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Articles from 2010 In July

Farming for the Future Conference Set for Aug. 24

A conference offering farmers details on state and federal regulations impacting livestock and poultry production is slated for Aug. 24, 9 a.m. to 4 p.m., at the Best Western Starlite Village in Fort Dodge, IA.

“Doing Things Right: Farming for the Future,” is sponsored by the Coalition to Support Iowa’s Farmers (CSIF), and features environmental and regulatory experts discussing regulations and manure and nutrient management issues.

A highlight of the day will be a visit to the A.J. and Kellie Blair cattle and hog farm near Dayton, IA, where regulatory and technical service experts will address specific questions about environmental needs on farms. Iowa State University livestock economist Shane Ellis will provide a market outlook report.

Steve Sapp, Iowa State University professor of sociology, will open the conference discussing results of his comprehensive study completed earlier this summer, highlighting the value of animal agriculture to the economic and social vitality of towns in Iowa’s 99 counties.

Iowa Department of Natural Resources and Environmental Protection Agency representatives have been invited to explain recent enforcement activities pertaining to the Clean Water Act. An “Ask the Expert” panel will offer farmers real-time examples of compliance efforts applicable to their individual farms.

There is no cost to attend but space is limited. To register, contact the coalition at (515) 225-5515 or

National Hog Farmer

Toyota Continues Long-Standing Partnership with National FFA Foundation

Thirty- Plus Years of Supporting Agriculture Education Moves Efforts Forward

TORRANCE, Calif., July 27, 2010 – Celebrating a 33-year partnership with the National FFA Foundation, Toyota Motor Sales (TMS) U.S.A., Inc. continues to move agricultural education efforts of the National FFA Organization (FFA) forward with significant support of existing programs and new initiatives. In the past 10 years alone, Toyota has donated nearly $4 million in cash and products to FFA, with funding benefiting various programs including student leadership development, alumni programs, local community service projects, collegiate scholarships, special events and enhancing diversity in agricultural education.

“Toyota’s longstanding support of FFA has made a real impact on countless individuals and local communities,” said National FFA Organization Chief Operating Officer Dwight Armstrong. “The strength of programs like those supported by Toyota has been the catalyst for FFA to achieve record membership numbers and reach previously underserved students.”

One FFA program developed at the request of Toyota is the “Enhancing Diversity in Agricultural Education” program. The program aims to recruit and retain young minority students who have not traditionally partnered in agricultural education and FFA, and to increase awareness and education regarding the importance of diversity in developing premier leadership, personal growth and career success in agricultural education. Toyota, like FFA, values diversity and is proud to have been the catalyst behind this program, which happens to be one of particular interest to FFA as it falls into one of the organization’s key strategic priority areas. Since the program’s inception in 2004, FFA membership by minority students has substantially increased, moving the group closer to its goal of performing as a diverse organization.

“When I first began working with FFA, I was amazed to see that even if a student’s collegiate and career path didn’t include agriculture, those students involved with FFA consistently went on to be successful in their pursuits regardless,” said Michael Rouse, vice president of Toyota philanthropy and community affairs. “For Toyota, it was important to give that same advantage to a more diverse student base and expand the impact of FFA, which the Enhancing Diversity in Agriculture Education program does today.”

Beyond Enhancing Diversity in Agriculture Education, many programs will benefit from Toyota’s donations in 2010, including the NAAE Outstanding Agriculture Teacher Award, NAAE Outstanding Post-Secondary Teacher Award, Career Show Exhibit and Toyota Motor Sales/FFA Scholarships. Toyota’s sponsorship efforts will also help support the national FFA convention this year where Toyota will provide 25 to 50 courtesy vehicles for use during the event, as well as meals for the national officer candidate dinner at the beginning of the convention. In addition to providing resource support, Toyota will be on hand as an exhibitor at the 83rd National FFA Convention from Oct. 20-23, 2010 in Indianapolis, Ind.

About The National FFA Organization

The National FFA Organization, formerly known as Future Farmers of America, is a national youth organization of 520,284 student members (and counting)—all preparing for leadership and careers in the science, business and technology of agriculture—as part of 7,429 local FFA chapters in all 50 states, Puerto Rico and the Virgin Islands. The National FFA Organization changed to its present name in 1988 in recognition of the growth and diversity of agriculture and agricultural education. The FFA mission is to make a positive difference in the lives of students by developing their potential for premier leadership, personal growth and career success through agricultural education.

