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Articles from 2003 In May

No Easy Answers

No one would ever have crossed the ocean if he could have gotten off the ship in a storm.”

I stumbled across this quote from John F. Kettering as we were compiling this year's “State of the Industry” report. It fits, I think. Recent months in the hog business haven't exactly been smooth sailing. And, getting off the ship isn't always an option.

Over a year of below breakeven hog prices have been a huge drain.

Clouds may be forming over the renegotiation of packer contracts. Although they offer the security of shackle space, some have saddled producers with huge liabilities. Still, some hard-learned lessons can be applied to a new round of contract negotiations.

Then there's the retail gorilla — Wal-Mart — who entered the food industry a half-decade ago and now claims nearly 20% of the retail market. The monstrous retailer's tight margins have put added pressure on packers and processors. Those tight margins certainly influence hog market bids and packer contracts.

The industry's also in a tough spot as the future of the mandatory pork checkoff hangs in appellate court limbo. Long-range planning is difficult, at best, as pork producer groups wait for a verdict.

And, who hasn't been touched by the plague of PRRS? One source even made the uncomfortable observation that if we solved PRRS today, the current sow herd would produce 119 million hogs! “I'm not sure we can afford to solve PRRS right now,” he said.

I'm sure he was kidding. But, it did make the point that there's plenty of pork in the world marketplace.

And, of course, there's the farce of country-of-origin labeling (COOL).

COOL Craziness Continues

Clearly, the challenges facing the U.S. pork industry are not contained within its borders. Should COOL become mandatory, the five million or so pigs that normally flow from Canada to the Midwest for finishing and/or processing will be added to the Canadians' annual pork supply. Much of that pork will be targeted for export to the U.S. and other ports.

U.S. barns, built to finish Canadian pigs, aren't likely to sit empty either. The U.S. sow herd will expand to fill the five-million-pig gap.

The colossal insanity of COOL has everyone from the producer to the packer to the neighborhood grocer in a quandary about what it will cost and who will pay.

Gary Machan, vice president of hog procurement at Tyson Fresh Meats Inc. (formerly IBP) pegged it best during a USDA-sponsored listening session when he called COOL “the law of unintended consequences.” Besides the monumental costs and recordkeeping nightmares, Machan says the consumers-right-to-know argument is flawed because over half of the red meat sales occur in restaurants, which is not covered by the mandatory labeling requirement.

And, as one of our freelancers wrote: “Canadian producers remain puzzled about why U.S. politicians seem so intent on implementing regulations that are expected to be damaging to their own producers and packers.”

He went on to say, “Coffee shop discussion in Canada likens COOL to the Canadian gun registry. Even though this unpopular program has now cost taxpayers a billion dollars more than originally estimated, politicians are unwilling to admit that mistakes were made.”

Where Hogs Are Welcome

A few years back, there was a lot of talk about hogs being raised “where they are welcome.” That often meant the wide-open spaces of Oklahoma and Texas. Now, it also could mean Canada's western provinces. Check out the hog density table on page 30.

Here's the bottom line — we are part of a North American pork industry. What happens in the U.S. impacts Canada and vice versa.

And make no mistake, producers in Mexico and South America, particularly Brazil, are not sitting idly by.

And don't forget China. Some see this far away land as a good export prospect. In the short term, it may be. But, a recent press release may tell a different story. The city of Shanghai announced a joint venture to build a new meat processing plant with an annual capacity to slaughter three million pigs. The new plant is one of two slaughterhouses the city is helping to underwrite to replace dozens of small- to medium-sized facilities.

China is on a fast track to modernize and develop new trade opportunities. Yes, they currently only export about 1% of their 400-million-head annual production. But you can be sure that a country that raises nearly 25% of the world's pork has its eye on the global pork market.

Another quote, this one from the Syracuse Herald, sums it up nicely: “Part of the problem today is that we have a surplus of simple answers and a shortage of simple problems.”

The challenges facing the North American pork industry may not be simple, but history has proven producers will rise to the occasion.

Understanding Canada's Diversity

Livestock production is well established in the eastern provinces, while the western provinces are in their adolescence.

Compared to the United States, Canadian pork production is admittedly small. But for Canada, the business of producing pork is big — and it's getting bigger despite some challenges from south of the border.

In terms of pork production alone, Canada now ranks fifth behind China, the combined 15 countries of the European Union (EU), the U.S. and Brazil. From the export side, Canada ranks second only to the EU.

Looking at conditions from a numbers perspective, the differences between Canadian and U.S. pork industries are staggering. Figures from the U.S. Department of Agriculture (USDA) for December 2002 indicate total hog inventory (U.S.) at 58,943,000, including 6.012 million sows, gilts and boars. Canada, by comparison, has roughly one quarter of that — 14,726,000 hogs, including 1.507 million sows, as reported Jan. 1, 2003 by Statistics Canada (Table 1).

Some of this size differential can be attributed to a greater regionalism in Canada. Where production can be spread among several states in the Midwest, the Great Lakes Basin and the Southeast, Canada's geography tends to dictate the size and development of livestock farming and pork production.

Table 1. Canadian Livestock Inventories (Jan. 1)1
2002 2003 % Change '02-'03 Sows
Atlantic 390 383 -1.8% 35.0
Quebec 4,291 4,280 -0.3% 413.5
Ontario 3,525 3,661 +3.9% 385.7
Manitoba 2,688 2,870 +6.8% 327.2
Saskatchewan 1,180 1,230 +4.2% 113.6
Alberta 2,125 2,140 +0.7% 213.8
British Columbia 168 162 -3.6% 18.1
Canada (total) 14,367 14,726 +2.5% 1,506.9
1Source: Statistics Canada, 000's of head

Quebec and Ontario represent the nation's “establishment,” while Manitoba, Saskatchewan and Alberta — the Prairie provinces — represent the younger generation. Urban populations are smaller and so are hog densities (Table 2).

Ken McEwen, an economics researcher with Ridgetown College, University of Guelph in Ontario, notes some of this regionalism can be attributed to political stripe but that geography is still the driving force. He notes that the majority of Canada's population lives within 60 miles of the U.S. border. Fourteen of Canada's largest 25 urban centers, including Toronto, Montreal and Vancouver, lie within that boundary, accounting for about half of the country's population of 31,414,000 (July 1, 2002, Statistics Canada).

“Also, we don't have farms that are the size and scope of some of the operations in the U.S.,” says McEwen, who specializes in pork industry issues. It is still fairly common to see 200- to 500-sow, farrow-to-finish operations in Canada, he adds.

“In the U.S., those operations are practically gone; you're either a 1,000-sow or 1,500-sow, farrow-to-finish, or you've specialized a particular segment,” McEwen says.

Marketing Matters

On the marketing side, Canadian production continues to have considerable variation. Again, regionalism dictates the marketing methods.

