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Dale Miller, Editor,
National Hog Farmer
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The Agriculture Committee of the House of
Representatives passed a farm bill that contained, among other features,
some compromise language on mandatory country-of-origin labeling
(MCOOL). There was a bit of compromising done but, unfortunately, meat
and livestock groups did most of it.
That may sound critical, although that's not my intent because I know
those groups worked hard to get more changes made. However, it appears
that the current Congress is listening much more to protectionists and
populists in their decision-making.
The biggest value of the compromises to U.S. pork producers is that it
limits the records that USDA can require for verification of origin to
those records kept in the normal course of business. Further, it
appears likely that producers will only have to provide their customers
with a statement indicating: a) the origin of the pigs, and b) that the
producer has records showing where he/she got the pigs. In other words,
the trail of those records would lead back to the origin of the pigs.
In addition, the new language allows ground meat to be marked with a
"may contain" label that lists all of the countries from which
ingredients either actually came from or could reasonably come. That is
not a big deal for pork, but it is huge for ground beef.
There is some disagreement about how the House bill will change the
actual labels applied to pork other than the fact that there will be
only three labels as opposed to the four or more presented in the
original rules. Those rules required actual combinations of where
animals were born, raised and slaughtered.
The law is clear -- imported meat is to be labeled as product of the
source country. My reading of the law says that animals born, raised
and slaughtered in the United States must be labeled "Product of the
U.S." Animals born or raised in another country and slaughtered in the
United States will be labeled "Product of Country X and the United
States." Some observers believe that product from animals born, raised
and slaughtered in the United States can be included in that latter
label, basically lumping everything other than imported meat into one
label. USDA will have to interpret the law during the rulemaking
Finally, the language exempts any animals that are in the country on
Jan. 1, 2008. Products from those animals would be allowed to move
through the channels of commerce without a label even if they are sold
after Sept. 30, 2008, the date MCOOL becomes effective. It also means
that any animal born or entering the United States on Jan. 1 or after
must have "normal business documents" that show its origin so products
can be accurately labeled.
Of course, there is no guarantee that any of this will survive the floor
debate in the House or the deliberations in the Senate. House
Republicans are already up in arms because of a funding provision in the
bill, and the administration has threatened to veto this version of the
farm bill if it makes it to President Bush's desk.
Tyson Announcement Puzzling
Five of the six weeks -- from late May through early July -- saw
slaughter 3-6% larger than last year. The three weeks prior to last week
saw slaughter runs much closer to year-ago levels (See Figure 1). It
appears to me that this is more a matter of large slaughters last year
than it is a reflection of small slaughters this year.
Federally inspected (FI) slaughter was up 3.6% from the 2006 level last
week and up 4.5% this week (through Thursday).
Tyson's announced cutback was somewhat puzzling when it came out last
week. The reduction totaled 24 hours in its six plants reportedly spread
over the end of last week and the beginning of this week. Pork packer
margins had gotten very low in late June and early July, but spiked
upward two weeks ago. As you review Figure 2, keep in mind that these
are estimated gross margins. Packers must still pay all of their non-hog
costs from these funds.
The rise two weeks ago was driven by a $2.40 increase in the cutout
value, a $1 drop in the national net price of hogs and a sixth
consecutive weekly record for per-head byproduct value ($17.04/head).
Last week saw another byproduct record ($17.26/head) and a rally in cash
hog prices that reduced packer margins.
What is driving the byproduct value? Fat. The price of fat is more
than double one year ago. Anything with energy in it is pretty valuable
Why did Tyson cut back on slaughter runs last week? Probably because
they were trying to look ahead and because there are lags between when
hogs are purchased and product is sold.
Looking ahead at pork product markets in late July hardly ever provides
a pretty picture. Except for a minor blip in August ribs and loins in
preparation for Labor Day, the price of virtually every cut declines.
It could well be that Tyson managers are just trying to manage the cost
of future inventories relative to cutout realizations that will almost
And, it could be that they share my concern about supplies and see
plenty of pigs that are now going to get bigger since corn is an
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
Hermitage NGT offers their North American clients:
- Breeding Stock (GGP/GP/Parent stock)
- Semen-fresh & frozen
- Closed herd breeding programs
- Genetic monitoring through the Hermitage BLUP recording system
Talk with our team of specialists in genetics, reproductive physiology,
nutrition, veterinary medicine, pig production management and A.I. to
design a program to allow you to take advantage of these exciting
Capturing More "Opportunity"
A closer look at "opportunity cost" can provide a fresh
look at what is being left on the table as current decisions are being
implemented in your production system.
