Jury is Still Out on Dangers Of Drug-Resistant Bacteria

Despite recent reports that point to possible dangers to human health from Methicillin-Resistant Staphylococcus Aureus (MRSA), the evidence is certainly far from conclusive that this presents a food safety issue in the United States.

In fact, Staphylococcus aureus is a common organism found in nasal passages and on the skin of people and pigs.

MRSA occurs when Staphylococcus aureus develops resistance to methicillin and some other antibiotics.

University of Minnesota veterinarian Peter Davies reported last month that he found the antibiotic-resistant organism in 7.1% of 113 swine veterinarians gathered at the American Association of Swine Veterinarians (AASV) annual meeting in March in San Diego, CA.

National Pork Board swine veterinarian Liz Wagstrom says those results are a little higher than the 2% rate found in the general public in the United States. But she says it’s unclear if the slightly higher rate in swine veterinarians is “statistically significant.” Of the 113 swine veterinarians swabbed at the meeting, a number were international AASV members.

The prevalence in swine veterinarians at the AASV meeting was similar to, or lower than, several surveys of equine veterinarians. Also, that figure is lower than the 12% level found in international veterinarians surveyed at the International Pig Veterinary Society annual meeting in Copenhagen, Denmark a few years back.

The Pork Board sponsored that voluntary survey. In another Pork Board survey, Davies will look at the level of antibiotic resistance in pork at retail.

“We are definitely looking at MRSA research and if the bacteria is in pigs at slaughter or in retail meats, but we are also looking to see if there are differences on farms in terms of production systems, the impact of different antibiotic regimes and if we can identify risk factors,” Wagstrom says.

She referred to the Centers for Disease Control (CDC), which responded late last year to an inquiry into the impact of MRSA on food-producing animals by the House Agriculture Committee. CDC Director Julie Louise Gerberding responded that more than 80% of life-threatening MRSA infections appear to result from patient-to-patient transmission in health care facilities.

In contrast to reported cases of MRSA resulting from close human-livestock contact in Europe, all U.S. outbreaks have been traced to human-to-human transmission, she says.

Wagstrom referenced another project funded by the Pork Board conducted at several universities that compared 14,000 pigs raised in conventional vs. antibiotic-free pork production systems on farms in North Carolina, Ohio and Wisconsin.

The results, just released by The Ohio State University, concluded that:

  • More than half of the pigs on antibiotic-free farms tested positive for salmonella, vs. 39% of conventionally raised pigs.
  • The Toxoplasma gondii parasite was detected in 6.8% of antibiotic-free pigs, compared to 1.1% of conventionally raised pigs.

Two naturally raised pigs out of 616 sampled tested positive for Trichinella spiralis, a parasite considered virtually eradicated from traditional U.S. hog operations.

More Health News

Anxiously Awaiting Hog and Crop Forecasts

All eyes turn to USDA reports as agency statisticians publish estimates of hog numbers on Friday and, perhaps more importantly, crop acreage and grain stocks on Monday. Watch your e-mail on Monday for our summary of the Hogs and Pigs Report.

Figure 1 shows the results of DowJones’ quarterly pre-report survey of market analysts regarding their expectations for the report. These numbers generally agree with my expectations. I believe (perhaps it is more hope than believe) that the breeding herd may be a bit smaller than this. I expect a 2% reduction based on both sow slaughter and gilt slaughter data from the University of Missouri.

I believe a few of these numbers are quite notable. First, analysts still expect the market herd to be significantly larger than last year. June slaughter has run 7.0% higher than last year when one compares the same number of weekdays and weekends. As usual, that number vs. the 180-lb. and over inventory will serve as an early checkpoint for the report.

Second, the March-May pig crop expectations are at +2%. If true, this means that we will not get much supply relief until 2009. Historically, we have had to adjust that number downward for death losses and upward for imports from Canada to arrive at an expected slaughter two quarters hence. The death losses should be much smaller, suggesting that fourth-quarter slaughter could be more than 2% larger. Imports of both market hogs and feeder pigs from Canada (See Figures 2 and 3.) have gone below year-earlier levels and, thus, suggest that fourth-quarter slaughter growth will be less than 2%. How those numbers balance will be important for fall hog markets.

Third, analysts see a larger reduction of output in the future as evidenced by the larger reductions in farrowing intentions. Those reductions, though, are slower than I expected given the feed cost situation we face.

