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Dale Miller, Editor,
National Hog Farmer
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Hog Runs Raise
Last week's U.S. federally inspected (FI) hog slaughter
total of 2.226 million head was the fourth-largest ever and a bit of a
shock that it came so early. The three weeks that now stand ahead of
that total on the all-time rankings all occurred in December, a time
that we typically expect weekly highs to occur.
If Friday and Saturday's slaughter runs just equal those of last week,
this week's total will be 2.240 million head and it will rank as the
third-largest slaughter week ever. It is very likely that Friday's
total will exceed that of last Friday and Saturday's run may do so as
well. I don't think the total will be large enough to eclipse the
current No. 2 week on record, with 2.258 million head processed the week
of Dec. 18, 2004. The all-time high is 2.265 million the week of Dec.
19, 1998, when some plants worked on Sunday. We all remember how much
fun that week was!
What Lies Ahead?
All of this begs the questions: "Where is this thing headed and just how
alarmed should the industry be?"
I don't think there is any doubt that slaughter totals are headed upward
this fall and that they will exceed what was predicted in the June Hogs
& Pigs Report. We will get a fresh read on the supply situation on
Sept. 28 when the next Hogs & Pigs Report comes out. I hope it gives us
a much better feel for market hog inventories.
The increase in slaughter was dramatic back in March (see Figure 1) and,
while it has jumped around a bit, we have had only one week below 2006
slaughter levels since then. The six-week average of year-over-year
change is stabilizing between 3.5 and 4%, so that looks like a good
range for the fourth quarter.
The shock comes in seeing where 4% more hogs leave us for weekly
slaughter totals (see Figure 2). Only one week exceeds 2.3 million
head, but four of those fourth-quarter weeks will break the current
record for weekly slaughter total. And that is if 4% is large enough to
capture the increase in supplies.
I don't think anyone should be alarmed, but I think everyone should be
concerned. The announced resumption of a partial second shift at
Morrell's Sioux City, IA, plant will add 3,200 head of daily capacity
and leave the U.S. total at 428,035 head. At 5.4 days/week and allowing
for 7,000 head/day more "push-them-through" capacity, U.S. packing
plants could handle 2.35 million head weekly. Hog prices would be under
some pressure at that operating rate, but the pressure should not be
Adjustments Will Be Made
What can be done? The first steps are in place.
Packers have added capacity and are ready to push animals through.
There is no real altruism in that as they expect to make a profit. That
is not a bad thing and they are fulfilling their role in the system.
It appears that retailers have many pork features planned for this fall
given the relatively high prices of both chicken and beef. That is very
good news, but packers and processors need to push for retailers to
extend those features over both time and product selection.
Don't expect any more help out of foodservice than is already in place.
That has nothing to do with their desire to help. It is just based on
the fact the foodservice operators have planning horizons of six months
to a year. They may do some featuring, but they cannot change menus in
the short run. The bulk of the extra product will have to go through
retail and to export markets.
Exports were better in July and, we think, have been better in August.
However, heating them up a bit would be a big help. While getting hogs
through the packers is an issue, we also have to move the meat and there
is just so much that can be done in the U.S. market without deep price
cuts. The best solution will be a recovery of our exports. China could
be a big part of that, but some recovery in shipments to Mexico would be
a huge help, too.
Market weights suggest that we are relatively current at present, but
producers need to keep that up in order to not back hogs up when the
runs get even bigger. Hog prices are not likely to get much better as
we go through this quarter, so there is little incentive to hold them.
Get hogs moving when they reach ideal marketing weights and think ahead.
Packers will be getting booked earlier and earlier and you will probably
have to plan at least one week out in scheduling deliveries.
Finally, all of you loyal North American Preview readers can
prepare to enjoy counting the money you will make this fall on those
October and December Lean Hogs futures that you sold back in the summer.
You did sell some, didn't you?
Click to view graph.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
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Getting to the Root of
I recently had the opportunity to participate in several
discussions about the challenges of finding good employees. When things
aren't going well, it's easy to conclude, "It's all about the people."
But is it? Without question, reliable, responsible employees are more
pleasant to work with. However, human nature often leads to greater
attribution, whether positive or negative, than what people actually
At an industry meeting recently, a prominent veterinarian noted several
examples of system failures leading to human failure. Young weaning age
was a major contributor to poor conception rates and elevated nursery
mortalities. Likewise, until recently, circovirus-associated disease
mortalities were attributed to poor stockmanship in finishers.
In other industries, efforts have been made to find and apply processes
that are robust to sources of variation. McDonald's, for example, is
often cited for its ability to deliver the consistent products from
franchises around the globe, even with a minimally educated workforce.
Producing pigs is not exactly analogous to preparing hamburgers. After
all, we deal with living beings that are sensitive to disease,
environment and the needs for food and water. But this does not mean
that we cannot make our processes more robust (a topic for a future
In our expectations of employees, it is my observation that we often
underestimate the value of a positive experience. For example, if an
employee is trained on how to treat animals, yet few of the treated
animals respond, the employee is likely to perceive the effort as
Similarly, if employees are trained to inseminate sows, but have no
sense as to which or how many inseminations generate a litter, there is
little incentive to refine their skills. It is the rare employee who
aspires to be "the worst." However, without constructive training and
feedback (from people and pigs), lowly motivated employees can often
default to that position.