Production in Quebec is more vertically integrated, yet its marketing authority continues to be single desk-selling (pooled and sold under one provincial authority.

Figure 2. Hog Densities (animals per square mile of arable farmland)
Country or Region Density
Netherlands 3,845.3
Taiwan 2,105.5
Denmark 1,304.8
North Carolina 1,204.7
South Korea 981.1
Japan 635.1
Germany 570.5
Quebec 554.3
Iowa 375.7
Spain 375.0
Ontario 234.6
France 227.0
Minnesota 162.3
Manitoba 99.8
Alberta 41.9
Saskatchewan 14.3
Source: University of Saskatchewan

At the other end of the spectrum, Canada's western provinces operate under a more American-style system, where the single desk-selling authority has been abandoned in favor of direct marketing to processors.

Kevin Grier, senior market analyst with the George Morris Centre in Guelph, Ontario, theorizes that in western Canada, there is an 80/20 rule, where 80% of the total volume of production is controlled by 20% of the producers.

“The vast majority of the hogs would be in the hands of producers who don't have need of a marketing assistant,” explains Grier. “Conversely, there are more producer numbers that would have liked to have kept mandatory marketing.”

For those wanting that security, the West still offers marketing through three provincial cooperatives: the Manitoba Pork Co-op, Sask Pork International and Alberta's Western Hog Exchange.

In Ontario, says Grier, marketing is still a mix of pooled and direct marketing, although the provincial authority, Ontario Pork (Producers' Marketing Board), still acts as a third party “go-between.”

Export Positioning

The other major difference between Canada and the U.S. is the reliance on exports. According to USDA estimates, Canada will export 815,000 tons of pork in 2003, second only to the European Union's 1.325 million tons. Although that represented 21% of world share in 2002, its growth in the past five years has been a healthy 85%. Within that five-year period, Canada also eclipsed the U.S. in pork exports. (See related article on export rankings, page 32.)

“We are much more diversified in our exports,” says Martin Rice, executive director of the Canadian Pork Council. “If you look at the export countries we ship to now, a lot of those countries we didn't ship to at all, 10 years ago.”

Yet for all the comparative differences, the similarities do remain; pricing is still fixed to the U.S. system, there is competition for export markets and there is a growing recognition of the role of consumer demand for food safety, animal welfare and the environment.

COOL The Canadian Perspective

Canadian producers remain puzzled about why U.S. politicians seem so intent on implementing regulations that are expected to be damaging to their own producers and packers.

Canadian producers were caught almost completely off guard when mandatory country-of-origin labeling (COOL) requirements for meat products were written into the 2002 U.S. farm bill.

Since approximately one-third of all pigs born in Canada end up in the U.S. as weaner/feeder pigs or chilled or frozen pork, the potential impact on Canada's hog industry is massive.

“COOL is all about impeding trade,” states Kevin Grier, co-author of “Impacts of U.S. Country-of-Origin Labeling on U.S. Hog Producers,” a joint study by Grier at The George Morris Centre in Guelph, Ontario, and David M. Kohl at Virginia Polytechnic Institute (VPI) and State University, Blacksburg, VA.

“If COOL is successful at disrupting the supply of Canadian hogs into the U.S., there will be fallout,” Grier adds.

Coffee shop discussion in Canada likens COOL to the Canadian gun registry. Even though this unpopular program has now cost taxpayers a billion dollars more than originally estimated, politicians are unwilling to admit that mistakes were made.

COOL Fallout

The George Morris Centre/VPI study showed that COOL would place at least 1,000 small, independent U.S. farms that depend on Canadian wean-lings at risk.

If the 5.3 million Canadian hogs and pigs annually moved to the U.S. were blocked, a short-term shortage would be created. But, large, integrated pork operations will likely fill the shortfall within a few years, the study states.

Under COOL, Canadian production would drop slightly. Hogs currently shipped to the States would largely be finished in Canada.

Grier and Kohl's study shows the net impact would mean 4 million more hogs in North America. As a result, hog prices would drop to levels 30% lower than if COOL were not implemented, they predict.

The study further states that up to five U.S. packing plants that process Canadian-born hogs could disappear along with 4,500 direct packing plant jobs. Another 8,000 jobs downstream are also put at risk. Overall, economic losses could mount to $4 billion.

“The worst part of the legislation is the live animal provisions (stating) animals have to be born, raised and slaughtered in the U.S. to qualify as a ‘product of the USA,’” says Martin Rice of the Canadian Pork Council.

“The legislation is definitely going to affect the competitive balance between red meat and poultry, since poultry isn't affected by the legislation,” he adds.

Pinching Canadian Producers

If U.S. packers reject Canadian-born pigs under COOL, the Canadian farms supplying weaners will feel the greatest impact.

An earlier study by Grier, commissioned by the Manitoba Pork Producers, states that under the worst-case scenario, 450 Canadian hog barns representing $350 million of income would disappear. Factoring in the additional loss of markets for 250,000 acres of grain, up to 1,000 Canadian farmers could face bankruptcy, he says.

U.S. farmers import at least 3 million weaners from Canada annually. Grier's study showed that if COOL regulations destroy this market, Canadian barns would be flooded while American barns would be starving for pigs. Weaners would become essentially worthless in Canada until roughly one million extra feeder spaces are built to accommodate the extra supply.

Processing the extra pigs in Canada wouldn't be a problem, however. With all the improvements and expansion to hog packing facilities over the past few years, Grier estimates that all of the live Canadian hogs currently exported to the U.S. could be processed if the plants started running second shifts.

However, there is widespread concern among Canadian producers that packers would take advantage of their now-captive suppliers by reducing prices. New pricing mechanisms that don't depend on U.S. hog cash or futures markets would have to be developed.

Rice says Canadian producers have always viewed the U.S. market as an alternative that helps ensure buyers make the maximum effort to buy their pigs for the top dollar.

“Most Canadian producers have always preferred to sell to Canadian packers to keep the value-added spinoffs in Canada,” explains Rice. “Ninety percent of all slaughter (weight) hogs are now processed in Canada. There are less shipping problems and less risk of border problems.”

The 5.3 million Canadian-born animals slaughtered in the U.S. in 2001 accounted for 6% of the total U.S. hog slaughter. Had those pigs been slaughtered in Canada, packers would have had to find markets for an additional 400,000 metric tons of pork.

Rice believes that, ironically, COOL may help Canadian-processed hogs capture a larger share of American supermarket shelf space. “There are definitely opportunities for Canadian packers to sell case-ready Canadian pork and beef to U.S. retailers,” he says.

“As far as we can see, there will likely be no extra costs for Americans handling Canadian pork,” Grier says. “Customs documentation that is already in existence will suffice to prove country of origin.”

Consequently, Canadians will avoid the significant costs that COOL places on American pork and beef producers and packers. While U.S. hogs will require an elaborate, birth-to-barbecue tracking system, Canadians will be able to market case-ready pork in supermarkets with just documentation from U.S. Customs indicating it is a “product of Canada.”

