Industry waits as USDA implements the new price reporting system and works out the glitches.
Mandatory price reporting — once it is fully implemented — will help pork producers find the best markets to earn the most from their hogs, says Weldon Hall, assistant branch chief of livestock and grain market news for USDA's Agricultural Marketing Service (AMS).
“Producers can look and see how their hogs stack up against all others on quality and price and buying program,” he says. “They will be able to go to the matrix and compare their kill sheet data.”
Each of the regional market reports has a kill sheet matrix that uses backfat, loineye area and loineye depth to chart carcass prices.
The new system launched April 2. Fifteen of 90 total price reports (for all species) were available that day. The transition from the old voluntary reporting system to implementation of new computer technology at packing plants and AMS played a role in temporarily limiting information available to livestock producers.
As of mid-May, AMS had ramped up to 83 reports available on a regular basis.
Hall understands the frustration of producers trying to establish a price for their hogs during the transition period in April and the first half of May.
“Patience is difficult when they are trying to get out in the marketplace and establish a price,” he says. “They have to be patient. We want to have all the information correct first.”
U.S. Agriculture Secretary Ann Veneman has ordered an internal review of the system, due to inaccuracies in hog and cattle reports, which may have cost producers and packers millions of dollars.
In 1999, Congress passed the law authorizing mandatory price reporting. Under the law, pork packers who processed more than 100,000 hogs a year are required to report prices, types of contract and negotiated purchases and slaughter hog numbers twice a day to USDA. The reports include regional hog purchase and slaughter reports, national hog purchase, prior day slaughter, non-carcass premium and slaughter cost reports.
Agricultural economists expected the transition to mandatory reporting to take time.
“I'm not surprised by the slow start. In addition to having to change the way people — packers and market reporters — operated the computers, they also had to communicate,” says John Lawrence, Iowa State economist. “I imagine that there are several ‘bugs’ to be worked out of the system.”
Producers must remember that the new system is complex, and the old reporting system had been in place for decades, says James Mintert, Kansas State economist.
“It's not surprising that there have been a large number of problems,” he says. “It appears that price information made available under the new reporting system will continue to evolve for some time.”
The new reports try to combine two important, but separate, market functions. The first is timely information on the direction of the market, which producers use to make marketing decisions. The second is very detailed information to make the market transparent and fair. The system combined the two functions and was set up to gather, summarize and then turn out detailed market information.
“I argued that we should separate the two functions and have timely superficial data throughout the day and very detailed, very complete data dumped to USDA overnight or over the weekend,” Lawrence says.
One of the mechanisms limiting information available to producers is the “3/60” guideline. The guideline restricts USDA from releasing information if fewer than three packers in a region report purchase and slaughter data, or if one packer contributes more than 60% of the data.
AMS is researching new options to replace the 3/60 rule, Hall says.
“We are looking at other statistical methods that would still protect individual packer confidentiality,” he says.
One of the options may be a 3/80 guideline (no information reported if fewer than three packers or if 80% of the data comes from one firm.)
“We are taking information where the 3/60 rule was used and studying it to see how many reports could be released under these guidelines,” he explains.
After they find the best option, AMS officials will have to get approval from Veneman and the Office of Management and Budget before changing the guideline. Hall could not estimate how long that process would take.
The confidentiality rule is not new. Lawrence finds similarity between the 3/60 guideline and USDA reporting guidelines for other data. “The Census of Ag data shows no data are reported for some categories — for example, county level data on broilers or laying hens in Iowa — even though we know there are operations of these types in a county,” he explains.
Steve Meyer, director of economics for National Pork Producers Council (NPPC), asks producers to allow AMS to fully implement the complete reporting package.
“This is a big system. Producers asked for this,” he says. “Everyone is working hard to comply with that law, and I think they are going to. We have to be a little patient about it.”
Meyer also stresses that producers need to study the reports carefully and learn what the numbers mean. He suggests printing out the entire list of pork reports from the AMS Web site at www.ams.usda.gov/lsg/mncs/LS_MPR.htm.
