feed.

In a typical community nursery, several sources of pigs are placed in the same room or building, but usually each source is penned separately to keep the health of the groups intact.

That sounds like a good idea. But experience shows commingling several sources of nursery pigs in this manner, even early weaned pigs, has not worked very well. It has resulted in numerous disease outbreaks and caused many pork producers to quit the practice.

Swine veterinarian Allan Carlson suggests mixing multi-source pigs together immediately, regardless of source.

"If you have two or more farms weaning into that nursery, and you try to keep them separate, you will only make matters worse. Because no matter how hard you try to sort pigs by size and put them in an appropriate pen and keep them healthy, you are going to have sick pigs develop and pigs that fall behind. It really messes up the performance of the group on average," says Carlson, a veterinarian with the Swine Health Center, Morris, MN.

"We sort pigs by size and gender on arrival without regard to the source. If you are going to put them all in the same room, literally mix them up at that point," he says.

As you fill a multi-source nursery or finisher, leave at least three pens completely empty, says Carlson. Then, immediately go back through and sort out the unthrifty barrows and gilts and pen them separately in two of the empty pens.

"Now you've got all these poor-doers, separated by sex, together. They can compete better, you can feed them a little bit better, and you can pay more direct attention to them," he explains.

The third empty nursery pen serves as the hospital pen. Put all the pigs you are treating into that one pen. That makes their treatment more efficient and helps prevent further disease spread, points out Carlson.

When he first started using this empty pen approach, producers complained that building space was being wasted. He counters: "You aren't really. You are filling the same space. You are just filling it according to your needs and not just to fill the room."

Early weaned pigs are hardy, but they also need proper care. "We can't just throw them into an environment and expect them to do as good as a pig that is 21-25 days of age," Carlson says. Provide early weaned pigs with a draft-free environment. Use a combination heating system rather than just trying to heat the nursery with propane gas heaters or radiant heaters.

"Using comfort mats or boards with heat lamps and gas or radiant heat in a combination heating system makes it a lot easier to manage the nursery temperature and humidity," he says.

Using a dual heating system, keep the general room temperature at 70"degrees"-75 "degrees" F and ventilate at a higher rate to move more air and reduce humidity. Make sure that temperature is 85 "degrees" to 90 "degrees" F at pig level for the first full week. Then cut the temperature back 1 degrees every other day.

"Pigs can get used to that slow decrease in temperature and it minimizes stress. A lot of new controllers can be programmed to provide this kind of temperature control," Carlson says.

For these early weaning nursery facilities, there shouldn't be more than a 2 "degrees" temperature variation over a 24-hour period, he adds.

Use a ventilation system that preheats the air. Be meticulous about eliminating drafts from around curtains and doors.

Feed, Water It's almost routine now that nurseries receive some 5- to 6-lb. early weaned piglets, points out Carlson. Even with pigs this small, mortality can be kept under 2% using management practices like feeding gruel. Mix pellets with medicated water or milk replacer and work into a paste. "By feeding them a small amount often for the first couple of days, it seems to pick them right up," he says. Feed on a mat the first few days.

Use small feeders. Keep feed fresh. Feed only enough to last 8-12 hours. Pellets spoil quickly in nursery environments, Carlson reminds.

Adding electrolyte products to the water helps combat gastrointestinal problems common to these young pigs, aiding them in eating and drinking.

Don't assume that new nursery piglets know where their water source is. Use small pieces of balsa wood to wedge nipple drinkers open so they drip periodically. More and more producers are using cup or bowl drinkers because nursery pigs find the waterer sooner and consume more water.

Remember, if pigs don't perform up to their potential in the nursery, they won't perform well in the finisher. "If we don't take advantage of the performance potential in the nursery, we are going to lose out on that pig all the way through," he stresses.

Low-Phytate Corn COMING SOON!

Even more nutritional solutions are on the horizon to help pork producers reduce excess nutrients lost in manure. The Optimum Quality Grains alliance between DuPont and Pioneer Hi-Bred International announced the expected introduction of low phytate corn to the market in the year 2000.

