Canadian Pork Producers:

[mikey]

Tuesday, June 17, 2008Print This Page
Pork Commentary: Are We in the Swine Business or Grain Market?
CANADA - This weeks North American Pork Commentary from Jim Long.

Jim Long on ThePigSite

Jim Long is President &
CEO of Genesus Genetics.
It now feels that we are no longer in the hog business. We are now in the business of weatherman, rainfall gauging, grain trader and worrier. The huge rains hitting most of the U.S. Midwest are pushing corn and soybean prices to record highs. Hog cost of production continues to rise. There is much anxiety. Losses per head are in the neighborhood of $25.00. Spot early weans were trading last week either side of $6.00 each. It’s ugly. Is there any relief in sight? As usual (we can’t help it) we are looking for the pony in this manure pile.

European grain production is projected to increase 14% this crop year. Europe has planted almost 6 million more acres of crops this year compared to last. Crop yields are projected to increase 9% with total European grain output up 14%. Last year 255.8 million tonnes, this year 291.3 million tonnes. This increase will cut European needs for imports and should stabilize prices. A major commodity trader told us that they expect European grain would be cheaper than the US in the coming months.

High grain prices have increased grain production. Canada is planting 2.5 million more acres. Australia wheat output is expected to double. We had visitors from Russia this past week with 80,000 acres of crop land and they talked about their efforts to increase yields. A Canadian finance group we talked to told us that they financed almost one billion dollars of Canadian tractors, large air seeders, etc. for Russia in the last few months. Mexico’s corn production is expected to go from 20 last year to about 25 million tonnes. Point is, we expect world grain production is growing faster than is being calculated in supply/demand models.

We believe world livestock production is rapidly decreasing. In March, Japan’s compounded feed tonnage decreased 4.5% year over year; a decrease of about 250,000 tonnes. You do not need feed for livestock that doesn’t exist. We expect both weights and number of livestock will continue to drop, decreasing feed consumption. US chicken weights and supply are below a year ago. Cattle and hog weights are lower. We expect this trend to increase. More intense feeder management is and will cut feed usage. The following is USDA feed usage estimates:
Feed Usage
Million Metric Tonnes
  06/07   07/08   
World 635   660   
US 148   164   
Mexico 23.4   23.28   
Canada   19.45   19.14
Japan 14.88   14.27   
Russia 18.6   18.78   
China 105.36   106.32   

We expect feed utilization is decreasing at a faster rate than being estimated.

We live near the Ford plant that builds Lincoln Town Cars (large gas consumers). In May 2007, Ford sold 4,600 Lincoln Town Cars. This May, they sold 850. The marketplace is rapidly adjusting to high fuel prices, just as high feed prices will do likewise.

Oil is at the highest price in history. If there is a big price correction (who is not cutting consumption now?), corn ethanol will be quickly challenged to cover variable costs. Plants close? Corn demand cut? We are usually bullish, but when oil and corn are at the highest prices in history, the odds of staying there are not good. My father (a corn farmer) always told me, “If it’s too good to be true, it’s probably too good to be true.”

US pork exports for April were nearly twice as large as they were one year ago, leaving year to date exports 52% larger than last year. These exports are caused by demand. Buyers have increased consumption and/or decreased supply. The world is cutting meat production (less feed needed). Both trends will continue.

We had some points from a Genesus customer on the state of the industry. We wished to share them. They are articulated better than we can.

“For the first time in 20 to 30 years, pork producers who raise their own feed are at a strategic advantage that we have not had for a long time.”

“The complete cycle of corn-feed-manure is still a cost effective one. We know that no one wants to raise hogs for the manure, but right now ‘it’ is a huge side benefit. When you apply 4,500 gallons of finishing manure per acre, it provides you with $150-$190 worth of nutrients.
We all see high prices are pushing technology forward in grain production. You have to look no further than Monsanto and Pioneer to see where seed corn costs have gone. Technology in seed, herbicides, insecticides, fertilizer utilization, etc. is breaking new plateaus annually. Yields are increasing on trend lines. High prices and global demand for food is encouraging fast adaptation of new yield making technology.

In the swine industry, we expect much the same will happen globally. There are approximately 70 million sows in the world. Most are just pigs with little or no genetic development. As costs rise, the economic pressures to use new genetic technology will increase. Feed costs are making feed conversions ever so important. Pig productivity is like corn yields supreme. There is a difference globally of between 2,500 carcass lbs per sow of meat per year up to 7,200 carcass lbs per sow. The difference is huge. Limited global resources are going to force productivity maximization in the search for producer survival and profits.

Adoption of advanced swine genetics is going to accelerate. Some swine genetic companies that are at the frontier of productivity maximization have a golden future. Others that are not doing the research and development science to keep advancing will flounder. Today, we see four to five pigs per sow per year average between some genetic companies. Minimum $400 per sow lifetime difference. No producer can continue to start their day so far behind and survive. It’s too hard. Magnify the difference genetically with feed conversion, growth, livability, carcass quality and grade; we can see in the marketplace that some swine genetics breeding stock, even if they were free, are too expensive.

Technology adaptation is more important that ever for both survival and prosperity. Globally and domestically, just any pigs will not be competitive compared to the new advanced swine genetics. There are good swine genetic companies and jokers. There are choices. Most businesses, including yours, have destinies based on their decisions.


Author: Jim Long, President & CEO, Genesus Genetics 

[mikey]

MRSA superbug widespread in pigs
// 06 jun 2008

The antibiotic-resistant staph bacteria known as methicillin-resistant Staphylococcus aureus (MRSA) is widespread among both pigs and pig farmers in Canada, Natural news has reported.


A study published in the journal "Veterinary Microbiology," suggests that the livestock industry is a possible source of the disease.

Tests
Researchers examined 258 pigs on 20 farms in Ontario, and also tested the workers on those farms. They found that 45 percent of farms, 25 percent of pigs and 20 percent of farmers were infected with MRSA, which is substantially higher than the rate of infection in the general North American population.

Among the MRSA strains found on the pig farms was one that has commonly infected humans in Canada and one that has been associated with serious skin, breast and heart infections in Europe.

Antibiotic resistance
The study has added weight to claims that antibiotic use in livestock farming may have led to the development of antibiotic resistance in human diseases. Consumer health advocate Mike Adams said that commercial raising of livestock for food is fraught with the potential for microbiological disaster.

"When we raise pigs, cows, chickens or other animals in artificial, enclosed, indoor environments, we are practically begging to be threatened by out-of-control superbugs that breed in such conditions," Adams said.

[mikey]

Friday, June 27, 2008Print This Page
High Fuel Cost Stimulate Interest in Composting
CANADA - The Niverville, Manitoba base Puratone Corporation reports increasing fuel costs are stimulating new interest in composting for the disposal of livestock mortalities, writes Bruce Cochrane.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
The Biovator, developed by the Puratone Corporation, consists of a rotating four foot diameter drum that mixes livestock mortalities with wood shavings while introducing oxygen to speed up composting.