The National FFA Organization operates under a Federal Charter granted by the 81st United States Congress, and it is an integral part of public instruction in agriculture. The U.S. Department of Education provides leadership and helps set direction for FFA as a service to state and local agricultural education programs. Visit for more information.

About Toyota

Toyota Motor Sales (TMS), U.S.A., Inc. is the marketing, sales, distribution and customer service arm of Toyota, Lexus and Scion. Established in 1957, TMS markets products and services through a network of nearly 1,500 Toyota, Lexus and Scion dealers which sold more than 1.77 million vehicles in 2009. Toyota directly employs nearly 30,000 people in the U.S. and its investment here is currently valued at more than $18 billion.

For more information about Toyota, visit,, or

# # #

Media Contact: Toyota Contact:

JoLee Liepman Sona Iliffe-Moon

GolinHarris for Toyota Toyota Motor Sales, U.S.A., Inc.

(213) 438-8792 (310) 468-6721

National FFA Contact:

Julie Adams

National FFA Organization

(317) 802-4225

National Hog Farmer

Sanofi-aventis and Merck appoint Raul Kohan as CEO for the new Animal Health joint venture

raul-kohan-2010-2mb.jpg Proposed JV to be called Merial-Intervet

Paris, France and Whitehouse Station, NJ – July 27, 2010

– Sanofi-aventis (EURONEXT: SAN and NYSE: SNY) and Merck & Co., Inc. (NYSE: MRK) announced today that Raul E. Kohan will be appointed Chief Executive Officer of their proposed Animal Health joint venture. Sanofi-aventis and Merck - known as MSD outside the United States and Canada - intend to combine Merial with Intervet/Schering-Plough, to create a new global leader in Animal Health to be called Merial-Intervet.

Mr. Kohan is currently President of Intervet/Schering-Plough, Merck's Animal Health business. He will commence his new responsibilities when the new joint venture is approved by regulatory authorities and closes, which is expected to occur in the first quarter of 2011. The formation of this new animal health joint venture is subject to execution of final agreements, antitrust review in the United States, Europe and other countries, as well as other customary closing conditions.

“Raul Kohan will head this new leader in Animal Health”, said Christopher A. Viehbacher, Chief Executive Officer of sanofi-aventis. “The talents, products and expertise of both companies are very complementary and will create a company with greater geographical and market coverage. As a result, we expect the new Merial-Intervet joint venture to drive significant growth”.

“Raul brings a wealth of animal health and global pharmaceutical industry experience," said Richard T. Clark, Merck Chairman and Chief Executive Officer. “We're pleased that Raul will lead the integration of the two companies while continuing to deliver global growth momentum. The new joint venture will have one of the broadest portfolios of animal health products and services in pharmaceuticals and biologics to meet the needs of millions of customers."

Raul Kohan is Executive Vice President and President, Global Animal Health, Merck. He joined Schering-Plough in 1984 and has since held positions of increasing responsibility. He served as Deputy Head of Animal Health and Senior Vice President, Corporate Excellence and Administrative Services for Schering-Plough Corporation. Previously, Kohan’s responsibilities included overseeing the company's Global Specialty Operations group, which comprised Animal Health and Consumer Health Care for Schering-Plough. Kohan graduated from the General San Martin Military Academy, Argentina, and holds an M.B.A. degree in economics from the University of Buenos Aires.

José Barella, the current Executive Chairman of Merial, will continue his role until the transaction closes. Thus, he will work closely with Mr. Kohan and will contribute significantly to the transition and creation of the new combined Animal Health business. Mr. Barella joined Merial in 2001 and became Chief Operating Officer in 2005 and head of business operations with responsibilities for all commercial activities for Merial globally, including sales and marketing for both the companion animal and production animal businesses, and the commercial functions that support them. He was named Merial's Executive Chairman in 2007 with responsibility for executing global strategy and through his leadership grew the company to be an industry leader.

The new Merial-Intervet joint venture will offer a broader portfolio of animal health products and services in pharmaceuticals and biologics, as well as, the ability to capitalize on growth opportunities in all fields and countries around the world.

The worldwide animal health market reached $19 billion in 2008. Products for companion animals accounted for 40 percent of total sales while products for production animals accounted for the remaining 60 percent of total sales. This market is expected to grow at around 5 percent per year over the next 5 years, driven by a growing demand for animal proteins, as well as a strong consumer needs for companion animal health care.