Researchers will soon be sharing results from feeding low-phytate corn to pigs.

The new corn was developed when plant breeders were able to genetically reduce the phytic acid content of the grain. Phytic acid is an organic form of phosphorus in corn that is essentially unavailable for use by pigs. It makes up about three-fourths of the total phosphorus in normal corn.

A lot has been written recently about the phytase enzyme that, when added to pig diets, can help the animals better utilize the phytic acid form of phosphorus. Gary Allee, University of Missouri animal scientist, has conducted five of the recent pig feeding trials using the new low-phytate grain. Pigs from 50 lb. to 260 lb. were fed low-phytate corn in one study. "In normal corn, the phosphorus level is in the 10-20% available range," Allee explains. "With the low-phytate corn, you are probably looking at 50-70% available phosphorus. This will result in some dramatic differences in the amount of supplemental phosphorus you are going to have to add to the diet if you are formulating on an available phosphorus basis."

According to Linda Wyss, product manager, corn feed traits, Pioneer Hi-Bred International, pork producers can expect substantial increases in available phosphorus by feeding the new product. Additional value may result from reduced phosphorus runoff.

Gary Cromwell, University of Kentucky, has conducted low-phytate corn feeding trials on both chickens and pigs, and says the results are quite promising. He found phosphorus is three to four times more available in the low-phytic-acid corn compared with normal corn. "This is not a product about which we are making pie-in-the-sky claims," he says. "I think low-phytate corn has some very important benefits and implications."

As with any new development, researchers urge producers to be on the lookout for more research and economic information as it becomes available on this new product.

Conjugated Linoleic Acid - Stay Tuned

University of Wisconsin (UW) scientists first identified Conjugated Linoleic Acid (CLA) as an anti-cancer compound found primarily in meats and dairy products. Research results with mice and humans look somewhat promising. Swine studies are now under way, not only in the U.S., but worldwide.

Scientists speculate market animals fed CLA could have less fat and more muscle, an increased rate of gain and improved feed efficiency. Research trials are following the product from feed trough to dinner table. Could a more healthful meat product result from feeding pigs CLA?

Mark Cook, UW, did the world's first CLA swine study. While he's enthusiastic about the product, he says it's a little early to make sweeping pork industry recommendations. Cook says producers should keep their eyes open. More scientific results will be released within the next month.

"Take the time to get informed as the research results become public, then you can make a good decision," Cook suggests.

Lee Johnston, University of Minnesota, agrees. He tells producers to analyze the data to see if animals fed CLA respond consistently under commercial conditions. "We can be guardedly optimistic, but it is hard to figure out if it's going to be cost effective until we know about the consistency of the response," Johnston says. UW maintains a Web page of CLA research worldwide. The address is: www.poultry.wisc.edu/cla

Diagnostic Tree Pegs Costly Inputs

Efficiency equals economic returns. You've heard that or a similar statement many times before.

Economics, feed efficiency and reduced nutrient excretion all fall within the same economic arena. "Anything we can do in one area helps all the others," says Jerry Shurson, extension swine specialist, University of Minnesota.

To help producers see all the options as they try to make an operation more efficient, both Shurson and Lee Johnston, West Central Experiment Station, Morris, MN, use a feeding program "decision tree" as an illustration (see Figure 1).

Johnston says the decision tree helps organize broad categories of high-impact factors that contribute to high feed costs/cwt. of pork produced. Feed cost/cwt. produced is comprised of whole herd feed/gain and feed cost/ton. Under each of the broad categories is a series of additional, interrelated factors.

"Effective nutritional consultants focus on the broad categories first to determine if performance in that area meets expectations," Johnston explains. "If expectations are met, the next category is evaluated. If expectations are not met, then one must travel down the tree to determine the source of poor performance."

The key to improving feed conversion (F/G), for example, is to start by focusing on the obvious, high-impact factors that can be changed with the least amount of effort. Then move on to the factors that get progressively more difficult or costly to correct, he says.

