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Articles from 2017 In June


USDA shocks markets with low soybean, wheat acres

new plant seedling

Farmers shifted acres to soybeans from corn and wheat according to the planting data released Friday by the U.S. Department of Agriculture (USDA), but soybean prices surged after the numbers were released as the total area for that crop was less than what many in the trade expected.

Wheat futures also rose as USDA’s wheat acreage was shy of trade forecasts, with the spring wheat acreage under all forecasts in a Reuters’ survey.

Also on Friday was USDA quarterly grain stocks, which were up from a year ago for all three crops, as expected, but the soybean supply of 963 million as of June 1 was under average forecasts. Corn and wheat stocks of 5.23 billion and 1.18 billion, respectively, were on the high side of trade estimates.

“Today’s reports continue the recent history of surprises at the end of June,” said Bryce Knorr, Farm Futures senior grain analyst. “Soybeans got a boost on both acreage and stocks, but not enough to tighten the balance sheet if yields hold up. So far, the crop is looking in pretty good shape but July and August weather will be crucial.”

USDA said farmers planted 89.5 million acres of soybeans, while traders in the Reuters poll on average expected 89.75 million and Farm Futures expected 90.10 million. A year ago, they planted 83.433 million. 

The corn acreage of nearly 90.9 million was on the high side of trade forecasts and above the March estimate of 89.996 million. A year ago, farmers planted 94 million.

All-wheat acreage of 45.66 million was shy of nearly all trade forecasts including Farm Futures’ 46.15 million, with a larger-than-expected reduction in spring wheat. Spring wheat acreage of 10.9 million, compared with the 11.2 million average forecast and the 11.31 million USDA had in March. A year ago, farmers planted 11.6 million.

“USDA’s corn numbers were bearish on both acreage and stocks, suggesting lower than anticipated feed usage this spring,” said Knorr. “The combination could add 300 million bushels or more to supplies in the coming year, increasing the burden for weather as the only card left for bulls. Basis will weaken on any rallies now as growers get more desperate about liquidating inventory, especially if pollination goes well.”

In midday trading, CBOT soybean futures were trading nearly 30 cents higher for the day, winter wheat was up about 27 cents while Minneapolis spring wheat was up 35 to 43 cents. Corn futures were about 7 cents higher for the day.

MIDDAY-MidwestDigest-06-30-17

The news from the cities of our region hasn't been good when it comes to crime. To assume that all of Heartland has rampant growing crime problem would be a mistake. Statewide in Minnesota, crime is down. 23% fewer murders in all of 2016. Crimes per 100,000 is about the same as it was in 1966. 

These June crop acreage reports most always bring significant reaction in market. 

The storage units, sometimes thieves prey on those. In Indiana, police say they have apprehended man and woman who went around taking stuff from storage units.

House Ag Subcommittee rejects administration’s proposed budget cuts

(Photo by Alex Wong/Getty Images) Senate Budget Committee presents FY2018 Budget
WASHINGTON, DC - MAY 23: Republican Staff Director of U.S. Senate Budget Committee Eric Ueland (L) hands out a copy of President Donald Trump's FY2018 budget proposal to a congressional staff May 23, 2017 on Capitol Hill in Washington, DC. President Trump has sent his FY2018 budget proposal request to the Congress.

House Ag Subcommittee passes FY ’18 ag appropriations
The House Agriculture Appropriations Subcommittee passed its Fiscal Year 2018 agriculture appropriations bill which provides a total of $144.9 billion in both mandatory and discretionary funding for USDA and the Food and Drug Administration. This is $4.6 billion above President Trump’s proposed budget request. The subcommittee rejected any of the administration’s requests to eliminate various USDA programs. The bill provides $20 billion in discretionary funding, which is $876 million below FY ’17 or approximately a 5% reduction. The bill includes:

