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Articles from 2002 In May


New Farm Bill’s Impact On U.S. Pork Industry

The new farm bill signed into law by President George W. Bush on May 13, 2002 contains several features that will impact the U.S. swine industry.

The major features of the six-year Farm Security and Rural Investment Act (FSRIA) of 2002 that relate to the swine sector are summarized here, although the full impact will remain uncertain until USDA regulations have been issued. Many of the provisions in the bill will take effect immediately, while others will be implemented beginning in 2003.

There are three general areas that could have an impact on pork producers’ businesses – crop policy, new conservation provisions and country of origin labeling of meat products. Although there were other provisions intensely debated, like the packer ban on livestock ownership, they were not included in the final bill.

Crop Provisions

Livestock producers will likely continue to enjoy low feed costs under the new farm bill. Estimates by the Food and Agricultural Policy Research Institute (FAPRI) suggest that feed costs will remain nearly unchanged, compared to the continuation of policies contained in the 1996 farm bill.

One word of caution remains for livestock producers, however. Grain stocks will still be at low enough levels that the threat of a short crop will drive feed costs higher. FAPRI’s full analysis of the new farm bill can be found on their Web site at: www.fapri.missouri.edu .

The new bill provides crop producers with the opportunity to update base area and program yields. The combination of loan deficiency, fixed and counter-cyclical payments provided for in the new bill should provide checks to crop producers similar to those seen in recent years under the 1996 farm bill and ad hoc disaster payments. Adjustments to government expenditures under these provisions could occur if they do not fall within our current World Trade Organization (WTO) commitments.

The new farm bill increases the cap on Conservation Reserve Program (CRP) acreage to 39.2 million acres from the previous cap of 36.4 million acres. Other conservation provisions, like the Conservation Security Program that pays producers for using good farm and ranch stewardship practices, are included as well.

More EQIP Funding

Funding of the Environmental Quality Incentives Program (EQIP) is increased under the new bill to $1.3 billion by the 2007 fiscal year, compared to the $200 million spent annually under the 1996 farm bill. Sixty percent of the total EQIP funding is targeted to livestock producers.

An individual producer or entity cannot receive more than $450,000 during the fiscal 2002 to 2007 period for all EQIP contracts entered into with USDA.

One reason for the increase in EQIP money for livestock producers is to help offset the cost of new Concentrated Animal Feeding Operation (CAFO) regulations that the Environmental Protection Agency (EPA) will issue by Dec. 15, 2002. EPA estimates that annual costs to the livestock sector could total near $1 billion under the proposed CAFO rule issued in January 2001.

Country of Origin Labeling

The farm bill contains a provision requiring retailers of pork products to inform consumers of the product’s country of origin at the point of final sale. Beef and lamb are included, too. This provision will not include products sold by foodservice establishments. The country of origin provision is voluntary for the first two years. The Secretary of Agriculture is required to issue final mandatory regulations no later than Sept. 30, 2004. This portion of the new bill could be one of the most important for the swine sector.

For pork products to be labeled "Made in the USA" the pig must be exclusively born, raised, and slaughtered in the U.S. This restriction calls into question how to label the over three million, Canadian-born feeder pigs that are finished in the U.S. annually. Depending on final regulations, this could markedly change the movement of feeder pigs. It is unlikely that a clear answer to this issue will occur until final regulations are issued.

USDA will be busy over the next several months implementing all of the provisions contained in the FSRIA of 2002. As regulations are issued, the bottom line of what the new farm bill means to the swine industry will become clearer. To keep track of USDA’s progress, check out their farm bill Web site at: www.usda.gov/farmbill.

Shifting Gears

Have you tried the mapping sites on the Web? They're great. You simply plug in a starting point and your destination, and the computer spits out detailed maps and driving directions, turn for turn, in fractions of miles. I wish we had an interactive mapping site for the pork industry.

Whenever we hit a straight stretch of road, it seems someone sets up a detour. Often those detours are marked with signs of the environmental zealots, animal welfare activists and low hog markets.

Springtime hog market lows are fairly rare, so when prices slipped into the $20s, producers and economists were sent scrambling to find answers. Checking the rear-view mirror, the market prognosticators offered these explanations:

  • The earliest Easter in 11 years put a bigger-than-usual gap between ham demand and the popular summer grilling season.

  • Total meat supplies reached record highs. Beef and broiler production was up nearly 5% in the first quarter; pork trailed with a modest 1% increase over the previous year. Birds and animals gained faster and were fed to heavier weights throughout a mild winter with cheap feed prices. A Russian embargo on U.S. chicken became a drag on other meat stocks.

  • Canadian-born feeder pig imports climbed from 60,000/week last year to 73,000/week in the first three months of this year — setting a course for nearly a million more Canadian pigs finished in the U.S. this year compared to last. Canadian-born feeder pigs, plus imported slaughter hogs, will claim over 5% of the U.S. slaughter capacity this year.



Canadian Pigs, Aye?

Canadian pigs are sent south because the American dollar is strong, feed quality in the western provinces is poor and the demand for these pigs is high in the U.S. heartland.