Shurson says the factors listed under the Whole Herd Feed/Gain "branch" of the decision tree tell a lot about how a farm is doing, but there is more to the big picture than just those areas. "Probably the ultimate measure would be return/sq. ft. or return/pig space when it comes to capturing nutritional value of some diets," he explains. "I think the decision tree helps producers realize when it comes to evaluating feeding programs, it is really a whole combination of things that have to be looked at sequentially."

By doing a better job of estimating nutrient requirements for specific farms, producers can reduce feed cost/lb. of gain. Specific data to use in estimating those requirements include: feed intake, lean gain/day (in the grow-finish stage), gestation weight gain, lactation performance measures (such as feed intake and litter weaning weight) and weight gain and feed intake in the nursery.

Feed Quality Control Shurson says quality control of feed manufacturing can either support or interfere with providing the desired diet composition to pigs. Formulation accuracy, correct particle size and mixing time are all crucial components of a feed quality control program. Having accurate scales (and making sure they get used) is another key.

Records should be kept on all production areas, including feed use. Johnston says at the very least, producers should record the weight of all feed deliveries to each phase of production, and the weight of all live pigs and sows leaving the unit.

Correct Ingredient Use Another key is to use every ingredient correctly. Shurson has seen a number of diets, particularly nursery diets, using both zinc oxide and copper sulfate.

"First of all, zinc oxide at high levels fits best within the first couple of weeks after weaning," Shurson explains. "We shouldn't feed it longer than that because of potential toxicity problems. A lot of producers are continuing to use copper sulfate with high levels of zinc. There is no reason to do that because there is no additive effect of having both in the diet."

Shurson says some producers are keeping copper sulfate in diets all the way to the finisher. "Copper sulfate acts like an antimicrobial and can have negative effects on solids' breakdown in anaerobic pits," he says.

Mycotoxin tests should be performed regularly, Johnston says. Midwest producers should be testing for vomitoxin, which reduces feed intake, and zearalenone, which causes high embryo mortality at high levels. Producers in the South should test for aflatoxins, which compromise pigs' immune systems.

Management Production System Johnston says alterations in management practices that increase comfort and improve health of growing pigs, finishing pigs and sows will likely improve efficiency of converting feed to pork.

Some areas, such as genetics, health, temperature/ventilation, space, feeder space, added fat, mixing/moving and growth promotants, repeat on various branches of the tree.

Johnston suggests implementing all-in, all-out pig flow to improve health status and allow easier adoption of phase feeding programs. He also says a rigid biosecurity program must be maintained. "Healthy pigs that are free of parasites are more efficient than pigs with lower health status," he says.

Keeping growing pigs and sows cool during hot weather helps reduce the amount of feed required and helps increase performance. However, Johnston says the cost of keeping animals cool needs to make economic sense in relation to the feed cost savings.

Johnston says pigs should not be overcrowded if producers are seeking to improve feed conversion. "Producers still need to figure out if this is the best economic strategy when considering the relative costs of feed and facilities," he says.

Fat and fiber levels should be adjusted based on environmental temperature. According to Johnston, the level of fat and fiber in the diet has a profound effect on the efficiency of feed conversion for growing-finishing pigs. His rule of thumb - for every 1% increase in dietary fat there is a 2% improvement in feed efficiency. "It is important to be aware, however, that fat supplementation may improve feed efficiency without improving economic returns," he cautions.

Increasing dietary fiber negatively influences feed efficiency. Increasing fiber levels is more detrimental in young pigs compared to older pigs. "To achieve maximum feed efficiency, remove fibrous feedstuffs from nursery and growing pig diets," Johnston suggests.

He says it is also important to minimize social stresses associated with mixing pigs.

Moving to the feed wastage branch, Johnston recognizes wastage occurs on every farm. Wasted feed can have a big economic impact. "A general thumb rule in the grow-finish phase is that if any feed is observed on the floor, this equates to at least 10% feed wastage," he says.

He suggests checking and adjusting feeders between two and three times a week. Feeder settings should be adjusted so there is slightly less than 50% of the feed trough covered. This setting keeps feed fresher in the trough, minimizes spoilage, and reduces feed build-up. Feeders should adjust easily so workers will make the adjustments.