Meyer suggests that producers continue reporting price via USDA's voluntary producer reporting lines.
“We ought to be calling in and reporting prices as confirmation of what we are seeing under the mandatory price reporting laws,” he says.
The producer reporting telephone numbers include:
Illinois: (888) 458-4787;
other Eastern Corn Belt: (217) 782-4925;
Missouri: (573) 751-5528 or (573) 751-4339;
Iowa and Western Corn Belt: (800) 687-7410;
North Carolina and Mid-South: (912) 226-2198; and
All others: (800) 687-7410.
NPPC is preparing a packet of educational materials on mandatory price reporting. Visit www.nppc.org for more news about these materials.
Semen suppliers who participated in our unofficial survey include:
Activists Mislead Producers on Pork Checkoff Vote
National Pork Producers Council (NPPC) President Barb Determan, Early, IA, chastised activists for using “empty rhetoric” in an attempt to confuse producers about the checkoff referendum.
The court made it clear the petition for the vote was 15% short of the required signatures, she says. The U.S. District Court in western Michigan hearing the case also says the former secretary of agriculture usurped his powers, and that the process leading to the termination of the pork checkoff was arguably flawed.
“As pork producers, we have more questions about how this whole situation was handled than we can get answers for,” says Determan.
“The flaws in the process don't just stop with illegally calling for the referendum; they continue with USDA's own Office of Inspector General (OIG),” she adds.
NPPC presented evidence to OIG of voting and ballot irregularities. OIG responded in just three business days, while it took 17 weeks to audit NPPC's use of checkoff funds.
In review, at the end of February, a settlement agreement was reached between NPPC, Michigan Pork Producers Association, a group of three independent pork producers and USDA.
Also on Feb. 28, the NPPC filed a lawsuit against the Campaign for Family Farms (CFF), the chief activist group, for their part in the checkoff fight. A day later, USDA was dismissed from the case.
In mid-March, the CFF filed a motion to file a cross-claim in order to bring USDA back into the case. The CFF waited until May 11 to actually file their cross-claim so they could create a media blitz when Agriculture Secretary Ann Veneman was in Iowa, says Determan.
NPPC, Michigan Pork Producers and the three independent producers also filed a motion April 6 for a preliminary injunction against the CFF and other farm activist groups for their part in the disruption and ransacking of NPPC's Washington D.C. offices on March 26.
In early May, the U.S. District Court for the Western District of Michigan, which also is hearing the checkoff case, enjoined those groups from future protests at NPPC's offices or from sending any harassing communications to NPPC employees at work or at home.
The Illinois House of Representatives has approved a measure that would give the state's producers the ability to continue a mandatory checkoff program, should the current federal one cease to exist.
While the checkoff issue was being decided earlier this year, most states set up backup plans (see “State Reactions to Checkoff Resolution Varies,” May 15, 2001, page 14).
Under the current federal program, pork producers pay 45¢/$100 of value.
Illinois asks pork producers to participate in a voluntary investment program that funds work on legislative issues.
Senate Bill 405 would allow the Illinois Pork Producers Association to establish a checkoff plan similar to the national program, but only if the federal one ceases to exist.
The National Pork Board (NPB) has begun its search for a chief executive officer (CEO) as part of the pork checkoff settlement agreement.
“The new NPB CEO must be an individual who is committed to the pork industry and driven by the desire to efficiently and effectively administer the pork checkoff program priorities as established by pork producers and importers,” says Hugh Dorminy, NPB vice president and CEO Search Committee chair.
A clarification is necessary on the May 15, 2001, story “Waterkeeper Lawsuits Target Pork Industry.”
Smithfield Foods is contributing $15 million to North Carolina State University to fund the study of environmentally superior technologies for manure management.
The $50 million amount is the total contribution from pork companies with financial interests in North Carolina to the state. It is a $1/head payment, not to exceed $2 million/year for 25 years.
The funds are to be used to enhance the state's environment, as deemed appropriate by the state attorney general.