Since American consumers already associate Canadian pork with quality, it should be possible to build a strong “Canadian Pork” brand similar to the one currently enjoyed by New Zealand lamb, says Rice.

Pork Export Leader

Canada is the world's second largest pork exporting nation, with 50% of its domestic pork production sold abroad. While half of these exports currently go to U.S. customers, Canadian packers have developed expertise in delivering large quantities of high-quality, fresh, chilled and frozen pork to customers around the world.

Canada Promotes Pork Brand to Japan

To the Japanese, Canada means pristine forests, mountains, lakes, skiing, Canadian Mounties and Anne of Green Gables, a fictional book character who has become almost a national icon in Japan.

Canada isn't thought of as a major supplier of safe, high-quality pork, however. If Jacques Pomerleau and others at Canada Pork International (CPI) have anything to say about it, that will soon change.

Japan is an increasingly important customer for Canadian pork as the industry tries to lessen its dependence on the U.S. market. Canada exported 913,000 tons of pork in 2002 (up from 880,000 tons in 2001) according to Canadian Food Inspection Agency figures. Japan is CPI's greatest success, as approximately 24% of Canadian pork went to Japan and another 47% to the U.S. This is a dramatic change from the early 1990s, when about 80% of the much smaller volume of Canadian pork exports went to the U.S.

Japan implemented country-of-origin label (COOL) regulations in April 2002 when a case of mad cow disease was discovered in Japan. Beef consumption dropped dramatically. In an effort to support Japanese beef producers, the government implemented a program to buy back excess beef from the marketplace. Since beef could not easily be traced, unscrupulous companies defrauded the program by labeling imported beef as Japanese. When the deception was discovered, the ensuing scandal bankrupted several of the offending companies and forced the government to implement COOL legislation to prevent it from happening again.

Regulations do not specifically require country-of-origin labeling — only that it be labeled as “imported.” However, both Canada and the U.S. want to promote their national brand so they use country-of-origin labels, Pomerleau says.

Prior to implementing COOL, Canadian products had a hard time developing an independent identity. When new country-of-origin labels came into place, the Canadians decided to openly promote their origin.

“Country of origin in Japan may turn out to be a very good thing for Canadians in the long term, but in the short term it requires changing the buying habits of the Japanese retailers,” Pomerleau says. “Retailers only want to promote just one imported brand. One retailer will only have Canadian products and the next will have an American one. Promoting one over the other is a difficult marketing job.”

Food safety is the Japanese consumer's greatest concern. High quality comes second. It isn't enough to say you are a reliable supplier of safe, high-quality food, you have to prove it

“That's why the Canadian Pork Council has developed a new Canadian quality assurance program,” Pomerleau says. “All Canadian packers now guarantee their chilled pork has at least a 55-day shelf life — very long for fresh pork.”

Canada's success at selling pork to Japan does come with risks. “Japan and the U.S. combined represent more than 70% of Canada's total exports,” Pomerleau explains. “We can't let ourselves continue to be so dependent on just these two markets. We have just completed opening up China. All our plants are approved, so now we can comply with China's new, very stringent labeling requirements.”
Lorne McClinton

Hogs Provide Second Family Income

Paul and Judy Lust left the hog business in 1972, long before their son, Matt, was born. Now, contract finishing eases their son back into the family farm.

In the early '70s, the Bucyrus, OH, family finished about 300 feeder pigs in three different barns. Labor demands and the need for better buildings were the main reasons the Lusts exited the business.

In 2002, the couple began contemplating the hog business again. “It wasn't our idea,” explains Judy, strolling down the gravel lane to a new 82 × 217-ft. wean-to-finish building equipped with a Raytec WayPig Auto Sort system.

Contract finishing 5,000 pigs/year provided a way to bring Matt, now 23, back to the farm, explain the Lusts. Their 1,500 acres of corn, soybeans and wheat wouldn't generate enough income to support two families.

“I'm excited,” admits Paul as he prepares the shiny steel building for the first 240, 14-day old pigs that will arrive in three days.

The Lusts brush off $30 cash hog prices, unconcerned about starting back in the business now. “It doesn't matter to me what hogs are selling for. They're not my hogs; we only get paid to feed them,” explains Paul.

As a contract grower, the family supplies the buildings and labor, and Hord Livestock Co. Inc. provides the pigs, feed and medication. The family is paid a daily rate by Hord Livestock, plus bonuses for good feed conversion (2.75 or better, wean-to-finish) and low death loss (3.5% or less, wean-to-finish).

Matt always wanted to become a pork producer, sporting a black shirt with the farm's “Brandyswine” logo. “I think it will be good over time; the first couple of years will be hard,” Matt says as his easy grin tightens.

Doing Some Homework

The several-hundred-thousand dollar building investment wasn't made lightly. Before bringing pigs back, the family spent a year budgeting, planning the building and talking to contract growers. Matt spoke to about 20 different growers when he hauled feed for Hords as a sideline. Paul tagged along, too, learning that most families who built a barn decided to add a second.

As a result, the Lusts built a doublewide barn. Paul points out, “I think if it works out, we'll look to build another one in three to five years.” They anticipate paying off the building loan in 15 years.

Matt, a crop protection applicator at a local co-op, realizes that balancing pigs, a family and a full-time job is a plateful. But it's a risk he's willing to take.

For Paul and Judy, part of the payoff is having their only child back on the farm. Matt and his wife, Holly, are expecting their first child in August.

“If the bottom would ever fall out of the market, I don't know what would happen…but I guess there's a risk with everything in agriculture,” says Matt, walking down the spotless wooden ramp where the first pigs will arrive.

Contracts Require Top Efficiency

Hord Livestock, a seven-family member operation, owns several thousand sows and has contract finishing agreements with 35 growers. The company's web page tells that during WW II the Hord family received a ceiling of 16-18¢/lb. for cash hogs. After the war ended, the Bucyrus, OH, family had windfall profits of 32¢/lb. But hog prices in the ‘30s this spring can hardly be described as a windfall.

The Hords have been through low hog prices before. Production manager Matt Davis says, “Basically, we need to focus on being as efficient as we can. It has also been necessary to take some form of risk protection in the market, which includes a blend of a marketing contract with a packer, forward contracting and the board of trade.”

Davis oversees the contract grower operations. The growers have five-year contracts and are paid on a per-day basis. “They're paid whether they have 2,000, one or zero [pigs]. It holds us more to the fire to keep the pigs moving. There's also more guarantee to the grower that the barns will be full,” Davis adds.

The Ohio-based company had six growers and nine barns in 1995. Presently, their 35 growers finish hogs in 50 barns.

“We've had very consistent additions for the past seven years,” Davis adds. “From a contractor angle, there's very good return on investment compared to almost anything in agriculture.”

