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Articles from 2008 In May


Advanced Reproduction Program Scheduled

Two swine reproductive specialists will headline the Advanced Swine Reproduction Seminar June 10 at the Marina Inn in South Sioux City, NE.

North Carolina State University professor Billy Flowers and University of Nebraska swine specialist Don Levis will provide information and insights on site-semen management, reproductive herd performance tips and troubleshooting breeding herd problems.

In the afternoon will be a question-and-answer panel.

Iowa State University Extension swine field specialist Dave Stender will talk about strategic ways to cut reproductive output while still benefiting individual operations and the industry as a whole.

For more information or to pre-register, contact Stender at (712) 225-6196 or dstender@iastate.edu.

Third Annual Swine Employee Management Conference

The third annual Managing People in Pork Production conference is set for June 24 at the Best Western Hotel and Conference Center in North Mankato, MN.

The program is designed to assist pork producers, swine unit supervisors, system managers and others in training and motivating employees and family members who work in production agriculture.

The conference runs from 8 a.m. to 4:30 p.m. Pre-registration is strongly advised. The pre-registration fee of $30 is due by June 18, $50 at the door, space permitting. The fee includes materials, lunch and refreshments.

For more information, contact the Minnesota Pork Board at (800) 537-7675 or go to www.mnpork.com/employ.php.

George Young Conference Scheduled for Mid-August

The George Young Swine Health & Management Conference is slated for Aug. 14 at the Marina Inn in South Sioux City, NE.

Program highlights include:
-- Investigation of high-fever disease in China by Rodney “Butch” Baker, DVM, of Iowa State University and Dick Hesse, DVM, of Kansas State University;

-- Economics of disease and evaluating swine health interventions in an era of high feed costs by Derald Holtkamp, DVM, Iowa State University;

-- Common mistakes seen in wean-to-finish facilities by Mike Brumm of Brumm Swine Consultancy;

-- Current issues regarding swine ventilation by Joe Zulovich of the University of Missouri;

-- Pork industry economic outlook and issues by North American Preview columnist Steve Meyer, president of Paragon Economics;

-- Results of porcine circovirus vaccine trials by Raymond Rowland of Kansas State University;

-- Field experiences and effects of porcine circovirus type 2 vaccination on the clinical presentations of porcine circovirus-associated disease by Jeff Okones, DVM, Boehringer Ingelheim Vetmedica, Inc.; and

-- Lessons learned from circovirus vaccination protocols by Jeff Feder, DVM, St. Peter (MN) Swine Vet Center.

For registration information, contact Sharon Clowser at the University of Nebraska at (402) 472-8550 or sclowser2@unl.edu.

A Supply-Demand Short Course

The entire concept of “demand” is foreign to many laymans economists. It is even foreign – or at least blurry – to some trained economists.

One of my missions since beginning my professional career with the National Pork Producers Council in 1993, has been to help people understand demand – what it is, what it is not, where it comes from, etc.

Live hog demand has been nearly unbelievable since mid-2007. While costs have not been covered since last September, it wasn’t the fault of hog prices! The remarkable performance of cash hog prices in the face of huge supplies has been well documented in these editions. The only way that can happen is for demand to be exceptionally good. But what is the source of that strength?

Figure 1 shows a conceptual model for the derivation of live hog demand and retail pork and pork by-product supply. My hope is that it will give you a mental model to see the relationships between the various parts, pieces, levels, etc.

Look first at red supply functions and the red arrows that indicate their influence on successive market level. For supply, everything starts at the farm level. The supply of market hogs is not the number of hogs available. It is the number of hogs that could be made available at various prices. The position of the supply function (the entire red line) in the P-Q space and its shape is based on the cost of producing pigs.

Successive supply functions are determined by the supply of hogs and the costs of transforming hogs into wholesale pork and pork by-products and, subsequently, retail pork and pork by-products. Thus, the wholesale and retail supply functions are “derived” from the farm level supply.

The green demand functions and green arrows work just the opposite. All demand relationships begin at the consumer level and work backward with upstream demands being “derived” from downstream demands and the costs of transforming hogs into pork and pork by-products. The demand for hogs is the last step in that process.

As with supply, demand is not the amount of product purchased. It is the amount of product that would be purchased at alternative prices. For example, the entire green line in each diagram, consumer tastes and preferences, income levels and the prices of complement and substitute goods determine the position of that green line in the P-Q space.

