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Spike in Variety Meat Sales Helps Boost Pork Export Values

A 45% hike in sales of pork variety meats in February helped overcome a slight dip in exports of pork muscle cuts to rally total pork exports to a 4.7% increase in value over February 2008, according to the U.S. Meat Export Federation (USMEF).

“We anticipated sharp declines in pork exports to certain markets, including China, when compared to the results we saw last year,” says USMEF President and CEO Philip Seng. “But markets such as Japan and Mexico continue to perform extremely well, and U.S. pork is regaining traction in many key regions across the world. The diversity and global reach of our marketing efforts are really paying off.”

For February, total pork exports reached $368.2 million in value. Pork muscle cut exports declined by about 1% from last year to $305.6 million, but still remained 45% above values for February 2007.

The volume of pork plus pork variety meat exports at 349.3 million pounds was an increase of 1% over February 2008 and 57% above February 2007.

For January-February 2009, pork plus pork variety meat exports rose 3% in volume over the same period last year to 694.7 million pounds and 6% in value to $728.4 million.

Japan continued its value market dominance in 2009, posting February purchases of 83.3 million pounds of U.S. pork worth $138.6 million, greater by 18% in volume and 32% in value compared to February 2008.

Mexico showed even greater growth in February, with volume surging by 64% over last year to 93.6 million pounds and increasing by 60% in value to $65.6 million.

Other markets showing excellent growth included Taiwan, which doubled the value of its pork plus pork variety meat purchases, and increased volume by 107% compared to February 2008.

Exports to the 10-member ASEAN (Southeast Asia) trade region climbed 60% in volume and 80% in value, led by gains in the Philippines and Singapore.

Exports to Australia climbed by 76% in both volume and value in February, while sales to the Caribbean jumped by 122% in volume and 114% in value over February of last year.

All those gains helped weather steep declines in U.S. pork sales to Russia and China, according to USMEF. Year-to-date total pork shipments to Russia have declined 49% in volume and 57% in value. Exports to China/Hong Kong declined 46% in volume and 48% in value for the period, with exports to China plummeting nearly 75%.

Those results were not unexpected considering the efforts of both countries to grow domestic pork production and reduce their reliance on imports.

China has been especially aggressive in these efforts, explains Joel Haggard, USMEF senior vice president for the Asia-Pacific region.

“China’s efforts to bolster its hog industry include assistance in the form of direct cash subsidies to large-scale farms, tax breaks for hog producers and development of targeted hog-raising counties throughout the country,” he says.

For more trade news go online to U.S. Meat Export Federation (USMEF).

Meat, Crop Supplies Vetted

In case anyone noticed and was wondering, the identical Q1-2009 slaughter numbers under each forecaster in last week’s Figure 1 (the table of forecasts following the March Hogs and Pigs Report) does not mean that all of us came up with the same number. Heaven forbid that economists would ever be that agreeable or precise.

The Q1-09 number in that table is my estimate of actual Q1 commercial slaughter given two months of actual data and virtually all of the daily federally-inspected slaughter data for March. I should have noted that last week. Sorry if I caused any heart attacks or fainting spells. Groups of economists, even when laid end to end, still seldom reach conclusions!

In my “be-patient-about-hog-prices” columns this spring, one factor that I have not addressed is Lent, which is still a big factor in late-winter and early- spring meat markets. Think of it in these terms — one day per week represents 14% of the meals for that week. While Lent is less observed than it once was, there are still a pretty large number of Catholics and some Protestants that abstain from meat on Fridays during Lent. Removing 1-2% of meat and poultry demand during the spring is still a very real possibility and putting it back into play next week could well be the kick start that meat and poultry markets need to begin a spring rally. The bottom line: Don’t’ forget Lent when you think about seasonal price variation. It’s still a factor.

USDA’s Crop-Use Projections
USDA’s monthly World Supply and Demand Estimates (WASDE), released Thursday morning, contained no big surprises that will move markets significantly. This report contains no forecasts for 2009-2010. The only objective data that USDA has at this point is the prospective plantings published on March 31. Projections for this year’s crop and usage will begin with the May Crop Production report and WASDE.

For corn, USDA increased its estimate of feed and residual usage by 50 million bushels to 5.35 billion. I have felt USDA has been low on this number for some time and still may be. The 5.35 billion estimate is still 10% below last year’s figure and roughly 7% lower when additional DDGS availability is taken into account. Reductions in egg sets and cattle placements may justify that large of a reduction, but the forecast of only 4% lower commercial slaughter and a good portion of that caused by fewer Canadian market hogs that don’t eat grain in the United States suggests that the 7% decline may not be achieved. Much depends on how long the broiler and cattle feeding sectors continue to feed fewer animals.