  •  Agriculture research: Provides $2.8 billion for agriculture research programs, including the Agricultural Research Service and the National Institute of Food and Agriculture. President Trump requested approximately $2.3 billion for these programs.
  • Research facilities: Rejects the administration’s proposal to close 17 ARS laboratories.
  • Animal and Plant Health Inspection Service: Includes $906 million which is $96 million above the president’s request and $40 million below last fiscal year’s level.
  • Farm programs: Provides $1.6 billion for farm programs which will continue support for various farm, conservation and emergency loan programs. The bill provides funding for full staffing at local Farm Service Agency offices and meets demand for estimated farm loan programs. 
  • Conservation: Provides $904 million, including $45 million for infrastructure rehabilitation to help small communities meet current safety standards for watershed projects.
  • International and trade programs: Provides full funding for the two trade promotion programs that help with expanding and preserving U.S. agricultural exports — Foreign Market Development Program is funded at $34.5 million and the Market Access Program is funded at $200 million. The president’s budget proposed eliminating these programs. The bill contains $1.4 billion for “Food for Peace” and 185 million for the McGovern-Dole International Food for Education and Child Nutrition program. These programs were to be eliminated in the administration’s proposed budget. 
  • SNAP: Provides $73.6 billion in required mandatory funding for the Supplemental Nutrition Assistance Program (food stamps). This is $4.87 billion below last year’s level because of fewer recipients using the program and lower food costs.  
  • Child nutrition: Includes $24.28 billion in mandatory funding for child nutrition programs, including school breakfast, school lunch and Summer Food Service Program.
  • Food Safety and Inspection Service: Provides $1.038 billion for food safety and inspection programs which is an increase of $6 million above FY ’17. The committee rejected the administration’s proposal for user fees for meat and poultry inspection services. 
  • Rural development: Provides $2.6 billion for rural development programs, including $1.25 billion for rural water and waste program loans that the president’s budget proposed eliminating.

The House Appropriations Committee is expected to consider the bill on July 12. As the House Appropriations Committee is considering the various FY ’18 spending bills, the House Budget Committee Republicans are trying to finalize the FY ’18 budget. Under consideration is $200 billion in cuts to mandatory programs, including farm programs and SNAP to help pay for increased defense spending.

Ag groups urge Trump to fill top USDA positions
A growing concern throughout the federal government is the slow rate the Trump administration is filling key positions in all of the federal departments and agencies. USDA currently has 13 key positions that will need Senate confirmation that have not even been named. These include the deputy secretary of Agriculture, undersecretary for Farm Production and Conservation Programs, undersecretary for Trade and Foreign Agricultural Affairs, undersecretary for Food Safety, undersecretary for Natural Resources and Environment and general counsel. A group of 16 agricultural organizations sent a letter to President Trump urging him to move quickly to fill key USDA appointments. With a struggling farm economy, the organizations say USDA needs leaders and decision makers to serve farmers, ranchers and consumers. In a letter to the president, they say, “We applaud you for picking such a strong secretary of agriculture in Sonny Perdue. We have the utmost faith that he will continue to do an outstanding job serving your administration and our nation. But he can’t do it alone. The absence of high-ranking officials at USDA puts our farmers and ranchers at a disadvantage. It is impossible to pilot such a large and complex agency without a team of powerful and talented people at the helm.” Those signing the letter include National Corn Growers Association, National Cattlemen’s Beef Association, National Pork Producers Council, American Soybean Association, National Association of Wheat Growers, American Farm Bureau Federation and National Farmers Union.

EPA moves to rescind WOTUS
The Environmental Protection Agency and the Army Corps of Engineers are moving forward to officially rescind the highly controversial Waters of the U.S. rule. The EPA is officially proposing a rule to rescind the WOTUS regulation. There will be a 30-day comment period on the proposed rule. This announcement by the EPA received high praise from the agriculture community. The AFBF says, “It was a federal land grab designed to put a straightjacket on farming and private businesses across this nation. That’s why our federal courts blocked it from going into effect for the past two years.”

The NPPC praises the administration for its action and says WOTUS was “the product of a flawed regulatory process that lacked transparency and likely would have been used by trial lawyers and environmental activists to attack farmers.” The NCBA says, “This is another great step in the right direction, and the administration deserves a great deal of credit for injecting some much-needed common sense into our nation's environmental policies.”

The environmental community was not pleased with the announcement. The National Wildlife Federation says, “Every American should be able to turn on the tap and get clean, safe drinking water. The president campaigned on the promise of ‘crystal clear water.’ The best way to make that promise a reality is to prevent pollution in the first place. Today’s hasty and haphazard repeal would do just the opposite. It disrespects the broad public support and strong legal and scientific basis for the Clean Water Rule, and it fails to provide the clarity inherent in the rule.”