Like any other business, surviving and thriving in the pork industry in the future will mean lowering the cost of production by improving efficiency and performance. Look anywhere you can to save a nickel or dime and not hurt performance or production, Davis suggests.

He suggests targeting these management areas in finishing barns:

  • Keep a close eye on ventilation controls.

  • Keep up with repairs. If it's broken, fix it. If it's going to break, fix it.

  • Watch for water leaks. With 160 nipple waterers in a barn, a constant drip can put a lot of water into the manure pit. A minor leak can add up to 50-60 gal./day. That costs time and money spent pumping the pit.

  • Labor will continue to be a major challenge. Contract growers in the area often have to pay $20/hour to find workers to load hogs. Trading labor with other growers is one way to ease the labor issue.

World Pork Expo

June 5-7, 2003 Iowa State Fairgrounds Des Moines, Iowa

“Pork Galore, three days of education, information and relaxation” is the theme kicking off the 15th annual World Pork Expo, hosted by the National Pork Producer's Council.

The three-day event will be held June 5-7 at the Iowa State Fairgrounds in Des Moines. A total of 421 companies have registered as pork industry exhibitors for the show. This includes 41 new exhibitors and 141 exhibiting companies from outside the U.S. The show will feature educational events and seminars, contests, family fun and a popular golf tournament, World Pork Open.

Highlights of the free educational seminars include three related sessions on PRRS covering transmission, investigating an outbreak and control strategies. A second educational seminar on managing the breeding herd features gilt management, sow management and a question-and-answer session.

Producers can also learn more about regulatory issues at the Environmental Education Center and sample pork dishes from the Pork Product Showcase.

Contests and family fun will be plentiful. At the Swine Barn, breed associations will be showcased during seven breed shows and sales. Artists will compete for prizes at the Pig-Casso Art Show just inside the Cattle Barn entrance, and the nation's top barbecuers will grill off for cash prizes in the Great Pork BarbeQlossal. An outdoor track will blaze with live pig races. And the World Pork Open, a favorite golf event with cash prizes, tees off on Friday, June 6.

Admission to World Pork Expo is $8/day for adults and $2/day for children 6-11. Children 5 and under are admitted free.

WPX Events and Times

These events and more can be found on

Trade Show

Th./Fri. 8 am - 5 pm, Sat. 8 am - 4 pm
Location: Varied Industries Building, Cattle Barn, Outdoors (southwest of Varied Industries Building)

At the world's largest pork-specific trade show, a wide array of pork industry products and services will be offered by over 400 exhibitors.

The Business District

Location: Cattle Barn

National Hog Farmer and other participating industry partners will feature business areas with professional representatives to answer producer questions on finance, marketing, production and financial recordkeeping.

International Visitors Center

Location: Cattle Barn South Annex

U.S. producers can discuss production and trade ideas with their international counterparts. More than 1,000 international visitors from over 60 countries have previously attended Expo.

Pork Product Showcase

Location: Cattle Barn

Visitors will be able to taste pork dishes and discover new flavors from around the world. Pork cooking techniques will be shown at the demonstration kitchen.

Educational Seminars

Location: Cattle Barn Sales Arena

Free educational seminars will be presented by some of the nation's leading experts. Topics and times follow:

Thursday, June 6

What You Should Know About Porcine Reproductive and Respiratory Syndrome (PRRS)

10 - 10:30 am: How is PRRS Being Transmitted?
Dr. Scott Dee, University of Minnesota

10:30 - 11 am: Investigating an Outbreak: What do Producers Need to Know?
Dr. Eric Neumann, National Pork Board

11 - 11:30 am: Current Control Strategies for PRRS
Dr. Monte McCaw, North Carolina State University

11:30 am - Noon: Questions & Answers

Managing the Breeding Herd

1 - 1:45 pm: Gilt Management
Dr. Mark Fitzsimmons, Swine Graphics Enterprises, Webster City, IA

1:45 — 2:30 pm: Sow Management
Dr. Tim Loula, Swine Vet Center, St. Peter, MN

2:30 - 3 pm: Questions & Answers

Friday, June 7

Market Outlook for 2003 and 2004

10 - 10:30 am: Weather Outlook
Elwynn Taylor, Iowa State University

10:30 - 11 am: Grain Outlook
Bob Wisner, Iowa State University

11 - 11:30 am: Hog Outlook
Glenn Grimes, University of Missouri

11:30 am - Noon: Questions & Answers

Environmental Issues

1 - 1:30 pm: What You Need to Know to Comply with the AFO/CAFO Rules and Available Resources
Rick Koelsch, University of Nebraska

1:30 - 2 pm: Diet Manipulation Strategies for Managing Manure Output and Composition
Merlin Lindemann, University of Kentucky

2 - 2:30 pm: Environmental Stewardship — Commitment to the Environment
Lynn Harrison, producer from Wisconsin and Marlin Pankratz, producer from Minnesota

2:30 - 3 pm: Questions & Answers

Contests and Competitions

Breed Shows and Sales

Location: Swine Barn

Breed associations will conduct seven breed shows and sales. The breed shows consist of live evaluation and feature tested or performance classes. For more information, visit

Friday, June 6

Ring A

8 am: Hampshire Show
Followed by Duroc Show
Followed by Landrace Show
Followed by Yorkshire Show

Ring B

9 am: Berkshire Show
Followed by Spotted Show
Followed by Chester White Show

Saturday, June 8

Ring A

9 am: Hampshire Sale
Followed by Duroc Sale
Followed by Landrace Sale
Followed by Yorkshire Sale

Ring B

10 am: Berkshire Sale
Followed by Spotted Sale
Followed by Chester White Sale

Pig-Casso Art Show

Th./Fri. 8 am - 5 pm, Sat. 8 am - 4 pm
Location: Cattle Barn Main Entrance

Pig images in a variety of media will be on display in this unique show where artists from around the country vie for ribbons and cash prizes. Expo attendees may vote for their favorite artwork in the Audience Choice Award.

Fun, Fun, Fun

8th Annual World Pork Open

Location: Briarwood Golf Course, Ankeny, Iowa
Friday, Registration: 8:30 am

A World Pork Expo favorite!

Reservations are being accepted for the first 144 golfers. Cost is a $100 contribution per golfer. Sign up a foursome or register individually. Register online at

Music Fest Musical Entertainment

Sat. Noon - 6 pm
Location: Riley Stage

Enjoy a variety of music presented by today's top performers: Highway 101 with Hal Ketchum, Sonny Geraci and the Outsiders and the Blooze Brothers of Chicago. Music Fest is included in the regular admission to World Pork Expo.

The Great Pork BarbeQlossal

Friday evening and Saturday afternoon
Location: Grand Concourse

The nation's best barbecuers will vie for $20,000 in cash prizes and national competition points in this World Pork Expo tradition. Contestants will bring their custom-made grills and sauces to compete in the categories of whole hog, ribs, loin and shoulder. Showmanship prizes will also be presented. The overall grand prize winner will receive $3,000 plus a Kingfish Kountry Kooker.