USDA also reduced non-ethanol industrial usage by 10 million bushels, but left ethanol usage stand at 3.7 billion bushels. That is barely enough corn to meet the 2009 renewable fuel standard of 10.5 billion gallons of ethanol.

The net effect of the changes was to reduce projected year-end stocks by 40 million bushels to 1.7 billion. That represents 14% of total annual usage or about 7.3 weeks worth of corn. USDA added 10 cents to the bottom and top of its projected range for the U.S. average farm price, leaving the range at $4.00 to $4.40.

Year-end stocks for wheat, even after being reduced by 16 million bushels to 696 million, are still projected to be over twice as large as last year. Wheat played an important role in feeding decisions last summer. USDA has $6.80 to $6.90 as its predicted range for this crop year, which ends in May for wheat, thus the very tight range since the crop year is almost over. Much higher world supplies and concurrently lower forecast prices kept projected U.S. wheat acres over 4 million lower than last year in the Prospective Planting report, so the degree of help that wheat may provide livestock feeders this year may not be nearly as large as one year ago.

World oilseed supplies were lowered from March’s estimates by 4.36 million metric tons or 1%. About one-seventh of the reduction was in the United States. The conclusion is that the world supply situation is driving soybean prices.

USDA reduced projected soybean carryout this fall by 20 million bushels, primarily due to higher soybean exports. That reduction drove the projected price range to $9.25 to $10.05/bu., higher on both ends than the March estimate of $8.85 to $9.85. Higher beans means higher meal and USDA added $15/ton to the bottom of its previous estimated range. The April estimate is $280 to $300/ton.

Meat Supply Adjustments
USDA made only minor changes to its forecasts for meat supply and usage. Pork production was decreased slightly while exports were increased by 50 million pounds after January’s decent showing. The net effect was to reduce projected 2009 disappearance by nearly 300 million pounds of 0.8 lb./person.

One piece of information that is a bit concerning is that USDA reduced its estimate for broiler production form 35.775 billion pounds to 35.475 billion pounds and reduced its estimate of 12-city broiler price from $81-$86 to $79-$83. This reduction is no-doubt driven by the lack of price impact that broiler industry output reductions have caused thus far – and that is a concern that I share. It doesn’t speak well at all for broiler demand.




Click to view graphs.

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

Targeting Pre-Weaning Death Loss

As we focus our management skills on saving more newborn pigs, it is critical to spend some time studying the pigs that die after the birthing process, but were not recorded as stillborn or mummified pigs.

Charts 1 and 2 from the Swine Management Services (SMS) database show the trends for pre-weaning death loss has risen for the last 12 quarters. Chart 1, representing the top 49 farms, shows a 1.1% increase for the last 12 quarters. Similarly, Chart 2, encompassing the top 233 farms, shows an increase of 0.40%.

Chart 3 displays the variation in pre-weaning death loss across the 568 farms in the database, where pre-weaning death losses range from <5% to >20%. When we combine stillborn and pre-weaning death loss (piglet survival), the percentage of piglets that survive has declined (Charts 4 and 5) during the last 12 quarters. Looking closer, the top 49 farms have dropped 2%, from 82.9% to 80.9%, and the top 233 farms have dropped 1%, from 82.1% to 81.1%. Also, as Chart 6 shows, there is a big variation in piglet survival among farms – ranging from <65% to 94%.

At SMS, we have 21reasons for a death loss (Table 1). These categorical reasons are used to record the cause of death. In turn, the tabulation of these reasons and day of death are analyzed and serves to guide training programs to reduce death losses and to ensure that piglet deaths are recorded accurately.

As the number of total pigs born per litter (stillborn and live born piglets) increases, the gains in litter size are running on par with an increase in pre-wean mortalities. Some of the factors that affect pre-weaning death loss include: sow parity, mothering ability, health, piglet birth weight, farrowing room temperature, flooring type, supplemental heat source, hygiene, ventilation, farrowing room personal, pig viability at birth, crossfostering methods, feeding and watering of sows, colostrum management, sow teat development, etc.