Merial and Intervet/Schering-Plough will continue to operate independently until the closing of the transaction.

About Merck

Today's Merck is a global healthcare leader working to help the world be well. Merck is known as MSD outside the United States and Canada. Through our prescription medicines, vaccines, biologic therapies, and consumer care and animal health products, we work with customers and operate in more than 140 countries to deliver innovative health solutions. We also demonstrate our commitment to increasing access to healthcare through far-reaching policies, programs and partnerships. Merck. Be well. For more information, visit

About sanofi-aventis

Sanofi-aventis, a leading global pharmaceutical company, discovers, develops and distributes therapeutic solutions to improve the lives of everyone. Sanofi-aventis is listed in Paris (EURONEXT: SAN) and in New York (NYSE: SNY).

About Intervet/Schering-Plough Animal Health

Intervet/Schering-Plough Animal Health, based in Boxmeer, the Netherlands, is focused on the research, development, manufacturing and marketing of animal health products. The company offers customers one of the broadest, most innovative animal health portfolios, including products to prevent, treat and control disease in all major farm and companion animal species as well as products for reproduction management. Intervet/Schering-Plough Animal Health; subsidiaries of Merck & Co. Inc., Whitehouse Station NJ, USA. For more information, visit

About Merial

Merial is a world-leading, innovation-driven animal health company, providing a comprehensive range of products to enhance the health, well-being and performance of a wide range of animals. Merial employs approximately 5,700 people and operates in more than 150 countries worldwide. Formed in 1997, Merial is a leading animal health company that was a 50/50 joint venture between Merck and sanofi-aventis and is now a wholly-owned subsidiary of sanofi-aventis, after Sanofi-aventis acquired Merck’s interest in Merial for a cash consideration of $4 billion (US) in 2009. For more information, please see

Forward Looking Statements by Merck

This news release includes “forward-looking statements” within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, statements about the benefits of the merger between Merck and Schering-Plough, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of Merck’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.

The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the possibility that the expected synergies from the merger of Merck and Schering-Plough will not be realized, or will not be realized within the expected time period, due to, among other things, the impact of pharmaceutical industry regulation and pending legislation that could affect the pharmaceutical industry; the risk that the businesses will not be integrated successfully; disruption from the merger making it more difficult to maintain business and operational relationships; Merck’s ability to accurately predict future market conditions; dependence on the effectiveness of Merck’s patents and other protections for innovative products; the risk of new and changing regulation and health policies in the U.S. and internationally and the exposure to litigation and/or regulatory actions.

Merck undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in Merck’s 2009 Annual Report on Form 10-K and the company’s other filings with the Securities and Exchange Commission (SEC) available at the SEC’s Internet site (

Forward Looking Statements by sanofi-aventis

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words “expects,” “anticipates,” “believes,” “intends,” “estimates,” “plans” and similar expressions. Although sanofi-aventis’ management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of sanofi-aventis, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include among other things, the uncertainties inherent in research and development, future clinical data and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or the EMA, regarding whether and when to approve any drug, device or biological application that may be filed for any such product candidates as well as their decisions regarding labelling and other matters that could affect the availability or commercial potential of such products candidates, the absence of guarantee that the products candidates if approved will be commercially successful, the future approval and commercial success of therapeutic alternatives, the Group’s ability to benefit from external growth opportunities as well as those discussed or identified in the public filings with the SEC and the AMF made by sanofi-aventis, including those listed under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in sanofi-aventis’ annual report on Form 20-F for the year ended December 31, 2009. Other than as required by applicable

Paul Geurts

Manager Media Relations Animal Health

Global Communications

Intervet International b.v.

Wim de Körverstraat 35

P.O. Box 31, 5830 AA Boxmeer

The Netherlands

T +31 (0)485 587893

M +31 (0)6 20573420

F +31 (0)485 585392

School Provides Training For Hog Farm Positions

Swine Jobs School was formed to help develop well-trained staff members for highly skilled positions on hog farms in Michigan.

Using a combination of classroom instruction and hands-on learning on local swine farms, Swine Jobs School trains interested students for positions on modern swine farms.

The next session of Swine Jobs School begins Sept. 7 with classroom sessions planned for the Schoolcraft Township Building in Vicksburg, MI.