Feeders should be designed to match the age and stage of the pigs using them. Pigs and sows should be able to consume feed comfortably without removing their heads from their feeders.

Worn out feeders should be replaced, Johnston says. Leaky bins, bin boots and augers should also be repaired or replaced. Prevent pigs from soiling the feed trough with feces or urine. Implement rodent and bird control programs to prevent contaminated feed.

Ingredient Cost "Ingredient cost contributes the majority of the total feed cost/ton, followed by the manufacturing cost, delivery cost and profit margin," Shurson says. He points out corn (primary energy source), soybean meal (primary amino acid source) and dicalcium phosphate (primary phosphorus source) are the three greatest cost contributors to ingredient cost of the diet. "Special considerations must be given toward meeting nutrient consistency and quality standards, while minimizing the purchase price of these nutrient sources," he says. Forward contracting corn and soybean meal is a good way of controlling diet cost/ton.

There should be a reason for adding every ingredient to a diet. "The ingredient has to provide something," Shurson says. "If you take the time to look at revenue, or return/pig space, you can account for effects of better quality nutrition on growth rate, pig flow and carcass benefits. You need to make sure the ingredients make economic sense, while not undervaluing proven benefits."

Shurson says the same rule applies to feed additives. "You should have confidence that the additive will return more money than it costs to put in," he says.

According to Shurson, on-farm feed manufacturing costs, including depreciation, interest, labor, utilities and analytical costs, range from $5 to $50/ton, depending on milling capacity and tonnage required/week.

Delivery cost from commercial mills typically costs $.90 to $1.20/loaded mile or $4/ton in a loaded truck. "Profit margins vary considerably among commercial feed products, with complete pelleted starter feed generally having the highest margin over costs, and finishing feeds having the lowest margins," Shurson says.

Making Good Decisions Both Shurson and Johnston emphasize the importance of consulting with an experienced nutritionist when evaluating swine diets. "Periodically reevaluate formulations to ensure a continued good fit between diet formulations and the performance potential of the pigs," Johnston says. "However, one should resist the temptation to immediately tinker with re-formulation of diets when pig performance does not meet expectations."

Johnston says the goal is to "walk" the nutrients off the farm.

Four Packers Kill 57% Of Hogs

Smithfield overtakes IBP as largest pork packer in the U.S.

Changes in the pork packing industry abound. The industry is becoming increasingly concentrated and integrated.

But experts looking at the changes do not believe there is cause for great alarm. A report prepared by John Lawrence, John Schroeter and Marvin Hayenga of Iowa State University (ISU) says the industry is still far away from a monopoly.

More Concentration Pork packers continue to concentrate processing among the very largest firms. The four largest packers now process 57% of the nation's hogs versus 32% in 1985. This concentration remains lower than in the cattle business. However, the four largest cattle packers process 80% of the market.

The four largest pork packers have changed over the years. Smithfield is now the largest pork packer in the U.S., recently exceeding IBP, now the second largest pork packer (Table 1).

Smithfield has been on a heavy expansion schedule since 1994 when they were ranked fourth. They built the largest pork packing plant in the world in North Carolina, which processes 26,000 head/day. They also acquired the John Morrell plant in Sioux Falls, SD. Their pork processing share is now 19% of the market.

IBP's growth has been slower. They added a new Indiana plant but closed a Council Bluffs, IA, plant last year. They process 17% of U.S. hogs.

Swift (ConAgra) holds the third spot with a 9% market share and Excel (Cargill) at fourth also with 9% market share.

Other pork packers have changed size, according to the ISU report. Farmland Foods increased in size while Hormel decreased. Seaboard entered the pork processing business in late 1995 with a plant in Oklahoma. They've recently moved to a double shift.

In 1994, the flood of hogs on the market caused packers to hit their processing capacity limits. This in turn led to sharply lower hog prices. Since then, packers increased plant capacity 15%. The ISU experts expect capacity to remain ahead of hog supplies for many years.