Shawn Compton, the sales and marketing manager with Puratone's Biovator Division, says the technology continues to generate interest.

Shawn Compton-Puratone Corporation
The Biovator was developed for the hog industry and, as we're all aware, the hog industry is in a bit of a downturn right now which has slowed a bit of the momentum on the switch over from other alternative methods of disposal.

However the larger integrators that are still out there are carefully examining their options.

The big driver right now is the price of fuel for incineration which a lot of producers are still doing.

That's really driving those producers to take a look at other alternatives and in-vessel composting is a very economical method when you compare it to the high fuel prices these days.

We actually had an interesting little study done in North Carolina.

It was an energy audit for the USDA, part of their renewable energy and energy efficiency program that was done by a professional engineer in the state of North Carolina.

It showed a 97 percent energy saving for in-vessel composting versus incineration.

The major energy component in the Biovator is the electrical use, which takes very little power to turn.

The major energy source for incineration is the fuel and, at the price of fuel these days it adds up quite substantially, so it puts a positive spin on the composting.

Compton adds the Biovator produces a useful nutrient rich pathogen free product that can be land applied.

He notes incineration produces ash, which can also be applied to the land but which contains no nutrient value.

[mikey]

Saturday, June 28, 2008Print This Page
Industry Embraces Certified Livestock Transport Training
CANADA - A relatively new training program for those involved in the transportation of livestock is being well accepted by Canada’s trucking and livestock industries.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
The Certified Livestock Transport (CLT) program was developed by Alberta Farm Animal Care (AFAC) in association with its sister animal care associations in Saskatchewan, Manitoba and Ontario for livestock transporters, shippers, and receivers.

The program was launched in May 2007 and has been promoted to livestock truckers across Canada.

“We have an advisory team that consists of industry, industry groups, government, bringing them all together and teaching truckers how to deal with animals,” says Mikki Shatosky, the Certified Livestock Transport program coordinator with AFAC.

Program Targets All Livestock Handlers
CLT instructor Ken McDonald, with Supreme Auction Services, adds, “The targeted group is basically both producers and commercial transporters of livestock.”

In April the Farm Animal Council of Saskatchewan (FACS) announced it would be providing trucking firms access to the program.

Livestock Transporters Face Increased Scrutiny
McDonald maintains, “Times have changed in the transportation business and we need to be very cognizant and very aware of the care of the animals in transport. The reality is important and the perception is important. It’s really time to take a look at these things and make sure that we’re on top of the issues and make sure the industry is looking after itself.”

“I think public scrutiny with animal handling has really come into the limelight,” observes Brian Heitman, the trucking manager with Cor Van Raay Farms.

He observes situations where various groups in the U.S. have recorded incidents that have occurred have increased the level of scrutiny on the whole industry.

“I don’t think in Canada we have a lot of issues but it’s always good to nip those issues before they occur.”

Southern Alberta Feedlot to Make CLT Certification Mandatory
Cor Van Raay Farms is one of several livestock operations that have adopted the Certified Livestock Transport program for training drivers. The southern Alberta company has set June 1, 2008 as the date by which all truckers hauling to or from its facilities will be required to be certified under the program.

Heitman notes, “There has been a lot of pressure in the industry to improve handling techniques and definitely here at Van Raay Farms we’re always striving to improve our techniques. That’s the biggest force of why we’ve decided to get on board with the CLT program.”

The training program consists of a package of modules. The core content covers the general transportation or relocation of livestock and then individual modules address issues to specific to beef, hogs, horses, sheep and poultry.

There are 58 trainers at this point and about 160 truckers have been trained under the program.

Content Focuses on Established Guidelines
Shatosky says the program promotes the guidelines developed by industry on the relocation of livestock. including cleaning and preparing trucks for livestock, pulling up to the docks, loading, unloading, helping the shippers and receivers load animals, the laws and regulations across Canada and going into the United States. It has information on crossing the border and re-entry back into Canada. Biosecurity is also covered in the program.

McDonald adds, “The new CFIA (Canadian Food Inspection Agency) regulations are looked at. We look at animals that are fit for transport and how to select them.”

He stresses the drivers have a say on which animals can be loaded and which can’t so it’s important that they’re aware of that. “We look at accidents involving animals, what’s the driver’s responsibility, how does he act and react in those situations? We look at loading densities, weather factors, loading facilities, that kind of thing,” he adds.

Once the course has been completed, there is a final examination that must be passed to receive certification. The exam is sent to AFAC in Calgary for grading and successful drivers are issued certificates and wallet size cards.

CLT Training Well Received
Shatosky says the program has been really well received. She believes the decision by Cor Van Raay Farms to make certification mandatory for delivering to its facilities is huge. “They see the benefit of the program, having the truckers [be] able to work with the livestock better and more humanely and quietly helps the whole loading, unloading, relocation process.”

McDonald agrees, the interest has been exceptional. “We have had some major carriers that are on the road to get all their drivers certified. I’ve trained individual carriers as well, people with one or two trucks and producers. I’ve had a broad spectrum and the interest has been excellent.”

Driver Experience Varies
The level of experience among new drivers will vary from company to company.

Heitman notes, “Most companies do set forth a standard of having three years experience, at least, driving a truck before handling livestock and I think that’s pretty much the norm that most livestock carriers are looking for.”

That and a willingness to learn more about safe handling techniques and safe handling of livestock, he says.

Heitman admits Cor Van Raay Farms has not yet noticed a significant change as a result of the training program. However he reasons, that’s because the number of certified drivers has not increased substantially so far and because Van Raay Farms’ in house drivers are already extremely experienced.

However, he observes, it has made the drivers more aware and stimulated more conversation about incidents and how to avoid them, especially with the new drivers that come on board.

McDonald stresses, “This is an industry led program.”

He believes, “It raises the professionalism of the drivers and it gives a standardization of the industry.”

Additional Support Available for Difficult Situations
In addition to the training, Shatosky adds, “There’s a whole support system that’s being set up. If truckers do have any questions or concerns they can call in to our 1-800 number which is 1-800-506-2273. If they have any concerns about the livestock they’re picking up or delivering, if they’re on the road and they’ve run into any problems, they can call this line. They will be directed to help or who ever answers the phone will be able to help them.”

For more information on the Certified Livestock Transport program, people are encouraged to contact their provincial animal care association. They can contact Ken McDonald directly at 1-306-695-0121 or they can visit SupremeAuctions.ca .

[mikey]

Wednesday, July 02, 2008Print This Page
Live Hog Prices Dependent on Sow Herd Reduction
CANADA - Rabobank International predicts the impact of efforts to reduce North American swine production will take some time to impact live hog prices, writes Bruce Cochrane.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
The Canadian Cull Breeding Swine program has reached just over the 100 thousand sow mark while sow slaughter numbers in the U.S. have been well above year ago figures for the first half of this year and are expected to accelerate.

