Crunch Exacerbates Price Spreads
Judging by some e-mails and phone calls I have received
recently, it is time once again to discuss retail pork prices and price
spreads. This topic always surfaces when hog prices fall sharply or
remain low for an extended period of time – especially if retail pork
prices don’t follow suit. The latter is virtually always the case!
Is it fair for producers to suffer and “middlemen” to make more
money? No, not really. But neither is it fair for producers to profit
during many past summers when margins for middlemen were reduced. That
happens less frequently than does a decline in hog values, but just what
That’s a difficult question to answer, especially when we know far
less about packers’, processors’ and retailers’ costs than we know
about producers’ costs. That results in us judging gross profits, not
net profits, as we should.
Here’s what we know about this situation is:
• The USDA retail price series is notoriously “sticky
downward,” which means that it very seldom shows a lower retail price
and, when it does, that decline is small. One reason is that retail
prices indeed rise and are more heavily impacted by general inflation
than are farm-level or wholesale prices because they include more cost
items (labor, transportation, packaging, real estate, etc.) that
inflate. But this “stickiness” is also a fault of the data
collected by the Bureau of Labor Statistics (BLS): They do not gather
sales quantities. More units are sold at lower prices, but the lower
prices are not more heavily weighted in the average because the BLS data
gatherers do not know how much was sold at each price. This is
especially a problem this year when widespread, heavy pork featuring by
retailers has helped move unexpectedly large domestic supplies. USDA
says that it will begin to capture scanner-based price and quantity
information again this fall, so this problem may be addressed soon.
Let’s hope so.
Investigation: Look for Infection
Recently, several reports from Europe suggested a new
disease threat to pig production as a syndrome of intractable diarrhea
in suckling pigs. Up to 40% mortality was reported, with both the cause
and the cure unknown.
As the diagnostic investigations unfolded, no consistent infectious
causes of diarrhea were identified. The investigations were interesting,
however, because of some of the implications from the analysis of risk
factors. These included in no particular order: offspring of gilts or
Parity 2 females; prolonged farrowing with later piglets at greater
risk; greater variability in quantity of antibody transferred to the
later-farrowed piglets; hyperprolificity of sows; excess milk/colostrum
production; overuse of antibiotics and chilling. More will be discussed
regarding these factors later.
Dealing with scours starts with looking for the infectious causes of the
increased diarrhea or increased preweaning mortality.
The rate and frequency of diagnosis of E. coli numbers in suckling
piglets at the Iowa State University Veterinary Diagnostic Laboratory
(VDL) has not changed appreciably in the last six years.
Reached on Chinese Poultry Trade
An agreement was reached by the House-Senate agriculture
appropriations committee that will allow imports of processed poultry or
poultry products from China after USDA notifies Congress that certain
conditions have been met. The agreement will allow USDA’s Food Safety
and Inspection Service (FSIS) to conduct risk assessments needed to
allow imports of cooked Chinese chicken products. USDA and the U.S.
Trade Representative worked closely with the conference committee on the
agreement. Secretary of Agriculture Tom Vilsack said, “We commend the
conferees for reaching an agreement that protects food safety and public
health in a manner consistent with our international obligations. The
agreement reached by the conferees will maintain the safety of our food
supply and ensure that America takes a leadership role in supporting a
science- and rules-based trading system." U.S. Trade Representative Ron
Kirk added, “The conferees have acted in Americans' best interests in
two ways: by insisting on the safety of our food supply, and also by
maintaining America's leadership in the rules-based global trading
system." The National Pork Producers commented, “We applaud the
conferees for finding a path forward that will permit USDA to conduct a
science-based risk assessment of Chinese processed poultry. It sends a
strong signal to China that the United States abides by its trade
obligations and will base decisions about imports on sound science. We
expect China to do the same.” Poultry products had become a major
trade issue with China.
Surveillance Program Shunned by Pork Producers
The U.S. Department of Agriculture (USDA) recently
released a program designed to monitor and provide surveillance in swine
herds carrying the novel H1N1 flu virus.
The catch was the program fails to provide pork producers with any
assurances that if their herds become identified as infected, that
packers will buy their hogs and retailers will sell the pork products.
“The reality is that USDA is willing to pay for testing samples if
producers want to voluntarily participate, and as of today, almost
nobody has elected to participate,” observes James Collins, DVM, head
of the University of Minnesota Veterinary Diagnostic Laboratory
Oct. 6-7, 2009: The Center for Food
Integrity’s 2009 Food System Summit, Hilton Kansas City Airport
Hotel, Kansas City, MO; contact: Jim Fallon at (816) 556-3129 or visit
Oct. 8-14, 2009: U.S. Animal Health Association
Annual Meeting, Town and Country Hotel, San Diego, CA; contact www.usaha.org for more
Oct. 12, 2009: National Pork Board’s RFD-TV Show
on the H1N1
outbreak and what it means to your operation, 7 p.m. central standard
time; contact: www.rfdtv.com.
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