Environmental restrictions, labor shortages and disease loads in hog-dense areas have many U.S. pork producers rethinking the high-investment, high-labor commitment inherent in breeding, gestating and farrowing sows. Many are midwestern operators who know hogs, like hogs, but are opting for a simpler life of stocking, feeding and emptying finishing barns.

The Canadian sow herd has recorded annual growth of 4-5% since 1998. Sow numbers have grown 8% so far this year. Meanwhile, for the last 10 quarters, the U.S. sow herd has stabilized at 2.9 million sows or less.

The Canadian influence may register as one of the major shifts in U.S. pork production philosophy, perhaps setting the stage for a new North American pork industry.

Checkoff Shifts Gears

In an unprecedented move, delegates to the National Pork Board annual meeting voted to lower the mandatory checkoff by a nickel, from 45¢/$100 value to 40¢.

Meanwhile, National Pork Producers Council (NPPC) delegates passed a resolution supporting a “producer's consent” initiative that will ask packers to deduct a dime per $100 value. Those monies will be divided evenly between NPPC and state organizations. NPPC also shifted plans for an expanded membership into high gear. Membership categories are being drafted across all facets of pork production and allied industry interests.

New NPPC CEO Neil Dierks states, “we need breadth to this organization” to ensure all members are well represented on all policy and regulatory issues that constantly bombard the pork industry.

Newspaper headlines serve as a billboard calling attention to the constant stirring of the environmental pot by Robert Kennedy, Jr. and the Waterkeeper Alliance as they spew out inaccuracies and falsehoods about the pork industry. Kennedy even ventured into Alberta this spring, broadening the scope of his misinformed message.

Animal welfare issues, too, must be faced. The drive to eliminate gestation stalls in Florida and Oregon is described as “the battleground, but not the war.” Fast-food giants are scrambling to appease the often-misinformed consumer. British pork producers can tell you that when animal welfare became a regulatory issue, they became uncompetitive. Consumers initially said they would pay more for “welfare friendly” production methods. Fact is — they won't. They've turned to less expensive, imported pork instead. Now, British legislators may moderate welfare laws in hopes of making domestic pork production more competitive.

Shifting gears is not new to the U.S. pork industry. The stories in this issue will bring you up to date on recent events. I've written it before — pork producers are as flexible, resilient and adaptable as the animals they raise. The road ahead will have the usual bumps and sharp turns, but the “state of the industry” is strong. We'll keep a watchful eye on the road ahead to help you achieve your desired destination.

Sow Stall Ban Issue Reaches Oregon

The state of Oregon has received a request to place a statutory amendment on the November general election ballot that would make it illegal to use gestation stalls or tethers that prevent pigs from being able to turn around.

Such uses under the amendment would be made a Class A misdemeanor. Normal punishment for such a violation is a fine up to $5,000 and up to a year in jail, but the amendment would raise the penalty to $20,000/pig/day for a business enterprise.

That is a ridiculous punishment, says Tim Breeding, president of the Oregon Pork Producers Association.

There would be exceptions. Confinement would be permitted for veterinary care, seven days before giving birth and during nursing.

Several producers have filed comments with the state raising serious objections. One producer pointed out that the amendment suggests an accredited veterinarian must be present in order to confine pigs to perform normal activities such as castration, artificial insemination and treatment of an injury.

Another producer suggested that the proposal failed to exempt transportation, pointing out that it is impractical and in some cases unsafe for animals to have too much room to move around when being hauled. Guidelines in the industry's swine care handbook recommend transport spacing of 6 sq. ft. for a 400-lb. hog. For a hog this size to meet the law's definition of being able to turn “in a complete circle without touching any side of the enclosure,” the producer calculates the hog would require almost 40 sq. ft. of space in a trailer.

Breeding figures that Oregon was selected for this proposal because there are only a few small producers to fight it. Breeding, for instance, is a small, farrow-to-finish producer who only confines sows during farrowing. Gestating sows run in an outside paddock.

The Oregon secretary of state's office says in order for this amendment to be placed on the November 2002 general election ballot, 66,786 signatures must be collected by July 5, 2002.

So far that process has been stymied while the state supreme court considers an appeal by individuals from the Oregon Pork Producers Association, Oregon Farm Bureau Federation and Oregonians for Food and Shelter. The individuals are contesting the description and title of the initiative ballot because it criminalizes confining or tethering pigs, making penalties more severe.

The proposed amendment also sets a new state policy regarding cruelty and inhumane treatment of animals. And it does not make clear the full intent of the amendment or the provisions for exceptions, says commenters.