Rabobank International executive director food and agribusiness research Fiona Boal says it'll take some time for those numbers to work themselves through the system.

Fiona Boal-Rabobank International
The catch phrase hogs, hogs and more hogs probably is still the best way to describe the industry at the moment unfortunately.

Many of your readers would have been waiting around on Friday afternoon to see the latest USDA hogs and pigs report which implied, in the U.S. anyway, that we'd have record slaughter levels right through to the end of 2008.

Based on my calculations that means U.S. production will be anywhere between about six and ten percent higher for the whole of 2008 compared to last year.

We've got a lot of hogs to still work through the system and, in the U.S. particularly, big supplies of meat and we really don't think that we're going to see any big reduction in production until about the middle of next year or maybe slightly before that but it's going to take awhile.

I think, just as the industry was quite slow to ramp up production when it was profitable, I think the same is the case in terms of reducing production.

It's actually a slow process and it takes you awhile to cut production in light of these high feed costs.

Boal says the meat industry has traditionally had to cut supply to induce higher prices and there is a time lag associated with that strategy but she's confident reducing supply will ultimately push up prices.

But she says, based on the futures prices, its difficult to see U.S. producers getting back to anything even close to profitability before the third quarter of next year.

[mikey]

Thursday, July 03, 2008Print This Page
KAP Encourages European Approach to Nutrient Loading Issues
CANADA - Keystone Agricultural Producers is encouraging the Manitoba government to look to Europe for strategies to address concerns related to nutrient loading issues on Lake Winnipeg, writes Bruce Cochrane.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
Last month, as part of his trip to Warsaw for the International Federation of Agriculture biannual meeting, Keystone Agricultural Producers President Ian Wishart toured several Polish dairy and hog operations to learn more about the Europeans approach to dealing with nutrient loading.

Wishart notes the Europeans have considerable experience with nutrient loading and they've had good success in getting some of their river systems cleaned up in a fairly short time.

Ian Wishart-Keystone Agricultural Producers
Their approach is very much along the lines of what we've been talking about with our new regulations, the site specific nutrient management.

If you on your own farm can manage the nutrients generated by your own livestock operation and not build excessive levels in the soils then you can continue to do that.

They do have some issues around needing to incorporate in some areas right away.

They don't seem to put a high priority on that and that's certainly something that we've moved a lot further on than they have.

But we're just beginning to take the site specific nutrient management approach and they've been doing it in some countries in Europe in particular for going on 20 years.

Some of the approaches, they vary a little from country to country, some have worked better that others and that was a good opportunity to talk to some of the delegates from different countries and learn about the particular issues in their approach that may work for us or may not work for us.

It was quite interesting to draw some comparisons and to see the fact that they actually did have success.

Theirs were mostly river systems and smaller lakes of course but they did make significant improvements in the nutrient loading on those rivers and lakes in fairly short periods of time.

Wishart says the information gathered will be used to lobby the provincial government for a different approach to nutrient loading issues rather than a ban on hog industry expansion and perhaps to fine tune some of the nutrient management regulations.

[mikey]

Saturday, July 05, 2008Print This Page
Time Required to Improve Live Hog Prices
CANADA - Rabobank International predicts efforts to reduce North American swine production will take some time to begins to impact live hog prices.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
“The catch phrase hogs, hogs and more hogs probably is still the best way to describe the industry at the moment unfortunately,” observes Rabobank International executive director food and agribusiness research Fiona Boal.

Producers on both sides of the Canada-U.S. border are taking action to rein in production.

USDA Forecasts Continued Record U.S. Slaughter
Boal observes, the latest USDA Hogs and Pigs Report, issued June 27, implies the U.S. will see record slaughter numbers right through to the end of 2008. That means U.S. production will be anywhere from six to ten percent higher for 2008 compared to last year.

And she points out there are a lot of hogs to work through the system and large meat supplies, particularly in the U.S. She doesn’t foresee any large reduction in production before the middle of 2009.

“Just as the industry was quite slow to ramp up production when it was profitable,” she suggests. “I think the same is the case in terms of reducing production. It’s actually a slow process and it takes you awhile to cut production.”

Canadian Cull Swine Program Hits 100,000
Approximately 500 Canadian pork producers have applied funding under the federal Cull Breeding Swine program. Under that program producers who depopulate breeding barns and agree to leave them empty for three years qualify for payments of $225 per culled animal.

The number of animals applied for so far has passed the 100,000 mark, still well short of the targeted 150,000, or about 10 percent of the national sow herd.

Canadian Pork Council executive director Martin Rice reports heavy participation in the Atlantic area, particularly the Maritime provinces where participation has been well over 10 percent. Participation in Ontario has also been significantly higher than the targeted 10 percent envisioned for the country. Saskatchewan is at 10 percent. Alberta, Manitoba and Quebec are below 10 percent.

Producers Reluctant to Commit to Leaving Barns Empty
“At this point it doesn’t look like we will get applications that will fully utilize the program account,” says Rice.

He believes the key element that has discouraged participation is the obligation to leave the barn closed for three years. As well improved returns over the past few months through the commercial market have made the 225 dollar payout, with its conditions, less attractive.

He notes many producers are reducing their numbers without going through the program and without emptying entire barns or obligating themselves to leave space empty.

Smaller Producers Represent Highest Uptake
Manitoba Pork Council producer services specialist Jeff Clark recalls there was quick uptake in Manitoba when the program was launched April 14 but within two weeks the number of applicants started to taper off.

“In Manitoba we’ve actually been kind of slow to pick it up compared to some of the other provinces.”

Clark estimates applications have been received for 16,000 sows in Manitoba representing just over four percent of the province’s breeding herd. He notes applications have been received from across the province but most have come from operations with fewer than 300 sows.

“We do have close to about 73 applicants in Manitoba and of those about 15 are larger than a 300 sow operation, the majority being less than 300, 200, 100 in many cases.”

U.S. Herd Reduction Drives Up American Slaughter Numbers
Boal observes U.S. sow slaughter levels have been well above year ago levels for the first half of this year and are expected to accelerate further.

“I think many U.S. producers had been sitting back and waiting to see what the reaction of the Canadian industry would be to their dire financial situation. But now even those U.S. producers have started to commit to culling sows. In the U.S. we do know that some smaller operations are shutting down, particularly those diversified farms that can rely on grain revenue. And we do know that some of the larger producers are really getting very ruthless when it comes to cutting the bottom 10 percent of their herd.”

“Traditionally the meat industry has had to cut supply to induce higher prices and there is obviously that time lag associated with implementing that strategy,” Boal explains. “It’s not simply a matter of changing production tomorrow.”

Down the road, she anticipates a sizable cut in U.S. production although it will be off a very high base and a slow continuation of the sow liquidation in Canada.