The following practices may help reduce pre-weaning death loss:

  • Pre-farrowing: Make sure farrowing rooms are clean and dry; load farrowing rooms 2-3 days before sows are due to farrow; make sure heat sources are ready to go.
  • Farrowing personnel: Make sure the staff is trained to identify and treat chilled pigs by drying them off, applying drying agent, and/or placing them under a heat source. Some units have a Day-1 person who is responsible for attending all farrowings, making sure pigs are dry, and ensuring all pigs have nursed before handing the room off on Day 2. This person needs to be able to see pigs that are falling back and understand how to properly cross-foster piglets during the first 24-48 hours of life.
  • Split suckling: Make sure all pigs are split suckled within 6-18 hours after farrowing to improve colostrum intake without excess competition.
  • Environment: Lowering room temperature after farrowing will encourage pigs to stay under the heat source; lower temperatures improve sows’ daily feed and water intake.
  • Hygiene: The farrowing room must be clean, disinfected and dry when new sows are brought in. Sows should be washed before entering farrowing room so new pigs are not exposed to worm eggs, E. coli, etc., which are often found on the sows and in the teat plug.
  • Water and feed intake for sows: To promote optimum growth of the piglets and reduce weight loss of the sows, it is important that lactating sows get all of the feed they can eat. Water is often forgotten as part of the nutrition program. Sows will consume 5-10 gallons of water/day during lactation. Flow rate of nipples in farrowing should provide a minimum of 2 quarts/minute.
It is important to have a set of standard operating procedures (SOPs) that address each of the points above. Your personnel in the farrowing room have a direct influence on how many live pigs will be weaned. A 2,500-sow unit that improves piglet survival by just 2% will sell, on average, 25 more pigs/week.

Key Performance Indicators
Tables 2 and 3 (attached) provide 52-week and 13-week rolling averages for key performance indicators (KPI) of breeding herd performance. These tables reflect the most current quarterly data available and are presented with each column. The KPI’s in the tables can be used as general guidelines to measure the productivity of your herd compared to the top 10% and top 25% of farms, the average performance for all farms, and the bottom 25% of farms in the SMS database.

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




Click to view graphs.

By Mark Rix and Ron Ketchem,
Swine Management Services, Inc.

Biofuels Pipeline Proposed

Senators Tom Harkin (D-IA), John Thune (R-SD) and Tim Johnson (D-SD) have introduced legislation that will authorize loan guarantees for the construction of renewable fuel pipeline projects. The purpose of the legislation is greater transportation efficiency of renewable fuels to the major population centers, especially in the eastern part of the United States. Senator Harkin said, “Promoting the planning and development of projects that transport renewable fuels efficiently and inexpensively helps enlarge the market for biofuels like ethanol, reduces our dependence on foreign fuels, and will provide good construction jobs.” Senator Thune added, “These pipelines will reduce energy costs across the country as well as create an estimated 25 jobs for every $1 million of construction. Access to ethanol-dedicated pipelines will benefit both consumers and the ethanol industry for years to come.”

Phase-Out Ethanol Support — Congressman Joe Crowley (D-NY) plans to introduce the “Affordable Food and Fuel for America Act.” This legislation would phase out the 54-cent tariff for imported ethanol and the ethanol blender’s tax credit over a five year period.

Congress Rejects Farm Bill Budget Proposals — Congressional Democrats passed a $3.5 trillion budget that includes many of President Barack Obama’s proposals. However, the Congress rejected the administration’s plan to alter the 2008 farm bill by phasing out direct payments for producers with gross sales over $500,000 and capping farm payments at $250,000. The administration met strong resistance from a united agriculture community and the leadership of the House and Senate agriculture committees. There is a strong feeling among Congressional agricultural members that the 2008 farm bill made cuts in farm programs and that further cuts would weaken the agricultural economy.

FDA Delays BSE Rule — The Food and Drug Administration (FDA) announced it would delay implementation of the bovine spongiform encephalopathy (BSE) final rule, “Substances Prohibited from Use in Animal Food or Feed,” until June 26. FDA indicated it was taking this action because affected parties have indicated their concerns about being able to comply with the original implementation date of April 27. Some indicated difficulty to find alternate ways of disposing of material that may “no longer be rendered for animal feed use” when the final rule takes effect.

USDA Confirmations — The U.S. Senate has confirmed Kathleen Merrigan as deputy secretary of agriculture and Jim Miller as under secretary of agriculture for farm and foreign Agriculture. Krysta Hardin, chief executive officer of the National Association of Conservation Districts, has been nominated to be USDA’s assistant secretary for congressional relations. More USDA nominations are expected in the near future.

Congressional Recess — Congress is in a two-week recess, returning on April 21. Key issues will be the budget conference report and fiscal year 2010 appropriation hearings.