Note that export demand for both by-products and pork operated at the wholesale levels. The prices of these goods in export markets differ from those of domestic wholesale markets, due to differing specifications and transportation costs.

This model also provides a framework for “what-ifs” regarding changes in what we economists call “exogenous” variables. The only variables “endogenous” (or inside) these diagrams are quantity and price. Any other variable, such as fuel prices, packing materials prices, the prices of substitute or complement goods, and consumer tastes and preferences, are called exogenous. When any one of those changes, it will move one or more of the supply and demand functions within the P-Q spaces of these charts.

What if corn costs rise? The farm-level supply function would shift up and to the left. That shift would flow through the red arrows to other levels, driving all of the red-derived supply functions up and to the left. The quantity of hogs and all pork products would fall and the prices of hogs and all pork products would rise. I believe we are in the midst of such a change at present.

What if fuel costs rise? There would likely be a farm-level cost shift, such as is described above, but there are more complex impacts. The cost of transporting hogs and pork products would rise, thus changing the derivation of downstream supplies (i.e. the red arrows) from the basic hog supply. Downstream supplies would shift upward by a larger relative amount than would hog supply, causing the spreads between farm level price and wholesale price and retail price to grow.

The opposite would be true for wholesale and farm-level demand. The green derivation arrows would change due to higher energy costs and upstream demand functions would fall relative to retail and export demand due to higher transportation and processing costs.

What if export demand for pork rises? It would pull wholesale pork demand upward and, thus, pull hog demand upward. Domestic demand would not change, but domestic retail price would rise as more product flowed overseas, thus reducing the quantity of pork supplied to the domestic market at any price level.

And finally, what about export demand for pork by-products? The action would be the same as is described above for pork, but notice that the change in the by-product market would not impact the domestic retail pork market. Thus, the foundation for my long-held position that by-product exports are a win for almost everyone. Foreign customers get more product, wholesale by-product demand rises, thus increasing hog demand and prices, all while domestic pork prices are unaffected. There is, however, a loser even in this case – domestic buyers of pork by-products who must pay more.




Click to view graphs.

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

Midwest Swine Nutrition Conference Planned

The 8th annual Midwest Swine Nutrition Conference will address nutritional issues facing pork producers. The program is Sept. 4 at the Indiana Farm Bureau Building in Indianapolis, IN.

Topics of discussion include:
-- Nutritional issues facing the swine industry with Steve Pollmann, Murphy Brown, LLC, Ames, IA;

-- Phased withdrawal and other issues with distiller’s dried grains with solubles for swine with Gretchen Hill of Michigan State University;

-- Tools to cope with current economics with Richard Coffey of the University of Kentucky;

-- Natural Resources Conservation Service nutrition and management standards that could affect how pigs are fed with Alan Sutton, Purdue University;

-- Integrating advances in maternal nutrition into a practical system of parity segregation with R. Dean Boyd, technical director and nutritionist for The Hanor Company, Inc.;

-- Effects of genetics and gender on mineral nutrition with Don Mahan of The Ohio State University;

-- Efficiency of utilization and energy from protein and fiber, University of Guelph, Ontario; and

-- The use of novel soybean products for swine with Hans Stein of the University of Illinois.

To register, visit www.swinenutritionconference.com.

Prairie Swine Centre Closes Research Unit

PSC Elstow Research Farm Inc., a subsidiary company of Prairie Swine Centre Inc., based in Saskatoon, Saskatchewan, will close due to huge losses in the pork business.

The farm is comprised of a 600-sow, farrow-to-finish barn designed to support research work in a commercial-style setting. It opened in April 2000. Research will be shifted to facilities at the parent company, Prairie Swine Centre (PSC).

The barn and feedmill will cease operations within the next few months, giving staff and related companies time to help lessen the impact.

John Patience, president and CEO of the research farm and PSC, says while the decision to suspend operations was disappointing, the cost structure of the Canadian pork complex made the research farm unviable in the short-term.

In its place, a $2-million renovation of the original barns located at PSC, is set for completion this month.

Distance Learning Opportunities Offered

The National Pork Board and the University of Iowa’s Center for Agricultural Safety and Health and the Great Plains Center for Agricultural Health have teamed up to offer pork producers a series of health and safety training sessions this spring and summer.

The 11, one-hour sessions provide learning opportunities right at your fingertips.

Presented on May 29 at 3 p.m. is Electrical Safety, available by going to https://admin.acrobat.com/_a787702991/pit/. Simply enter your first and last name and your company name in the box. Click on the “Enter Room” button to be transferred to the meeting.