She foresees bigger cuts in the U.S. given its share of the North American market while Canadian production will also fall but not as quickly.

Return to Profitability Still A Way Off
Boal is confident a point will be reached where, by forcing supplies lower, prices will equally be forced to increase. However, based on the futures prices, she doesn’t foresee anything resembling profitability in the U.S. before about the third quarter of next year.

“I think what we’re at at the moment is a situation where higher input prices have simply not been worked through the system. They haven’t gone through the supply chain but higher livestock prices and subsequently higher meat prices are coming.”

Consumer Demand Expected to be Key
Boal warns, “Hog producers should not underestimate the importance of export demand, particularly in the current market conditions.”

She says given the volume of meat, including beef and poultry in the global market today, hog prices have held up amazingly well. She expects exports to continue strong.

As well, she observes, U.S. consumers have been very resilient and surprisingly so.

“We have seen some trading down, among consumers shifting their protein expenditure away from beef to less expensive chicken and pork. Pork did very very well over the start of summer and has continued to feature quite heavily in a lot of retail outlets.”

North American Industry Holds Long Term Competitive Advantage
Boal remains confident in the North American hog industry’s long term ability to compete. She believes, because North America is still a net exporter of grain, its pork producers are actually in a much better position than many of their competitors.

She notes the European industry is finding it very tough and continues to contract with the Danish and Dutch industries in particular facing very difficult market conditions.

She notes, while Chinese production is recovering slowly, high feed costs are likely to restrict the size and the speed of the rebuilding of its sow herd, which bodes well for countries that are able to export to that market.

Boal observes, South America continues to be a formidable competitor to both Canada and the U.S. in some key export markets.

“We expect to see Brazil enter the Chinese market quite aggressively over the next couple of months now that a few of their plants have been given authorization to export.”

However, Boal concludes, “As hard as it might be for players in the North American market, they actually are still very very competitive compared to some of the other countries that produce pork.”

[mikey]

Wednesday, July 09, 2008Print This Page
Live Hog Prices Pressured by High US Slaughter
CANADA - The Saskatchewan Ministry of Agriculture reports continued high U.S. hog slaughter numbers and abundant supplies of meat in cold storage are keeping a lid on live hog prices, writes Bruce Cochrane.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
North American live hog prices have declined by about 10 dollars per 100 kilograms, or about five to seven percent, over the past month.

Livestock economist Brad Marceniuk observes, while Canadian production has declined, we've continued to see high U.S. hog slaughter numbers and large supplies of pork in cold storage and that has kept hog prices from the big increases we typically see during the summer.

Brad Marceniuk-Saskatchewan Ministry of Agriculture
In Canada hog production continues to decline as sow liquidation increases.

In the United States, based on the June quarterly hogs and pigs report, U.S. hog market inventories are actually up about 6.5 percent from June of last year while their breeding herd numbers are down only about one percent from last summer.

So the report was very negative leading many economists to estimate that fourth quarter U.S. hog slaughter numbers could be over 31 million head which really could test slaughter capacity and be negative for fourth quarter prices.

Canadian producers continue to lose significant amounts of money.

Feed costs have been the main reason.

While prices are a little bit below long term averages, feed costs have increased significantly over the last year and they're up about 40 percent from the same period a year ago.

United States hog producers are in a similar position, losing significant amounts of money.

Corn prices in the United States have and continue to increase which has really increased their feed costs also.

Marceniuk notes pork stocks declined in May from April but are still about 15 percent higher than year ago levels while meat stocks overall, also declined in May but are up about 18 percent from year earlier levels.

He says, while demand has kept prices relatively stable, fourth quarter U.S. hog slaughter numbers are expected to reach 31 million head which could test slaughter capacity and put further pressure prices.

[mikey]

Thursday, July 10, 2008Print This Page
Transport Program Welcomed in Canada
CANADA - Alberta Farm Animal Care reports the response to a new national livestock trucker training program has been exceptional, writes Bruce Cochrane.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
The Certified Livestock Transport program was launched in May 2007 and is being promoted to livestock truckers across Canada.

The program focuses on the relocation of livestock and includes information on cleaning the trucks, loading and unloading livestock, biosecurity, the laws and regulations across Canada and the United States pertaining to moving livestock and information on crossing the border and reentry into Canada.

Mikki Shatosky, the Certified Livestock Transport program coordinator with Alberta Farm Animal Care says the program has been really well received.

Mikki Shatosky-Alberta Farm Animal Care
The program was developed by industry, truck drivers, and by the Alberta Farm Animal Care and our sister groups across Canada for livestock transporters, shippers and receivers just to help them understand better how to handle livestock, how to move them safely and humanely.

The program is available across Canada.

It has different modules.

There's a core content that talks about the general transportation, relocation of livestock.

Then we have modules that break down into beef, hogs, horses, sheep and poultry.

It has been accepted really well across Canada.

We have 58 trainers right now and as of right now I believe we have about 160 truckers that are trained under the program.

Shatosky notes a support system is being set up that will allow truckers to address questions or concerns by calling a toll free number.

She says truckers who have concerns about the livestock they are picking up or delivering or who are on the road and have run into problems can call 1 800 506-2273 and whoever answers will be able to provide assistance or direct the caller to somebody who can to ensure the animals are being delivered humanely and are being dealt with properly.

[mikey]

Tuesday, July 22, 2008Print This Page
Higher Wheat Yields Key to Improvement
CANADA - Manitoba Pork Council says achieving higher wheat yields is key to improving the competitive position of Canadian livestock producers compared to their U.S. counterparts, writes Bruce Cochrane.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
The start of the new crop year will see the elimination of kernel visual distinguishability as a registration criterion and grading tool for western Canadian wheat and the introduction of a new Canada Western General Purpose class.

Livestock producers are hoping the changes will allow development of higher yielding wheat varieties suited for livestock and ethanol production.

Manitoba Pork Council chair Karl Kynoch says, with feed grain and transportation costs on the rise, any yield improvements will help.

Karl Kynoch-Manitoba Pork Council
As you know the corn prices were going up and up and any of the corn that was coming in, it did get as high as eight dollars a bushel to bring corn in so that was getting very costly.

It was pushing the break even margins up very high on the hogs and producers were starting to hit heavier losses again.

The corn prices have dropped back a little bit but still there's a lot of nervousness in the industry of where these feed prices are going to go.

The first thing we're looking for is to get some high yields, to get some bushels there.

I know in the ethanol industry they're looking for starch and you always hear about the livestock industry looking for protein but we can add canola meal, we can add soy meal to adjust that protein around so we need to get some volume in there, need to get some bushels and reduce some of this freight cost on bringing the feed grains in.

So we're really looking forward to the breeders moving forward and getting some of these varieties moving and getting the higher yielding grains available for producers to use.