Packer Costs The packer's share of the farm-to-wholesale margin has averaged about the same since 1980, according to the ISU report. Meanwhile, the wholesale-to-retail sector's margin has, on an average, steadily increased.

The report states packers are experiencing better efficiencies and stagnant nominal wages. They can operate their plants efficiently with low-skilled labor and high turnover rates, the report explains.

Between 1987-92, wages in meat processing were stable or fell. This is shown in a comparison of meat industry wages to manufacturing wages. In 1987, meat processing wages were 82% of manufacturing wages, but fell to 71% by 1992.

The report says the cost of hogs amounts to 70% of all fixed and variable costs for a packer. Other costs of operation from 1996-97 were $20/head for two-shift plants and $22/head for single-shift plants. Labor accounts for about half of the variable and overhead costs.

Filling plant capacity greatly affects packer profitability. They operate cheaper at optimum capacity.

The need to keep capacity filled helps drive the trend to integration. It also helps push packers to form long-term hog supply contracts with pork producers, the ISU report adds.

Increased Integration One trend among packers is more integration. Smithfield is the largest integrated packer - currently believed to rank third in U.S. hog production. It also is tightly coordinated with other large producers, the ISU report says.

Seaboard has constructed a large hog operation around its packing plant in Oklahoma.

Other integrated packers include Excel, Farmland Foods, and Premium Standard Farms, which recently had a majority stake purchased by Continental Grain Co.

Tyson, one of the largest pork producers in the country, attempted integration in the pork business. They bought a slaughter plant in 1993 and sold it two years later.

The report also noted the large number of hogs imported into Iowa for processing at in-state packers. In 1996, 8 million hogs were brought in by packers to fill capacity.

Life Without Growth Promotants

Antibiotic growth promoters, antibiotic growth enhancers, pro-nutrients - call them what you like. Europeans within theEU are moving toward banning them in livestock feeds.

The Swedes did so 12 years ago. From March 1998, the Danes are to "fine" their pig producers about one cent a pound deadweight if they include any others outside avoparcin and virginiamycin, which are already blanket-banned. Now British supermarkets are increasingly refusing to buy pork which has been routinely fed on antibiotic growth promoters.

Of course, this is illogical. But more and more European consumers are now hypersensitive over meat safety and are not convinced we aren't pushing farm livestock too hard anyway.

Americans are (probably justifiably) upset that Europe will not accept your hormone-treated beef.

Friends, this is not a cunning defensive marketing stratagem - our consumers wouldn't accept it as a free gift if they knew the beef was raised on hormonized chow. So forget it. The prejudice is now too entrenched. And antibiotic-treated pork looks like joining the club, despite a determined rearguard action which states, factually, the following:

Case For Antibiotics * The antibiotic growth promoters permitted are proven to be safe; there is no evidence of residues causing resistance. Any that have, have been expurgated.

* Permitted antibiotics have been in use for decades with no known ill effects.

* The pigs benefit from antibiotics. When Sweden banned them, postweaning mortality rose 1.6%c and scouring rose from 2% to 8% (now 5%).

* The environment benefits from antibiotics. Improved digestibility of feed reduces slurry output by 12 gal./pig. In the EU, 15 countries have determined that from pigs alone, antibiotic growth promoters reduced nitrogen output by over 58,000 tons/year, as well as 18,500 tons phosphates/year.

* The consumer benefits. Should antibiotic growth promoters be banned in Britain, production costs for pork would rise by 8.2%. Who pays? The consumer in the end. The producer does to start with, then it tends to filter through.

* The hog farmer benefits. With no in-feed antibiotics, the feed conversion rate worsens by 6%, growth rate slows by 5% and veterinary costs rise by 4%.

But it all looks to be of no avail; the public has convinced itself that growth promoters are bad things and that they should go, just like hormones and PST.

Surviving A Ban Can we survive a ban on antibiotic growth enhancers?

Asked to cover this subject at a conference in 1997*, and again at a think-tank in 1998, I have researched the situation in depth. Here are my findings. Sure, they are just one observer's conclusions, but I don't think they are far out. I have studied what happened in Sweden and what their countermeasures were and what they cost.