Pig Races

Th./Fri. 10 am - 5 pm, Sat. 10 am - 4 pm
Location: Outdoors, southwest of the Varied Industries Building

The excitement and fun of live pig racing can be found at Expo. Racing pigs will hoof around a sawdust track at blazing speeds. It will be fun for the entire family as you participate in the pageantry of the Pig Races.

Celebrated Chefs

Th./Fri./Sat. 10 am - 3 pm
Location: Cattle Barn

The pork checkoff-funded Celebrated Chefs program is designed to increase awareness and build excitement for pork's versatility, variety and profitability among chefs, foodservice operators, distributors and food media. They serve as spokespersons for the pork industry and provide cooking demonstrations. The 2001-2002 Pork Celebrated Chefs will demonstrate how to create great pork dishes at home.


Sat. 7:30 — 10:00 am

Iowa Farm Bureau Foundation's 2nd Annual Hog Jog returns after great success last year. Runners, walkers and bikers will converge on the Iowa State Fairgrounds on Saturday, June 7. Sponsored by the Iowa Farm Bureau Foundation, Zylstra Harley-Davidson of Ames, IA, and World Pork Expo.


Sat. 11:00 am — Riley Stage

This is a unique fund-raising campaign with a comical approach to raising dollars for a very serious issue: the need for funding vital diabetes research and programs. We honor the pig for aiding in the discovery of insulin for people who suffer from diabetes. Sponsored by American Diabetes Association and Lions Clubs of Iowa. See for more information.

Pork Checkoff Theater

Th., Fri., Sat. — Cattle Barn

A short video program will be shown throughout each day, every 45 minutes, to showcase the activities of the pork checkoff program. Producers who view the video are eligible to enter a drawing to win a John Deere Gator push lawnmower, riding lawnmower, weedeater and a barbecue grill. Tickets to an ARCA race will also be given away. Producers who view the video are invited to sample pork products. Staff will be on hand to answer any questions about pork checkoff programs.

Pork Product Showcase

Th., Fri., Sat. — Cattle Barn

Celebrated chefs will be cooking entrees on stage in the demonstration kitchen. They will also hand out samples of pork products. Niche markets, advertising, retail, foodservice, exports and the Pork Information Bureau will all be featured in the Pork Product Showcase.

Big Grill

Th. 11- 2, Fri. 11-2, Sat. 11:30-2
Midway Area

Pork producer volunteers prepare pork from the largest grill in the world. About 50,000 servings of the best will be portioned out during the three-day event.

2nd Annual Celebrity Rib-Eating Contest

Th. noon — Cookies BBQ stand on midway

Put this on your schedule for fun activities and belly-laughs.

World Pork Expo Merchandise Shop

Location: Varied Industries Building, south main entrance

Here you will find World Pork Expo merchandise and materials such as shirts, hats, jackets, calculators and other souvenir items.

product news

Stock Trailer

Donahue Corporation now offers a new stock trailer called the Weigh-N-Haul. The trailer has a built-in, 20,000-lb. platform scale equipped with six weigh bars, electronic indicator, printer and a cable to download information onto a personal computer. Simply enter each animal's identification number as you load, and weight is recorded into the indicator memory. The trailer has ⅛-in. steel lower side walls, Galvannealed sheet metal sides, top and gates. A full, 7-ft. inside width with no fender wells, 6-ft. 9-in. inside height and smooth outside styling makes the trailer easy to tow.
(Circle Reply Card No. 101)

Lagoon Cleanup

American Tree Seedling Company provides wetland plants that filter runoff from hog manure lagoons. Packaged in lots of 200, bulrush plants come as “plugs” or “tubelings” complete with potting soil, starter fertilizer and a complete root system. Extension agents in North Carolina, South Carolina and Iowa have identified bulrush as the perfect plant to assist producers with limiting nutrient runoff. Capable of absorbing massive amounts of nutrients on a year-round basis, the plant is native to eastern and midwestern states.
(Circle Reply Card No. 102)

Combination Vaccines

Pfizer Animal Health is now marketing the first swine reproductive disease and swine influenza virus combination vaccines. FluSure/FarrowSure provides bivalent protection against swine flu subtypes H1N1 and H3N2, and protection from porcine parvovirus, erysipelas and five strains of leptospira. FluSure/FarrowSure Plus B delivers the same protection against swine flu and the reproductive diseases, plus protection against the Leptospira Bratislava strain of leptospirosis. Efficacy studies showed the swine flu vaccines did not interfere with the parvovirus, erysipelas and leptospirosis fractions of the vaccines. Duration of immunity studies showed 26 weeks of protection against erysipelas. Both combination vaccines contain Pfizer's patented adjuvant, Amphigen, to enhance immune response and duration of immunity, lessen injection site irritation and improve syringeability.
(Circle Reply Card No. 103)

Scale Indicators

Weigh-Tronix, Inc. introduces the 1040/1040XL scale indicator series. Models feature easy-to-read displays regardless of mounting location. Model 1040 features 1.1-in. digits while the Model 1040XL offers extra large, 2-in. digits. With a backlit LCD display, viewing is clear even in light-restricted conditions. The 1040 series is ideal for TMR applications with enhancements to simplify batching and manage feed costs. The addition of an alpha-numeric keypad allows the user to spell out names of ingredients, diet formulations and pens for easy identification. A new Automatic Ration Adjustment feature provides the proper ration balance for the remainder of the ration once the first ingredient is loaded. An optional memory module can be used with several available PC packages.
(Circle Reply Card No. 104)

Junior Boar Cart

Hog Slat introduces its newly redesigned Junior Boar Cart to the U.S. market. The multiple articulation system allows the cart to easily turn 2 × 2-ft. alley corners. Available in 20-in. and 22-in. models, the cart's new drive system features an automatic lock/unlock assembly that ensures superior performance when climbing an alley ramp or turning corners. The remote control is water and shock resistant for extended life span.
(Circle Reply Card No. 105)

Lock ‘n’ Load Syringe

Agri-Pro Enterprises announces the availability of the Lock ‘n’ Load syringe from Instrument Supplies. The 20-ml. syringe offers increments of 0.5 ml. to 5 ml. and the 50-ml model offers increments of 1 ml. to 5 ml. These instruments have non-corrosive metal shafts to withstand heavy use and a trademarked NRG cap for simple needle removal and replacement. A combination of metal and poly materials creates comfortable, lightweight construction. Replacement barrels are available.
(Circle Reply Card No. 106)

Cover Systems

Layfield Geosynthetics & Industrial Fabrics and Encon Technologies have announced an alliance to jointly market, supply and install Negative Air Pressure (NAP) Floating Cover Systems. The covers are patented, lightweight systems for controlling odors emanating from manure storage lagoons. The NAP floating cover system is suitable for medium-to large-sized lagoons. An air agitation system is available to complement the NAP floating cover that can agitate solids in a pond without causing damage to the liner or cover system.
(Circle Reply Card No. 107)

No Easy Answers To PRRS Puzzle

Porcine reproductive and respiratory syndrome (PRRS) continues to be a big draw at our swine veterinary conferences and is the number one swine disease facing our farms.