Kynoch concedes, while it will take time for the plant breeders to gear up their research to adjust to the changes, anytime we can increase yields, it will reduce the cost of bringing in feed for hogs.

He says the hog industry needs those higher yields now but he expects it to take two or three years to see some of the significant yield increases livestock producers are hoping for.

[mikey]

Is There an Optimum Production System?
This paper by Michael C. Brumm of Brumm Swine Consultancy is from a presentation given to the London Swine Conference in Ontario.

 

INTRODUCTION
Increasingly, the US and Canadian pork production industries are linked, both because of the linkages of costs for such inputs as feed grains and because of the large numbers of Canadian weaned pigs transported to US sites for growth to slaughter. Many Canadians have even taken to retaining ownership of weaned pigs in US facilities. This suggests that an ‘optimum’ production system now must include management of financial risks that include currency exchange rates.

As North American production reacts to the latest round of very high priced feed grains and a very weak US dollar, there are expectations that Canadian producers will be the ones who reduce their production capacity first. In the next round of profitable pork production, what will ‘optimum‘ production systems have in common?

IS THERE AN OPTIMUM SYSTEM FOR NORTH AMERICA?
The quick and easy answer to this question is no – there is no single optimum production system. The more appropriate question is – what do ‘optimum’ systems have in common? If we can answer this question, even partially, we then have to look at what direction the pork industry in North America is heading.

The North American System of Production
Notice that I begin by saying the pork industry in North America, not the industry in Canada or the industry in the United States. This past year has demonstrated to Canadian producers with harsh economic reality the complete linkages of the US and Canadian industries and the risks currency exchange rates add to this linkage. As market hog prices sank in response to record supplies in late fall and early winter of 2007-08, feed grain prices in both countries soared in response to increased demand. This demand is being driven by the large inventory of livestock in the US (feedlot cattle, pork and poultry), the rapid growth of the bio-fuels segment of the economy and the weak US dollar which is causing a very large export demand for US sourced feed grains.

Canadian producers have built an industry that is increasing linked to US production sites. Imports of Canadian born feeder pigs (defined by USDA as live pigs weighing <55 kg) have steadily increased in the past 9 years, reaching record numbers in 2007 (Figure 1). In 2007, 6.47 million feeder pigs entered US production systems from Canada. At 22 weaned pigs per sow per year, this represents the output of 294,000 females. Given that the October 1, 2007 sows and bred gilt inventory in Canada was 1,560,000 head, export of feeder pigs to US systems in 2007 accounted for almost 19% of all pigs weaned in Canada.

Figure 1 Weekly US imports of Canadian feeder pigs
(http://www.ams.usda.gov/mnreports/WA_LS637.TXT)
A combination of demand by US producers for feeder pigs and economic conditions in Canada is the driver of this importation demand. Demand in the US is being fueled further by the regulatory climate facing owners considering construction of new farrowing and growing facilities and the continued evolution of the US industry.

In many instances, wean-finish barns are being constructed by former farrow-finish producers who have sold off their breeding herd, but want to continue to have pigs as part of their agricultural production system, in part because swine manure is viewed as a valuable contributor to corn and soybean cropping systems.

For many finishers of pigs, the opportunity to participate as owners in large farrowing sites is limited, or the finisher perceives the risks as too large, or the finishers long term plan is to exit the swine industry at a future date. Thus, a demand was created for feeder pigs that are not tied to ownership of the breeding herd that generated the pigs.

By sourcing pigs from Canadian producers, these Midwest US producers avoid the long term financial commitment associated with ownership of sows in a production network while retaining pork production as a contributor to their economic well-being.

Recently, US cash grain farmers have been investing in pork production facilities with the intent of having access to large amounts of manure as a fertilizer resource. In many cases, the cash grain farmer owns the facility with a management firm hired to coordinate pig ownership and labor for daily pig care activities.

It is interesting to note how the changing regulatory process has directed the evolution of the production process. Over the past 10-15 years, regulation of pork production sites via zoning ordinances and pollution control permitting has been touted by opponents as one way that large production systems would be limited in scope. The regulatory process has imposed large costs to production systems of all sizes. Not only is the process of siting and constructing new facilities more complicated, but the record keeping requirements and the risks of noncompliance with pollution control permits are an on-going expense. The net result is that many small and even medium size operations in both Canada and the US have chosen to either not expand production or to quit production. The regulatory process has in fact favored large production sites/systems due to the ability to spread the regulatory costs over large numbers of pigs and the ability to be large enough to have one or more employees dedicated to meeting the regulatory paperwork and filings requirements.

In Iowa and southern Minnesota wean-finish sites are very often sized for capacities of 2400 pigs. This size is chosen in that it is just small enough to not require application for a state operating permit but is large enough to capture some of the economies of scale.

On the economic side, the exchange rate for the Canadian-US dollar was an early driving force linking Canadian and US production systems. In the late 1990’s and early in this century, the Canadian dollar traded as low as $.67US per $1CA. This meant that producers selling weaned pigs delivered to US buyers at $32/pig were receiving $47.75CA for these pigs, a strong incentive to expand farrowing. At the end of 2007, the exchange rate was $.98US per $1CA. The same $32 delivered price now returned only $32.65CA, a 32% drop in income just due to the change in exchange rate. On the other hand, the US producer pays $32US at all times since the Canadian pigs have been a relatively small segment of the US total industry, meaning they don’t warrant a major price differential.

What Will the Next Generation of Production Systems Look Like?
While current economic conditions don’t support investment in production facilities, at some point reinvestment in production facilities will occur. This reinvestment will be done with an eye towards producing pigs in an ‘optimum’ system. These ‘optimum’ systems will have production goals that were thought to be unattainable a few years ago (Table 1). The question then becomes - how do production systems attain these goals? The answer lies in how these systems apply the resources of females, facilities, people and dollars to the production process.

Table 1. Attainable production goals in 2008.
24 pigs sold to slaughter per female/year 
6500 pounds sold to slaughter/female/yr
1.7 lb/d daily gain wean-finish
>75 pounds of gain per ft2 of pen space wean-finish/yr 
<3.0 whole herd feed conversion farrow-finish 
<2.55 feed conversion wean-finish on mash diets with minimal added fat
<4% post weaning mortality
<4% lights and culls at slaughter

In the production process, the key component is people. While the industry talks about the ‘science’ of pork production, the best production systems put in place people who practice the ‘husbandry’ of pork production. Successful production systems have procedures in place to not only hire the right people, but they also spend considerable amounts of time and money on training and assessing these people.

The second component of successful production systems is the matching of facilities with the realities of pig flow. In the case of facilities, as discussed earlier, the trend in Iowa and Southern Minnesota (which have 40% of the US growing pig inventory) is to construct weanfinish facilities sized for 2400 pigs. Wean-finish facilities are now costing over $250/pig space when you add up the site development fees (site preparation, well, road, electricity, etc.), permitting fees (zoning hearings, permit application fees, etc.) and construction costs. The larger the facility, the lower the per pig costs of site development and permitting as these tend to be the same total dollars regardless of facility size. On the other hand, no state construction or operating permits are necessary for most sites as long as they contain fewer than 2500 pigs.