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In every country where I work, pig producers are beset with new virulent diseases. I am not a veterinarian — just a pig management specialist. At least 80% of my work these days involves disease prevention.
I confer with many veterinarians specializing in pigs. They, too, are trying to stem the tidal wave of new diseases that threaten profits.
I am concerned we have become complacent about the beneficial effects of good, natural immunity, especially in the breeding herd. In our race to get expensive gilts into production, we may have forgotten that two vital factors have not kept pace with the swift bodily development that modern genetics and nutrition have given us.
We must remind ourselves of the underdeveloped hormonal readiness of a 275-290-lb. gilt, and we must recognize the underdeveloped immune status of such an animal.
By sheer size and appearance — because they grow so fast and look so fit — we expect these fully developed, modern gilts to have fully developed hormonal systems. Truth is, they do not.
In bodyweight terms, many producers have accepted the current advice not to mate these gilts until they have their second true estrus and have reached 275 lb.
Remind yourself just how fast the gilt can grow these days. Many easily reach 275 lb. by 200 days of age. These young breeding females, full of male genes (rather too many to my way of thinking, as I prefer very “female” females) for rapid flesh deposition, arrive at service insufficiently immune-primed to cope with many of the “new” viruses that are appearing.
I advise my clients to breed them heavier but also to slow them down between 200 lb. and 275 lb. This procedure bears fruit on virtually every problem farm.
These farms are mired in second litter (often third litter) reproductive disappointments. As a result, these young sows get culled and the replacement rate is in the upper 30% and often more than 40%.
So common is this problem globally that a 38% replacement rate is now considered “normal.” This is madness!
A herd that has to cull so many young sows can only count on about 50% natural protection against virus disease. However, one that can put an extra two litters on its average sow herd life is 80% protected (Figure 1). I find this does make a difference to longevity.
You have to give your gilt replacements time to acclimate properly. The latest advice is — three days total isolation, 14 days challenge period (consult your veterinarian for the farm-specific protocol) and then, remove all challenges for at least a five-week rest/fortification period. This could be six weeks for some of the viruses that may be around.
Therefore, in the future, you'd better allow eight weeks from selection to service, and if that means mating at the third estrus, so be it.
Any nutritionist who is up to speed can design a diet that grows a modern, high-performance, high-growth-rate gilt at no more than 1.43 lb./day. This will still give you a sexually mature gilt but with proper hormone balance and a decent immune status at 8 to 8.5 months of age. This will help her give you 60 or more pigs produced/lifetime instead of a miserable 40.
So things like junior gilt production, gilt pools, special gilt developer diets, batch production using gilt stimulation techniques and a watchful eye on things to encourage immunity from your veterinarian are some of the less frenetic ways to go.
Please stop fussing about the cost of all this delay and extra accommodation, feed and overhead. Sure it could cost more, but divide that extra cost/gilt by 20 more pigs sold/lifetime, and it comes back into perspective. Even eight more pigs make it a bargain. Do the sums and you'll see.
We've got to get back to thinking more about natural immunity. I'll have more to say on this in the future. It is too important to ignore.
The effects and devastation of porcine reproductive and respiratory syndrome (PRRS) has focused the need for proper biosecurity, isolation/acclimation (I/A) and herd stabilization.
In general, artificial insemination (AI) is a more biosecure means of introducing genetics.
But multiple semen purchases in a week can potentially expose your herd to disease introduction quite often compared to quarterly or biannual introduction of live replacement stock.
I like my clients to screen their semen suppliers in the same manner they would screen their other genetic suppliers. First and foremost, the purchasing farm must fully understand the health status of their own herd.
The most appropriate way to screen a potential semen supplier is to have your veterinarian talk to the veterinarian overseeing the boar stud's health. The veterinarian-to-veterinarian correspondence is normally the most effective way to gather information and to ensure a good health match between your unit and the stud.
Questions and details your veterinarian should find out include, but are not limited to, the following.
How often are boars introduced to the boar stud — annually, biannually, quarterly or monthly?