High Futures Prices Aren’t Profitable
Which brings us to the elephant that remains in the room. Figure 4 shows cost and hog price projections based on Chicago Mercantile Exchange (CME) Group futures prices on June 23. These include those $99-plus Lean Hogs futures prices for next summer and note that they do not cover costs. While that purple line representing projected hog prices appears pretty close to the red cost line, readers must look at the vertical distance between them to estimate losses per cwt. of carcass – and that difference is significant. A 200-lb. carcass will incur losses of $25.10 in June, $34.28 in September and $40-plus in October and November. If you sell one pig per month at these costs and prices through May (i.e. those June Lean Hog futures prices impact May more than June), you would lose right at $300.

I do not see much relief in sight for this situation. There is at least as much chance for the corn crop to get smaller as there is for it to get bigger. Oil prices hit $140/barrel yesterday and that adds value to ethanol and corn used for ethanol. Hog prices could be higher, but these futures prices are optimistic relative to the prices I get from basic supply-demand analysis. Excellent consumer demand or export demand could help, but helping enough to alleviate these projected losses is unlikely, in my opinion.

Communicating the Crisis
I spent Tuesday and Wednesday in Washington, DC, with National Pork Producers Council officers and staff, and Dr. Robert Wisner of Iowa State University and Mark Greenwood of Agstar Financial in Mankato, MN. Our mission was to inform key members of Congress and the administration (USDA, the White House, Council of Economic Advisors) of the serious situation facing the pork industry. The midwestern floods have created a teachable moment, it appears, as we got far more attention than ever before.

NPPC is asking Washington for five things:

  1. Penalty-free release of non-environmentally sensitive land enrolled in the Conservation Reserve Program (CRP). This has been a controversial issue, but it appears to be gaining some support. It is estimated that 12-15 million of the 34 million CRP acres could be cultivated without detrimental environmental impacts. NPPC is asking for this release by Aug. 1 to allow farmers to plan for the 2009-2010 crop year – and in hopes that some acres might get planted to winter wheat to provide feed supply help as early as next June.

  2. Support the request by Texas Gov. Rick Perry to waive the renewable fuel standard. My impression is that there is sincere interest in reducing the standard or, perhaps, just pushing the numbers out one year given this year’s tight supplies. That would mean the standard for 2010 would be 9 billion gallons instead of 10.5 billion.

  3. Eliminate the blender’s tax credit. The amount of agreement to “leveling the playing field” for corn buyers surprised me. A more politically palatable alternative might be structuring the credit so it is negatively related to corn prices – i.e., significant when corn prices are low and zero when corn prices are high. The trick is defining high and low – but it is possible and, I think, should be pursued.

  4. Eliminate the import tariff. This goes hand-in-hand with a change in the tax credit.

  5. Waive farm program rules to allow a harvestable crop to be planted yet this year on acres that have not been planted or have been lost due to weather. This is point 5 just because there probably is not enough time to get it done at Washington, DC’s notoriously slow pace.

Time to Get Involved
Now is the time to get involved whether you agree with these five items or think something entirely different should be done. Congress will have limited opportunities to take action over the next two months. Please let your representatives and senators know what you think.

Click to view graphs.

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

Hog Futures React to High Feed Prices

“If it weren’t for bad luck, we’d have no luck at all.” That line from the old Hee Haw song skit “Gloom, Despair and Agony on Me” kept coming to mind this week. It may not have come to you less culturally indoctrinated readers, but it came to mine.

Deferred Chicago Mercantile Exchange (CME) Group Lean Hogs futures reached record highs with June 2009 approaching $96/cwt., carcass. Figure 1 shows the chart of weekly prices on the nearby contract and it is plain to see that we have never been in this rarified air before.

The futures are reacting to higher corn and soybean meal prices, of course, and are being more logical in that reaction than in past months. Several times over the past year, nearby lean hogs futures would rise when corn prices rose. Perhaps that was the separate markets competing for speculative fund money, but it doesn’t make a lick of economic sense since there are such time lags in pork production.

This week’s rise was different, with the deferred contracts impacted significantly more than the nearby contracts. Someone is figuring out that it takes awhile for these costs to have an impact and that has brought a bit more economic logic to the equation.

Still, the record-high prices for next summer may not be profitable. Figure 2 shows my cost forecasts based on corn and soybean meal prices on Tuesday, June 17. July 2009 stands at a record $96.79/cwt., carcass, higher than the corresponding lean hogs futures price even without a basis. Those futures prices may not be right, but they have to be at least respected in your current planning.