Following are PRRS farm work-ups from our practice, and how we handled them.

Case Study No. 1

In the spring of 2002, I investigated a 300-sow, farrow-to-finish, single-site facility. Sows are bred and gestated outside. Pigs move through nursery and finishing facilities, all-in, all-out by room, but continuous flow by airspace.

The farm had mixed results with PRRS vaccination. At the time of my visit, sows and pigs were not being vaccinated for PRRS.

Clinical signs included severe respiratory challenges in the nursery and early finisher, over 10% mortality in the nursery, and and pigs very slow to go to market.

Pigs in all stages of production were blood tested. Tissue samples from nursery pigs were also submitted to the lab.

PRRS virus was isolated from lung tissues in nursery pigs. Serologically, pigs had exposure shortly after weaning, with titers peaking at 8-12 weeks of age. We isolated a field strain of the virus.

We recommended mass vaccination of the sow herd, twice, 30 days apart, with modified-live PRRS vaccine (Boehringer Ingelheim Vetmedica). We also began vaccinating piglets at processing time with the modified-live vaccine (extra label). This helped piglets develop immunity before entering the nursery. The herd stabilized and quieted down shortly after the second vaccination.

Sows were placed on a maintenance vaccination program for PRRS, parvovirus and leptospirosis one week prior to weaning. Production was very good for the next eight months.

Case Study Review

During a routine herd visit in February 2003, we again found several pigs in the nursery falling behind, with the “fuzzy” PRRS appearance. Several sows coming through the farrowing house had poor born alive numbers and poor milking performance.

Diagnostics again revealed PRRS activity in the nursery, and also higher-than-expected titers from the poor-producing sows in the farrowing house. Virus sequencing determined that it was a new field strain of the virus, unrelated to the strain isolated in the spring of 2002.

Treatment again consisted of two mass vaccinations of the sow herd, 30 days apart, using the same modified-live PRRS vaccine. We also continued vaccinating piglets at processing.

Further investigation revealed that the producer had purchased a set of early weaned pigs from a PRRS-positive source to fill in a gap in production. These purchased pigs never showed clinical signs like the home-raised pigs.

We also learned some of the sows in the farrowing house had been non-breeders through late summer/early fall. Several months had passed since their last PRRS vaccination.

It appeared the new PRRS strain was either from the early weaned pigs, or was an existing field strain which had not been identified and then surfaced in unvaccinated sows.

This herd has elected to mass-vaccinate sows quarterly and continue pig vaccination.

Case Study No. 2

A 1,200-sow, farrow-to-feeder pig farm was experiencing a high percentage of abortions at 18-24 days post-breeding, along with a smattering of late-term abortions. The recycles were classified as abortions because fetal tissues were passed by the sows and collected by the owner.

PRRS virus was isolated from submitted tissues and sequenced as a field strain. The herd had been PRRS-positive previously, and was using a killed PRRS vaccine (Intervet) in sows.

This field strain appeared more closely related to a new vaccine called PRRS-ATP, as compared to the original PRRS-MLV vaccine (both from Boehringer Ingelheim Vetmedica). Thus, the producer elected to mass-vaccinate the sow herd twice, 30 days apart, with modified-live PRRS-ATP.

The abortions diminished very quickly. Records from this farm did not demonstrate any elevation in pre-wean or post-wean mortality, and born alive numbers and farrowing rate are back to the herd's typical status.

The farm is now mass-vaccinating sows on a quarterly basis. No pig vaccinations are given.


These cases emphasize many points to remember when dealing with PRRS:

  1. Thorough diagnostics and case history are necessary before implementing PRRS control strategies.

  2. PRRS vaccine cannot be expected to provide 100% protection at all times.

  3. There can be risk involved introducing PRRS-positive animals, even into a PRRS-positive herd.

  4. There can be risk involved with extended time between PRRS vaccinations.

  5. Mass vaccination of the sow herd can stabilize health more quickly than “letting nature take its course.”

  6. Extra-label vaccination of piglets can allow more time for immunity to develop.

PRRS continues to challenge the industry. A thorough diagnostic workup is essential in understanding the strain you're dealing with, and where the virus is active. Only then can effective decisions be made to meet the PRRS challenge.

PRV Program Advances

The National Pseudorabies (PRV) Control Board has recommended to the U.S. Department of Agriculture that the PRV status for Iowa be upgraded to Stage IV, and Nebraska's and South Dakota's to Stage V.

With those changes, all states are in Stage IV or V in the national eradication program.

The exception is a small pocket of counties in southeast Pennsylvania that remains in Stage III, says Paul Sundberg, DVM, assistant vice president for Veterinary Issues, National Pork Board. See Figure 1 for a state breakdown.

All of the known, infected herds in southeast Pennsylvania have been depopulated, and state officials are investigating the outbreaks and heightening surveillance.

The state-federal-industry cooperative eradication program still needs vigilance in maintaining surveillance in the U.S., stresses Sundberg. Pork producers still need to observe good herd biosecurity procedures. In the remaining Stage IV states, producers should consult their veterinarians regarding herd health vaccination procedures for PRV, he says.

Equity Drain, Margins Reflect Price Woes

Farrow-to-finish producers have lost money raising hogs four out of the last six years, including 2003, says Iowa State University agricultural economist John Lawrence.

If you raise hogs, you have become all too familiar with low cash hog prices in the last half-dozen years. And, at this point, 2003 looks like a breakeven year overall.

Single-digit market prices in late '98 were the lowest recorded in modern times. That was followed by red ink in '99 and a modest recovery in 2000 and 2001, only to have prices fall surprisingly flat in 2002. Prices have been slow to recover in 2003, and it appears that summer may be the best bet for black ink.

Even more troubling for struggling producers than hog prices are profit margin trends and the overall equity drain plaguing U.S. operations.

Yet as bad as all that news is, record low interest rates, coupled with profitable hog prices projected to return during the last half of 2003 — and all of 2004 — should provide for some recovery.

Profit Margin Plunge

Since 1998, the pork industry has experienced an average profit margin of only about 64¢/cwt., or about $1.70/hog, says Chris Hurt, agricultural economist at Purdue University. That makes the hog business just a little bit better than a breakeven business in the last five years, he says.

Hurt illustrates the downward profit margin trend in Figure 1. It tracks hog prices from 1974 through projections for 2003. Prices are based on the national average value of 51-52% lean carcass quoted on a live weight basis.

Hurt declares: “The point is that profit margins have narrowed by about 13¢/cwt./year on average over the last 27 years (or a total decline in margins of $3.51/cwt. based on 27 × 13¢).

