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Articles from 2014 In May


Download the World Pork Expo App

Download the World Pork Expo App

Download the handy 2014 World Pork Expo app to help keep track of all of the adventures that the world’s largest pork industry-specific event has to offer. World Pork Expo will be held June 4-6 at the Iowa State Fairgrounds in Des Moines. The app is designed to make it fast and easy to find everything you’re looking for at World Pork Expo.

Save the “must see” seminars to your personal schedule with the “My Schedule” feature. A full listing of all seminars is available by day, time and location. Maps help you find your favorite booths, while up-to-the-minute notifications from the show and sponsors are provided via app alerts. The app also helps you find out who’s tweeting about the show (possibly helping you locate the freshest bacon-flavored treats, for example).

You can download this free mobile app by searching for “World Pork” in the Apple Store, Android Market or Blackberry’s App World. Learn more at http://app.core-apps.com/wpx2014.

Producers Want More Time to Comment On Water Rule

Producers Want More Time to Comment On Water Rule

The National Pork Producers Council and 71 national and state agricultural organizations are requesting extensions of the comment periods on a proposed regulation and accompanying agricultural exemptions rule related to changes in the federal Clean Water Act (CWA) that could negatively affect farmers and ranchers.

The U.S. Environmental Protection Agency and the U.S. Army Corps of Engineers in April issued a proposed rule that would greatly expand the agencies’ authority under the CWA over various waters. Currently, that jurisdiction includes “navigable” waters and waterways with a hydrologic connection to navigable waters.

The rule would redefine “waters of the United States” to include intermittent and ephemeral streams, which could potentially affect agriculture. Application of manure on lands near such streams, for example, could be considered a discharge and require a CWA permit.

In requesting the extensions, the agricultural groups pointed out that an EPA study of the connection between intermittent waters and wetlands and larger bodies of water has yet to be completed. They also said the timing of the comment period and stakeholder public meetings coincide with one of the busiest times for farmers, who are “preparing soil for planting, planting and replanting seed, applying crop nutrients and crop protection products, and harvesting hay and winter wheat crops.”

“For most farmers and ranchers,” said NPPC President Howard Hill, a veterinarian and hog farmer from Cambridge, Iowa, “more than two-thirds of the comment period for the proposed rule occurs when we are in the fields round the clock, not sitting at our computers reading regulatory proposals.”

The agricultural groups also raised in their request concerns that EPA has made during stakeholder meetings statements on the rules that it then has contradicted in public pronouncements, complicating the groups’ ability to develop meaningful comments.

The organizations are asking for an additional 90 days beyond the July 21, 2014, deadline for submitting comments on the proposed rule, or 90 days after EPA releases its “Connectivity Report,” which is supposed to serve as the scientific basis for any expansion of CWA jurisdiction. For the agricultural exemptions rule, the groups are requesting that the comment deadline coincide with the closing date for the proposed rule but be at least an additional 45 days beyond the current June 5, 2014, deadline.

World Pork Expo Organizers Implement Biosecurity Plan

In preparation for this year’s World Pork Expo, June 4-6, NPPC gathered a group of veterinary experts to determine the best ways to prevent the potential for disease transmission in all areas of the exposition. According to Neil Dierks, NPPC CEO, the experts have assured stringent health requirements are in place for the World Pork Expo shows and sales.

Expo attendees are asked to observe good biosecurity practices, including wearing clean clothing and shoes that have not been inside a pork-production facility.

Dierks says as an added assurance, the swine barns and pens on the Iowa State Fairgrounds will be disinfected before the pigs arrive and immediately after Expo. And, attendees can take advantage of specially designed stations near the exits, where they can disinfect their shoes before heading home.

Veterinarian Confirms PEDV Can Re-infect a Previously Exposed Herd

Veterinarian Confirms PEDV Can Re-infect a Previously Exposed Herd

Reuters News reported on an incidence of re-infection with the porcine epidemic diarrhea virus (PEDV) on an Indiana farm this spring. Matt Ackerman, DVM, a southeastern Indiana swine veterinarian, spoke to Reuters on behalf of his clients who own the farm that experienced the re-break. Ackerman said that the same strain of PEDV hit the farm in May 2013, and again in March 2014. Jittery pork producers had been talking about rumored re-breaks throughout the winter and spring. Ackerman’s announcement is said to be the first public confirmation of a farm’s experiences with a re-infection that occurred in spite of strict biosecurity and sanitation protocols.

The outbreak was not as deadly to piglets the second time around, with a 30% death rate on the second outbreak compared to 100% piglet mortality with the first PEDV infection, according to Ackerman.

An American Association of Swine Veterinarians (AASV) spokesman told Reuters that PEDV outbreaks tend to recur in about 30% of infected farms.