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

PQA Plus Gains Momentum

Over 26,000 U.S. pork producers have received Pork Quality Assurance Plus (PQA Plus) certification, according to a recent report from Erik Risa, manager of education programs for the Pork Checkoff. The number of sites that have received PQA Plus site status has also grown.

In addition, over 16,600 individuals have been certified in the companion Transport Quality Assurance (TQA) program.

Adding to the momentum is an announcement from one of the nation’s largest pork production systems, Murphy-Brown LLC based in Warsaw, NC, noting that PQA Plus certification training and farm site assessments of all its company-owned and contract grower-owned swine production operation managers and farms in the United States will be completed before the end of 2009.

In December 2008, Hormel Foods also formalized its support of the PQA Plus and TQA programs by requiring its producer suppliers to be certified and have their sites assessed under PQA Plus. Hormel also will require that all who transport hogs to its plants be certified in TQA.

“Thousands of responsible pork producers from around the nation have demonstrated their commitment to the health and well-being of the animals in their care, and to providing a safe and wholesome product to their customers by participating in PQA Plus," Risa said. "We are excited that the momentum behind the program continues to build."

At the recent Pork Industry Forum in Dallas, TX, pork producer delegates voted overwhelmingly in support of PQA Plus. "Participating in PQA Plus by getting PQA Plus-certified and by having an assessment of animal well-being practices conducted on their farms is another way pork producers can demonstrate to the industry's customers that they do the right thing on their operations every day," Risa added.

PQA Plus is the industry's flagship pork safety, antimicrobial use and animal well-being program. The program demonstrates to customers, consumers and the public that the pork industry is committed to the responsible production of safe and wholesome pork product. More information on PQA Plus can be found online.

Congratulations to the Environmental Stewards

New Limits Missing in Obama’s Budget Plans

The chances the Obama administration – and some Midwest, farm-state senators – will be able to impose new limits on spending on farm programs appear to be growing dimmer for the 2010 fiscal year.

In his budget message earlier this year, the president said he wanted Congress to phase out direct payments to farmers with more than $500,000 in gross annual sales and limit total farm program payments to $250,000 per individual.

Neither of those provisions made it into the fiscal 2010 budget plans passed by the House and the Senate on April 3. Both were passed along party lines, by a vote of 55-43 in the Senate and 233-196 in the House.

Sen. Charles Grassley, R-Iowa, offered an amendment that would have capped farm program payments at $250,000 during the Senate Budget Committee’s budget hearings. But three senators – Robert Byrd (WV), Patty Murray (WA) and Ron Wyden ()R) – changed their votes on the amendment, which the committee passed in 2008.

The turnaround, which led to the defeat of the amendment by a vote of 13-10, drew scathing criticism from environmental groups, such as the Sustainable Agriculture Coalition, that have been lobbying for stricter payment limits.

The reversal was due, in part, to a series of letters written by Senators Blanche Lincoln (AR), Saxby Chambliss (GA) and Pat Roberts (KS) asking senators not to reopen the 2008 farm bill, which the Senate worked on for more than two years and overrode two presidential vetoes to pass. Representatives Marion Berry (AR), Mike Conaway (TX) and Frank Lucas (OK) wrote similar letters to House members and Agriculture Secretary Tom Vilsack.

The president had said he wanted to increase spending on child nutrition programs by $1 billion with the savings on the $500,000 gross sales cap on direct payments and the more stringent payment limit ceiling of $250,000.

The proposal would have pitted farm subsidies against programs for feeding children, two areas which farm organizations have fought for in tandem in the past. A portion of the Senate plan to cut spending on federal crop insurance subsidies by $350 million would go for child nutrition programs. The House budget plan does not include such language.

The two budget blueprints now will be reviewed by a conference committee, which must decide on whether to include provisions that would, like the House plan, allow health care overhaul legislation to move through the reconciliation process and how much in discretionary spending should be provided to the Appropriations panels to write the 12 annual spending bills.

The Senate plan would provide the Senate and House Appropriations Committees with $1.08 trillion, which is $15 billion less than the president requested and about $8 billion less than the House resolution.

The Senate also endorsed, by a 51-48 vote, an amendment offered by Senators Lincoln and Jon Kyl (R-AZ), which would reduce the estate tax rate to 35% and provides an inflation-adjusted $5 million per-person exemption on the estate tax.

The administration’s budget proposals and the payment limit legislation named for Senators Grassley (IA) and Byron Dorgan (ND), could be offered again during the appropriations process but would have to generate more votes and support than in the just-completed budgeting process.

The chances the Obama administration – and some Midwest, farm-state senators – will be able to impose new limits on spending on farm programs appear to be growing dimmer for the 2010 fiscal year.