At one time there was considerable debate regarding the pros and cons of using nurseries and finishers versus using wean-finish facilities. The industry has made the clear choice with wean-finish as the preferred housing option. This choice has been driven in large part by lenders.

If lenders loan money to producers for construction of swine nurseries and finishers, they feel they have increased risks since there currently is very limited demand for swine nurseries. That is, if the lender is forced to assume a swine facility loan for a swine nursery, what are the options to generate enough monies to pay off the loan? Is there someone willing to place pigs in the nursery unit, either as a buyer of the facility or as a contract user of the facility? On the other hand, if the lender has to assume a swine facility loan for a wean-finish facility, the option to utilize the facility as a contract finisher is very attractive. The demand for contract finishing space in the upper Midwest remains very strong. Cash income is readily generated to pay off the debt.

Because of cost considerations, wean-finish barns are routinely overstocked, most often as a double-stock. The extra pigs are removed at 5-8 weeks post weaning. While different economic models exist, a common estimate is that double-stocking lowers the per pig facility expense by $3/pig or more versus single stocking. This means that the 2400 head wean-finish facility must source approximately 4800 pigs at the time of pig placement. To minimize age variation and the management issues associated with this variation, including ventilation and weaned pig diet budgeting, sites most often want to have the full complement of pigs delivered in less than a 2 week period. Minimizing age spread due to weaning to less than 2 weeks also limits the duration of marketing to slaughter, maximizing the utilization of the facility for gain.

This need for large numbers of weaned pigs with minimal variation in age is one of the driving forces in the sizing of farrowing sites. To deliver 4800 weaned pigs within 2 weeks to a wean-finish site requires pigs from 516 litters at 9.3 pigs weaned/litter. To get this many litters, one can either co-mingle pigs from a number of farrowing sites, or have a farrowing site that farrows 260 litters per week. In order to minimize health risks from PRRSV, PCVAD, swine influenza, etc. production systems are choosing to not co-mingle pigs whenever possible. This means the farrowing site needs to have approximately 6000 females, not counting replacement gilts. It turns out that a common size many systems are considering is 6500 female places which includes room for the replacement gilt inventory.

Batch farrowing is an option to these very large farrowing sites. Four 1500+ female sites that each farrow 260 females/week on a 4 week rotation achieve similar weaned pig numbers. Weaned pigs at any wean-finish site are limited to being sourced from 2 farrowing sites. As most large wean-finish facilities are comprised of 2 rooms, all pigs within one room are often from a single farrowing site, reducing the co-mingling of sources effect. Of course, batch farrowing carries with it the scheduling difficulties of females (re)cycling off-schedule, etc. and work loads that are very intense for 2 weeks and then relatively lax for 2 weeks. At least one production system in the US with a number of farrowing sites located relatively nearby rotates specialized production staff such as farrowing and breeding technicians between 4 sites on a weekly basis to address this challenge.

This evolution in size and scale is not recent (Key and McBride, 2007). In the late 1970’s and early 1980’s a common production system was the 100 sow farrow-finish producer. In this system, the basic unit of production was the 20 crate farrowing house. Often times, there was a 180 pig nursery associated with the farrowing house. The move to confinement finishing meant the addition of a 4-500 head continuous flow grower-finisher.

In many instances, in the late 1980’s and early 1990’s, the sows were sold with the producer seeking a source of weaned or feeder pigs to continue in pork production with existing facilities. As the benefits of all-in/all-out pig flow became recognized, this meant sourcing 4- 500 pigs with minimal age variation, preferably from a single source to minimize the risks of diseases due to co-mingling. This meant that the preferred sources for pigs were sites that farrowed 50 or more litters per week. This translated into farrowing sites with approximately 1200 females farrowing weekly, or sites with 350 females batch farrowing once every 4 weeks.

In the mid 90’s, the common investment in finishing facilities was a 1000 head facility, meaning it took 2 weeks to fill with weaned pigs from a 1250 female site or from 2 350 sow sites batch farrowing. This makes it very clear that the evolution of swine production facilities, especially as related to size, is clearly tied to the health benefits of all-in/all-out flows and minimal age differences. It is also clear that the sizes of today’s production facilities are a result of the first confinement facilities built to accommodate pig flows from 20-crate farrowing facilities.

Because of the large investments associated with both farrowing and growing pig sites, the swine industry has started to focus more attention to the impact of variation in pig numbers (as reflected in pigs weaned/week) on costs of production. It is one thing to plan production flows with spreadsheets and financial budgets for 260 litters of 9.3 pigs per litter per week. The reality is that pork production is a biological process with considerable potential for variation in the biological process. The ‘optimal’ production system puts in place people and production practices that minimize variation. These practices include information systems that serve not only to document what has happened but to also be useful in predicting future production variations.

The ‘optimum’ production system does not make decisions in a vacuum. The successful production system utilizes a team of advisors. Note that I said a team, not a series of individual advisors. It is important that the animal health advisor sit at the same table as the financial advisor, along with the legal advisor, nutritionist, etc. The complex interactions between production, finances and legal requirements means that all members of the team need to be informed about the impact their recommendation(s) have on other team member’s recommendations. All too often an advisor or consultant is brought into a production system or site and is forced to make a recommendation without having full knowledge of the limits to implementation of the recommendation or causes for the situation. Information sharing between members of the advisory team is critical to the success of the swine enterprise.

Also note that as public support for University and USDA research and extension outreach decreases in the US (Fuglie and Heisey, 2007), with a similar decline in related services for Canadian producers, access to new technology and information will become fee based. Increasingly producers will have to pay an advisor for information that is relative to a production need whereas this information was publicly available in the past via university research reports and extension specialists. Look for this trend of less public access to information to continue as politicians wrestle with budget deficits and an agricultural production system that is an ever smaller segment of the Canadian and US economy. This limit to public funding of information ultimately benefits those production systems which access information. This information access may be thru investment in specialized research facilities or it may be thru information sharing in peer-to-peer discussion groups.

CONCLUSIONS
The many factors that go into an ‘optimum’ production system often are only slightly related to individual pig performance. The economics of facility and site sizes, when combined with the growing number of regulatory requirements has meant that the ‘optimum’ production system is much larger than in the past. While production systems have added science-based information to their decision process, quality people involved in the daily care of pigs remains a key component of successful production.

LITERATURE CITED
Fuglie, K.O. and P.W. Heisey. 2007. Economic returns to public agricultural research. Economic Brief Number 10, United States Department of Agriculture, Economic Research Service. http://www.ers.usda.gov/publications/eb10/eb10.pdf. Accessed January 14, 2008.