And the reaction has been swift. I have had reports of a large number of entire sow herds being sold for slaughter in the past two weeks. One Midwestern buyer reportedly bought over 14,000 sows last week and the smallest operation was 1,200 sows. I had a report today that sows are booked for at least a week and more likely a week and a half out.

Perhaps most important is the news that more and more of these sows are still pregnant at the time they are sold. There is a major difference between selling dry sows and selling “piggy” sows, and we usually see major shifts in the breeding herd the quarter after we hear reports of piggy sows in slaughter plants.

New Pig Crop Report Next Friday
USDA’s June Hogs and Pigs Report will be released next Friday afternoon. I expect the U.S. breeding herd to be 2% lower than last year and the market herd to still be 5-7% larger, given the size of lightweight inventories in March and March-May farrowing intentions. Those numbers would not change my supply or price forecasts through June 2009.

I still do not expect cash hog prices to reach the levels that futures are now offering, at least through April 2009. October and December futures reached new contract life highs on Friday morning, and I think producers should be watching those contracts for signs that the rally has run out of steam – thus signaling a selling opportunity.

February and April Lean Hog (LH) futures are also at contract life highs and I would be watching for pricing opportunities there as well. Some coverage before the report next Friday would be prudent – perhaps out of the money puts to protect against a bearish surprise.

Grain Situation Looks Bleak
The grain situation is bad and far from safe. The condition of the corn crop last week was below the corresponding week’s value in 2002, the year with the worst-ever average full-season corn crop condition. USDA’s Acreage report will be released on June 30 (I should have analysts’ pre-report estimates in next week’s NAP) and the trade is talking about 1-2 million fewer corn acres and 2-3 million fewer soybean acres than the April 30 Planting Intentions report indicated. It will take a major miracle for either of these crops to reach their long-term trend yield, so lower-than-expected supplies are a given, I believe.

Ethanol Flinching at Corn Prices, Too
Finally, hog producers are not the only ones hurting with $7-plus corn. There were several rumors of ethanol plant cutbacks last week as gross margins have plunged since June 1. Corn costs are part of that, but a sharp drop of the ethanol price (from $2.46 to $2.33/gal. in Iowa) two weeks ago was the biggest contributor. That price recovered to $2.55/gal. last week, but expect to hear this more often as corn and natural gas prices continue to rise.

This factor underscores another issue that will be important: The “off” switch is much more effective and timely for ethanol, food and export uses of corn. If short-term rationing is needed, prices have to go high enough to cause these users to back off and that will mean prices will be very high indeed.

Click to view graphs.

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

Pig Farmers Take Action

Ride Along with a Pig

Pigs Are Hungry, Too

U.S. Pork Exports Predicted To Jump 200% in a Decade

U.S. Pork Exports Predicted To Jump 200% in a Decade

In 1998, the United States shipped 1.116 billion pounds of pork, meaning that about 1 of every 6 lb. of pork exported was of U.S. origin.

How times have changed. For the first four months of 2008 alone, the U.S. pork industry already has exported 1.389 billion pounds of pork products to countries around the world. For every 3.3 lb. of pork traded, 1 lb. came from the United States.

The consistent taste and quality of U.S. pork, coupled with decades of campaigns and promotions, have made the United States the dominant player in the global pork industry, according to the U.S. Meat Export Federation (USMEF).

“It’s clear that future growth and prosperity for the U.S. pork industry are inextricably tied to our ability to grow exports,” says Danita Rodibaugh, USMEF executive committee member and pork producer from Rensselaer, IN. “The increasing presence and importance of U.S. pork in the global marketplace is a tribute to the quality of product, in addition to how well we are marketing it overseas.”

U.S. pork has set export records for 16 consecutive years, the best two months ever for U.S. pork exports were both in 2008, and this year exports have made up 22% of total U.S. pork and pork variety meat production, compared to 16.5% last year.

Total pork exports for January-April 2008 have soared 52% above the same period a year ago and are valued at $1.4 billion. USMEF forecasts 2008 pork exports will reach 3.34 billion pounds, or an increase of 200% over exports in 1998.