The school focuses on students who have completed high school and are seeking immediate employment, or workers who are unemployed and seeking to reenter the workforce. The school provides training skills to work on hog farms and interpersonal skills needed for employment. The school is taught, organized and sponsored by Michigan State University (MSU) Extension swine specialists and Extension educators.

The first two weeks of Swine Jobs School involves meeting for eight sessions combining classroom instruction and on-farm, supervised training. The sessions run from 9 a.m. to 4 p.m. from Sept. 7-10 and from Sept. 13-16. In the following nine weeks of the school, students will spend 16 hours a week gaining on-farm work experience on local swine farms. Work schedules will be arranged to meet the needs of the students and the schedules of the host farms.

Jeff Taylor, production manager for Circle K Family Farms, LLC and Lafayette Pork Production, LLC says Swine Jobs School graduates have more chance for success than other employees entering their system.

“We are very pleased with the Swine Jobs School graduates currently working on our farms,” Taylor says. “We pay them a competitive wage and allow them the opportunity for advancement. Swine Jobs School graduates come into our system better prepared for the positions with a greater chance of success than if we hire new employees with the intent of training them internally.”

For more information about hog farm occupations in Michigan or for further training for your employees, contact Jerry May by e-mail; phone (989) 875-5233 or Dale Rozeboom by e-mail; or phone (517) 355-8398.

Swine Jobs School applications, a class syllabus and expectations for the on-farm training are available on the MSU Pork Team’s Web site at

National Hog Farmer

JBS United Acquires Iowa Feed Mill to Continue Expansion in the Midwest and to Better Serve its Customers

SHERIDAN, IN, July 22, 2010 – JBS United, Inc., has acquired a feed mill and the surrounding property in Washington, Iowa that was previously owned by Practical Environmental Solutions. Purchased through an auction on July 21st, 2010, the plant was not currently operating, so no jobs will be lost, and it is likely some jobs will be added in the area by the new JBS United plant opening. Steve Schneider, JBS United’s Operations Manager stated, “The addition of the Washington, Iowa feed mill facility will complement the company’s existing presence in Iowa as well as regionally in the Midwest. This will allow JBS United to expand in the region and better serve our customers.”

The mill and property consists of 2 acres of land, 27,000 sq. ft. of warehouse space, 3,000 sq. ft. of office space, 44,000 cu. ft. of outdoor storage bin capacity, 34,000 cu. ft. of interior storage space, and 13,500 cu. ft. of bulk load out storage. Additional JBS United employees will need to be hired to staff this mill and no staffing or business changes are expected at any of the other

JBS United mills in the region. “This is a true expansion of the business”, stated Doug Webel, Chief Operating Officer of JBS United’s Nutrition and Emerging Technology division, “This was a planned, strategic acquisition that will position us to better serve the region in the future.”

Beyond this new Washington, Iowa mill, JBS United operates six additional company-owned production facilities throughout the U.S. focusing on pre-mix and base-mix products. In the U.S. market, JBS United provides nutrition products manufactured primarily in the form of feed pre-mixes, base mixes, nursery starter feeds and feed additives. The JBS United feed business has grown substantially over the years through both acquisitions and innovations that have helped the company reach more customers around the globe.

Speaking on behalf of the company, Mr. Schneider stated, “Adding this additional feed mill to the list of JBS United facilities is another example of our commitment to providing high quality animal nutrition products and services that exceed the expectations of our customers. We are excited about this purchase and our continued growth. This will help us maintain our position as one of the leading animal nutrition providers in the country.”

About JBS United

Since its founding in 1956, JBS United, Inc. has been dedicated to providing research-based solutions to enhance animal nutrition and livestock production profitability. The company provides products to swine producers worldwide. For more information, visit the JBS United website at

National Hog Farmer

USMEF Earns Highly Effective Rating in FAS Review

The U.S. Meat Export Federation (USMEF) has earned the highest category ranking possible from evaluators at the Foreign Agricultural Services (FAS), which reviews participants in the Cooperators Programs for receipt of USDA Foreign Market Development (FMD) and Market Access Program (MAP) funds.

“USMEF’s program and UES (Unified Export Strategy for 2010) were rated as ‘highly effective,’” wrote Bonnie Borris, director of the FAS Cooperator Programs Division. “USMEF does an excellent job of adjusting to market conditions and making changes to marketing plans accordingly…Overall, we are very pleased with USMEF’s market development operations…Thank you again for your continuing participation in the market development programs and your dedication to the U.S. red meat industry. My staff and I are truly looking forward to working with you over the coming year.”