In his budget message earlier this year, the president said he wanted Congress to phase out direct payments to farmers with more than $500,000 in gross annual sales and limit total farm program payments to $250,000 per individual.

Neither of those provisions made it into the fiscal 2010 budget plans passed by the House and the Senate on April 3. Both were passed along party lines, by a vote of 55-43 in the Senate and 233-196 in the House.

Sen. Charles Grassley, R-Iowa, offered an amendment that would have capped farm program payments at $250,000 during the Senate Budget Committee’s budget hearings. But three senators – Robert Byrd (WV), Patty Murray (WA) and Ron Wyden ()R) – changed their votes on the amendment, which the committee passed in 2008.

The turnaround, which led to the defeat of the amendment by a vote of 13-10, drew scathing criticism from environmental groups, such as the Sustainable Agriculture Coalition, that have been lobbying for stricter payment limits.

The reversal was due, in part, to a series of letters written by Senators Blanche Lincoln (AR), Saxby Chambliss (GA) and Pat Roberts (KS) asking senators not to reopen the 2008 farm bill, which the Senate worked on for more than two years and overrode two presidential vetoes to pass. Representatives Marion Berry (AR), Mike Conaway (TX) and Frank Lucas (OK) wrote similar letters to House members and Agriculture Secretary Tom Vilsack.

The president had said he wanted to increase spending on child nutrition programs by $1 billion with the savings on the $500,000 gross sales cap on direct payments and the more stringent payment limit ceiling of $250,000.

The proposal would have pitted farm subsidies against programs for feeding children, two areas which farm organizations have fought for in tandem in the past. A portion of the Senate plan to cut spending on federal crop insurance subsidies by $350 million would go for child nutrition programs. The House budget plan does not include such language.

The two budget blueprints now will be reviewed by a conference committee, which must decide on whether to include provisions that would, like the House plan, allow health care overhaul legislation to move through the reconciliation process and how much in discretionary spending should be provided to the Appropriations panels to write the 12 annual spending bills.

The Senate plan would provide the Senate and House Appropriations Committees with $1.08 trillion, which is $15 billion less than the president requested and about $8 billion less than the House resolution.

The Senate also endorsed, by a 51-48 vote, an amendment offered by Senators Lincoln and Jon Kyl (R-AZ), which would reduce the estate tax rate to 35% and provides an inflation-adjusted $5 million per-person exemption on the estate tax.

The administration’s budget proposals and the payment limit legislation named for Senators Grassley (IA) and Byron Dorgan (ND), could be offered again during the appropriations process but would have to generate more votes and support than in the just-completed budgeting process.

Vilsak Announces $17 Million in Grants for Beginning Farmers

Secretary of Agriculture Tom Vilsack, during a recent trip to Missouri, announced more than $17 million in USDA grants are available under the Beginning Farmer and Rancher Development Program. In addition, Vilsack described recent initiatives, such as the American Recovery and Reinvestment Act (ARRA), designed to help producers and keep farmers on the land.

“This program underscores President Obama's commitment to support the nation's beginning farmers and ranchers,” Vilsack said. “Through the beginning farmer and rancher grant program, we can help ensure that we are doing all we can for the next generation of America's farmers and ranchers.”

The Beginning Farmer and Rancher Development Program is an education, training, technical assistance and outreach program designed to help U.S. farmers and ranchers – specifically those who have been farming or ranching for less than 10 years.

Congress authorized funding for this program in the 2008 Farm Bill, including another $19 million in mandatory funding for FY 2010. USDA will make grants available to state, local, tribal, regional, non-profits, community-based organizations, academic institutions and networks, both public and private, to design programs to help beginning farmers and ranchers.

The projects will be limited to 3 years. Budget requests are due May 13, 2009, and must not exceed $250,000/year. USDA is looking for proposals from these areas:

  • Mentoring, apprenticeships, and internships;
  • Resources and referrals;
  • Assisting beginning farmers or ranchers in acquiring land from retiring farmers and ranchers;
  • Innovative farm and ranch transfer strategies;
  • Entrepreneurship and business training;
  • Model land leasing contracts;
  • Financial management training;
  • Whole farm planning;
  • Conservation assistance;
  • Risk management education;
  • Diversification and marketing strategies;
  • Curriculum development;
  • Understanding the impact of concentration and globalization;
  • Basic livestock and crop farming practices;
  • The acquisition and management of agricultural credit;
  • Environmental compliance;
  • Information processing; and
  • Other similar areas that would be useful to beginners.

More information about the program.

Scenic in the Sand Hills