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Not a
Banner Year for Packers Either
The situation with pork packing margins has been somewhat
of a mystery this year. There is always mystery regarding the actual
level of packers’ profit margins since they are quite understandably
reluctant to publicize those numbers beyond what is required of the
publicly traded companies, such as Smithfield Foods, Tyson Foods and
Hormel Foods.
I think it is safe to say that most pork producers feel the same way
about their financial performance data. But we do have enough data to
estimate pork packers’ gross margins (i.e. the margins that they
achieve above the amount they pay for hogs) by comparing the pork cutout
value to the cost of hogs and then adding in an estimate of by-product
revenue. Figure 1 shows these estimates for 2008 and 2009,
year-to-date, as well as the five-year average.
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Three
Main Variables to Improve Farrowing Rate
Improving farrowing rate has economic value to your sow
farm. Improving farrowing rate by 4% will increase pigs/sow/year by
approximately 1.35 and reduce the breakeven by approximately
$1.75/weaned pig. That 4% would also allow you to reduce sow inventory
by approximately 5% while producing the same number of pigs and reducing
the breakeven by approximately $0.25/ weaned pig.
Swine Management Services’ Fertility Triangle (Figure 1) shows the
three variables in breeding: female (sow/gilt), boar semen (quality),
and person (Artificial Insemination Technician). We have discussed
these key factors in previous Weekly Preview columns. We feel it
would be good to summarize the key performance measures and standard
operating procedures (SOP) into one document. The following should be
part of your farm’s SOP manual:
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Concentration Does Not Adversely Affect Food Prices
In a new report, the Government Accountability Office
(GAO) concluded that concentration in the processing segment of the
beef, pork, or dairy sectors or the retail sector, overall, has not
adversely affected commodity or food prices. The study looked at trends
in agricultural concentration, trends in retail food expenditures and
prices, trends in prices farmers receive, and the effects of
concentration on commodity and food prices. The report also found:
• Concentration generally has increased at all levels of the
food marketing chain in all agricultural sectors since the 1980s. At
the farm level, less than 2% of farms accounted for 50% of total sales
in 2007. At the food processors’ level, in general, a small number of
companies accounted for a large and growing portion of sales in 2007.
The market share of the largest four hog slaughtering firms increased
from 36% in 1982 to 63% in 2007. The share of grocery store sales held
by the largest four firms more than doubled, from 16% in 1982 to 36% in
2005.
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South
Korea Eases Restrictions On U.S. Hogs and Pork Imports
The Republic of Korea has decided to only inspect a sample
of U.S. pork exports, rather than 100% of them, and to lift a ban on
U.S. live hog imports. The restrictions were imposed following the H1N1
Flu Outbreak Virus.
“South Korea’s decision is good news for U.S. pork producers,”
says National Pork Producers Council (NPPC) President Don Butler.
“NPPC has been working closely with U.S. and foreign government
officials to terminate all remaining H1N1 restrictions on U.S. hog and
pork exports. Korea is a top market for U.S. pork exports and an
important destination for swine breeding stock. Our producers are
enduring very difficult financial times, and the removal of these
restrictions by Korea is appreciated.”
U.S. pork producers have lost nearly $4.5 billion or more than $21/hog
marketed since September 2007 – resulting from high production costs
mainly due to feedgrain prices and restrictions on U.S. pork and hog
exports fueled by fears of the novel H1N1 virus.
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Aug. 24-28, 2009: ID•INFO EXPO 2009,
Kansas City, Mo. the ID•INFO EXPO 2009 will focus on recent advances
in animal identification technology as there's been significant advances
made these past two years. In addition, we'll explore traceability as it
lines up with food safety, animal health and marketing efforts. With
recent food safety concerns in produce and troubles locating the source
of the produce, more and more consumers are asking "Where did this
come from?" and retailers are actively pursuing solutions to meet
consumer demand. In addition, export markets will continue to increase
demands for traceability. More information is available at www.animalagriculture.org.
Sept. 1, 2009: Carthage Veterinary Service (CVS), Ltd.
19th Annual Swine Conference, Western Illinois University, Macomb, IL;
contact: CVS at (217) 357-2811 or visit www.hogvet.com.
Sept. 10, 2009: Midwest Swine Nutrition Conference,
Indiana Farm Bureau Building, Indianapolis, IN; contact: Tip Cline at
Purdue University at tcline@purdue.edu or visit www.swinenutritionconference.com.
Sept. 15-16, 2009: 70th University of Minnesota
Nutrition Conference, Holiday Inn, Owatonna, MN; contact: http://www.ansci.umn.edu/mnc.html.
FULL ARTICLE
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