Florida Update

Sponsors of a constitutional amendment to ban gestation stalls or tethers in Florida have collected just over 200,000 signatures, says Frankie Hall, state executive for the Florida Pork Improvement Group. To appear on the November ballot, half a million valid signatures must be collected by June.

product news

Portable Scanner

The Agroscan pregnancy detector and backfat measurer from Cotran Corporation weighs just over 3 lb. and features a built-in battery. It is equipped with a dual frequency probe (3, 5/5 MHz) and uses a 5.2-in. high-resolution screen, producing exceptional images in any situation. Producers can now detect a sow's pregnancy as early as 19 days. Cysts and metritis are also easy to see.
(Circle Reply Card No. 101)

Ileitis Clearance

Pharmacia Animal Health's Lincomix Feed Medication has been cleared for use in the control of Porcine Proliferative Enteropathy, commonly known as ileitis. Lincomix is the only FDA-approved product labeled for control of ileitis and reduction in severity of Mycoplasmal pneumonia. For ileitis control, Lincomix should be fed at 40 g./ton. When Lincomix is administered at its approved dose of 200 g./ton to reduce the severity of mycoplasma, pigs are automatically covered for ileitis. The company says research trials have proven that Lincomix reduced shedding of Lawsonia intracellularis, the organism that causes ileitis, and reduced the severity of the disease.
(Circle Reply Card No. 102)

Articulation System

Ro-Main's new Contact-O-Max articulation system, for efficient heat detection and artificial insemination, can turn 90° corners without having to remove the boar from the cart. The system also utilizes a bar system, preventing the boar from lying down and restricting its field of vision. A brake, glider and roller system permits closer nose-to-nose contact.
(Circle Reply Card No. 103)

New Bacterin

ImmTech Biologicals announces the availability of M-HyoGard Bacterin, an innovative bacterin for aiding prevention of lung lesions due to swine enzootic pneumonia, caused by Mycoplasmal pneumonia. Vaccination with the bacterin is recommended for healthy pigs two weeks of age or older. Studies have shown that M-HyoGard can dramatically reduce pig lung lesions and improve weight gains.
Circle Reply Card No. 104)

Mycoplasma Vaccine

Schering-Plough Animal Health has received flexible-dose labeling for M+Pac, making it the first Mycoplasmal pneumonia vaccine on the market to provide two dosing choices from one bottle. Previously labeled for a two-dose regimen, M+Pac is now also approved as a one-dose application, allowing producers to only stock one product instead of two, according to the company. For one-dose use, pigs can be vaccinated at 6 weeks of age or older with a 2-ml. injection. For a two-dose regimen, the product is labeled for vaccination 7 to 10 days of age with 1 ml., followed by a booster 14 days later with 1 ml.
(Circle Reply Card No. 105)

High Airflow Capacity Exhaust Fan

Munters Corporation offers an exhaust fan for applications requiring high airflow capacity. The fan's square housing and air conveyor are made of strong, galvanized sheet-steel, and the propeller design is self-cleaning, allowing for high airflow efficiency. The fan is energy efficient and produces low noise and vibration.
(Circle Reply Card No. 106)

Stainless Steel Gestation Stall

The All 304 stainless steel gestation stalls have been introduced by Thorp Equipment, Inc. The never-rusting stalls feature a drop back for ease in artificial insemination and a slam latch system for ease in animal handling. It is available in 22-in. or 24-in. widths and a straight or slanted front. A standard, stainless steel feed tube with optional stainless steel trough is sold in 10-ft. sections.
(Circle Reply Card No. 107)

Milk Jug Fly Trap

Farnam Companies, Inc. introduces the new Milk Jugg Trap. Used with an ordinary plastic milk jug, the product can trap more than 35,000 flies, says the company. The product includes a reusable trapping device that fits on a standard-sized plastic milk jug, plus a natural fly attractant (no insecticides are used).
(Circle Reply Card No. 108)

Vertical Paneling

Kaycan Siding introduces AgriTuff vinyl panels to create smooth, easy-maintenance walls and ceilings with low adhesion for dirt or animal wastes. The interlocking design discourages insect pests, while its bright white surface reflects and makes the most of available light, says Kaycan. AgriTuff panels come in a choice of three patterns and a brushed finish.
(Circle Reply Card No. 109)

All-Aluminum Livestock Trailer

M.H. Eby, Inc. introduces the Maverick LS Series, a line of all-aluminum livestock trailers for small- to mid-size livestock operations. Designed to be pulled by light-duty trucks or SUVs, the new bumper-hitch trailers feature a reduced width of 6 ft. 5 in. Available in floor lengths of 13 ft. and 16 ft.
(Circle Reply Card No. 110)

Salmonella Reductions

The prevalence of salmonella in raw meat and poultry has dropped across the board due to implementation of the Pathogen Reduction/Hazard Analysis and Critical Control Point (HACCP) program, according to USDA.

The science-based inspection program, begun in 1998, requires packing plants to develop a plan to prevent hazards and reduce pathogens in meat products.

In combined data for all sizes of plants from 1998-2001, salmonella prevalence in market hogs went from 8.7% before HACCP to 5.4% with HACCP. Broilers improved from 20% to 10.7% and cows and bulls went from 2.7% to 2.2%. Ground meat and poultry products recorded double-digit reductions in salmonella prevalence.

Those large reductions correlated with reports from the Centers for Disease Control and Prevention that human illnesses due to salmonella declined during that same time period, say USDA officials.

For the full report, log on to www.fsis.usda.gov.

PRV Case Resolved

Minnesota's first case of pseudorabies (PRV) in about a year, discovered in early April, has been cleaned up without further incident, reports Assistant State Veterinarian Paul Anderson.