“With topics ranging from animal handling to fire safety, we hope participants are better informed about the hazards found in their daily work environments and learn methods for reducing the risk of injury or illness,” says Aaron Kline, with Iowa’s Center for Agricultural Safety and Health.

Future sessions to be held every other Thursday at 3 p.m. (central standard time) will include Personal Protective Equipment (June 12); Housekeeping (June 26); Animal Handling (July 10); Lockout Tagout (July 24); Fire Safety (Aug. 7); and Confined Spaces (Aug. 21).

“Each session will outline the risks associated with that topic and use real-world examples to illustrate the presence of the hazards in the attendees’ facilities,” says Kline. “Presenters will include safety personnel from large swine operations such as Seaboard, Iowa Select and Hitch, in addition to leading agricultural health and safety researchers.”

2008 Master of the Pork Industry - Wayne Singleton

2008 Master of the Pork Industry - Wayne Singleton

To be called a “pioneer” in any field or discipline requires high marks from many who are willing to make such a designation. The term seems suitable when it's used to describe Wayne Singleton's contributions to the broad and successful adoption of artificial insemination (AI) in the swine industry.

Singleton spent 33 years at Purdue University, with an 80% Extension, 20% teaching appointment focusing on reproductive physiology for the majority of that tenure. During those three-plus decades, the interest in artificial insemination by pork producers advanced by fits and starts until the early '90s, when adoption skyrocketed.

Academic Achievements

Singleton grew up in southwestern Indiana near Vincennes on a grain and livestock farm, where beef cattle often overshadowed the small herd of Hampshire and crossbred sows. But encouragement from a high school agriculture education teacher, Paul Begeman, and a local veterinarian, Paul Brocksmith, took hold and young Singleton enrolled in a 2-year, general agriculture curriculum at Vincennes University. Purdue University staff taught many of the courses, and that's where Singleton first crossed paths with Bill Foley, who taught livestock reproduction and did some of the early work with AI in swine.

In 1964, with a 2-year degree in hand, Singleton headed north to Purdue to gain a Bachelor's of Science degree. Foley was his undergraduate advisor and “probably the best teacher I ever had,” he says.

“My senior year, he kept saying, ‘you're going to graduate school,’” Singleton remembers. “Who was I to argue? So, I applied for the master's program at Purdue, but the (animal science) department head, Ralph Erb, said, ‘We'll accept you, but I'm not going to let you in here unless you apply to other schools, too, which was really good advice,’ Singleton says.

An application to South Dakota State University (SDSU) was accepted. Once again, Foley guided Singleton, this time to a former Ph.D. student, Don Shelby, a reproductive physiologist at SDSU.

As Singleton tells it, “I packed all of my stuff in my little Volkswagen bug, which was about one suitcase, and I headed west. I went out there with the idea that I'd work with beef cattle. When I got there, I had to choose between working on a pig project, where the data needed for a master's degree could be collected relatively quickly, or I could work with cattle, where it would take two calving seasons to collect the data. So, I chose the pigs and I've been with them ever since.”

His degree work focused on the effects of boar semen characteristics on embryonic growth and development. “I collected boars, measured oxygen consumption of the semen and identified semen characteristics in the old style, then bred gilts to each boar. We collected the reproductive tracts, counted the embryos, and then tried to correlate semen characteristics with the number of embryos and their survival. It was one of my best projects,” he proclaims.

It was during this time, 1968, that he met a foreign language major in the hallways of the animal science building, where she was working a summer job with the range management specialist. Singleton and his wife, Diana, were married a year later.

A Ph.D. degree focusing on boar semen extenders and semen preservation followed at SDSU. The degree was granted in January 1970, and six months later, Singleton returned to his alma mater as an Extension specialist in breeding herd management.

Career in Extension

The first two years, Singleton had an 80% Extension and a 20% research appointment, which was later switched to 20% teaching and a focus on an undergraduate AI course.

“This was one of the first extension positions that focused on reproduction,” Singleton explains. “Jim Foster and Vern Mayrose were already here at Purdue when I came. They were really good role models in the way they conducted their programs and their relationships with producers.” He also cites Emmett Stevermer (Iowa State University) and Mac Whitaker (University of Kentucky) and Al Jensen (University of Illinois) as well as Lew Runnels, DVM and Hobe Jones, both at Purdue, as a few who influenced his professional career.