NPPC Urges EPA to Waive Ethanol Mandate

Due to rising pressures on this year’s corn crop, squeezed even more from recent Midwest floods, and the chance that large numbers of pork producers could exit the business from the resulting rise in feed prices, the National Pork Producers Council (NPPC) today called for the federally-mandated target for corn-based ethanol production be cut in half.

In comments submitted to the U.S. Environmental Protection Agency (EPA), NPPC supported a request by Texas Governor Rick Perry urging that the agency grant a waiver of the Renewable Fuels Standard (RFS). That waiver would reduce the amount of biofuels produced in 2008 from 9 billion gallons to 4.5 billion gallons. Ethanol is the only viable biofuel.

EPA must rule on the waiver request by July 24.

Feedgrain prices already were on the rise in the summer of 2006, caused in part by the rapid rise in ethanol production. In the meantime, increased global appetite for crops, drought conditions in parts of the world and the RFS requirement have combined to push grain prices even higher. A bushel of corn for July delivery now is selling for over $7, compared with about $2.60 in July 2006.

From September 2007 to April 2008, corn prices rose 124% and soybean meal prices climbed 94%. During that time, pork producers lost an average of $30 on each hog marketed.

“The U.S. government’s intervention in grain markets through the RFS has created one of the most severe economic crises to ever hit pork producers,” declares NPPC President Bryan Black, a pork producer from Canal Winchester, OH. “The impact for the pork industry and its customers will be devastating as herds are culled, producers go out of business and pork prices skyrocket.”

Compounding matters are recent floods in the Corn Belt and delayed plantings due to the cool, wet spring that have combined to significantly drop USDA corn yield forecasts. The latest prediction is 149 bu./acre, down from 154 bu./acre.

NPPC says the expected shortfall, along with a mandated 38% increase in ethanol production over last year, has pork producers very concerned about gaining physical access to corn to feed their livestock.

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USDA Plans Survey of Flood-Ravaged Crops

The U.S. Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS) has announced it is taking several steps to assess the impact of massive rainfall and flooding on the 2008 crop acreage.

NASS will release the 2008 Acreage report on June 30 at 8:30 a.m. EDT. However, NASS collected most of the acreage data during the first two weeks of June, prior to the majority of flooding.

NASS will use standard procedures to estimate planted area. But in an effort to more accurately reflect how much of the planted area will actually be harvested for grain, NASS will re-interview producers during the week of June 23 in affected areas of Illinois, Indiana, Iowa, Minnesota, Missouri and Wisconsin. This effort will help gather additional information about producers’ harvesting intentions for corn, soybeans and sorghum.

In addition, because some producers could be difficult to contact or are still assessing their options, NASS will conduct a more extensive survey of planted acres in July in the impacted areas. This information, along with data normally collected from across the country during this time, will be reflected in the Aug. 12 Crop Production report.

More information on USDA’s response and efforts in the Midwest.

Building Functional Biosecurity Barriers

Pork producers and veterinarians have eliminated many diseases, but now it's time to build a workable biosecurity program to upgrade animal health.

Many positive strides have fueled the control and elimination plans for porcine reproductive and respiratory syndrome (PRRS) virus, notably fixing the semen supply and improving the procedures for introducing replacement gilts.

But all too often, that work goes for naught as the devastating disease finds its way back onto the farm. The reason — many hog operations still lack a functional biosecurity program, says Rodney “Butch” Baker, DVM, Iowa State University.

“I think if we are going to really start down the road where we want to eradicate agents like mycoplasma and PRRS, the first thing we have to fix is our national biosecurity,” he stresses.

Such a program must include two biosecurity components:

  • Internal biosecurity (bio-management) protects against known farm agents. Producers commonly protect against such bacterial diseases like Echerichia coli by sanitation — washing the rooms between farrowing groups — and use of vaccine.

  • External biosecurity (bio-exclusion), on the other hand, is the wall that is built around the farm or even a country to keep out a PRRS-type virus or a foreign animal disease, he says.

For Baker, who has worked with a number of major pork production companies on PRRS elimination strategies, one of the keys will be addressing the next biosecurity frontier — the trucks and trailers used to haul pigs and breeding stock around the United States.

“In my opinion, it is the transport area where we should really be currently focused, and not just for control of the PRRS virus,” he states.

Baker says he is “really bothered” by how fast the European strain of porcine circovirus type 2 (PCV2) swept across the country.

“In late 2005 and early 2006, we saw the first cases of porcine circovirus-associated disease (PCVAD) in North Carolina, and the virus was in California in less than 12 months. The only way that could have happened was through viral spread by trucks,” he explains.