“The profit margin trend in 1974 was $5.23/cwt. But in 2003, it is running only $1.21/cwt.,” he continues.

Hurt acknowledges the price margins in Figure 1 could be underestimated due to the wide variation in price quotes published by USDA, and higher prices based on higher lean percentages, now estimated at 53-54%.

Hurt estimates that a producer raising 1,000 hogs in 1974 would have generated $12,020/year in returns above projected costs. In 2003, 1,000 hogs would only generate $3,146/year, emphasizing the decline in profit margins.

For today's family to achieve an income comparable to the 1,000 hogs' 1974 profits, they would have to market 14,203 head/year (an income of $44,684), based on changes in the Consumer Price Index, he explains.

“The point here is margins are much more narrow today, yet family living costs have risen sharply, requiring a family to have 14 times more income from hogs (in 1974 dollars),” Hurt stresses.

Equity Drain

The equity drain felt by pork producers from 1998-2003 is borne out in Figure 2. It shows that the large losses experienced in 1998 weren't fully recovered until the first quarter of 2001. Producers raising 1,000 head of hogs/year would have slipped over $20,000 into debt based on accumulated returns. Those losses would have been recovered in the following two years and returns leveled out from losses in 2002 and early 2003.

“Producers would have worked for six years (1998-2003), paid all of their bills, including depreciation on their buildings and a labor wage rate, but have only $10,000 ahead after this long period,” points out Hurt.

Hog, Price Cycles

Iowa State University (ISU) agricultural economist John Lawrence predicts this latest downturn in the hog cycle will last 19-20 months, ending by late May or June 2003. “People tend to forget that when we go into downturns, they typically last 18-24 months,” he says.

Several issues have made this cycle seem longer. The Russian poultry ban last year dampened meat demand and eliminated the summer price rally many analysts had predicted, he says.

The fallout from the '98-'99 price crash is still fresh in people's minds, compounded by the depth of hog expansion going into that crisis, recalls Lawrence.

Actually, 2002 was more economically devastating, he says. Producers suffered through a slow profit drain throughout the year, as prices seemed stuck in the $30s.

The result was an average equity loss for 2002 of $16.20/head for Iowa pork producers, based on ISU's Estimated Return Series, says Lawrence. That loss bounced between $16-19/head during the first quarter of '03.

Purdue's Hurt is predicting prices should climb from the mid-$30s in March to the low $40s by the end of May, and reach an average return of $40/cwt. for the second quarter. For the year, prices should average $39/cwt., with the cost of production dipping to $38/cwt. with a near-normal corn crop, he says.

Provided the hog cycle turns as expected, all of 2004 should be profitable, short of some demand or feed surprise, says Lawrence.

New Economics

The four articles featured in the following special section touch on the dawning of a new economic model for the pork industry.

This opening article acknowledges the equity drain experienced throughout the pork industry and tells how average profit margins have narrowed over the course of almost three decades. Economists share their thoughts on what this troubling trend means to producers today.

The impact of these difficult economic times is providing strong motivation for a growing number of producers to restructure their hog operations. Several producers from Indiana talk about the financial and emotional struggles facing them as they confront their future in the hog business.

In a rare twist, an Ohio farm family returns to the hog business after a 30-year absence. They built a 5,000-head contract finisher so their son can stay on the farm.

A final article delivers some powerful lessons on survival. Two AgStar lending officials bluntly point out that only low-cost producers will survive the financial crunch, and emphasize the importance of becoming more efficient. They also suggest producers should consider partnering arrangements. There are profits to be made in contract production, and marketing groups can provide volume clout.

Struggling to Survive

Low hog returns and repeated battles with porcine reproductive and respiratory syndrome (PRRS) are pushing change in the pork industry.

The traditional pork industry profit center, the farrow-to-finish enterprise, is facing certain change in the Hoosier state and elsewhere.

Stung by poor prices and health issues often beyond their control, producers are making their operations more specialized in hopes they can save the equity in their farms. Many are selling off sows and turning to feeding out pigs. Some are converting to breed-to-wean systems.

Still others are simply depopulating their hog operations or are being forced out of business by their lender.

Restructuring Process

John Vincent, feed sales consultant with Indiana-based United Feeds, says his company is betting their independent pork producer clients will survive.

A number of United Feeds' small-to-medium-sized customers (200-500 sows) across the U.S. are undecided as to their future in the hog business, he says. His company strongly advises producers not to exit the industry now or they will miss profits later this year and next.

Most of United's Indiana customers who have chosen to restructure their hog operations have opted to sell off sows and convert to finishing pigs, says Vincent.

“Most of these guys have a solid land base with an ample corn supply and good hog facilities, and can handle the extra feed grinding and manure. This all fits in with their management style,” he points out. Plus, there are three major packers within reasonable driving distance: IBP at Logansport, IN; IPC at Delphi, IN; and Swift at Louisville, KY.

Switch to Finishing Only

One of the biggest financial and emotional drains on these mostly single-site hog farms has been dealing with repeated outbreaks of the PRRS virus.

Bob Stafford and son, Tim, of Tipton, IN, owned a 500-sow, farrow-to-finish operation with 3,000 acres of farmland. They struggled with selling off the sows, but herd health problems forced a change.

“It seemed like we were vaccinating the breeding herd for everything including PRRS,” recalls Tim. After gilts were acclimated, vaccinated for PRRS and then introduced into the sow herd, another new strain of the virus would sweep through the herd, he says. PRRS especially caused problems in the nursery. The respiratory form of the virus proved almost untreatable on this farm, adds Vincent. They also had problems with Actinobacillus pleuropneumonia causing sudden deaths in the finisher.

Throw in the long economic downturn and the pair decided the best move would be to convert their separate nursery-to-finish barns to feed out segregated early weaned pigs.

Bob Stafford says the original farrowing facilities, overdue for remodeling, dated back to the '70s. In contrast, the nurseries and finishers were in good shape.

They converted farrowing to nurseries, and gestation and breeding units to finishing.

In January 2003, they started buying 200-300, 11-lb. pigs per week. Used to four-week weaning, the switch to early weaned pigs presented some challenges, admits Tim.

“It's challenging and pretty intense labor for the first 2-3 hours after arrival because you have to hand pick every one of them, get them sized, sexed, give them a shot and put them in a pen. These pigs need more constant, individual care,” says Tim. Plastic flooring was added in the nursery to provide a warmer environment for the younger pigs.

“I would have never thought that such an itty bitty pig like this could survive, but they have proven to be very hardy,” adds Bob.

Without the sows, the Staffords have been able to cut back on vaccines. Pigs are only vaccinated for erysipelas, salmonella and Mycoplasmal pneumonia. PRRS has not been diagnosed.

Broad-spectrum antibiotics are used to maintain pig health and growth. But feed medication use has declined as overall performance has improved, says Bob.