“When I saw them at meetings, I would watch how they operated, watch their approach to visiting with producers. I learned a lot from them,” he explains.

Artificial insemination was slow to be accepted in the swine industry. “It was the mid-'70s or early-'80s before we started hand mating very much. Until then, sows were in outdoor lots, so we concentrated on how to rotate boars,” he remembers. “Then, I got involved in some of the ideas about bringing sows into confinement.”

By the early-'90s a lot had changed. Technology and housing had improved. Genetic evaluation methods had gained favor, and the best boars were identified and assigned breeding values.

“Commercial hog units got bigger, and packers developed buying grids to pay for higher lean values,” he remembers. “Those are the things that accelerated the acceptance of AI. We went from less than 5% AI up to 80-90% of the sows being bred that way.”

Singleton says a few other things also made AI easier. “We had dedicated labor, we had sows inside where heat detection was much easier and we learned how to design buildings better. In addition, semen extenders got better and we shifted from on-farm boar collection and storage to centrally located boar studs. Today, I figure there are 115-120 independent and corporate boar studs providing semen to commercial producers.”

Nearly 30 years into his career, Singleton took a six-month sabbatical. “It was a chance to learn a new area and new techniques in distance education and employee education — an area I was really interested in,” he explains. He spent two months at the University of Nebraska, working with reproductive specialist Don Levis and others. “I went out in the field as often as biosecurity would allow and visited boar studs, sow farms and outlying centers to experiment with distance learning equipment,” he explains.

In November 1998, he headed to North Carolina State University to work with swine reproduction specialist Billy Flowers and Extension swine specialist Todd See. Four months were spent learning about the needs of employees working in the state's swine production systems.

“What I found was that owners and managers are interested in employee education and all had good intentions of providing it, but they were more consumed with making sure that there were enough employees there every day to get sows moved, bred and farrowed,” he explains.

Transition to Consulting

Retired in December 2003, Singleton still offers consulting services on a limited basis. “I do it because I enjoy it,” he says. “That's why I retired a little early. I knew I could keep my fingers in the pork business, but it still allows me time to go pheasant hunting and do a few other things. I do a fair amount of third-party semen verification for some boar studs. They ship me semen and I do concentration, motility, bacteria and volume tests.”

One of the biggest changes Singleton has seen in his field also excites him the most. “We can move so much information so fast today,” he declares. “It's really neat. Someone can send me a dose of semen to check, I can do the evaluation to see if it's abnormal, then snap a picture or two or a short video clip and send it back with a report by e-mail so they can show their people in the lab what I am talking about. It's almost instantaneous.”

Singleton also consults with a few commercial operations - ranging in size from 500 to 2,400 sows. “I usually get called in after the feed man, the genetic supplier and the vet have thrown up their hands trying to figure out why conception rates are low. The most common problem is people,” he explains.

“The pork industry has always been users of technology. That's one reason I always liked working with pork producers,” he declares.

Some of the best advice Singleton feels he ever received was from a swine veterinarian who declared: “Listen here young man, I don't expect you to know everything about pig production, but I do expect you to know somebody that does.”

Singleton also sites fellow Hoosier and pork producer John Hardin, Jr., who was very active in state and national pork industry organizations, as a mentor and colleague. “John has that ability to address a group on a controversial issue, gently addressing it from one side, then the other. He is so eloquent in a way that doesn't upset people.”

The National Pork Board recognized Singleton's contributions to the U.S. pork industry in 2007 by presenting him with the Distinguished Service award.

“I still think the pork industry is a good place to be,” he says. “Not everyone can be an owner; but, my goodness, there are many opportunities throughout the industry. I tell my students, follow your interests and listen to people with an open mind. I figure if you do that, you will end up where you should be.” It certainly worked for Wayne Singleton.
— Dale Miller, Editor

2008 Master of the Pork Industry - Randy Stoecker

2008 Master of the Pork Industry - Randy Stoecker

Few people in the pork industry today can walk you through nearly four decades of production evolution. Randy Stoecker can.

Stoecker's personal and professional experiences run parallel to that evolutionary timeframe - much of which he actually led.

Last December, Stoecker retired as president of the Murphy-Brown West operations based in Ames, IA. It was a personal decision. He wanted to spend more time with his grandchildren — all under 3 years of age and living on the east coast — and aging parents who live in western Kansas. Stoecker and his wife, Gwen, relocated to Austin, TX, chosen for its favorable climate and a healthy population of university students. “I like being around young people,” he explains.