Opportunity costs are the price of choosing one option over another.
More specifically, it's the cost of the next best opportunity that was
not selected. While the concept is usually applied to the price (cost)
of production, it can be applied equally well to the revenue side.
The opportunity cost of becoming a pork producer is the lost income,
satisfaction and experiences that you could have had if you had chosen
to be a plumber or a physician, for example.
The idea in economics is that the cost of a decision is not really best
viewed as the money you pay for inputs, which, after all, is only a
symbol of value. Rather, it is the outcome(s) you abandon by virtue of
committing to your present course.
The value of considering opportunity costs for the decision-maker is
that it awakens the urgency that choices are both limited and limiting
and, therefore, should be made carefully. The time and the opportunity
that are committed to one set of choices cannot be recovered and applied
to an alternative. You can change course, but you cannot turn back and
remake a decision.
Another twist on the concept is to consider the outcome of a set of
decisions and then measure what you achieved vs. the perfect outcome.
The shortfall is the "opportunity" that could have come your way except
for the variety of factors that determined the actual outcome. Some
factors may not be within the control of management, but a great many
When I walk through a production facility that is operated in a
less-than-desirable fashion, I often point to something that is out of
adjustment and provide the building manager a quick estimate of the
dollar value of the savings if the problem were fixed. I've even been
known to reach into my wallet and actually lay $20 bills on the problem.
This helps remedy the common "disconnect" in the minds of pig care
providers and their ability to recognize the potential savings in terms
of real dollars.
What is the lost opportunity associated with an out-of-feed or
out-of-water event? What is the cost of failure to maintain proper
temperature and ventilation levels, especially in newly weaned pigs?
Every insult to the animal saps a bit of its potential performance and
that's potential that can never be recovered.
The accumulated result of these decisions and failures is a burgeoning
volume of unrealized profit.
Along with calculating your cost of production this year, take the
opportunity to calculate the dollar value that never reached your bank
account because of less-than-optimal performance. The wise producer
then measures the cost of capturing more and more of that opportunity
By Dennis DiPietre
Editor's Note: Dr. DiPietre is an independent consultant from
Columbia, MO. For all your agricultural news, markets and commentaries,
go to www.farms.com
Introducing the new PIC Camborough® Family
You asked for greater lifetime reproductive performance and longevity.
You asked for more pounds of pork marketed per sow. You asked for a
higher percentage of market pigs in the full-value pay box.
Take another look at our new Camborough family, we think you will like
what you see--after all, it is just what you asked for.
Farm Bill Passes House
The House of Representatives passed the 2007 farm bill
last Friday afternoon by a vote of 231-191. The budget was a major
factor in its development. The bill moved forward after the House
Democratic leadership found additional funds for nutrition and energy.
The debate became very partisan on the floor and split the House
Agriculture Committee membership over the funding mechanism for the
additional $4 billion for nutrition. The Republicans called the
revenue measure a "tax increase," while the Democrats said they were
closing a "tax loophole" identified by the Department of Treasury in
2002. Only six of the 21 Republicans on the House Agriculture Committee
voted for the bill. Republicans on the committee strongly supported the
committee-passed version, but the funding mechanism caused them to vote
against final passage. Only 19 Republicans voted for final passage of
Senate Farm Bill in September -- Now that the House of
Representatives has passed their version of the farm bill, all eyes will
focus on the Senate. Senator Tom Harkin (D-IA), chairman of the Senate
Agriculture Committee, has indicated the committee will begin
considering the bill the third week of September. He would like to see
a strong conservation title for working lands, increased programs,
grants and loan guarantees for cellulosic ethanol, advance broadband for
rural communities and improved nutrition programs.
Water Resources Act -- The House passed by a large bipartisan
vote the conference report for H.R. 1495, the "Water Resources
Development Act," which would authorize funding for flood-control,
navigation and environmental projects managed by the Army Corps of
Engineers. The legislation provides $3.6 billion for the modernization
of the locks and dams on the Upper Mississippi River and the Illinois
Waterway system. This has been a high priority of the National Corn
Growers Association and the American Soybean Association. The
conference report now goes to the Senate for consideration.
South Korea Suspends Inspection of U.S. Beef -- South Korea has
temporarily suspended quarantine inspection of all U.S. beef shipments
effective Aug. 1, 2007. They are asking USDA to investigate the current
incident where product not approved for export was in boxes shipped to
South Korea and what corrective steps will be taken. USDA has indicated
that out of some 600,000 boxes of U.S. beef sent to South Korea since it
resumed imports in April, only six have contained unauthorized material.