In Britain, I have five clients who voluntarily gave up antibiotics in feed eight years ago to secure a niche market in "antibiotic-free pork." Three have survived, getting only an 8% premium over average returns. What did they do and what did it cost?

1) Doing nothing is unaffordable. Removing antibiotics saves 1.25% of your feed costs. Doing nothing to replace them increases total costs by 5-15% and can raise veterinary/medical costs by 10-42%.

These two alone would reduce net margin/pig in UK by 36-48% (January 1998).

2) Countermeasures. Tables 1 and 2 give a list of findings. All are solutions that have been tried and which, on the whole, do work. No hog farmer can do all of them, especially at once. Several of the findings in the two tables you can do virtually tomorrow. The other items will take longer, because they are alterations to management systems and housing.

The cost column is based on UK costs per pig during late 1997. I guess that in the U.S., these costs will be 10-17% cheaper, especially in the replacement drug/nutrient area.

The costs are confused by the items marked "now." These are ideas you should be doing now anyway. On the farms studied, these ideas were hurried into practice because of suddenly being unable to use antibiotic growth promoters.

In theory, on the "ideal farm," these "now" ideas can be deducted from the overall cost of countermeasures. This is important because on the less-than-ideal farm, the cost of mitigating the damage caused by not using antibiotic growth promoters will be much higher. You have more to lose.

And, there's no getting away from the fact that management changes, not feed changes, force survivors of such a ban to assimilate the bulk of the costs. These changes will cost you between 5-8% more to maintain the output formerly provided by the withdrawn growth promoters.

Worth Doing But it must be worth doing because taking no action will cost at least the lower level of 5% and maybe as much as 15%. I know of one producer who just sat tight and did nothing who suffered $15/pig drop in income when his breakeven floor was $11.55. He went out quite quickly.

Will it happen in the U.S.? I hope not. But if it ever does, learn from our hard-won experiences. Better still, start down the defensive road I've described now, as it is bound to pay in the end, antibiotics or no.

* For John Gadd's full, 14-page paper on surviving a ban on antibiotic growth promoters, consult Biotechnology in the Feed Industry (1997), eds Lyons and Jacques, Nottingham University Press, Nottingham NG11 0AX, UK.

On-Farm HACCP Programs Coming

Hormel to only buy Pork Quality Assurance Level III hogs in 1999.

Up to now, pork packers have borne the brunt of the responsibility for food safety.

"Right now, the packers have taken on that responsibility," says Ray Bjornson of Hormel Foods Corp.,Austin, MN. "But ultimately, it is going to be shared by the entire industry. The industry includes everybody from the time before the pig is conceived through the time it gets into the retail case and is picked up by the consumer," he continues. That especially includes the time the pig is in the producer's care, Bjornson emphasizes.

"The industry as a whole is responsible for supplying a safe, wholesome product to the consumer, and we have to work together to accomplish that goal," he adds.

New Hog Buying Policy The federal government enacted a new meat and poultry inspection program on Jan. 26, 1998, whereby large packing plants (500 employees and up) must have a HACCP (Hazard Analysis and Critical Control Points) plan in place to prevent product contamination.

Hormel recently announced a new hog buying policy which coincides with the HACCP plan. Bjornson says beginning Jan. 1, 1999, the company will no longer buy hogs unless they are from PQA (Pork Quality Assurance) program Level III certified producers. PQA is a three-stage, voluntary educational program sponsored by the National Pork Producers Council (NPPC), in cooperation with the National Pork Board. By enrolling, producers review their whole production system with their verifier and learn how to raise hogs free of violative chemical residues.

Bjornson explains the new policy includes all hogs, not just those sold under contract, as has been rumored. Currently, all contracted hogs must be at Level III or working toward that status.

He stresses the policy was not implemented in direct response to the HACCP rule. "It's just the right thing to do. Hormel is a leader and our customers deserve safe, wholesome products, and this is just one more way to ensure that they get that."