The Formative Years

Randy Stoecker's career in the pig business started on his parent's farm near Oakley, KS, where as a teen he bought and finished feeder pigs for an FFA project. His next stop was Kansas State University, where he earned a degree in agricultural economics. Then, in 1970, in what appeared to be a step away from pork production, Stoecker took a job as a farm loan officer in an Ottawa, KS, bank. As it turned out, the bank position launched him back, headlong, into the pork industry.

“Three customers and two other investors wanted to put up a 600-sow unit, but they didn't know how to put a cash flow together,” he remembers. “I worked on that thing from start to finish. I helped get it financed through to operation.”

While planning the new sow unit, Stoecker met with Ralston Purina staff and soon realized that banking wasn't his primary interest. Within months, he took a district manager's position at Lafayette, IN, “where there was some serious pig production.” There, he met one of his early mentors, Horace Ginn. “He was a guy who saw more in me than I saw in myself,” Stoecker says.

Soon, Ralston-Purina recognized Stoecker's extra talent and offered him a new sales position in North Carolina. At the time, Charlie Yeager was one of his leading clients and one of the biggest pork producers in the nation.

Stoecker was reluctant to relocate. “If you don't want to move, why don't you come work for me?” said Yeager.

Stoecker did, as co-manager of Yeager's business. Dick Hicks managed the sizable poultry operation while Stoecker focused on feeder pig finishing and the feedmills and elevators that supported them. “It pushed me into a P&L (profit and loss) managerial responsibility at a very early age,” he remembers.

“We had 60,000 pigs on feed in 1973; all but about 3,000-4,000 were in red barns with Smidley feeders lined up along the fence and water tanks with propane heaters and bedded barns. We used thousands of bales of straw, hauled manure and could spread dysentery about as efficiently as anybody,” he says jokingly, but still serious.

Yeager wanted more pigs than he could buy locally, so he headed to Missouri, Tennessee and Kentucky to find them. Large groups were purchased, grouped and processed. Soon others were placing orders for feeder pigs, so Yeager and Joe Sullivan built a feeder pig sales barn and launched the Yeager & Sullivan feeder pig enterprise.

Any pigs that didn't sell were placed on feed “in about every combination of facilities you can imagine,” Stoecker says. “That's where I learned about contracting.”

Early Confinement Systems

Clearly, the health and quality of the feeder pigs were too variable, so in 1973, Stoecker began a campaign to build sow farms. As the first sow farm was being built, he had the good fortune to meet up with Hobe Jones, a Purdue University professor and swine production specialist. Jones was touring with a small group of producers from England, and they wanted to have a look at Stoecker's design.

“As far as I know, this was the first farm that had rooms for weekly farrowings, weekly nursery fills and so on,” he explains.

After the British producers had toured the farm, a young visitor approached Stoecker, explaining that he had drawn the short straw and was designated to offer their critique: “It's obvious you don't know much about confinement pig production,” he said.

Taken aback, Stoecker acknowledged that there was probably more to learn. “After you operate this for a while, come over to England and I will arrange a tour of some of the best confinement units in Europe,” he offered.

About a year later, as plans to build another sow farm were under consideration, Stoecker remembered the British producer's invitation, so he pulled together a small group that included Morris Robison; Yeager's nephew, Fritz Holzgrefe; and a friend from Ralston-Purina and they set off on a three-week tour to England, Germany, Belgium and Holland.

“The goal was to see enough different farms to find the common threads of success,” Stoecker explains. “We decided that we wouldn't visit any farm that was not willing to share their production records. Our goal was to get so committed to a change that we wouldn't get cold feet and go back to what we were doing. We finalized a lot of the design on the flight home.”

A key challenge was to come up with a floor that had a 60% void to replace the montage of farrowing crate flooring materials being used. They had seen flat iron rod grating on supported floors in Europe, but no such product was available in the States.
Robison, the closest the group had to an engineer, began experimenting and eventually developed the prototype for woven-wire flooring. “We found a company to produce them, but we had to order two semi loads to get them to make them,” Stoecker remembers.

“We built double-wide buildings, learned about energy efficiencies, shallow manure pits and hand mating. A lot of people told us we couldn't breed sows indoors, but we decided we were going to start at that level,” he adds.