A 10-week-old pig from the James Joens, Jr. nursery-finishing operation at Wilmont, MN, tested positive for PRV on April 5. On retest of the herd, nine of 150 head tested positive and the herd was quarantined on April 11. The herd of 800 head was depopulated. After a 30-day quarantine, the operation expects to repopulate.

Anderson says 80 herds tested in a six-mile radius of the Joens' farm all proved negative.

Likewise, the 450-sow herd of Keith Moller of Larchwood, IA, who shipped weaned pigs to Joens, all tested negative for PRV.

A small circle test of 10 herds within a two-mile radius of the Joens' two-site operation was to be done by late May to comply with national PRV program standards, says Anderson.

Booster vaccination, extra surveillance and vigilance in the six-mile radius of the infection were to be carried out well into summer to guard against infection, he notes.

Because the infection was promptly depopulated and no other cases were found, Minnesota retains its Stage IV (surveillance) status conferred March 24 (Figure 1).

Minnesota and Iowa veterinary officials have no clue where the PRV came from, says Anderson. But he observes it would be surprising if a few cases don't crop up as the nation attempts to stay PRV-free. The key is to quickly remove the infection.

Permit Threshold Lowered

After extensive debate during late-night sessions in Des Moines, the Iowa Legislature passed a bill on April 11 that puts air quality limits on livestock confinement operations. The bill also includes provisions for an annual fees assessment on a per-animal-unit basis, and construction permit fees for equipment and personnel monitoring.

The long-awaited bill surfaced from the Senate Ag Committee and was debated and passed by both houses during the last three days of the legislative session.

Nearly 1,300 livestock producers rallied on April 4 to urge legislators not to restrict the growth of the Iowa industry. Their efforts resulted in several changes from earlier drafts of the legislation, lightening the restrictions of the bill.

Previous bills, passed in 1995 and 1998, had established requirements for manure management plans and in-creased setback distances.

More County Input

The new bill includes a matrix, or point system, which counties and the Iowa Department of Natural Resources (DNR) must use to award “construction points” to producers wishing to build confinement facilities. According to the interim matrix, at least 100 points are required to build, explains Eldon McAfee of the Beving, Swanson and Forrest law firm in Des Moines, IA, which represents a number of independent pork producers and the Iowa Pork Producers Association (IPPA).

“The matrix is the most significant [part of the bill] from a policy standpoint,” McAfee says.

The process rates a proposed site based on its effect on the environment and community. Any new operation being built to house more than 1,000 animal units (2,500 pigs over 55 lb. or 10,000 pigs from 15 to 55 lb.) must first complete a matrix and submit it to the county for approval as part of applying for a state permit with the Iowa DNR. (One animal unit equals 0.4 hogs weighing more than 55 lb. or 0.1 hogs weighing 15 to 55 lb.)

If a proposed facility does not pass at the county level, the Iowa DNR must evaluate the site using the same matrix.

“Many like the idea of the matrix because it gives more county input,” McAfee continues. However, “it sets the principle without knowledge about how it will work.

“This new process lowers the permit level,” he says. “However, a site can house up to 7,499 head (3,000 animal units) before additional engineering is required.”

The previous permit threshold of 625,000 lb. of animal weight capacity, or about 4,100 head of finishing pigs, kept most new Iowa sites at three- or four-building finishing sites because of the state DNR permit process. McAfee predicts that pattern might change. “They (pork producers) will likely build below 2,500 head or larger sites in the 5,000 to 6,000 head of finishing pigs range,” he says.

A site with less than 1,000 animal units will not require the county matrix or a state permit, but will have to meet construction design standards and have a manure management plan. Any Iowa operation with more than 500 animal units must have a manure management plan on file at the state DNR.

Increased Setbacks

The increase in setback distances makes building a new operation in Iowa even more difficult. “Every time the law is amended, they increase the distances,” McAfee says.

Residential setback distances will be increased from 1,000 ft. to 1,250 ft. for operations housing 1,250-2,500 head weighing more than 55 lb. For operations up to 7,500 head, the separation distance will be increased from 1,000 ft. to 1,875 ft.

New setback distances also now apply to operations using dry manure systems. “This mostly affects poultry producers and hog producers with hoop buildings,” he adds. Under current law, those operations are subject to the same animal unit permit and nutrient management requirements as producers with liquid manure storage. However, the same separation distance now applies to facilities with like size.

“There will be producers — family farmers — who own land and could be the ones prohibited from building. They can't just build somewhere else,” he says.

The new setback distances will be effective on March 1, 2003.

Phosphorus Limitations

The legislation makes both phosphorus and nitrogen limiting nutrients in manure management plans. The bill provides for three phase-in periods for existing producers, allowing them time to adjust to the phosphorus standard for nutrient application, McAfee continues:

  • Operations submitting new manure management plans after Sept. 1, 2003, must meet the requirements by July 1, 2003, when the new rules become effective.

  • If a producer submits their first manure management plan on April 1, 2002 and before Sept. 1, 2003, that operation must meet the phosphorus index by July 1, 2005.