Under PQA, producers must recertify every two years to retain status. Bjornson says Hormel will be making sure producers in all of their buying areas know about recertification procedures as well as educational meetings where producers can learn about the PQA program.

State Producer Support Minnesota's pork industry strongly supports Hormel's move, according to David Preisler, executive director of the Minnesota Pork Producers Association (MPPA).

At its annual meeting in January, the producer group passed resolutions supporting the PQA program. The chief one asks that all U.S. producers reach PQA Level III certification by the year 2000.

"The idea is that if the U.S. is going to continue to grow world markets and be serious about that, and also if we want to have the confidence of our domestic consumers, we need to be professional in the way that we produce pork. We need to be responsible in how we manage quality assurance," comments Preisler.

In a second resolution, the MPPA supported a national effort to form an identification system for all hogs to allow food safety problems to be traced back to the farm of origin. Preisler notes there already is a fairly reliable slap-tattoo system for identifying market hogs, but the backtag system for sows and boars has a poor record of retention. Should a food safety crisis arise, the industry needs the capability of tracing back problems, to be able to isolate them and correct them, he adds.

Packer Testing Options To comply with the new HACCP regulations, packers must write HACCP plans which show that they have some knowledge of the incoming animals, the premise where they come from, explains Paul Sundberg, DVM, director of Veterinary Issues for the NPPC. USDA's Food Safety and Inspection Service (FSIS) doesn't specify how that should be done. One approach is that taken by Hormel, he says. There are three other options:

1. Test random numbers of hogs for violative chemical residues.

There will also be bacterial screening to develop the baseline data required by FSIS for E. coli and salmonella. But don't expect to see full-fledged testing for microbiological hazards with traceback to the farm because researchers know little about preventing those problems on farm.

2. Suggest that animal drug residues aren't a food safety hazard at all, at least in market hogs. "The incidence of violative residues is so low, it has consistently been at the 1% or less detection level," explains Sundberg. "We have history that shows since the PQA program started in 1989, we in the pork industry have been at or below the 1% detection level on antibiotic residues in market hogs so that those chemical residues have practically become a non-issue."

3. A letter of guarantee from the producer that says his/her animals aren't in violation of the Food, Drug and Cosmetic Act.

Other Packer Responses At Smithfield Foods, two slaughter plants in Virginia and one in North Carolina, suppliers are required to sign a letter of guarantee to accompany each load of hogs, says Jeff Luckman, vice president of Livestock Procurement at Smithfield. The letter, drafted by the company, indicates the supplier is following proper drug withdrawal guidelines and is feeding and managing each load of hogs sent to the packer in a quality assurance manner.

Luckman explains that the Smithfield plants on the East Coast are dealing with basically about 30 large suppliers, the majority of whom are at Level III of the PQA program. "We have no problems with the producers. We work with quality suppliers and they have nothing to hide."

Jeff Arner, manager, Livestock Procurement, Hatfield Quality Meats, Hatfield, PA, says he is confident that most of their producers are already at PQA Level III, although there are no formal requirements for certification.

"Hatfield has aggressively worked with their suppliers to become PQA Level III certified," adds Arner. "We have promoted the PQA program by participating in regional meetings and by identifying Level III status on our settlement sheets. To document Level III status, producers must have a current Level III certificate on file at Hatfield. We strongly believe the PQA program is an important first step in ensuring a safe food supply for our customers."

Sioux-Preme Packing at Sioux Center, IA, is a small packing/processing facility that doesn't have to implement a HACCP program in the plant until January 2000, when all meat and poultry plants must be in compliance.

Company official Gary Malenke has two big concerns regarding pork quality assurance. The first is the need for education to ensure that if producers and packers do their job, that it will be carried through the food chain until the consumer makes a purchase.

According to the American Meat Institute (AMI), thousands of meat and poultry plant workers have been trained to use HACCP plans to produce safer products. But tens of thousands of other food industry employees are also being trained how to use HACCP, from workers in the supermarket to foodservice and restaurants. Consumers are also getting better education through the new federally sponsored "Fight Bac!" public health education campaign which teaches consumers to clean, chill, cook and store foods properly.