Reuters reports, “The state and federal effort to stamp out PEDV has operated on an assumption that a pig, once infected, develops immunity and will not be afflicted by the disease again for at least several years. Likewise, farms that had endured the disease were not known to suffer secondary outbreaks. But a year after the virus was identified, repeat outbreaks have occurred at farms but not been publicly confirmed before now. These so-called secondary outbreaks are a challenge to efforts to stem the disease, which is almost always fatal to baby piglets.”

Read more about the realization that immunity to PEDV does not appear to be long-lived.

Global Food Security Index Improves

The question of global food security is significant but a new report from the Economist Intelligence Unit EIU sponsored by DuPont offers improving grades on an important report card
<p>The question of global food security is significant, but a new report from the Economist Intelligence Unit (EIU) sponsored by DuPont offers improving grades on an important report card.</p>

The question of global food security is significant, but a new report from the Economist Intelligence Unit (EIU) sponsored by DuPont offers improving grades on an important report card. The 2014 Global Food Security Index shows that 70 percent of countries in the study saw food security scores rise over the previous year.

This index, which measures 28 different food security indicators, looks at the issue for 109 countries. Craig F. Binetti, president, DuPont Nutrition and Health, comments: "The index provides a common set of metrics that enable us to track progress in food security globally, and the outcomes thus far are promising. But we know it will take continued collaboration, innovation and investment in agriculture, food and nutrition to overcome the vast challenges to feeding the world's growing population."

With the prospect of feeding 9 billion people by 2050, food security is a global issue. Food prices are a key factor impacting security, with many in the developing world already spend half to three-quarters of their income on food. Rising worries over water availability and access to arable land, add to the food security challenge.

The index showed that every region improved from the prior year, but most progress was seen in Sub-Saharan Africa, driven primarily by improved political stability and economic growth, despite the food-insecure-environment. The index slid for Central and South America and Asia Pacific as diet diversification fell and there was a decline in public spending on agricultural research.

In developing countries, the index shows the key challenges include inadequate infrastructure, political risk and food price inflation. For developed countries, the challenges include adapting to urbanization and the continued rise of obesity.

Adding obesity as a background variable in the index shows its impact across both the developed and developing countries. In developing countries including Syria, Mexico and Jordan, nearly one-third of the population is obese, those numbers are comparable with the United States.

Globally there was improvement, but as noted here there's room for progress in the 109 countries included in the index.

Leo Abruzzese, director, EIU Global Forecasting, says: "While obesity was once studied independently of food security, today many scholars and policymakers are considering the relationships between the two. This will provide insights for individuals, policymakers, private sector leaders and others who are trying to understand how progress can be made on both fronts."

There's also a new indicator for food loss that will look at post-harvest loss and pre-consumer food loss. This is a growing challenge facing producers as they try to move crops and livestock from field to market.

You can check out the 28 global indicators, impact of changing food prices and multi-country comparisons and more, visit foodsecurityindex.eiu.com.

Agriculture Funding Bills Advance

The Senate Appropriations Committee and the House Appropriations’ agriculture subcommittee voted last week on fiscal 2015 funding legislation for agricultural programs. The Senate bill provides for discretionary spending of nearly $20.6 billion for Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, including $100 million in disaster relief spending. The House bill has $20.9 billion in discretionary funding.

Included in the Senate bill, which is ready for action by the full Senate, is $1.139 billion for USDA’s Agricultural Research Service (ARS) and $1.292 billion for the National Institute of Food and Agriculture (NIFA). It would fund USDA’s Animal and Plant Health Inspection Service at $876 million, including $20 million to control and eradicate feral swine and funding for research and surveillance to combat the porcine epidemic diarrhea virus (PEDV); the agency’s Food Safety and Inspection Service (FSIS) would receive $1.023 billion.

The House subcommittee measure, which is expected to be taken up by the full Appropriations Committee this week, would fund ARS and NIFA with $2.65 billion and APHIS would get nearly $871 million; FSIS would get $1 billion for food safety and inspection programs. The subcommittee legislation also includes money for PEDV research, which NPPC strongly supports.

Additionally, the House bill has a provision that precludes USDA from writing, preparing or publishing a final rule or an interim final rule on certain onerous provisions of the Grain Inspection, Packers and Stockyards Act (GIPSA). Lawmakers said USDA ignored congressional intent when writing a 2010 GIPSA rule and that certain sections of the rule, such as ones defining “competitive injury” and “undue and unfair preferences” related to livestock purchase negotiations, should not be promulgated because of their economic significance. 

Congress Considers Bipartisan WRRDA Bill

The House and Senate have reached a bipartisan agreement on a water resources and development bill, the “Water Resources Reform and Development Act” (WRRDA), that will authorize projects to fix ailing locks and dams and improve ports and waterways. This legislation has been a priority of the agricultural community who depend upon the waterways and ports for a competitive advantage in the international marketplace.  Over 60 percent of agricultural products use waterways and ports for transportation. 