  • Existing operations that filed their first manure management plans before April 1, 2002, have four years or until July 1, 2007 to comply with the new rule.



Producer-Assessed Fees

Pork producers will fund additional DNR staff and equipment under the new bill. Producers will pay a construction permit fee up to $250 and a first-time manure management plan fee up to $250. An annual fee for their updated manure management plan is based on 15¢/animal unit, which equals about $240 for a 4,000-head capacity operation.

Air Quality Rules

The bill includes air quality standards to be measured at the nearest “separated location,” which includes a residence, business, church, school or public-use area, according to McAfee. The Iowa DNR has the authority to develop rules limiting hydrogen sulfide, ammonia and odor from any open feedlot or livestock confinement facility.

“This bill is clear — they have to take the measurement at the separated location, not on the farm,” McAfee explains. “The standard cannot be enforced before Dec. 1, 2004. However, DNR currently plans to move forward to establish those standards by this fall. This is apparently an attempt to have standards in place for lawsuits by citizens against livestock operations before the standards can be enforced on Dec. 1, 2004.”

Jill Spiekerman-Carrothers is a freelance writer based in Cambridge, IA.

Desperately Seeking Pigs

It seems almost impossible, with the glut of pigs expected to reach market weight this month, but there's a good chance some grow-out barns have sat empty this spring. And, there were reports of concrete being poured for finishing barns without a ready supply of pigs.

Nowhere were these situations more apparent than in Iowa, say industry observers. The demand for feeder pigs continues to grow. Grain producers, trying to make up for depressed crop prices, have put up finishing barns to squeeze more revenue out of their land base. A slew of sow herds have been hard-hit by PRRS (porcine reproductive and respiratory syndrome), forcing producers to tap other sources to fill pig spaces.

Meanwhile, the sow exodus continues in Iowa. Industry analysts like Randy Geyerman of the management firm Pork Pro Associates in Cherokee, IA, say it intensified a couple of years ago when producers liquidated herds because they felt they couldn't compete.

Others are selling off sows now because they are tired of dealing with reproductive problems fueled by PRRS. Still others can't hire adequate help, or are tired of the grind of breeding and farrowing and are switching to just feeding out pigs, reports veterinarian Duane Seehusen of Sheldon, IA.

Changing Times

Scott Tapper has run a 350-sow, farrow-to-finish operation near Webster City, IA, for 20 years. It's a modified, two-site operation — one site with gestation-breeding-farrowing, and the other with nursery-finishing facilities and attached gilt pool area.

That's expected to end when he forges a long-term contract to buy Canadian pigs.

There are two main reasons he's considering the change. First, he's had employee labor issues. “I went through four farrowing house guys in six months and couldn't hire the caliber of people that I wanted.

“The problem with a 350-sow farm is that you can't pay what you need to in order to get several good employees. You can afford one good person when you really need two for this size operation.”

Tapper, vice president of resources for the Iowa Pork Producers Association, says the second reason is PRRS in Iowa. “Everybody you talk to here in hog-dense Hamilton County has got PRRS infections in their operations,” he declares.

“Pig density has really affected herd health in central Iowa,” he continues. In the past, his herd has achieved 24 pigs/sow/year. PRRS has dropped farrowing rates as low as 50% and production down to 17 pigs/sow/year.

Tapper has been buying segregated early weaning (SEW) gilts and growing them out. Herd replacements were selected from those groups at finishing weights and placed in the gilt pool for acclimation. But PRRS has hit hogs at 140-150 lb., circumventing his program.

“At almost 45 years of age, I've decided I don't want to invest a couple hundred-thousand dollars to do a total depopulation-repopulation and build a gilt grow-out barn,” he observes.

Tapper's plan is to convert farrowing and breeding barns to nursery space and use the existing nursery-finishing site to feed out Canadian pigs. He decided he has the best chance of securing PRRS-free pigs in Canada.

Other pluses of the prospective deal include his ability to produce cheap grain and a land base of almost 1,000 acres to apply manure.

Production Holes

Paul Cook and his father-in-law own a 750-sow, farrow-to-finish operation in Hubbard, IA.

The operation had grown to over 1,000 sows, all in outside lots except for farrowing, he recalls. Then in 1998, Iowa stepped up pseudorabies eradication efforts. The partners blood-tested sows and ended up culling nearly 35% of the sow herd. Harsh winters in 1999 and 2000 further cut into sow numbers.

That forced them to buy feeder pigs locally every seven weeks to fill empty pig spaces. But Cook says they weren't able to fill all seven, 1,000-head barns, so they buy feeder pigs on the open market from as far away as North Carolina, Utah or Canada.

Paul Cook has no preference. He finds Canadian-sourced pigs are no different than U.S.-sourced pigs, in health or in price.

He has rejected an occasional group of pigs from both U.S. and Canadian sources for health reasons or for being too heavy. He uses “vet-to-vet” health checks before he commits to a purchase. And, when sourcing Canadian pigs, he requires known genetic sources.

Whereas U.S. pigs are identified with tattoos for interstate movement, Canadian-born pigs must be identified by metal ear tags at the border — a drawback, says Cook, because it is a good place for a strep infection to start.