USDA stops Brazilian beef shipments
USDA announced it was suspending all imports of fresh beef from Brazil because of recurring concerns about the safety of the product. Since March, USDA’s FSIS has been inspecting 100% of all meat products arriving in the United States from Brazil. FSIS has rejected 11% of the Brazilian shipments due to public health concerns, sanitary conditions and animal health issues. The rejection rate for shipments from the rest of the world is 1%. The suspension of shipments will remain in place until the Brazilian Ministry of Agriculture takes corrective action which the USDA finds satisfactory.

Hamlet Protein takes on new regional sales manager for piglets

Ronald Rampersad, Hamlet Protein

Ronald Rampersad has joined Hamlet Protein Inc. as regional sales manager for piglets.

Rampersad brings experience and expertise in sales, marketing, business development and management. He has previous held various sales and account management roles with BIVI, and was a poultry and swine industry specialist and livestock territory manager with Pfizer Inc. He has a Master of Science in Agricultural Economics and a Bachelor of Science in Animal Science.

Rampersad is responsible for leading sales, marketing and technical support within the Eastern Region of the United States.

For further information, contact Scott Moore, Hamlet Protein Inc. president.

Groundbreaking changes coming to the U.S. pork industry

National Pork Board U.S. Hog farm

The U.S. swine business is in a seismic shift as the magnitude of change over the next several years will define its future. “The next five to 10 years will be the biggest dynamic changes in the pork industry,” says Mark Greenwood, AgStar Financial Services senior vice president.

Speaking at Iowa Swine Day, Greenwood confirms the industry’s financial strength has led to capital spending or reinvestment into production. “It is really a combo platter between production and packing plants,” he notes.

Healthy packer margins over several years stimulate growth in pork processing capacity as five new plants are set to be operational by 2018. Meanwhile, processors will add shifts or expand current facilities to handle the additional market hogs so long as they are making money.

AgStar

For the most part, U.S. hog farmers are also showing solid balance sheets despite the narrow margins last year and the rough start to 2017. Input costs remain affordable as feed prices are at a lower level. Also, many producers, learning from previous tough financial years, paid down operation and real estate debt. The financial strength of the industry is real. Greenwood says the majority of hog farmers can lose $20 per head for two straight years without touching their operating money except to pay taxes.

Financial strength gives hog farmers the sureness to expand. “When you have a strong balance sheet, you tell your lender what you are going to do,” explains Greenwood.

However, he warns not to get overconfident. He encourages U.S. pork producers to strive for continuous improvement in productivity and financial strength. Despite the record amount of pork being produced, prices are better than anticipated on Jan. 1, 2017. Still, Greenwood asks, “As we increase pork supplies this fall, can we keep our value?”

One area all pig farmers and lenders can work on is negotiating more hogs on the open market. It needs to be a more coordinated effort. Currently, only 2.5% of hogs are negotiated. Greenwood recommends 5-10% is a more comfortable level for the industry. He understands it takes more work for producers. However, Greenwood further explains producers selling on the open market have a better handle on the future markets. “Yes, it does take work, but the best of the best are doing it,” stresses Greenwood.

AgStar

Words of wisdom
The U.S. pork industry is venturing into unfamiliar territory. Robust export markets and product innovation are driving demand. Pork bellies featured on menus from fast food to fine dining is good news for the swine business.

Consumers’ preference and shopping habits are also evolving. Busy family schedules are embracing online shopping and pre-packaged meals. It will require an adjustment for the entire industry and a coordinated effort for marketing pork and telling the real pig farming story.

Only time will tell if hog prices sustain as production rises. Any disruption to the export market can be a game changer.

Be that as it may, looking ahead Greenwood foresees more integration. Pork processing must take a broader approach and capture a true value through brands. More alignment between producer and processor is anticipated, but the industry needs to find a balance with some pigs negotiated in open market space.

Overall, Greenwood advises all hog farmers to think long term, utilize data to drive decisions and continue investing in new technology and employees’ talent. He stresses, “The single biggest risk to this industry is people.”