What are the boar stud's I/A procedures? How long are they isolated; how long are they acclimated before entering the boar stud?
Does the stud have separate I/A facilities for different genetic lines?
What vaccination protocols are followed in I/A?
What serology or diagnostic testing is performed to ensure clean boars are entering the stud?
Where are I/A facilities located in relation to the stud or other hogs?
What diagnostic surveillance is routinely performed within the stud to ensure a quality product?
Are other tests such as semen polymerase chain reaction (PCR) being performed on regular intervals to monitor PRRS status?
What vaccinations are used within the stud?
How many genetic lines are housed at the stud? If multiple genetic lines are maintained, do they all go through the exact same stringent guidelines to gain entry into the stud?
How close is the boar stud to other hog facilities?
Can the stud give you a list of satisfied customers as reference with detailed production records?
Has the stud maintained good health status so that semen supply has not been interrupted to clients?
Does the stud have a back-up plan, should it go down with a major health issue, to continue supplying semen to clients?
Does the stud deliver directly to the farm?
Does the stud ship through commercial carrier services?
Does the stud re-use Styrofoam containers or coolers, and if so, what quality control measures are in place to make sure these items are properly cleaned and disinfected?
How are delivery personnel trained, and what protocols are in place for cleaning their vehicles?
Unit A broke with Transmissible gastroenteritis (TGE) in late January. Diagnostics pointed to incoming gilts in isolation carrying in the TGE virus.
The unit received fresh-delivered semen three times weekly. The boar stud immediately implemented a change in delivery status by providing a separate driver and vehicle to Unit A. Other area clients were notified of the TGE break to beef up biosecurity measures at each of their farms.
Three weeks later, another facility, Unit B, broke with TGE. A separate, off-site drop point for semen was created so drivers from the boar stud did not have to enter Unit B. Later investigation led to the feed delivery system as the most likely source of contamination for Unit B.
In the following weeks, no other units serviced by this stud broke with TGE. The boar stud also remained free of TGE.
Ultimately, what appeared to be a relatively simple, self-contained case of TGE turned into a huge health concern for the servicing boar stud and all of its clientele.
Fortunately, good communication between the boar stud and its clients and quick action in delivery changes helped prevent the spread of TGE virus to other farms and the boar stud.
This example again emphasizes that while semen is “safer” than live animal introduction, other factors such as the number of times semen is brought in and the added risk with delivery vehicles and personnel must keep us all “on our toes.”
By working closely with your veterinarian and having good communication with your semen suppliers, you can help limit these occurrences.
How accurate are the price forecasts given monthly or quarterly by university agricultural economists?
John Lawrence, Iowa State University ag economist, set out to answer that very question. He found that, on average, price forecasts for one and two quarters into the future are fairly accurate.
Lawrence studied three methods of price forecasting, using records from 1990 to 2000, including his market hog price forecast published in the Iowa Farm Outlook Newsletter, the Lean Hog Futures and the 10-year seasonal index. Please click here to reference Table 1. (This download requires Adobe Acrobat Reader, a free download.)
The forecast error is defined as the actual average price minus the forecast price. Therefore, a positive error means the forecast was too low and a negative number that the forecast was too high, he explains.
“On average, all three forecasts work pretty well for the first two quarters and are not bad for three and four quarters out,” he says. “But it is not the average that you worry about – it’s the variability.”
Lawrence uses this example: there is a 67% chance that first quarter prices will be from $4.28/cwt. below to $4.28/cwt. above the ISU forecast. Although this range is not very assuring, it is similar to the futures and index forecasts.
Producers must remember that the forecasts represent an average; therefore, they are not very accurate, Lawrence says.
“Forecasts do, with the results of this study, provide a likely range of prices and a realistic measure of the risk,” he says.
“The futures market, with a good estimate of the basis to the cash market, is a quick, always available and free forecast that is as good as anything out there,” he says. “But keep in mind it is a forecast at that point in time, not a guarantee of what prices will be unless the producer takes action to hedge at that price.”
Download more information at www.econ.iastate.edu.
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