In efforts to boost efficiency, throughput and revenue, the Staffords plan to increase annual hogs marketed from 7,000 to 12,000 head.

They are selling hogs at 260-270 lb. to IBP at Logansport, IN. United Feeds' Vincent supports feeding hogs to heavier weights.

“Producers are paying an average of $32/pig to properly compensate breed-to-wean producers for those 11-lb. pigs,” he says. “Finishers will probably have $95 in that pig counting the cost of the pig, feed, labor and facilities. By feeding out hogs to those heavier weights up to 275 lb. or so, you dilute that cost out over more pounds of pork produced.”

For example, if you sell at 250 lb., with $95 in production cost, your cost of production for wean-to-finish is $38/cwt. ($95 divided by 2.5 = $38/cwt.).

By taking that pig 25 lb. heavier, you add about $4.50 in feed costs ($0.18/lb. × 25 lb. = $4.50) and about $1.50/pig in facility costs. That equals $6 ($4.50 + $1.50) for that extra 25 lb. of gain. It pushes production costs to $101/hog ($95 + $6) divided by 2.75 cwts., which equals $36.73/cwt.

“You've actually dropped your production cost by $1.27/cwt. ($38 - $36.73 = $1.27), which is why more producers are feeding hogs to heavier weights,” says Vincent. Most genetic lines are viable to these heavier weights, and IBP's buying grids reward producers for lean, heavy hogs. If you are selling to other packers, find out their acceptable weight ranges, he advises.

Vincent admits that selling hogs at 275 lb. increases the natural weight spread of the group and adds to sort loss. But he figures the total gross dollars feeding to heavier weights outweighs that loss.

Fed Up with Prices, PRRS

Changes in Frankfort, IN, pork producer Mike Beard's farming enterprise have all hinged on survival. “We keep a pretty doggone good set of records; I don't want to give away too much equity,” he explains.

Beard used the dairy buyout program in 1987 to sell off his 200-cow herd when prices sunk.

In 1999, he sold off his 450-sow operation in the pseudorabies buyout program after the disease and market losses of '98 dug a deep hole in his financial equity.

He repopulated to 450 sows later that same year, with the promise of good returns, which materialized through 2001.

However, with a lengthy run of poor prices in 2002-2003, and return of the PRRS virus, Beard decided to sell off his sow herd again; the last sow farrowed April 8.

“We thought we were clean, but PRRS came back when we repopulated in 1999, and we have battled it ever since,” he remarks. “We've thrown a lot of money at the PRRS issue, trying every new remedy to come out every six months or so, along with heightened biosecurity. Those steps just haven't kept it out,” he laments. PRRS regularly caused 10% sow death loss, meaning finishers were seldom full, and 20% of surviving pigs were slow growers.

An offsite nursery-finisher was built in 2001 to try to improve pig health. But in 18 months, the facility has never been more than half full due to PRRS complications in sows.

Beard hasn't decided on his future in the hog business. He will miss working with sows — but not the PRRS virus that goes with them.

The 57-year-old producer still has an offsite, 4,000-head contract finisher and may choose to contract feed pigs on the home farm. He has the grain operation and last fall started a dragline custom manure hauling business.

Profits Turn Sour

“We lost a lot of equity in '98-'99, had a real good hog year in 2001,” says Dana Scott of Logansport, IN. “We expected last year to be profitable, too. Instead, it was negative.”

Scott, 45, a 400-sow, farrow-to-finish producer, said those unexpected low markets led he and his brother, Kevin, to sell off their sows. The last were shipped this spring.

He remarks: “It feels good. I've always liked working with the sows, but when you keep doing it for nothing, it gets old.”

Contributing to the cost crunch was an on-farm retail meat store featuring their locally processed pork. It was popular, but never became financially successful.

The brothers also decided to cut staff to reduce overhead. They let an employee go earlier this year. Dana's 23-year-old son and his brother's 18-year-old son were told they'd have to pursue off-farm careers.

Pig production now consists of buying 500 head of 12-lb., single-source pigs every two weeks. The pigs will flow all-in, all-out through four, 500-head nurseries, one 200-head nursery and 3,300 finisher spaces they remodeled.

Declares Scott: “You can't guarantee your price, so you've got to cut your costs. We are paying $32/head in a five-year contract for these pigs. We think we will be able to finish them at a breakeven cost of right at 37¢/lb.”

Buying the early weaned pigs costs a bit more than the cost of raising them, which used to be 38-40¢/lb., says Scott. But he figures by producing nearly twice as many pounds of pork through the operation, the reduction in their cost of production will more than make up the difference. Their output will increase from 7,000 to 13,000 hogs marketed/year, and hogs will be sold at 255-275 lb. to IBP at Logansport.

No More Bleeding

P.L. Wilson, 65, built his basic 250-sow, farrow-to-finish operation in stages from 1969 to 1973, paying for each in cash. He added finishing in '78 and another nursery in '92.

Debt was low, but problems loomed. In '94, hog prices dipped to 28¢. Wilson was shocked to learn that a neighbor who lost his banking business to high interest rates, and whose hog operation was faltering, killed himself.

In 1997, his son, Ped, returned to the Wabash, IN, hog farm after receiving a degree in business management from Purdue University.

The fall of '98 brought more financial bleeding as the hog market crashed. P.L. and Ped decided to depopulate and repopulate the herd in '99 due to PRRS problems.

This January, following another bad hog year, the elder Wilson took refuge with a month-long vacation in Texas. No sooner had he arrived in Browns-ville when he learned another hog farmer neighbor committed suicide.

For his part, P.L. figures he has lost $300,000 in equity since '99, and countless hours of sleep, keeping his small hog farm afloat. He has struggled, but will soon finish paying off a six-year note for $300,000 on another farm he purchased.

The bottom line for the elder Wilson is that the joy has gone out of working in the hog barns. Although he has yet to make a move, he vows he won't let the hogs take the family farm.

Ped, 28, wants to build a 4,000-head contract hog barn. But he realizes it probably won't be long before Dad sells off the hogs, and he will be forced to dust off his degree and find a job outside of the hog business he so loves.

Veterinary Advice

Swine veterinarian Max Rodibaugh has seen many pork producers exit the hog business in his 25 years of practice in the Frankfort, IN, area.

As numbers continue to dwindle, the survivors must first know their costs to make good business decisions, he advises.

When choosing a production option, look for local arrangements that offer advantages of proximity, he says.

Also, figure out a way in which both the farrower and the finisher share the risk. “There needs to be an equitable return for each segment,” stresses Rodibaugh.

There's nothing wrong with producers converting to a hog-feeding-only venture, he says. “But don't think that just because you lost money in farrow-to-finish that you are going to automatically make money in this new effort. There is no more profit in that (feeding only) equation. The only way to make it work is if you have better efficiency to capture some of that cost,” he concludes.