Successful pork producers share similar qualities. Greenwood suggests the following tactics for fruitful pig farming.
• Be great at blocking and tackling. Without that, you have no shot.
• Embrace data management and use the information to make sound decisions that add to your financial bottom line.
• Benchmark against your peers to better understand where you stack up.
• Be willing to change the current practices for overall improvement. Avoid the status quo.

All pig farmers need to look at the whole picture. Don’t become too isolated. Understanding the entire fundamentals of the global pork industry will keep hog farmers in the swine business long term.

MORNING-MidwestDigest-06-30-17

Some of the state legislatures will continue to be in session today with sense of urgency 46 of 50 states will go into new fiscal year tomorrow. As of Wednesday, 11 states have not reached new budget deal. Challenges come despite improvements in nation's economy. No where is situation worst than Illinois.

Hog futures might come in for selling today. While not far off mark of trader expectations, report did come in toward high in.

60,000 bridges in need of repair and replacement throughout our nation. 43% older than average design life of 50 years. Will take $123 billion to fix.

Did you see video of car swallowed into sinkhole? When he came out he thought car had been towed, then he saw 20 feet deep hole with water gushing around his car.

Farm Progress America, June 30, 2017

Congress is now dealing with the Water Rights Protection Act, which bars taking water rights from farmers using public lands under permit. The American Farm Bureau Federation offers insight into how the federal government is taking water rights from permit holders.

Farm Progress America is a daily look at key issues in agriculture. It is produced and presented by Max Armstrong, veteran farm broadcaster and host of This Week in Agribusiness.

Photo: arinahabich/iStock/Thinkstock

Food made safer thanks to David Theno

Getty Images/Oli Scarff Meet cutters

If you have read the June issue of National Hog Farmer you’ll have seen that a quality pork supply is of utmost importance. Consumers demand a quality product regardless if you’re talking pork, beef, televisions, smartphones or widgets. Problem is consumers determine what quality means to them. Ten consumers will have 10 different ideas of what makes a pleasurable pork dining experience for them. While determining what a quality pork product is can be a lot like trying to nail Jell-O to the wall, the overlying theme the entire meat industry has to agree on is the component of ensuring that a safe product ends up on consumers’ plates.

Food safety is a true farm-to-fork issue, with every step of the way in the meat production chain playing an integral role. No one person or facet is any more or any less important with the goal of providing a safe food product. Though that may be true, the industry recently lost a man who had been credited with putting food safety at the forefront.

David Theno may not be a household name, but consumers are indebted to his service to the meat industry. In a case of being the right person in the right place at the right time, Theno was senior vice president and chief food safety officer for Jack-in-the-Box, the San Diego fast food chain that was implicated in a massive and deadly outbreak of E. coli O157:H7 in 1993. Four deaths and hundreds of illnesses were blamed on the burger chain that some said would not survive.

According to an article on the Food Safety News website, “top management of Jack-in-the-Box made an early decision to give Theno complete authority over food safety. He implemented a comprehensive Hazard Analysis and Critical Control Point plan and then required a finished product testing protocol, test and hold, that initially irked others in the meat industry before it was almost universally adopted.”

Theno remained with Jack in the Box for almost 16 years. When he left for Gray Dog Partners Inc., he took on being chief global food safety and quality officer for Milford, Conn.-based Subway restaurant chain. Before he joined Jack-in-the- Box, his Theno & Associates Inc. did food safety and quality management consulting for such companies as Foster Farms, Kellogg’s, Armour Food Co. and Peter Eckrich & Sons Inc.

Theno earned a bachelor’s degree in zoology and science journalism from Iowa State University and master’s and doctoral degrees in food microbiology and animal sciences from the University of Illinois at Urbana-Champaign.

The U.S. meat industry and U.S. consumers owe a lot to Theno, and his leadership in responding to the 1993 outbreak and challenge of E. coli O157:H7 has been recognized by numerous scientific and industry organizations.

He was inducted into the 2012 class of the Meat Industry Hall of Fame. In his biography on the Hall of Fame website, it reads: “Theno’s lasting contribution to the meat industry was his leadership in responding to the E. coli O157:H7 outbreak. He was instrumental in demonstrating how the scientific community and the meat industry can work together to solve food safety challenges.”

Theno died June 19 while swimming with his grandson in Hawaii. He was 66.