The farm, built in 1974, was for 1,200 sows. “We picked up the idea that some of the white sow lines have more pigs, give better milk and were pretty docile,” he continues. “Another thing that wasn't very common back then was how to biologically account for a farm. It seems simple today, but back then we didn't have PigChamp or anything like it, so we had to figure out how to get those sow cards into a summary. PIC had a handwritten, manual system that compiled each week's numbers. It's one of the things I took away from one of my first meetings with PIC.”

Stoecker met PIC founder Ken Woolley during his trip. A couple of years later, Woolley made his first overture to hire Stoecker. He declined. A second call enlisted Stoecker as “the token American at PIC” in 1979.
His tenure with PIC spanned eight years, beginning with responsibilities for the southern division based in Franklin, KY. In 1982,Stoecker became general manager of the U.S. division and began focusing on a more functional female line and a terminal sire line that would produce higher yields at the packing plant.

In 1987, PIC's parent company, Dalgety, asked him to move to England and manage PIC worldwide. He declined.

Building Murphy Family Farms' System

But Stoecker was well positioned to join Murphy Family Farms (MFF), having dealt directly with Wendell Murphy while at PIC. His transition to production manager in North Carolina was relatively seamless.

“Murphy's only had 17,000 sows. My goal was to design a sow system that could be built and repeated. By March 1988, we decided we were going to build 3,600-sow units with on-site gilt production, off-site nurseries, and utilize three-site production. We took what we knew about modified- and medicated-early weaning and did our best to modify them so they would be commercially viable,” he says.

At that time, MFF was producing only about 20% of their feeder pig needs. “The pigs that we produced were cheaper and performed better, so we ramped up and didn't even slow down when we went past the 50,000-sow mark,” he remembers. “By the summer of 1998, we were somewhere around the 330,000-sow mark.”

Murphys set up nucleus and multiplication herds, produced their own replacement gilts and minimized the mixing. “As the industry grew, we made the mistake of getting a little too concentrated. That was always one of the debates that Wendell and I had,” Stoecker recounts. “He wanted the pigs close to the feedmill because he could measure the cost of freight.”

But when MFF expanded into Iowa, Stoecker recommended that the commercial sow herds be located in Missouri. “My experience told me that if you put too many sows around concentrated pig production, you're going to have more health problems. The cost of cleaning up a sow farm is far different than the cost of cleaning up an AIAO finisher. We've trucked those pigs to Iowa since 1994,” he notes.

A business philosophy Murphy and Stoecker shared, however, was a focus on finding people with good character. “When we looked for growers, we didn't look for people with a lot of land or a lot of money. We wanted long-term relationships. We did the same when we went to the universities.

“I told Wendell, if we transform this business, all of the people raising pigs today are not going to quit farming and come to work for us. So, we're not only going to have to design and execute the construction of the farms, we're going to have to recruit and develop a team of leaders and managers. The people we bring in early will have a big impact on this business for a decade or more,” Stoecker explains.

Industry Challenges

When asked to identify the biggest challenges facing the pork industry in the next decade, Stoecker responds: “First, there will have to be serious effort put into understanding the utilization of feed.

“I think we will also see innovation in building and equipment design. We've built things bigger, but we really haven't had any innovation in about 20 years. Today, we have (manure) nutrients that have real value. We have air exchange that is pretty expensive. Energy costs have tripled. We don't even talk about body heat anymore, but it's a real resource and it's more valuable today than it was five years ago,” he says.

In addition, Stoecker feels more attention should be paid to specific components of the production system, such as farrowing. “If you think of a farrowing crate — the floors, the supports, the things that hang on it, none of those things were designed with a consistent life cycle in mind. When one (component) wears out, you have to dismantle everything to get to it.

“We will not be well-served if we just keep doing what we're doing. I think the industry needs to look for people who can actually step away from all of the things that we are so comfortable with.

“You really have to extract yourself from your current prejudices and paradigms,” he continues. “The only way to make serious change is to become totally disgusted with the status quo. Any tolerance for it will lead you right back to where you were.'”

Where are these industry innovators to be found? “I wouldn't look just in this industry or just in this country. Sometimes you have to get out of your industry to find creative solutions,” he says.

“Being large is no security. I tell people they are bigger because they were better first. They aren't better because they're bigger.”

Personal Thoughts

Stoecker credits his depression-era parents and his western Kansas upbringing for his appreciation for honest, hard work and things of value.

To single out a person who has influenced his career the most is difficult.