“USMEF welcomes this valuable feedback, especially in an environment that has become increasingly competitive for funding from all sources, including our leading funding source, the USDA,” said Philip Seng, USMEF president and CEO. “This is great news for our members, because MAP and FMD funding are key components of the revenue mix that enable USMEF to multiply the value and strength of producers’ Checkoff dollars.”

Seng noted that USMEF anticipates spending just over $18.7 million from the USDA’s MAP and FMD programs in the current fiscal year. While some of the USDA funds are utilized to cover the costs of USMEF’s network of international offices, the majority of the funds are applied to the programs that support beef and pork exports. There they are combined with funding from the Beef Checkoff and Pork Checkoff, sizeable contributions from the Corn and Soybean Checkoffs and substantial foreign third-party contributions to USMEF promotions.

This unique funding formula increases the purchasing power of beef and pork producers’ checkoff dollars nearly 300 percent. For every $1 in funding their checkoff programs supply to support USMEF’s programs, the USDA, third-party contributions and the Corn and Soybean Checkoff programs add more than $2.99.

USMEF annually submits its Unified Export Strategies to FAS for review, assessing conditions in each target export market. The current UES for FY11, submitted June 18, analyzes the United States’ position in each market relative to domestic products and international competitors, and looks at the potential for sales growth in key sectors: processing, retail and hotel/restaurant/institutional. Specific strategies are outlined for each market.

The FAS analysis of its cooperator programs fell into the following categories: “highly effective,” “moderately effective,” “adequate” and “results not demonstrated.” USMEF’s program earned the highest category ranking.

# # #

The U.S. Meat Export Federation ( is the trade association responsible for developing international markets for the U.S. red meat industry. It is funded by USDA; the beef, pork, lamb, corn and soybean checkoff programs, as well as its members representing nine industry sectors: beef/veal producing & feeding, pork producing & feeding, lamb producing & feeding, packing & processing, purveying & trading, oilseeds producing, feedgrains producing, farm organizations and supply & service organizations.

For more information, contact Jim Herlihy at

USMEF complies with all equal opportunity, non-discrimination and affirmative action measures applicable to it by contract, government rule or regulation or as otherwise provided by law.

AMI Leads Opposition to Increasing Ethanol Blends

The American Meat Institute (AMI) is joined by 35 diverse stakeholders in urging Senate leaders to block any amendment to the Senate energy bill that would authorize boosting ethanol blends beyond 10% for use in gas-powered engines.

“Such an amendment would short-circuit existing two-year joint Environmental Protection Agency (EPA), Department of Energy and Industry research projects designed to insure that mid-level ethanol blends do not harm gasoline-powered engines, defeat emissions control devices, pose safety risks to consumers or increase emissions from these engines. Sound science, environmental protection and consumer safety – not politics – must guide this important decision,” states the letter sent to Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY).

Section 211 of the Clean Air Act mandates a detailed scientific review before new fuels, additives or fuel blends are introduced into commerce. EPA is in the process of carrying out this review, including soliciting public comment on the introduction of mid-level ethanol blends.

“This review must be allowed to continue and must not be pre-empted by Congress. We collectively urge you to reject any attempt to attach a mid-level ethanol authorization amendment during the Senate’s consideration of energy legislation in the coming weeks and months. Such an amendment would be bad for consumers, bad for safety, bad for the environment and by placing politics over sound science, bad public policy,” the letter concludes.

NPPC Welcomes GIPSA Extension But Raises Several Concerns

The National Pork Producers Council (NPPC) welcomes the extension of the comment period on the U.S. Department of Agriculture’s (USDA) proposed rule on buying and selling of livestock and poultry, but remains concerned it would be a disaster for producers.

USDA announced Monday a 90-day extension of the public comment period on the regulation that implements sections of the 2008 Farm Bill and amends the Packers and Stockyards Act. The original 60-day comment period was set to expire Aug. 23. The new deadline is Nov. 22.

“We are pleased that USDA extended the comment period on the proposed USDA rule,” says NPPC President Sam Carney, “but this thing will be a disaster for pork producers like me who need options for selling our pigs and for managing risks.”