Among the tools that Toyota uses to address problems, one is referred to
as "the 5 whys?" To address a problem at the root cause, they don't ask
"why?" just once -- they ask it five times.
Suppose we have a problem with nursery mortality. If we ask "why?"
once, we might conclude that the employee isn't treating pigs. But if
we persist and ask, "Why isn't the employee treating pigs?" We may find
that the pigs haven't been responding to treatment.
The three remaining "why" questions are then aimed at getting to the
root of the problem:
In the end, another nursery employee might be willing to treat more
pigs, but the underlying problem would still remain.
- "Why aren't the pigs responding to treatment?" Answer: The
pigs have been weaned too young, and it is the young pigs that are the
source of the higher mortality.
- "Why is the sow unit weaning young pigs?" Answer: There are
insufficient numbers of bred sows.
- And finally, "Why are there insufficient bred sows?" Answer: The
sow unit does not have adequate inventory to meet breeding targets.
When expectations have not been met, if we are willing to look beyond
the people, we may indeed find that good employees are not such a
rarity, but good processes are.
Stephanie Rutten-Ramos, DVM
University of Minnesota
Editor's Note: For all your agricultural news, markets and
commentaries, go to www.farms.com.
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to Run for Senate
Secretary of Agriculture Mike Johanns resigned this
week. Johanns is expected to announce next week that he is running for
the Nebraska Senate seat that opened by retiring Senator Chuck Hagel
(R-NE). President Bush, in accepting Johanns' resignation, said he had
"brought focus and energy to the department." Chuck Conner, Deputy
Secretary of Agriculture, has been named as Acting Secretary. Johanns
in his resignation letter to the President said, "I can assure you that
I leave the farm bill finalization in supremely capable hands. Deputy
Secretary Chuck Conner has been intimately involved in the deliberations
-- from the development of our proposals to his attendance at virtually
every hearing during the House mark-up. Few people are as knowledgeable
and insightful about farm bill policy. He is supported by some of the
most dedicated civil servants in the federal government." Conner grew up
on a family farm in Benton County, Indiana. He served as staff director
of the Senate Agriculture Committee in the mid-90s and was Special
Assistant to the President for Agriculture prior to being appointed
Deputy Secretary of Agriculture.
U.S. Expands Market to Canadian Beef -- USDA released its
much-anticipated final rule to expand the list of beef products allowed
into the United States from Canada. USDA said, "This rule is firmly
based in science and ensures that we continue to protect the United
States against bovine spongiform encephalopathy (BSE). It also is
consistent with our commitment to promote fair trade practices and
further normalizes trade with countries that institute the appropriate
safeguards to prevent the spread of BSE." The rule allows for the
importation from Canada of:
The rule will take effect on Nov. 19, 2007. Additional information is
available at www.aphis.usda.gov.
- Live cattle and other bovines (bison) for any use (including
breeding) born on or after, March 1, 1999, which Animal & Plant Health
Inspection Service (APHIS) has determined to be the date of effective
enforcement of Canada's ruminant-to-ruminant feed ban;
- All beef and beef products;
- Blood and blood products derived from bovines, collected under
certain conditions; and
- Casings and part of the small intestine derived from bovines.
U.S. Red Meat Export Values Up -- According to the U.S. Meat
Export Federation and USDA, U.S. red meat exports posted higher values
through July of this year, compared to the same time period last year.
U.S. pork and pork variety exports were up 5% in value to $1.7 billion.
However, volume of these products decreased 5% to 774,552 tons. U.S.
beef and beef variety exports increased 27% in value to $1.42 billion
and 16% in volume to 467,933 tons.
ITC Investigates Global Beef Trade -- The U.S. International
Trade Commission (ITC) is beginning an investigation of the effects of
animal health, food safety, tariffs, quotas, import licensing and
distribution systems and other issues on U.S. beef exports. The ITC will
hold a public hearing on Nov. 15 in Washington, DC. The ITC is to
submit a report of its findings to the Senate Finance Committee on June
NPPC Fall Legislative Action Conference -- Pork producers from
throughout the United States were in Washington, DC this week to meet
with Congressional members and administration officials to discuss key
issues affecting the U.S. pork industry including the 2007 farm bill and
the various trade agreements pending before Congress. The producers
were a part of the National Pork Producers Council's Legislative Action
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Pork Industry Calendar
Oct. 3, 2007: SowBridge Program on Heat
Detection; contact: Sherry Hoyer, Iowa State University, by phone (515)
294-4496 or fax (515) 294-5698.
Oct. 11-12, 2007: Employee Management for Production
Agriculture Conference, Airport Marriott Hotel, Kansas City, MO;
contact: Sarah Fogelman, Kansas State University research and Extension
economist, (620) 431-1530.
Click here to get National Hog Farmer's
complete pork industry calendar.
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