In a tribute on the Food Safety News website Dan Flynn writes: “we are consoled to know that the true legacy he leaves — food that’s safer now than ever before, though it always could be safer, will not only endure, it will save many, many hundreds if not thousands of lives.”

David Theno may not have been a household name, but his work made a lot of households safer.

How fast is the U.S. pig industry growing?

National Pork Board Pigs filling a hog barn

Market analysts predicted a record number of hogs to appear in the June USDA Quarterly Hogs and Pigs report, and the final tally did not deviate far from pre-report estimates. As of June 1, there were 71.7 million hogs and pigs on U.S. farms, up 3% from June 2016 and the second largest inventory on record ever.

It is clear the U.S. pork industry is in growth mode. It is no longer a question if America’s pig farmers are expanding or not. “All we are talking about is the magnitude and rate of growth. We are all settling into the growth mode. It is simply a question of how fast,” stresses Joseph Kerns, president at Kerns & Associates.

Despite the record production year for 2017, hog prices currently are decent. Lee Schulz, Iowa State University Extension livestock economist, says swine profitability turned the corner in June to the positive side with an anticipated annual average of $15 per head for the year.

Overall, the economic picture for the U.S. hog farmer is brighter than expected and will most likely fuel producers to expand the breeding herd. However, the growth of the breeding herd numbers is modest at 6.07 million head, up only slightly from the previous quarter and an increase of 2% from the same quarter in 2016.

Scott Brown, University of Missouri assistant Extension professor, says the breeding herd numbers show stability in the industry. The breeding herd is still growing but easier to predict as pre-report estimates align with the USDA report. The only exception is the March-May farrowing intentions, which penciled higher than market watchers’ forecasts (refer to the chart below).

“Given better economics than many of us thought when we started 2017, I would not have been surprised to see a little larger breeding herd, in the report today, than we end up with,” notes Brown.

Kerns explains it is not economics that are driving the expansion but the ability to execute the expansion. For those hog farmers involved in the new processing plant, they are dead set on expanding. In other states, permitting issues and construction resources inhibit rapid expansion to occur. It can’t happen overnight.

Looking deeper into the sow numbers, variation occurs across the states. For instance, Iowa added 30,000 sows this quarter. This is reasonable as the new Seaboard-Triumph plant is soon to come online in the area this fall. On the other hand, the sow numbers declined in the region — Illinois and Indiana — most likely to send hogs to the new Coldwater, Mich., plant.

The growth of the sow herd will continue to climb. U.S. pig farmers added 90,000 sows to the herd in 2016, which easily fills the current packing capacity. Kerns expects hog farmers to add 100,000 sows per year for the next two years as more shackle space comes available. “In my opinion, we still have some upward pressure on expansion opportunities. I do not see anything that is providing a braking mechanism to slow sow expansion,” says Kerns.

The optimistic nature of the U.S. swine business is driven by strong demand around the globe. Dermot Hayes, Iowa State University economist, calculates pork production climbed 3.4% so far this year while pork demand resulted in a net increase of 4%. The growth in pork demand is not domestically as it remains relatively flat in 2017. Exports account for the majority of the increase in pork demand for 2017.

“As of April this year, exports are up 15%. So, when you have 15% increase in a market that’s responsible for almost one-third of your production that can explain why prices are high when production is high also,” states Hayes. “It is as if we added 4-5% more pork-consuming Americans to the base.”

For this year, U.S. pork exports exceeded expectations and hold the key to the future of the industry. 

By the numbers

  • U.S. inventory of all hogs and pigs on June 1, 2017, was 71.7 million head. This was up 3% from June 1, 2016, and up 1% from March 1, 2017. This is the highest June 1 inventory of all hogs and pigs since estimates began in 1964.
  • Breeding inventory, at 6.07 million head, was up 2% from last year, and up slightly from the previous quarter.
  • Market hog inventory, at 65.6 million head, was up 4% from last year, and up 1% from last quarter. This is the highest June 1 market hog inventory since estimates began in 1964.
  • The March-May 2017 pig crop, at 32.3 million head, was up 4% from 2016. This is the second largest March-May pig crop since estimates began in 1970.
  • Sows farrowed during this period totaled 3.06 million head, up 3% from 2016. The sows farrowed during this quarter represented 50% of the breeding herd.
  • The average pigs saved per litter was a record high 10.55 for the March-May period, compared to 10.48 last year. Pigs saved per litter by size of operation ranged from 7.70 for operations with 1-99 hogs and pigs to 10.60 for operations with more than 5,000 hogs and pigs.