A review by NPPC indicates the rule would dictate the terms of contracts, restrict marketing arrangements, require reams of paperwork, create legal uncertainty and limit producers’ ability to negotiate better prices for the animals they sell.

“That’s a recipe for stifling innovation, driving up costs, forcing simple contract disputes into court and – given those adverse consequences – compelling packers to own their animals rather than to contract with farmers like me to raise them,” Carney says.

In addition to the extension, USDA issued a “misconception and answer” document on the rule, attempting to clarify six provisions, considered a highly unusually move during a public comment period.

“In issuing the ‘clarifying’ document, it’s clear USDA had no idea of the tremendous adverse affects this rule would have on producers,” Carney states. “That said, we not only question why the agency would issue such a document during the public comment period, but why it appears to be trying to confuse the plain meaning of the language in the proposed rule.”

American Meat Institute (AMI) President J. Patrick Boyle says the extension is a step in the right direction, but doesn’t go far enough.

“While we appreciate the additional time, the new deadline precedes USDA’s final public meeting on competition issues scheduled for December – a meeting that officials indicated in congressional testimony this week is extremely important in determining public views on this issue,” he says. “Had the full 120 days been granted, the public meeting would have preceded the comment deadline and allowed all interested parties the full benefit of the public disclosure in formulating their comments.”

Comments on the GIPSA rule may be submitted via e-mail to or by mail to Tess Butler, GIPSA, USDA, 1400 Independence Ave., SW, Room 1643-S, Washington, DC 20250-3604; fax to (202) 690-2173 or via the Federal rRulemaking Portal at

For more information, contact Brett Offutt, director, GIPSA Policy and Litigation Division, at (202) 720-7363.

Canadian Feeder Pig Imports and a GIPSA Rule Update

Readers will notice that our table of North American pork industry data contains #VALUE errors for imports of pigs from Canada for the week of July 10. That’s because no data were available from USDA for that week. USDA’s website says simply, “The complete data set used to compile this report is not available from APHIS. When it becomes available the report will be disseminated.”

It’s a problem that rears its head now and then, but a quick look at the weekly import chart in Figure 1 shows that the last two observations for feeder pig imports are very low. Dan Bluntzer, research director at Frontier Risk Management, discovered early last week that USDA had some questions about the feeder pig counts in those two weeks and now AMS has delayed the next week’s data. We’ll get it lined out eventually but, in the meantime, I wouldn’t read too much into those two weeks of less than 70,000 pigs coming south.

U.S. feeders and packers have figured out how to use these pigs efficiently in the face of MCOOL-imposed challenges. Packers take “Label B” pigs only on certain days in specific plants and merchandise the pork primarily to export and foodservice markets where it is not required to carry a label. It’s amazing how economic agents adjust to new conditions if they have some freedom to do so.

Ignoring the last two observations for feeder pig imports in Figure 1, it is obvious that the downtrend has been slowing since early 2009. In spite of the difficulties imposed by MCOOL and caused by the increase in the value of the Canadian dollar, this number is not, as many warned, going to zero. It appears to be settling in the area of 80,000 per week. Michael McCain, CEO of Maple Leaf Foods, told a gathering that I attended last week in Manitoba that he expected the number to stabilize near 75,000 per week. That’s a reasonable number as well.

Much of this, of course, depends on what happens to the Canadian breeding herd (see Figure 2). It numbered 1.3038 million head as of April 1 and was almost certainly smaller on July 1. Stats Canada will publish its estimate of that number in August. While Canadian producers are again seeing some profits, albeit small ones, the herd there will likely decline on a year-on-year basis for another year. It may decline in actual numbers for a few more quarters as well. I have said 1.2 million for some time. Some think it will never get that low, while some are now saying 1.1 million. I’ll stick with my earlier idea until proven wrong.

If the Canadian herd does settle at 1.2 million, it will still be larger than at any time prior to the huge expansion that began in 1996. The reduction will continue to exert significant pressure on Canadian packers, and I suspect that at least one or, more likely, more plants will close. The number really depends on the size of the first ones that throw in the towel.