The American Soybean Association said, “This is a huge step forward to ensure the continued success of the soybean supply chain, and leaders in both the House and Senate deserve a great deal of credit for shepherding this bill through a challenging policymaking climate.”  With the recent rail transportation problems, the National Grain and Feed Association said, “Rail service disruptions have magnified and reinforced the importance of the United States having an “all-of-the-above” transportation infrastructure policy that focuses on all modes - truck, rail, barge and vessel.” 

The following are key items from the conference report according to the House Transportation Committee:

·       Sets hard deadlines on the time and cost of studies

·        Consolidates or eliminates duplicative or unnecessary studies and requires concurrent reviews

·       Streamlines environmental reviews and improves coordination

·       Deauthorizes $18 billion of old, inactive projects that were authorized prior to WRDA 2007

·        More than fully offsets authorizations with deauthorizations

·       Sunsets new authorizations to prevent future project backlogs

·       Reduces the inventory of properties that are not needed for the missions of the Army Corps of Engineers.

·       Maximizes the ability of non-federal interests to contribute their own funds to move studies and projects forward

·       Expands the ability of non-federal interests to contribute funds to expedite the evaluation and processing of permits

·       Establishes a Water Infrastructure Public-Private Partnership Program and new options to expand the local role in project implementation

·       Creates innovative methods to invest in and finance water resources infrastructure and municipal drinking water and wastewater needs

·       Strengthens dam and levee safety

·       Improves Corps of Engineers responses to extreme weather events

·       Encourages resilient construction techniques and the use of durable, sustainable, and innovative materials

·       Authorizes needed investment in America's ports, strengthens ports that move the majority of the nation's commerce, and ensures equity for those ports that contribute the most to the Harbor Maintenance Trust Fund

·       Supports underserved, emerging ports

·       Reforms and preserves the Inland Waterways Trust Fund

·       Authorizes priority water resources infrastructure improvements recommended to Congress by the Chief of the Army Corps of Engineers to improve navigation and commerce and address flood risk management, hurricane and storm damage risk reduction, and environmental restoration needs.

FY ’15 Agriculture Appropriations

The House Appropriations Committee this week will consider the FY ’15 agriculture appropriations bill. The bill includes a total of $142.5 billion in both discretionary and mandatory funding which are $1.5 billion below the administration’s request and $3 billion below last year’s level. 

 

Discretionary funds total $20.9 billion, which is equal to last years appropriations bill.  The proposed bill does not include any user fees for meat and poultry inspection.  

PEDV-Sensitive Market Requires Sound Risk Management Strategy

When it comes to market dynamics, 2014 has been a very interesting year for the swine industry.  We have seen record- high cash hog prices while at the same time, producers have been dealing with porcine epidemic diarrhea virus (PEDV). Practicing sound risk management has been key as the industry navigates through an environment with historic margin calls as well. It’s also worth noting that swine producers are receiving over $225 for their hogs, but some are still unhappy because production is not as good as it has been in the past, causing them to  lock up margins too early and requiring them to pay margin calls. We have also seen our operating lines drop from a peak volume of over $1 billion to $600 million, which is a drop of 40% in less than 60 days. These are interesting times.

I have stressed to many producers, and I’ll say it again: everything is relative. The swine industry will make money this year despite poorer production (remember 2006-2007 and the porcine circovirus?).  Another  advantage of practicing sound risk management, as compared to producers selling  pigs on the open market, is that they have outperformed the industry average for the past two years by more than $12 per head (see table).  It’s a “given” that 2014  will look quite different, but I want to remind everyone what this industry went through in 2008-09. The industry changed and producers who did not practice any form of risk management went out of business.  Today, more and more producers are comfortable with locking up profits, knowing they are going to make money. They’ve left the stress and worry of being on the open market behind.  Instead of hoping that they will be profitable, through margin management, they know they will be profitable.

Options vs. Straight Futures?

We are so fortunate to have very good relationships with our clients. Many of our recent discussions with them have focused on the use of options as opposed to a straight futures position. The margin calls over the last four months have had many producers exploring this strategy. I don’t have a preference for one over the other, and I tell clients we support both strategies. What I stress to clients most of all is how vital it is to understand cost of production. You also need to understand that there are variables impacting your overall margin.

Basis on cash hog sales as well as what you used for basis on grain will effect what you actually receive for a profit. This is always a moving target and, again, not always an exact science. The key point we try to stress is taking advantage of an opportunity for locking up profits when they are available and utilizing a strategy that incorporates what you believe your bias is. What I mean by that is whether or not you are bullish on what the hog market might be doing going forward (option strategy might make sense if that is your bias) or if you are bearish (a straight futures position might make more sense if that is your bias).  I would suggest communicating with your market advisor to determine which strategy best fits your operation.

