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National Hog Farmer Weekly Preview
May 24, 2010
 
In this issue:
  Stay Focused on Risk Management Objectives
  Profits Help Realign Priorities
  Billions Added to U.S. Exports
  Financial Risk Focus Of Pork Expo Seminar

MARKET PREVIEW
Stay Focused on Risk Management Objectives
Should a pork producer measure the success of a biosecurity program by looking at the amount of money spent on vaccines? The latter is only one part of the former. Vaccines are important, but they certainly are not the definitive measure of success.

Similarly, should a pork producer measure the success of a risk management program by the price received? The answer is no – and the similarities between the two questions are clear.

Current discussions about price levels which could have, should have or would have been reached remind me of ongoing discussions about pork quality. In the 1980s and 1990s, the industry made great strides in making hogs leaner. At the same time, some real concerns arose about the quality of the lean in the new, high-efficiency hogs and their carcasses. Some of those concerns remain today. Selection for one trait, while improving the targeted trait causes improvement in that trait, but may have deleterious effects on another.

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FINANCIAL PREVIEW
Profits Help Realign Priorities
If you are involved in the swine industry, the last couple of months have been encouraging. Cash prices have been over $80/cwt., carcass, for the last month (Figure 1) and producers are finally able to improve their balance sheets. The industry needs an extended run of profits to get back to where it was in 2007. Not only will it take some time to repair the economic damage of the past two years, there were many production system items placed on the back burner due to a lack of cash. If profits continue – and I think they will – I believe we will see many production systems looking at the following investments over the next 12 months:

    Sow Parity – The last couple of years, producers have retained sows for more parities. In many productions systems, the sow parity average was over 4. With cull sow prices over 50 cents/lb., you can replace those older sows with gilts and bring the average parity of your sow herd back to a more typical level. Down the road, this will lead to better production in your sow herd.

    Human Resources – I think many companies stretched their people resources to their limits over the last two years. In visiting with many companies, we have learned that people could do more if asked; but, now may be a good time to invest in these key employees (e.g., training, bonuses), which will likely pay dividends down the road. There is always a limit to how much you can push employees. Investing in human resources should be on the list for many production companies.

    Fixing and Repairing – Many companies put any major repairs on existing buildings on hold. Because of limited cash, many production systems spent only the bare minimum to maintain their buildings. There will be many gates, feeders, crates, slats, etc. that need replacing across the industry. As balance sheets continue to heal, equipment suppliers will likely be busy, as will businesses in new construction.


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LEGISLATIVE PREVIEW
Billions Added to U.S. Exports
USDA’s Foreign Market Development (FMD) program and Market Access Program (MAP) have had a positive and significant impact on U.S. agricultural trade. This was the finding in an independent study by HIS Global Insight, which evaluated the effects of the FMD and MAP programs administered by USDA’s Foreign Agricultural Service (FAS). The study focused on the period from 2002 through 2009. By 2009, the report concludes, the increase in market development spending since 2002 increased U.S. export market share by 1.3% and the annual value of U.S. agricultural exports by $6.1 billion. The study concluded that increased investment in market development resulted in the following:

    • For every additional $1 expended by government and industry on market development, U.S. food and agricultural exports increased by $35;

    • Export gains associated with the programs increased the average annual level of U.S. farm cash receipts by $4.4 billion and net cash farm income by $1.5 billion. At the same time, U.S. domestic support payments were reduced by roughly $54 million annually due to higher prices from increased demand abroad, thus reducing the net cost of the programs.


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NEWS FLASH
Financial Risk Focus Of Pork Expo Seminar
To learn more about making wise investment decisions in these times of volatile hog markets, attend the financial risk overview at the 2010 World Pork Expo in Des Moines, IA, by Thomas Clark, associate director of Commodity Products for CME Group, including Chicago Mercantile Exchange.

Clark’s seminar, “Risk Management for Pork Producers,” will focus on the importance of risk management in operating a successful hog operation. Clark will present a brief overview about hedging investments with futures and options, discuss how producers can develop a marketing plan and explain educational training tools producers can use to leverage their risks.

“I hope producers that attend the educational seminar at World Pork Expo will walk away with a basic understanding of why risk management is important to their financial future,” says Clark. “The markets are different now than they were 10 years ago, and the way previous generations ran their operations and managed ‘the bottom line’ may not be the best way for our generation to do business.”

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PORK INDUSTRY CALENDAR
June 8-10, 2010"Sustaining Animal Agriculture: Balancing Bioethical, Ecnomic and Social Issues."
Jefferson Auditorium, USDA's South Agriculutre Building
Washington, DC
For more information contact: Dave Stender by phone (712) 225-6196, fax (712) 225-3173 or e-mail dstender@iastate.edu.

June 9-11, 2010: World Pork Expo, Iowa State Fairgrounds,
De Moines, IA;
For more information contact: www.worldpork.org.


June 23, 2010: Advanced Swine Reproductive Management Workshop Lifelong Learning Center
Norfolk, NE
For more information contact: Dave Stender by phone (712) 225-6196, fax (712) 225-3173 or e-mail dstender@iastate.edu.



FULL ARTICLE
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 BLUEPRINT

As positive margins return to pork producers’ ledgers, owners and managers are recounting the hard lessons learned as they redouble efforts to improve risk management skills, measure and manage production variance with greater precision, and produce quality pork in a safe and sustainable manner. At the heart of the 50th edition in the Blueprint series, published April 15th, 2010, is a focus on new and improved pathways to profitability.

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It’s Expo time! Thousands of producers and industry professionals from all over the world will be in attendance. Don’t miss three jam-packed days of learning, networking and training plus discover the latest trends, products and innovations. And, don’t forget the fun — click here for all the details!

 MAGAZINE HIGHLIGHTS

The May 15 edition of the National Hog Farmer will feature the fifth class of the “Masters of the Pork Industry,” featuring personal and professional profiles of industry entrepreneurs destined to leave their mark on the North American pork industry. This special edition also features 21 products nominated for the National Hog Farmer’s World Pork Expo New Product tour and a full slate of WPX events and activities.

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Feed The Right Pig At The Right Time
Using Feedlogic’s FeedSaver technology, you save money by precisely matching your pig’s feed requirements. Sound difficult? It actually makes feed management simpler for you and the feed mill. Click here for more information.

 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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FOR ROBUST RESULTS, GO TO THE SOURCE.
Our breeding technology is delivering what your operation demands, high production results across a wide range of environmental conditions. Count on the industry leader. Go to the trusted source. Click here for more information.

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