Debate on proposed rule regarding the Packers and Stockyards Act by the Grain Inspection, Packers and Stockyards Administration (GIPSA) is becoming more contentious. USDA officials, including GIPSA Administrator J. Dudley Butler, were on Capitol Hill last week for a hearing before the House Sub-Committee on Livestock, Dairy and Poultry and faced a blistering barrage of questions from members from both parties. I was in DC last week and one veteran (25 years) Congressional staff member told me that he had NEVER seen members so upset about an issue before the committee. Suffice it to say that Republicans and Democrats alike are skeptical of the wisdom of the rule and are particularly upset with some of the rule’s content that is diametrically opposed to decisions made by Congress during the debate on the 2008 Farm Bill.

It does appear that the comment period will be extended. And it should, primarily due to the completely inadequate (or nonexistent) economic impact done by USDA. Determining the probable cost of something so full of contingent liabilities will not be easy but it doesn’t appear that USDA even tried. Look for an announcement of a comment extension early this week.

Final point for this week: Government actions are rarely if ever Armageddon for an industry. MCOOL has not destroyed the pork industry on either side of the border. That does not mean that it has had no impact – it has indeed hurt Canadian producers and contributed greatly to the demise of one U.S. packing plan and thus the loss of 1,500 jobs. This GIPSA rule, even if adopted in its current Draconian form, would not destroy the U.S. livestock and poultry industries. Individuals and firms would adjust and adapt. BUT JUST HOW MANY OF THESE STRAWS CAN WE CONTINUE TO PILE ON THESE INDUSTRIES’ STRONG BACKS? I’m not sure what the answer is to that one but I’m confident there is a finite number beyond which costs will increase enough to price these products high enough to become luxuries for most common folk. The businesses cannot carry

Click to view graphs.

Steve R. Meyer, Ph.D.
Paragon Economics, Inc.

Benchmarks for Profitability

I recently had the honor of speaking at the National Pork Industry Conference held in the Wisconsin Dells. I focused on the current financial state of the U.S. pork industry because there seems to be a rather large discrepancy regarding how quickly producers are recovering, financially.

Through May, we saw producers who broke even, while others recorded profits of up to $18/head, year-to-date. In my presentation, I pointed out that this difference could be illustrated by taking out hedge gains and/or losses, and just looking at operational profits. That’s essentially what we are seeing in our loan portfolio.

The main variance in the profit/loss picture is cost of production, year-to-date. Some production systems have breakeven costs of $0.45/lb., live wt., while others run as high as $0.55/lb., live wt. The difference calculates to over $27/head on a 270-lb. market hog. The major drivers in these discrepancies are overall herd health and feed cost/head.

A couple of key benchmark figures to focus on are weaned pig costs under $32/head and total wean-to-finish costs/lb. of gain under $0.38. If you are weaning a 12-lb. pig and selling market hogs at 270 lb., that means your total costs from 12 to 270 lb. should be under $98 (258 lb. of gain x 38 cents).

Producers with costs at these levels or below are challenging their feed formulations without giving up performance. In the past, many producers figured it took 10 bu. of corn to raise a pig. Today, many producers figure it takes just 6 bu. of corn to raise a pig. Distillers dried grains with solubles (DDGS) and other alternative ingredients can lower feed costs without giving up performance. You must be willing to think out of the box and change how you look at diet composition.

Another key item is herd health. We have systems today reporting wean-to-finish mortality at 10%, while others have held it under 4%. These differences affect costs of production greatly.

Manage Your Margin – In the past couple of weeks, we have seen rather dramatic swings in grain prices, which certainly affect the margins in the swine industry. It’s vital that you continue to stay focused on managing your margin. It is very hard to predict what hog prices or feed prices might do, but if you stay focused on developing a sound plan to manage your profit margin, you will be able to control your own financial destiny.

GIPSA Rule Comment Period – I urge everyone involved in the pork industry to go the National Pork Producers Council (NPPC) site,, and read the rule that the Grain Inspection, Packers and Stockyards Administration (GIPSA) has proposed. The 2008 Farm Bill authorized the U.S. Department of Agriculture, through GIPSA, to promulgate regulations related to livestock and poultry contracts.

I believe all sides need more time to fully understand what the implications of the rule are for producers, so I feel an extension beyond the current deadline of Aug. 23 should be granted. It is important to fully understand what is being proposed and to file your opinion with your representative.

From a lender’s perspective, I’m concerned that we do not have enough time to fully analyze and comprehend the proposed rule and what the risks might be for pork producers. More time and debate on the ruling is needed to make sure the best interests of the industry are taken into account.

Mark Greenwood
Swine Industry Consultant
Contact Greenwood at