Upcoming Webinar with Brett Stuart

We are hosting a webinar with Brett Stuart with Global Agritrends on Wed., May 28, at 1:30 p.m. Here is the link to sign up if you have interest: http://pages.agstar.com/porkupdate_apr2014.html . You can actually sign up for the webinar and if this time frame does not work for you,  we will send the recording and slides  so you can listen to the webinar at a time that is convenient for you.

Staying Engaged on Advocacy

I spend time on the weekends and early in the morning reading articles concerning the swine industry and agriculture. It seems that many in the media portray our industry in a negative light and we need to continue to stay engaged in telling our story. Our marketing department at AgStar pushed me to be active on Twitter and I am. Social media, such as Twitter and Facebook is a way to tell our story. I try using twitter to reach out and tell our story and others do as well. We need more of you to engage in the discussion. If you have a twitter account and wish to follow me, please do at @AgStarAgGuy. We can no longer afford to stay on the sidelines.

Mark Greenwood is the Senior Vice President for Relationship Management at AgStar. He is responsible for overseeing the industry expert group consisting of consulting, large grain, dairy, renewable fuels and the swine industry. He has been with AgStar since 1997. For more insights from Mark and the AgStar Swine Team, including their weekly video Hog Blog, visit AgStarEdge.com.

Fewer Pigs Force Packers to Cut Shifts

Fewer Pigs Force Packers to Cut Shifts

Last week’s federally inspected (FI) slaughter total of 1.973 million head was 4.8% lower than one year ago. This level was slightly lower than was suggested by USDA’s March Hogs and Pigs Report, and slightly higher than my forecast based on that report and porcine epidemic diarrhea virus (PEDV) case accession data.  As can be seen in Figure 1, FI slaughter has been very close to the levels anticipated by the USDA report since the last week in April.  Prior to that date, slaughter runs were consistently lower than the report suggested. 

F1 hog slaughter weekly

 

Since March 1, actual FI hog slaughter has been 4.8% lower than last year and about 1% lower than what I had forecast using just the USDA inventory data.  Over the same period, actual slaughter has been 0.4% larger than I had forecast using both the report and the PEDV accession data.  So far, it is not at all clear which forecast has been the best but the USDA numbers, as pointed out, have been very good recently.

Recall that last week I pointed out two variables to watch closely as we go through the summer months:  Prices and weights.  I plan to include a regular update on those two variables as well as slaughter to see just where the PEDV impacts will end up. 

national producer sold by weight

 

National producer-sold negotiated net prices were lower last week, with the weekly average falling by $2.14 to $109.71.  That is the lowest weekly average for this price since the week of March 21.   Lower hog prices in late May do not suggest any aggressiveness in filling a rather small slaughter run, but some help should be on the way in the form of a cutout value that gained nearly $1 for the week, closing on Friday at $115.06. 

The average weight of all hogs was steady last week at 217 lb..  The average weight of producer-sold barrows and gilts, however, fell to 215.9 lb., down 0.5 lb. from the previous week.  This level is the lowest since the week that ended April 11, and would suggest that even the relatively low slaughter level last week required producers to dip a bit further into their barns than they have in recent weeks.

average weight, producer-sold barrows and gilts

 

I would say there is nothing definitive in the data at this time to say either that the worst of PEDV is behind us or the worst is ahead. 

There were two important announcements last week, however, that suggest much lower slaughter totals will arrive soon.  Hormel announced that it would cut operations at its Fremont, NE, plant to four days.  Hormel said nothing about operations at its flagship plant in Austin, MN, but focusing on Fremont makes perfect sense since it is a single-shift plant, where Austin runs two shifts most of the time.

Hormel’s announcement came shortly after Tyson said that it would begin reducing hog slaughter and pork production levels more than usual during the summer months.  Tyson CEO Donnie Smith said the production levels will be made week-to-week.   Tyson has considerable more flexibility than does Hormel, given that it has five plants in the Western Cornbelt.   Slaughter and production levels at Tyson’s Logansport, IN, plant may be a bit more difficult to manage when the pigs from higher Indiana and Illinois PEDV case numbers in late January and February reach their market window in August. 

We have heard nothing from either JBS Swift or Excel about operating rates.  Cargill draws many of its hogs from Missouri and Illinois, states that were late to the PEDV party, so hearing nothing from them at this point is not much of a surprise.  Swift, however, should see some impacts soon at its two big plants in Marshalltown, IA, and Worthington, MN, since some large Swift suppliers began to experience PEDV troubles in December.  Any losses incurred then should show up in slaughter hog supplies in June. 

north american pork industry data, May 24, 2014

Competing meats data, May 24, 2014