Circovirus presents some unique challenges. It is spread solely by fecal-oral contact. It is a very hardy virus that isn't killed by heat, meaning baking trailers won't work.

“You have to get the disinfectant and the virus together to kill it; in our trailers there are just too many virus hiding places. So just a physical inspection of a trailer is not good enough,” he notes.

PRRS Challenges Ahead

Despite years of research and on-farm efforts to control PRRS, the jury is still out on exactly how the virus spreads. Aerosol spread is real, but documentation indicates it's probably a rare event, he says.

“We think that the PRRS virus is evolving and mutating in the finishers — in the growing pig — where it has opportunities to go through its natural change process,” Baker says. Through biosecurity breaks, the virus is finding its way back onto sow farms from the off-site finishers, and then working its way back through the production system to the finishers in a perpetual cycle.

That's not to say that progress hasn't been made. Many breeding stock companies and commercial production companies have eradicated PRRS, and the list of those dedicated to PRRS elimination continues to grow.

Commitment Needed

In Baker's opinion, the industry needs to commit to a national biosecurity process in order to embark on disease eradication efforts for PRRS and possibly Mycoplasmal pneumonia — something he says really hasn't happened so far.

Those functional biosecurity programs must be simple enough that farm staff can implement, monitor and steadily improve them. “Some people are doing a lot of things with biosecurity, but there are a lot of people doing nothing. There are a lot of transportation companies that are doing nothing, and a lot of over-the-road truck washes that instead of eliminating disease, end up disseminating disease because of cross-contamination.

“What we need is a national certification program for truck washes and trucks — a standard of sanitation — whereby you'd have a certifying body that comes around and checks truck washes annually.”

Baker applauds the Transportation Biosecurity Summit, July 15-16 in Kansas City, MO, as a first step toward real action on this issue (see sidebar).

Health Reaps Rewards

Fixing biosecurity could protect the nation's hog health and provide opportunity for disease eradication, which in turn could improve returns.

“If we eliminated a few diseases in our industry, we could produce as many pounds of pork as we produce today with less environmental impact and fewer sows, and increase our total efficiency and productivity 10-12% without spending a dollar on building more barns,” Baker says.

Transportation Biosecurity Summit Set

The Transportation Biosecurity Summit is scheduled for July 15-16 at the Embassy Suites, Kansas City International Airport.

Iowa State University and the National Pork Board will host the two-day program. The goals are to update participants on the science of transport biosecurity practices, and to identify areas where additional efforts are needed to strengthen control of disease organism movement during transport.

Highlights on July 15 include:

  • Pork producer Joy Philippi, Bruning, NE, will discuss the need for transport biosecurity.

  • Swine veterinarian Steve Henry, Abilene, KS, will talk about biosecurity limitations in pig transport.

  • Smithfield Foods swine veterinarian Perry Harms will review trailer washes and other cleaning strategies.

  • University of Minnesota swine veterinarian Scott Dee will discuss the use of thermal and non-thermal disinfecting techniques.

  • Swine veterinarian Angie Delks, Algona, IA, will review how to measure success of disinfecting protocols.

  • Pork producer/veterinarian Craig Rowles, Carroll, IA, will discuss producer-driven transport guidelines.

  • Swine veterinarian Max Rodibaugh, Frankfort, IN, will present a look at commercial haulers and on-farm concerns and solutions.

  • National Pork Board swine veterinarian Lisa Becton will talk on whether effective internal fleet separation increases biosecurity.

The July 16 program includes:

  • Leif Christensen of the Danish Meat Board will discuss Danish experiences with transport equipment and practices.

  • Matt Ritter of Elanco Animal Health will review trailer design/selection and pig handling from farm gate to packing pants.

  • National Pork Board's Erik Risa will cover the next generation of the Trucker Quality Assurance program.

  • Steve Meyer of Paragon Economics, Adel, IA, will present economic valuations for improved transport biosecurity/mortality.

For more information, contact Butch Baker, DVM, Iowa State University at rbbaker@iastate.edu; or Lisa Becton at the National Pork Board at LBecton@pork.org.

Reserve a hotel room by calling (816) 891-7788 or faxing (816) 891-7513. Registration is $25 through June 15, $50 after June 15. Online registration is available at http://www.pork.org.EventRegistration.aspx?id=2.