Both his U.S. and Canadian pigs are sourced by M&F Livestock (www.farms.com), which has access to larger numbers of pigs.

Cook stresses he won't be a long-term client for M&F. He and his father-in-law completed construction of a new breeding-gestation barn about six months ago. They expect to build their breeding herd back to about 900 sows, ending their pig-buying days.

Elma, IA, producer Max Schmidt says his 1,250-sow, farrow-to-finish operation has virtually always been PRRS-positive. Last October PRRS struck hard. He says it seems like every three months or so a different strain hits.

Like the Cooks, Schmidt and his partners have purchased Canadian pigs a few times “when we had some holes in our production.” He bought two, 600-head batches of 13-lb., 19-day-old SEW pigs through a broker and has been very pleased.

“It is just astounding how well those little pigs take that travel,” says Schmidt, Iowa's representative to the National Pork Board. “They come in tremendously healthy.”

To keep them healthy, they need to be segregated from U.S. hogs. “We've got so many diseases in the U.S. that we've got our hogs immunized against, and these pigs come in pretty much naïve to everything,” he notes.

Ed Wiederstein's main source of pigs to finish is from a feeder pig cooperative of which he has been a member for 27 years.

But he also buys pigs on the open market from some major U.S. suppliers like Tyson's, Land O' Lakes and sometimes from Canada. He buys 500-head bunches of 45-50-pounders to be fed out in four custom-fed hoop barns.

Purchases are arranged by his feed supplier. A few days after the pigs arrive, the feed supplier checks the groups. If there are any ruptures, broken legs or other injuries that occurred during transport, the purchase price is adjusted accordingly.

Before making a purchase, try to ensure the deal pencils out, urges Wiederstein, immediate past president of the Iowa Farm Bureau Federation. Because of the strong demand for Canadian pigs, some reportedly have been selling for a premium, which may limit their ability to turn a profit, he says.

Wiederstein acknowledges the impact of his buying decisions. “I know there are a lot of Canadian pigs coming across the border. And in the big picture, it is adding to the tonnage here in the United States, reducing packer capacity and probably having an impact on market price. But I am one little guy out here just trying to make a go of it in pork production.”

For the last eight years, Forest River, ND, producer Craig Jarolimek has been contract buying 40-lb. feeder pigs to fill 1,600 finishing spaces. He has sourced pigs from the U.S. and Canada.

He says two fallacies exist. The first is that Canadian pigs will be cheaper because of the exchange rate, when in fact pigs are priced about the same. The second myth is that Canadian genetics are superior. U.S. stock has gained ground the last half a dozen years.

The advantage with Canada is ready access to large numbers of single-source, healthy pigs — fueling the growing trade to the U.S.

Minnesotans Invest in Canadian Sow Complex

Four southwest Minnesota partners have invested in a Canadian sow complex to guarantee their group a ready source of pigs to feed out.

Wynland Pork is made up of three Luverne, MN, area pork producers: brothers Dave and Roger Wynia and Mike Hoiland, as well as a silent investor. Kevin Barnhart, their Land O' Lakes swine consultant, coordinated development of the venture.

Each of the three producers independently manages their own contract finishing sites for Wynland Pork.

Wynland Pork started a few years back when the group began purchasing pigs from an Iowa operation that are fed out by Dave Wynia.

Looking North

The other two producer-members, impressed with the success of that arrangement, decided they wanted to expand the hog feeding part of the operation.

Barnhart says the group asked him to help them find a source of pigs. They searched all over Iowa, Minnesota and South Dakota without any luck. “As a last resort, we ended up looking in Canada,” he says.

The more they looked north, the more they liked what they saw. They would be able to obtain a steady supply of healthy pigs. But they admit the pigs' health would be challenged by the concentration of PRRS (porcine reproductive and respiratory syndrome) outbreaks in the area. “We'd like to at least start with a healthy pig, realizing that in this hog-dense area around here, we will probably still have challenges,” observes Barnhart.

Also, the group was able to buy shares in the limited liability partnership that in turn owns shares in two, 2,500-sow complexes being built in southern Manitoba. The arrangement guarantees Wynland Pork a consistent supply of single-source pigs, with 1,000, 12-lb. weaned pigs coming every four weeks, says Dave Wynia. Genetics are a combination Monsanto Choice Genetics and Shamrock Genetics.

Under the agreement, when the pigs arrive at Wynland Pork, the partners own the pigs, provide feed and veterinary services and pay for all trucking services. But, pigs do have to meet some quality criteria, says Barnhart.

There will be discounts for imperfections such as off-weight pigs, ruptures, lame pigs and poor-doing pigs. Sows in Canada will be vaccinated for parvovirus-leptospirosis-erysipelas. The pigs are expected to be PRRS-negative and mycoplasma-negative. The plan is to vaccinate pigs in late nursery for mycoplasma.

The first pigs from the Canadian sow complex are expected to be delivered to Wynland Pork in September. In the interim, they are being supplied with pigs from another source, explains Barnhart.