“The pig industry has given me an opportunity to work with a lot of really good people and shape a business or two,” he reflects. When pressed, he settles on Ken Woolley. “He made me see the world. He would not allow me to focus just on our industry. He forced me to have a broader perspective than anyone I ever dealt with. He would rather argue than eat - and Ken loved to eat,” he says affectionately.

“What this country needs is a couple of people to come along and show the people that think they are pretty good at it that there are still things to learn. It could be somebody who brings a different model, one that really galvanizes quality people and turns it up a notch. I still believe that one person, one approach can make a difference.”

Stoecker's best advice for young people: “Know yourself first. If you don't do anything else, recognize that you are the greatest asset you will ever manage in your life. Then, commit yourself to something that you have a great opportunity to be successful at. Don't fret about your so-called weaknesses. Align yourself with people who have strengths in those areas. If you choose to work in an organization, pick your boss. Be selective; don't be selected. If you don't get the person you want, then go and work for somebody else. Early mentors have a disproportionate impact on your life.”

Dale Miller, Editor

Cold Storage Trending Up

USDA’s monthly cold storage report, released yesterday (May 21), showed a slight reduction in April 30 frozen pork inventories from their record level of March 31. Total pork in commercial warehouses amounted to 652.2 million pounds, fractionally lower than last month’s 652.7 million pounds (see Figure 1). This level is still the second highest on record.

The increase was led on a percentage basis by stocks of butts, which grew by 158% vs. April 2007. The actual increase in butt inventories amounted to 16.937 million pounds, putting butts third on the actual tonnage increase list for this month. The 27.7 million pounds of butts in cold storage is a new record, breaking the old mark set two months ago. Note that butt inventories had never exceeded 20 million pounds until January 2008 and they have done so each month since.

The largest tonnage increase for April cold storage stocks was bellies at 38.58 million pounds. Those stocks now stand 62% larger than one year ago. Ham inventories increased by 30.6 million pounds or 38.5% over last April.

I think at least a portion of the increases in inventories of these three cuts is attributable to the refrigerated shipping container shortage, which we have discussed in the past. While many think the U.S. pork industry primarily exports loins and tenderloins, these three cuts have become much more important in the export mix in recent years – especially as more price-sensitive markets, such as Mexico and China/Honk Kong, – have grown. Any difficulties for exports in general will show up in these inventory numbers.

Loin inventories grew by 23%, year/year, or 8.75 million pounds in April.

I am still not overly concerned about the levels of cold storage inventories. As can be seen in Figure 2, cold storage stocks as a percentage of production dropped in April, indicating that March was very likely the high for the year. If that’s the case, this year’s peak will be lower than in six of the past 10 years.

Meat Inventories Plentiful
Demand has been, by all accounts, exceptional this spring. If that continues, these stocks will not pose a problem for the U.S. pork industry. On the other hand, one must remain concerned about the sheer volume of product that is in warehouses. Should any hiccup develop for pork demand – either at home or abroad – these supplies would become burdensome to prices very quickly.

That concern increases when one considers the amount of total meat and poultry in cold storage (Figure 3). April’s level of 2.354 billion pounds is just 10 million pounds shy of the April record set back in 2002. Turkey stocks will continue to grow through next fall, so it will take some pretty dramatic reductions in either chicken or pork stocks or both to keep from surpassing the 2002 record levels the rest of this year.

And current levels of output do not portend well for large reductions of frozen inventories. Figure 4 shows the amount of combined weekly meat and poultry production increase over last year. I have used a six-week moving average to smooth the data a bit, but the message is clear: We are producing a huge amount of meat protein each week.

Corn Concerns Grow
Finally, the situation with this year’s corn crop does not look good at all. Figures 5 and 6 show data as of last Monday for the percent of corn acres planted and percent emerged. The planting rate is the second lowest since 1990 – barely ahead of the flood year of 1993, while the percent of corn emerged is far and away the lowest since 1999 (the first “emergence” data that I could find in the USDA database). Hopes for more than the planned 86 million acres of corn are now, I think, long gone and the hope for at least a trend-line yield of 153 or so bushels per acre is in dire jeopardy.

Consider the likely consequences of 86 million acres and lower-than-needed yields, plus crude oil surpassing $130/barrel this week. What does that mean for corn prices if gasoline and ethanol follow the oil market? Will there be any reason to run ethanol plants below their capacities?

This is not a good situation for the meat business. But you’ve heard that before, right?




Click to view graphs.

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