Key, N. and W. McBride. 2007. The changing economics of U.S. hog production. ERR-52. United States Department of Agriculture, Economic Research Service. http://www.ers.usda.gov/Publications/ERR52/. Accessed January 14, 2008.

[mikey]

Tuesday, August 05, 2008Print This Page
Alberta Comes Up with Animal Protection Act
ALBERTA - The new Alberta Animal Health Strategy is set to be released for public consultation in August 2008. Contained within the strategy is an animal welfare component with several goals that will improve welfare of all animals in Alberta and increase the understanding among Albertan's of their responsibility for assuring animal welfare.

 

"There are many misunderstandings when it comes to the laws surrounding animal protection in Alberta," says Adrienne Herron, livestock welfare tech transfer specialist with Alberta Agriculture and Rural Development, Red Deer. "For example, many people believe that only the owner of an animal can be charged or considered responsible for the welfare of the animal. In Alberta, you don't have to be the owner of an animal to be charged under the Animal Protection Act (APA). The APA states that any person who fails to prevent an animal from being in distress can be charged."


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*
"All animals including wildlife, domestic and zoo animals in Alberta are covered by the APA. This means that both companion animals (pets) and livestock animals are protected by the APA." 
Adrienne Herron, livestock welfare tech transfer specialist with Alberta Agriculture and Rural Development, Red Deer
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Animal distress, in the APA is defined as animals not being provided with adequate food, water, veterinary treatment, reasonable protection from injurious heat or cold, or if an animal is injured, sick, in pain, suffering or abused, subjected to undue hardship, privation or neglect.

This definition does not include the possible distress caused by reasonable and generally accepted practices. Animals in distress that result from an activity carried on in accordance with the regulations or in accordance with reasonable and generally accepted practices of animal care, management, husbandry, hunting, fishing, trapping, pest control or slaughter are exempt from the APA.

Fines for APA convictions are serious. The maximum fine set out in the APA is for $20,000 and, if convicted, a prohibition order preventing the convicted person from owning animals could be issued.

"All animals including wildlife, domestic and zoo animals in Alberta are covered by the APA," says Herron. "This means that both companion animals (pets) and livestock animals are protected by the APA." Another way Alberta's animals are receiving better protection is in the form of a special dedicated prosecutor. Moira Vane with Alberta Agriculture and Rural Development's regulatory services has been named the lead prosecutor on all APA related charges.

[mikey]

Thursday, August 07, 2008Print This Page
Swine Budget Shows Loss of $30 per Pig
CANADA - The June 2008 budget figures compiled by John Bancroft, Swine Strategies Program Lead at the Ontario Ministry of Agriculture, Food and Rural Affairs (OMAFRA) show average income of $138 per pig and costs of over $169.

Information provided courtesy Ontario Pork

 

The OMAFRA budget was calculated based on the estimated accumulated cost for a market hog sold in June 2008. The farrow-to-wean phase estimates the weaned pig costs for January 2008, the nursery phase estimates the feeder pig cost for March 2008 and the grow/finish period subsequently. All costs and income figures are in Canadian dollars.

Total costs for the farrow-to-wean, nursery and grow-finish phases were $35.90, $24.90 and $103.82, respectively, making a total of $169.23.

Feed costs accounted for $12.05, $13.77 and $78.16 for each phase, respectively. At $105.79 in total, feed constituted 62.5% of total costs.

Total variable cost per pig was $148.17, while fixed costs (depreciation, interest, tax and insurances) came to $21.06.

The income for a market pig weighing 92.03kg was $139.44, while total costs were $169.23, making a net loss per pig of $29.79.

Income ($/pig)
 Farrow to Wean Nursery Grow-Finish Farrow to Finish
Market Pig @ $138.54/ckg, 109.37 index, 92.03 kg $139.44


Variable Costs ($/pig)
Breeding Herd Feed @ 1,100 kg/sow $12.05   $13.20
Nursery Feed @ 32.6 kg/pig  $13.77  $14.43
Grower-Finisher Feed @251 kg/pig   $78.16 $78.16
Net Replacement Cost for Gilts $2.75   $3.01
Health $1.96 $3.16 $2.25 $7.70
Breeding ( A.I. & Supplies) $1.41   $1.54
Marketing   $3.56 $3.56
Utilities (Hydro, Gas) $1.96 $1.18 $1.64 $5.02
Miscellaneous $0.45 $0.15 $0.35 $1.00
Manure Disposal $0.83 $0.33 $1.13 $2.39
Repairs & Maintenance $0.70 $0.38 $1.13 $2.29
Labour $6.96 $1.96 $4.00 $13.67
Operating Loan Interest $0.44 $0.51 $1.17 $2.18
Total Variable Costs $29.50 $21.44 $93.39 $148.17




Fixed Costs ($/pig)
Depreciation $3.48 $1.88 $5.67 $11.44
Interest $2.23 $1.20 $3.63 $7.32
Taxes & Insurance $0.70 $0.38 $1.13 $2.29
Total Fixed Costs $6.40 $3.46 $10.43 $21.06




Summary of Costs ($/pig)
Feed $12.05 $13.77 $78.16 $105.79
Other Variable $17.45 $7.67 $15.23 $42.38
Fixed $6.40 $3.46 $10.43 $21.06
Total Variable & Fixed Costs $35.90 $24.90 $103.82 $169.23




Summary
Net Return Farrow to Finish ($/pig) -$29.79
Farrow to Weaned Pig Cost ($/pig) $35.90 
Farrow to Feeder Pig Costs ($/pig) $62.43 
Wean to Finish Costs ($/pig) $129.91 
Farrow to Finish Breakeven Price ($/ckg, 100 index) $168.13

[mikey]

Thursday, August 07, 2008Print This Page
Pork Commentary: Global Liquidations Drive Prices and US Exports
CANADA - This week's North American Pork Commentary from Jim Long.

Jim Long on ThePigSite

Jim Long is President &
CEO of Genesus Genetics.
USDA Pork Cut-Outs at New Record High
Despite US hog slaughter of almost 2.1 million head last week (actual 2091.1), about 120,000 head more than the same week a year ago, the USDA pork cut-out hit a new record high of 88.23 lb. Phenomenal export demand is fueling prices that blow by any ag-economist’s predictions for pricing at these supply levels. Thank goodness! High feed prices are leaving little profit for producers even at prices hovering around 80¢ lean. It’s also good that packers have good margin so that they can build up their reserves to pay the prices that are coming from the lack of hogs in 2009.

Europe
Several European countries have released their mid-year breeding herd inventory numbers. To keep in perspective the EU-27 countries had 15.03 million sows at the beginning of 2008. This is almost double the sow inventory Canada, USA and Mexico combined. The just released European breeding herd results reflect the carnage caused by high global feed prices and hog prices that lead to large financial losses for most of the last twelve months.