Pricing Positives

The group's pricing mechanism for the Canadian pigs provides for some flexibility. It is based off a Kansas State University matrix in which the price of pigs fluctuates as the price of corn and soybean meal goes up and down, explains Barnhart. The matrix also takes into account the Chicago futures price, providing a base value for that pig, then adjusting that base according to the corn and soybean meal prices.

Wynland Pork also receives market price protection through three different marketing contracts. “Another thing that we were looking for when we got pigs was that we also wanted to be protected on the other end,” emphasizes Dave Wynia.

An additional reason Wynland Pork was won over by the Canadian arrangement was the availability of other investors. As such, there are preferred shares of stock which Wynland Pork members have purchased. Dividends will be paid out to investors on the profits earned.

Risk Management Model

Wynland Pork developed a risk management model to protect their investment against disease and financial risks, according to Barnhart. Each producer-partner has his own separate finishing site, located several miles apart from the other two partners. And, each producer-partner has a different packer contract to balance out the price risk for Wynland Pork.

The risk management model has three parts:

In the first model, the partnership buys pigs from an Iowa sow unit and the weaners go to an Iowa contract nursery. From there the feeders go to Dave Wynia's three-barn finishing site. Market hogs are all sold to Swift at Worthington, MN, on the first marketing contract.

The second model involves purchasing weaner pigs from the first sow unit in Canada. These pigs go to a contract nursery at Roger Wynia's farm; feeders move to Roger's two-barn finishing site and later are sold to John Morrell's in Sioux Falls, SD, on a second marketing contract.

In the third model, purchased weaner pigs from the second sow unit in Canada go to a contract nursery at Mike Hoiland's farm. Feeders move to Hoiland's two-barn finishing site and are marketed to Morrell's on a third marketing contract.

Wynland Pork has 7,000 head of finishing space. Turning their barns an average of 2.65 times/year, they expect to market nearly 18,000 head/year, says Barnhart.

Air Quality Study

The U.S. Department of Agriculture is funding a three-year study to determine the air quality outside livestock buildings.

“The objective of the study is to quantify what we're calling the ‘DOG’ emissions — dust, odor and gases,” says Yuanhui Zhang, University of Illinois agricultural engineer. He points out that livestock buildings aren't currently regulated, but that exemption won't last long. To head off regulations, guidelines must be developed, he says.

The study will produce a large database to make writing emission standards more practical. Mobile laboratories will collect data at selected sites for 15 months.

Researchers will measure dust, odor and gases at several spots inside livestock buildings. Flow rates of fans will also be recorded. Combined data will give emission levels, says Zhang.

Participating schools include Iowa State University, Purdue University, North Carolina State University, Texas A&M University, the University of Illinois and the University of Minnesota.

U.S. Market Attractive On Several Fronts

Martin Rice, executive director of the Canadian Pork Council, says 3.17 million Canadian pigs under 110 lb. were shipped to the U.S. for finishing in 2001. That's about 12% of all pigs born in Canada.

Why are Canadians shipping pigs south instead of finishing them? After all, Canada, like the U.S., is suffering from a shrinking rural population. Sending pigs south means fewer jobs in finishing barns and processing plants. In fact, Maple Leaf Foods' brand new, state-of-the-art processing plant in Brandon, Manitoba can only source enough hogs to run one shift — half its capacity.

Feed Price, Quality Plight

Owning a hog barn on either side of the 49th parallel doesn't guarantee a profit, of course. The advantage seems to lie with American finishers, particularly in the Midwest, with abundant supplies of cheap feed. And, Canadian producers have found they can net more dollars by supplying the pigs than they can by finishing them at home.

“The Canadian hog finisher is at a $20 (US$) disadvantage to the American finisher in the Midwest,” says Larry Friesen, a farrower and spokesman with the Manitoba Pork Council. “It all comes down to corn subsidies in the U.S. Farm Bill. The Canadian government has neither the will nor the means to subsidize grain production, whereas the U.S. government has both. You can buy corn for $1.50 to $1.75 a bushel, so feed has become a very small component of your inputs. We cannot afford to feed pigs, economically, if we have to compete with the U.S. Treasury,” he concludes.

Canadian finishers have always had to import American soybean meal. However, in recent years, other grains used in hog rations have been difficult to find in western Canada, too.

Canadian grain producers, struggling to find any crop that can be grown profitably, have taken millions of acres out of feedgrain crops and planted them to a wide range of higher-returning specialty crops instead. Grain supplies in western Saskatchewan and Alberta have been further reduced by a severe drought that's now entering its third year. At the same time, wheat and barley crops in eastern Saskatchewan and Manitoba have become heavily infested with Fusarium head blight, the fungus that produces vomitoxin.

Friesen prefers to buy grain from western Canada farmers to finish his hogs, but the vomitoxin problem makes it impractical. “There is virtually no barley left in Manitoba to feed our pigs,” he says. “Right now we are importing grain from Saskatchewan, but vomitoxin is moving west. I don't think that it can stop the industry, but it is a cloud hanging over us and we'll need to have a few dry years to get rid of it.”