But, Malenke and other packers wonder about the ability to monitor and follow through on PQA program standards.

PQA Program Status PQA program coordinator Sundberg is keenly aware of Malenke's concern about monitoring, and believes that most producers who participate keep up with the key elements of the program.

As of early February, there were 21,200 certified, Level III PQA producers, who are responsible for the "vast majority" of pigs produced in the United States, says Sundberg.

Hormel's recent announcement has given a big boost to the producer numbers in the PQA program, he explains. There have been more than 2,000 requests for PQA materials in just the last few weeks.

The sudden windfall for requests comes because there are still a number of producers who aren't familiar with the PQA program, says Sundberg.

While the PQA program still focuses on proper use and withdrawal of animal drugs, Sundberg reminds producers of a few changes announced last summer. "We added an explanation of what HACCP is and how the producer can satisfy packer requirements within the context of the HACCP program in their role as a supplier." And, in addition to the drug handling and residue avoidance information in the new food safety section, new material is provided on herd health plans, animal welfare and continuing education.

"Perhaps packers may not be directly concerned if you have a herd health program, but it does affect how and if you use drugs on your farm and absolutely plays a role in the whole industry's pre-harvest food safety program," he says.

Sundberg is currently reviewing an eight-state survey of producer attitudes about recent PQA program changes.

What comes after PQA Level III has not been decided, he says. NPPC is considering a professional pork producer or similar classification which could incorporate other assurance programs such as the environmental assurance program.

PQA Level III Standard But for now, PQA Level III is the gold standard. To Worthington, MN, pork producer Linden Olson, the industry must expect the quality of its product to be just as good as what producers would demand of any other product they may buy in the store.

"The days of generic pork are probably limited if for no other reason than because we as consumers demand assurances about what we are eating that we have not demanded in the past. It is very hard to do that without some sort of program controls in place all along the pork chain," relates Olson.

Therefore, the product standard soon becomes PQA Level III pork, he predicts. Instead of a premium, producers may be looking at discounts for not achieving that standard, he says.

Hormel's Bjornson emphasizes they do not anticipate paying premiums for production practices producers are supposed to be following anyway.

The U.S. Department of Agriculture is proposing a record $573 million in "user fees" to pay for meat and poultry inspection.

The American Meat Institute (AMI), representing the nation's meat and poultry slaughter and processing plants, strongly opposes the proposal in USDA's fiscal year 1999 budget.

"The $573 million budget request for user fees is the largest ever," says AMI President J. Patrick Boyle. "And I can say with certainty it will be the most vigorously opposed."

The user fee proposal is opposed by industry, producer, consumer and labor groups alike.

Every attempt to impose user fees has failed, including last year's attempt to collect $390 million in fees.

Agriculture Secretary Dan Glickman defends the user fees proposal as necessary to doing a solid job of inspecting people's food, particularly with the new HACCP (Hazard Analysis and Critical Control Points) system.

Glickman also cites a reduction in his budget from $63 billion in 1993 to $54.3 billion for FY '99, including a 2% cut in the number of food inspectors. There are about 7,500 inspectors working in 6,400 plants around the country.

As it stands, taxpayers pay the cost of inspection unless an inspector works overtime.

Under USDA's plan, processors would pay the full cost through a fee based on production volume. Glickman said the plan would cost consumers about a penney a pound if processors decide to pass the costs along.

The National Pork Producers Council (NPPC) has just released a PQA/HACCP video which explains the HACCP (Hazard Analysis and Critical Control Points) management system and how it affects the packing industry. It also explains how HACCP will affect the producers who are supplying the packing industry with product.

The video outlines the 10 Good Production Practices in the PQA (Pork Quality Assurance) program, which is a HACCP-like program for pork producers, explains Paul Sundberg, DVM, NPPC's director of Veterinary Issues.

The 20-minute PQA/HACCP video is available through the NPPC at a cost of $15. For additional information about the PQA program or to order the video, call the NPPC at 515/223-2600 or fax at 515/223-2646.