 The entire USDA Quarterly Hogs & Pigs report can be found here.

European Commission adopts new antimicrobial resistance action plan

The Europe Commission adopted a new Action Plan on June 29 to tackle Antimicrobial Resistance — a growing threat that is responsible for 25,000 deaths and a loss of €1.5 billion in the EU every year. The Action Plan is underpinned by a One Health approach that addresses resistance in both humans and animals. In parallel, the Commission adopted the first deliverable of the plan: EU Guidelines on the prudent use of antimicrobials in human health.

Vytenis Andriukaitis, commissioner for Health and Food Safety, says, “Antimicrobial Resistance is a global growing threat, and if we do not step up our action and commitment now, by 2050 it could cause more deaths than cancer. The ambitious agenda I present today focuses actions on key areas with the highest added value for EU countries. By promoting prudent use of antimicrobials in people and animals, consolidating surveillance, improving data collection and boosting research, I aim to make the EU a best practice region worthy of shaping the global agenda on AMR in this increasingly interconnected world.”

Carlos Moedas, commissioner for Research, Science and Innovation, adds, “Antimicrobial Resistance already kills thousands and is a significant burden for the society and the economy. It’s a threat that no country can tackle alone. We need a truly European research effort to save human lives, animals and the environment. That’s why the One Health Action Plan is so important — it will mean better research coordination and collaboration between EU Member States, as well as public and private sectors across Europe and beyond.”

The plan includes guidelines to promote the prudent use of antimicrobials in people. The guidelines target all actors — doctors, nurses, pharmacists, hospital administrators and others who play a role in antimicrobial use. They complement infection prevention and control guidelines which may exist at national level.

In addition, the plan foresees more than 75 actions built on three main pillars:

Pillar 1: Making the EU a best-practice region
Making the EU a best-practice region will require better evidence, better coordination and surveillance, as well as better control measures. This will support Member States to establish, implement and monitor their national One-Health Action Plans on AMR in line with the commitment they made at the 2015 World Health Assembly. Examples of Commission support include providing evidence-based data with the support of our agencies, updating EU implementing legislation on monitoring and reporting AMR in animals, food and humans, enabling mutual learning, exchange of innovative ideas and consensus building, and co-fund activities in Member States to tackle AMR. The action plan will be extended to include environmental aspects as one of the major contributors to the development and spread of AMR.

Pillar 2: Boosting research, development and innovation
Actions under this pillar aim to boost research and further incentivise innovation, provide valuable input for science-based policies and legal measures to combat AMR and address knowledge gaps such as the role of AMR in the environment. The Commission will work in partnerships with Member States and industry, including small and medium enterprises, to address AMR in bacteria, fungi and parasites. Special attention will be given to the WHO priority list of pathogens as well as tuberculosis, HIV/AIDS, malaria and neglected infectious diseases.

Funding and partnership programmes will focus on improving knowledge on effective infection control and surveillance including new diagnostics, and developing new therapeutics and preventive vaccines. Actions within these priority areas will help to improve public health and deliver economic and societal benefits throughout Europe and beyond.

Pillar 3: Shaping the global agenda
Whereas areas of action have been agreed upon internationally, the EU will work towards reinforcing engagement and collaboration with multilateral organisations, and intensifying cooperation with the most affected developing countries.As one of the largest markets for agricultural products, the EU can play a major role by promoting its standards and measures for addressing AMR with its trade partners. In the research arena, the EU will build upon its successful large-scale international initiatives, such as the European and Developing Clinical Trial Partnership and the Joint Programme Initiative, and further develop a stronger and interconnected AMR research landscape with global outreach.

The new action plan builds on the first AMR Action Plan which ran from 2011 to 2016. The new plan draws on the recommendations of an independent external evaluation and views of stakeholders gathered through a public consultation. Respondents to the consultation were largely positive about the Commission's role in complementing Member States’ action, with 79%) rating the Commission’s actions as helpful.