Contract-Driven Expansion

The Willow Creek Hutterite Colony near Cartwright, Manitoba, and three other colonies combine pigs with the same genetics and same health status to fill an 1,800-pig transfer truck destined for the U.S. every week. The colony has been exporting early weaned pigs since they constructed a new 1,200-sow barn four years ago. Each week, 250 of the 700 weaned pigs are shipped to U.S. farms under contract. The rest are finished on a separate site.

Colony weaned pig manager Tim Hofer says they expanded the sow herd with the export market in mind. “Before we finished the barn, we had a contract ready to go,” he says.

The difficulty of finding good, clean grain and growing manure disposal problems contributed to their decision to enter the export market.

“Americans are willing to pay a premium for a steady, incoming supply of quality pigs,” Hofer explains. “We have a guaranteed price no matter what the price fluctuation is. It's really a type of diversification. It really helps with the cash flow.

“Last year we made $960,000 (Canadian$) profit on the Isoweans and about $600,000 (Canadian$) profit on the [home-raised] finishers. If we were going to build another barn, we would build a 2,400-sow, Isowean barn.”

Weaned pig production is particularly profitable because Willow Creek Colony's sow productivity ranks among the highest in North America — averaging 28 pigs weaned/sow/yr. Hofer credits the colony's production success to its highly trained and stable workforce.

“This barn has been running 3½ to 4 years and we still have the same labor that we started with,” Hofer explains. “You can't teach a farrowing technician or an AI technician anything in six or seven months. It takes a couple of years to train them. That is what you need for sow production — good, dedicated labor.” In private barns, a 50% annual staff turnover is not uncommon, he adds.

Profit Opportunity

Canadian producers are attracted to the U.S. market because of the opportunity for higher returns. But, no market would exist if Midwest hog finishers weren't interested in sourcing Canadian hogs, reminds Greg Gates, director of marketing for Sioux Nation of Sioux Falls, SD. Gates purchases Canadian weaners for customers in Iowa, Minnesota and the Dakotas.

“We've been sourcing KPA pigs out of Canada for our independent farm customers for the past two years,” he explains. (KPA stands for Keystone Pig Advancement in Canada and Keystone Pig of America in the U.S.) “We've had tremendous luck with their health and productivity, and they are very, very well liked by the packer. The genetic cuts, the meat quality, the scores and the performance of these pigs have been very good.”

Gates says Sioux Nation supplies about a million pigs to U.S. finishers annually. About 200,000 of those come out of Canada. He expects pig placement to grow to about 1.2 million this year, with roughly 25% brought in from Canada.

The popularity of KPA genetics has played a large part in the recent increase in weaned pig exports to the U.S. KPA, headquartered in Oakville, Manitoba, has only been in business since 1995, but has quickly become a major player in the North American swine genetics market.

“Our pigs are popular with both the farmers and the packers because we have done a lot of genetic work to make our product useful to them,” says KPA President Pat O'Meara. “We measure carcass and meat quality traits on nucleus pigs from our terminal lines each week at East 40 Packers in Brandon, Manitoba.” KPA has contracted Bob McKay of the Manitoba Swine Research and Development Consortium to do this work. Weight, length, loineye depth and area and backfat thickness are measured in the carcass. Meat quality measurements include loin color (using Minolta technology), loin texture, marbling score and 24-hour loin pH. Drip loss is measured from one pork chop removed from each carcass, O'Meara explains.

“The producer is trying to get a fast-growing, lean hog that saves him money and gives him maximum packer premiums. Our pigs seem to be getting the best of both,” he continues.

Writing Contracts

Contracts for Canadian weaned pigs headed for the U.S. are no different than those offered to domestic farrowers. Pigs can't be over 21 days old and must weigh at least 8 lb. High health standards have to be guaranteed. All pigs destined for export receive a farm-specific ear tattoo at 3 days of age to prove point of origin.

“Our pigs are shipped when they are 18 days old (on average) and we aim for a shipping weight of about 13 lb.,” Hofer says. “You don't get paid for a pig under 7 lb., half price for pigs between 7 and 8 lb. and full price for anything over 8 lb.”

Hofer's three-year contract, set to expire in April, was renegotiated last fall. The original contract, $30 (US$) per pig, was bumped to $31 and the contract extended for another three years. “We pay our vet bills, and right now, they pay the trucking,” Hofer adds.

Three days before shipping, a veterinarian inspects all the pigs. “If he sees anything wrong or anything abnormal with any pig, he will put a red mark on it and that pig is not allowed to go on the truck,” says Hofer. “If they don't meet the health standards, they don't go out of our barns. Pigs that don't meet the weight requirements are kept back and we finish them ourselves.”

Willow Creek Colony's contract was arranged by KPA. “The genetic companies quite often set up the Isowean contracts,” Hofer explains. “We only have 1,200 sows and aren't too involved in that stuff while the genetic companies sell thousands of Isoweans. They have better contacts down south and it would take too much effort for us to go look up contacts ourselves.”

Editor's Note: Exchange rate was $1.00 U.S. = $1.62 Canadian at this writing.



Lorne McClinton is a freelance writer based in Yellow Grass, Saskatchewan, Canada.