Summer Recess -- Starting next week, Congress will be in recess
until after Labor Day. Members will be in their districts and this
would be a good time to visit with them on key issues concerning the
farm bill and agriculture. Contact your Senator's or Congressman's
office and ask for their schedule of town hall meetings that you could
P. Scott Shearer
Advancement in PRRS Research Award.
Boehringer Ingelheim is awarding $75,000 annually to fund three
research proposals to help solve the PRRS mystery.
Entries due January 1, 2008.
Pork Industry Calendar
Aug. 8, 2007: "Bringing and Keeping Gilts in the
Breeding Herd;" webcast runs from 1-2 p.m.; contact: Mark Whitney,
University of Minnesota swine extension specialist at (888) 241-3214 or
Aug. 8, 2007: Informational Seminar for Pork Producers,
Governor's Inn and Conference Center, Casselton, ND; contact John
Dhuyvetter, North Dakota State University area live specialist at (701)
Aug. 16, 2007: The 48th Annual George Young Swine Health and
Management Conference, Marina Inn, South Sioux City, NE; contact: Sharon
Clowser, University of Nebraska, by phone (402) 472-8550, fax (402)
472-9690 or e-mail firstname.lastname@example.org.
Aug. 21, 2007: ManureTech 2007, Dairy Forage Research Center
Farm, Prairie du Sac, WI; contact Randy Fonner, University of Illinois
at (217) 333-2611, email@example.com or log onto www.imanuremgt.org.
Aug. 23, 2007: "Managing Prices for Optimal Returns," Hilton
Garden Inn, Johnston, IA; contact: Ali Smith, Iowa Pork Producers
Association, at (515) 225-7675, (800) 372-7675 or firstname.lastname@example.org.
Aug. 28, 2007: 17th Annual Swine Conference sponsored by Carthage
(IL) Veterinary Service (CVS), Ltd., Western Illinois University,
Macomb, IL; contact: CVS by phone (217) 357-2811, fax (217) 357-6665,
e-mail email@example.com or log onto www.hogvet.com.
Aug. 28-30, 2007: ID INFO EXPO, Westin Crown Center, Kansas City,
MO; contact: the National Institute for Animal Agriculture at www.animalagriculture.org
Sept. 6, 2007: Midwest Swine Nutrition Conference,
Indiana Farm Bureau Building, Indianapolis, IN; contact: Tip Cline,
Purdue University by phone (765) 583-2831 or e-mail firstname.lastname@example.org.
Sept. 9-12, 2007: 13th Discover Conference on Food Animal
Agriculture: Sow Productive Lifetime, The Brown County Inn, Nashville,
IN; contact: the American Dairy Science Association by phone (217)
356-5146, fax (217) 398-4119, e-mail email@example.com or
log onto www.adsa.org/discover.
Sept. 11, 2007: Midwest Pork Conference, Hendricks County
Conference Complex, Danville, IN; contact: Sarah Bustamente at the
Indiana Pork Producers Association at firstname.lastname@example.org.
Sept. 15-18, 2007: Leman Swine Conference, RiverCentre, St. Paul,
MN; contact the University of Minnesota by phone (612) 624-3434 or (800)
380-8636, e-mail email@example.com or log
Oct. 17-24, 2007: U.S. Animal Health Association (USAHA) Annual
Meeting, John Ascuaga's Nugget Hotel, Reno, NV; contact: USAHA by phone
(816) 671-1144, fax (816) 671-1201 or e-mail firstname.lastname@example.org.
Make ileitis disappear?
Denagard® (tiamulin) 10 is approved to control ileitis in as little
as 10 days. And with its small dosage -- 35 grams tiamulin/ton -- and
less medication time, no other feed medication is as cost-effective for
on the Denagard logo to learn more.
Are you seeking a professional position in
pork production management, and an excellent
family environment? If yes, look at Texas
Located in the Texas Panhandle counties of
Ochiltree and Hansford, Texas Farm LLC is
currently producing pork from 33,500 sows,
and we are growing.
Texas Farm is constantly searching for highly
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Benefits: Competitive pay; Excellent medical,
vision, dental, and prescription drug benefits;
401K; paid vacation, holidays, and sick leave;
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4200 S Main, Perryton, TX 79070
Corby Barrett * (806) 435-5935
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