Changes in Breeding Sow Numbers
% Annual Change
Denmark -8%
France -3%
Germany -5%
Hungary -13%
Ireland  -5.3%
Netherlands -6.5%
Poland -20%
Spain -8%

It is estimated that the total EU herd in 2008 was 9% smaller than in June 2007. Nine percent on 15 million sows is about 1.2 to 1.3 million fewer sows. The production capacity of over 20 million market hogs disappearing. Is there any wonder why US export demand is increasing? As Europe’s production drops, pork available for export declines. Europe’s domestic prices have also increased with market hogs bringing last week. We expect Europe’s prices will get stronger yet as supply falls further as the sow liquidation results in fewer hogs in the months ahead.

Last week we had visitors from Spain at Genesus. They told us market hogs are currently bringing $ 235 US @ 110kg. with cost of production at $ 225 US per head Everywhere we look fewer hogs on the horizon Korea, Japan, Mexico, Canada, Europe and USA. The only way to ration less supply is higher feed prices. US pork exports are taking market share everywhere. It’s cheaper. It’s available.

Liquidation in North America
Last week we read reports on slowed liquidation in North America. Maybe. Official June US sow slaughter was up 39,000 sows over last year. In our books that’s about 10,000 net sows out of the herd. That’s liquidation. Another factor is sows are so cheap compared to market hogs that many producers are hanging on to sows longer. Cash flow is king and buying gilts is a luxury to many. Net results – sows are being held (cutting sow slaughter) but gilts are going to slaughter.

Recent year over year gilt-barrow slaughter percentage data indicates 2% more gilts as a percentage of total marketings are going to slaughter. On a weekly basis we calculate 40,000 plus more gilts being marketed relative to a year ago. How accurate we are not sure, but the trend probably reflects cash flow need, holding sows (that are worth little) and lack of producer confidence. We will not be surprised if the US sow inventory is down 160,000 to 200,000 on Sept.1 compared to a year ago. That will result in 3 to 4 million fewer market hogs in 2009.

Feed
Just wonder where the economists are at that predicted $10.00 corn? Looks like its closer to $5.00. As global meat protein production declines, the corn producers who saw ethanol as their salvation will realize that they have been part of the destruction of their best customer base. Not smart business. US ag-secretary Schaefer’s decision not to allow opt out of set aside land was disappointing. The only thing for sure as land comes out of yearly commitments. US grain production will expand. A new administration, whether McCain or Obama in the US might see it differently before next year’s crop year.

Greenwood Calls for 10% Sow Herd Reduction
Recently at the National Pork Industry Conference held at Lake of the Ozarks, Missouri (A conference we went to once, but were banned from returning. Chalk it up to insecure competitors), Mark Greenwood, Ag Star’s Financial Services Vice-President of Agribusiness Capital spoke and called for:

A 10% reduction in the US sow herd.
The industry to reduce market weights.
Large systems must lead the way, with the top 30 producers publically sharing their intentions.
A viable long-term model will emerge - most likely this will be a farrow to finish model.
Mr. Greenwood’s idea that the industry should reduce the sow herd by 10% is noble. He is correct that the industry has lost 2 billion dollars in equity. Obviously supply management would work. We have 80¢ lean hogs now. Cut the sow herd 10% and we would expect $1.20 lean next summer easily when coupled with the declined total global meat supply. But, heck it’s not going to happen. No one is going to buy in until they have to. Everyone is doing the Black Bear scenario. I do not have to be the best producer (fastest) I just have to be ahead of the worst (slowest). It’s human nature.

All banks also have to take responsibility. They funded the expansion. They are accomplices to this current situation. They also want high hog prices quickly to cut their loan exposures. Banks’ worst nightmare is having to take over hog farms. It’s good in a way that there are not many who prosper in a low price scenario other than sausage makers and consumers.

Mr. Greenwood’s assessment that the top 30 producers should publically share their liquidation intentions is interesting. We expect it would mostly be organized head fakes and a game of chicken. Much like packers, many pronouncements on COOL

Yes, we are
No, we are not
Maybe
So the end of the day no one wants to give the competitor an advantage. Not going to happen. Most are private companies and have no legal obligation to reveal business plans. It’s the way it is and won’t change.

Mr. Greenwood’s belief that the long-term business model could be farrow to finish could be correct. We are not sure. We do not see that farrow to finish is necessarily more profitable. Losses per head, whether a small pig producer or f to f are relatively in balance. The issue is that many finishers do not want to have sows. They do not want the debt, responsibility, workload or production risk. They want the return and many want the manure. We expect small pigs will be $50 to $60 plus by January. The spot market always finds the real value. As prices recover, the finishers will pay the price as they always do. There could be more farrow to finish in the future but it takes more capital and with sow units more and more being placed out of the disease risk areas of the Corn Belt, the difficulty of ownership distance has become greater. Most early wean producers do not want to be farrow to finish unless they have to and as the market changes and prices for small pigs increase, the trend will reverse in our opinion. All smart finishers are currently lining up supply for the inevitable decline in production and higher prices that are coming.

 


Author: Jim Long, President & CEO, Genesus Genetics 

[mikey]

Friday, August 08, 2008Print This Page
Tightening of Corn Supplies Expected
CANADA - The Manitoba Corn Growers Association says less than ideal growing conditions and a strong demand from the ethanol industry could put pressure on supplies of corn for feed for the livestock industry this fall, writes Bruce Cochrane.





Farm-Scape is sponsored by
Manitoba Pork Council and Sask Pork

Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council
and Sask Pork. 
Over the past six months the price of corn has been extremely volatile.

Since last October the price of corn in Manitoba has gone from about four dollars a bushel to a high of about seven dollars a bushel this spring, fueled in part by a strong demand for ethanol, before backing off again to the five dollar a bushel range.

A combination of factors has contributed to the recent easing of the value of corn including lower crude oil prices, a reduction in the value of the Canadian dollar, the normal seasonal price slide in anticipation of the start of the harvest and the withdrawal of speculators from the market.

Manitoba Corn Growers Association president Murray Prichard says demand patterns for corn are changing.

Murray Prichard-Manitoba Corn Growers Association
There was a large demand for ethanol in the U.S. which corn has been used for.

Oil prices as you know have been very high and corn has followed that. Our end uses here have changed.

In the last year or so, we've got an ethanol plant in Minnedossa which has been buying a fair amount of Manitoba corn as of lately.

We had a little bit of a switch from relying totally on the livestock industry to now an ethanol industry that's picking up demand for our corn here locally.

Prichard suspects there could be a shortage of corn in Manitoba this fall for livestock producers.

He notes, in the past, we had seen a lot of U.S. corn coming into Canada because of the value of the dollar but that has slowed. He notes, locally, the corn is behind this year and while some of that corn will make it, some won't.

He says it'll all depend on whether or not we have an open fall.