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National Hog Farmer Weekly Preview
August 31, 2009
 
In this issue:
  Sow Slaughter Finally Takes Upward Path
  When Will the Hog Market Get Better?
  Ten-Year Budget Deficit to Reach $9 Trillion
  Time Magazine’s Cover Article Draws Pork Industry Rebuttal

MARKET PREVIEW
Sow Slaughter Finally Takes Upward Path
U.S. federally inspected (FI) sow slaughter finally went above year-ago levels the week of Aug. 15. That’s one of those occurrences that is hoped for and lamented at the same time. It means we may have turned the corner to the liquidation that is needed to restore profitability to our business. But it also means that some friends and perhaps neighbors will not be in the business to see those profitable days.

Figure 1 shows weekly sow slaughter for 2008 and 2009 as well as the weekly averages for 2003-2007. August 15 marks only the third week this year in which U.S. sow slaughter has been larger than one year ago. The others were the weeks of Jan. 10 and July 25.

The same pattern holds true if one considers sow slaughter as a percentage of the breeding herd, which is probably a better measure of sow herd change, since we should expect lower numbers of slaughter sows with a smaller breeding herd. The week of Aug. 15 was the second-highest percentage of the breeding herd (1.16%) this year, second only to January 8 (1.18%). Through Aug. 15, 26.6% of the breeding herd has been slaughtered thus far in 2009, compared with 29.6% in 2008.

FULL ARTICLE

FINANCIAL PREVIEW
When Will the Hog Market Get Better?
I can’t tell you how many times I have been asked this question over the past 12 months. In 2007, the industry had strong profits and strong balance sheets. That was a long time ago.

The bottom line is this – if demand remains sluggish, it could take until 2011 for the pork industry to be consistently profitable again. We will eventually get supply down, but it will take a while longer for this to occur.

In our last severe downturn (1998-99), a good portion of the industry could exit the business and turn back to crop farming. Some actually became a contract grower for someone else. The current issue is the swine industry has become more specialized. The top 30 producers represent almost 70% of the industry. Pork production is their livelihood. If they decide to get out of the business, it’s likely they do not have another option to turn to. This is why it’s taking so long for the industry to contract. The swine industry is very good at producing 115 million pigs. However, with current demand, we only need 105-107 million pigs – a reduction of 5-7%. We will get there, but unfortunately it will be a slow and painful process.

A Challenge to All Pork Producers – I have spoken to several groups this past year and every time I have urged people to become an advocate for the industry. I believe this is our biggest Achilles heel. We are great at production, but we need to do a much better job of “rebranding” our industry. We need to take steps to make the industry better – not only from a profitability standpoint – but also from a public perception standpoint. We can no longer set back and just raise pork. Here is my challenge for each of you:

FULL ARTICLE

LEGISLATIVE PREVIEW
Ten-Year Budget Deficit to Reach $9 Trillion
The Obama administration has announced it expects the 10-year budget deficit to reach $9 trillion. This is approximately $2 trillion more than was estimated earlier this year. The administration said the deficit is a “result of a deeper-than-expected recession, certain spending programs (such as unemployment insurance and food stamps) are projected to automatically increase and revenues are projected to automatically decline, compared to our previous projections.” Congressional members were raising concerns earlier this year about the increasing deficit. This could have an impact on the health care debate when Congress returns after Labor Day.

Farm Storage Facility Loan Program — USDA announced changes to the Farm Storage Facility Loan (FSFL) program as a result of the 2008 farm bill. This will allow producers of eligible commodities to obtain low-interest financing to build or upgrade farm storage and handling facilities. The maximum principle amount of a loan through FSFL is $500,000. Participants are required to provide a down payment of 15%, with the Commodity Credit Corporation (CCC) providing a loan for the remaining 85% of the next cost of the eligible storage facility and permanent drying and handling equipment. Loan terms of 7, 10 or 12 years are available depending on the amount of the loan. Interest rates for each term rate may be different and are based on the rate which CCC borrows from the Department of the Treasury. Corn, grain, sorghum, rice, soybeans, oats, peanuts, wheat, barley or minor oilseeds harvested as whole grain are the commodities that are eligible for the program.

FULL ARTICLE

NEWS FLASH
Time Magazine’s Cover Article Draws Pork Industry Rebuttal
National Pork Board President Tim Bierman has sent a strongly worded letter to the editor of Time magazine for its recent cover story, “America’s Food Crisis and How to Fix It.

For starters, there is no food crisis in America, he says. “Americans have access to abundant, safe and affordable food that is the envy of the rest of the world. It is produced by caring farmers using methods that are supported by science and backed by experience,” Bierman responds.

“Unfortunately for Time’s readers, the food plate of the article’s author, Bryan Walsh, is half empty. He blames modern pork production for much of what he considers to be today’s environmental concerns. He says pigs eat too much corn-based feed, which in turn, relies on too much commercial fertilizer.

FULL ARTICLE

PORK INDUSTRY CALENDAR
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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 BLUEPRINT

MORE EFFICIENT USE OF FEED
The volatility of feed prices in recent years has heightened producers' awareness of the need for continual improvement in the efficiency of feed use. Click here for the complete Blueprint archive.

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 MAGAZINE HIGHLIGHTS

This month's focus: Pig Care & Handling
Euthanasia: Making a Tough Call a Little Easier
Always unpleasant, but undeniably necessary, the task of compassionate euthanasia must be addressed.
Walk the Pens Advance Pig Handling, Welfare
Proper care at the start eases pig movement at marketing time.
Keep'em Moving
University of Illinois research reveals hauling shortcomings.

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 POSTERS

FREE SELECTION GUIDES AND MANAGEMENT POSTERS
National Hog Farmer offers 10 posters targeting key production areas, offering guidance in critical areas such as feet and leg soundness and reproduction traits soundness in replacement gilts. Others include pig anatomy, heat detection, sow condition, etc. All posters are in English. Select posters are translated to Spanish, Chinese and Japanese.

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Suvaxyn® PCV2 is proven to be a safe and efficacious way to control circovirus. And it controls viremia, too. Suvaxyn PCV2 also provides what no other circovirus vaccine can: the option of one- or two-dose regimen to meet the needs of your operation. Either way, you’ll take more pork to market. Ask your Fort Dodge representative or your animal health supplier about Suvaxyn PCV2.Click here for more information.

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