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National Hog Farmer Weekly Preview
July 26, 2010
 
In this issue:
  Canadian Feeder Pig Imports and a GIPSA Rule Update
  Benchmarks for Profitability
  Committee Reprimands USDA on
GIPSA Rule
  Industry Coalition Launches Ad Campaign Against Ethanol Increase

MARKET PREVIEW
Canadian Feeder Pig Imports and a GIPSA Rule Update
Readers will notice that our table of North American pork industry data contains #VALUE errors for imports of pigs from Canada for the week of July 10. That’s because no data were available from USDA for that week. USDA’s website says simply, “The complete data set used to compile this report is not available from APHIS. When it becomes available the report will be disseminated.”

It’s a problem that rears its head now and then, but a quick look at the weekly import chart in Figure 1 shows that the last two observations for feeder pig imports are very low. Dan Bluntzer, research director at Frontier Risk Management, discovered early last week that USDA had some questions about the feeder pig counts in those two weeks and now AMS has delayed the next week’s data. We’ll get it lined out eventually but, in the meantime, I wouldn’t read too much into those two weeks of less than 70,000 pigs coming south.

U.S. feeders and packers have figured out how to use these pigs efficiently in the face of MCOOL-imposed challenges. Packers take “Label B” pigs only on certain days in specific plants and merchandise the pork primarily to export and foodservice markets where it is not required to carry a label. It’s amazing how economic agents adjust to new conditions if they have some freedom to do so.

FULL ARTICLE

FINANCIAL PREVIEW
Benchmarks for Profitability
I recently had the honor of speaking at the National Pork Industry Conference held in the Wisconsin Dells. I focused on the current financial state of the U.S. pork industry because there seems to be a rather large discrepancy regarding how quickly producers are recovering, financially.

Through May, we saw producers who broke even, while others recorded profits of up to $18/head, year-to-date. In my presentation, I pointed out that this difference could be illustrated by taking out hedge gains and/or losses, and just looking at operational profits. That’s essentially what we are seeing in our loan portfolio.

The main variance in the profit/loss picture is cost of production, year-to-date. Some production systems have breakeven costs of $0.45/lb., live wt., while others run as high as $0.55/lb., live wt. The difference calculates to over $27/head on a 270-lb. market hog. The major drivers in these discrepancies are overall herd health and feed cost/head.

FULL ARTICLE

LEGISLATIVE PREVIEW
Committee Reprimands USDA on
GIPSA Rule
USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) announced today that it was extending the comment period on the proposed GIPSA rule on livestock marketing practices by an additional 90 days. The comments will now be due by November 22, 2010. The call for extending the comment period became very strong last week during the House Livestock Subcommittee’s hearing on the proposed rule. Also, Senators Blanche Lincoln (D-AR), chairman of the Senate Agriculture Committee, and Saxby Chambliss (R-GA), ranking member of the committee, and 15 other Senators had sent a letter to Secretary of Agriculture Tom Vilsack asking for the comment period to be extended 120 days. National Farmers Union, R-CALF, and others had written the secretary asking that the comment period not be extended.

Committee Sends Strong Message to USDA on GIPSA Rule — Members of the House Livestock subcommittee sent a very strong bipartisan message to USDA regarding the proposed GIPSA rule on livestock marketing practices. The committee members told administration officials that the Department had gone far beyond Congressional intent that was established in the 2008 farm bill. The Department was reminded by both Democrats and Republicans that many of these issues that GIPSA is proposing were considered and defeated during the writing of the livestock title of the farm bill. Some members complained that the proposed rules would actually increase concentration, hurt producers, and would eliminate some businesses. The Department officials said the rules were intended to provide transparency, fairness and protect producers against unfair practices. At the end of the hearing Congressman David Scott (D-GA), chairman of the subcommittee said, “For you and the department to arbitrarily go against the wishes and intent of Congress is serious. The least – the least – you can do is to extend the comment period. To move ahead would be the worst thing that we could do for the industry and America.”

FULL ARTICLE

NEWS FLASH
Industry Coalition Launches Ad Campaign Against Ethanol Increase
The American Meat Institute and 14 other industry and environmental groups have joined forces in launching an advertising campaign advocating more scientific testing as part of an effort to convince Congress to reject calls to mandate boosting the amount of ethanol in gasoline by 50%.

The campaign has the tagline, “Say NO to untested E15.”

Most gasoline sold in the United States contains 10% ethanol (E10). Corn-based ethanol supporters want Congress to boost that to 15% (E15), while some support a compromise to boost it to 12% (E12).

“Increasing the consumption of corn-based ethanol by 50% will increase food and feed prices, driving up costs for meat and poultry producers and ultimately consumers,” says American Meat Institute President and CEO J. Patrick Boyle. “This controversial decision certainly warrants careful and thoughtful examination considering the many negative consequences increasing the blend will have.”

FULL ARTICLE

PORK INDUSTRY CALENDAR
August 31, 2010: 20th Annual Carthage Veterinary Service, Ltd. Swine Conference, Western Illinois University, Macomb, IL
For more information contact: (217) 357-2811 or go to www.hogvet.com

August 30-31, 2010: Joint Strategy Forum on Animal Disease Traceability, Renaissance Denver Hotel, Denver, CO
For more information go to: www.animalagriculture.org or www.usaha.org..

August 31-Sep. 2, 2010: Feet First Sow Lameness Symposium, Hilton Minneapolis, Minneapolis, MN
For more information contact: (612)-376-1000 or go to www.zinpro.com/feetfirst.

FULL ARTICLE
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1. Data on file, Study Report No. 768-9690-0-CPC-97-002, Pfizer Inc.

 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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NPPC conducts public-policy outreach on behalf of its 43 state associations, enhancing opportunities for the success of U.S. pork producers and stakeholders by establishing the pork industry as a consistent and responsible supplier of high-quality pork to domestic and world markets. Click here to learn more and support your industry.


 MAGAZINE HIGHLIGHTS

The July 15 edition of National Hog Farmer features 10 “practical, common sense” new products that found favor with our independent review panel. Four industry experts – a pork producer, a swine veterinarian, a swine nutritionist and an Extension agricultural engineer – reviewed 19 new products nominated and introduced at the 2010 World Pork Expo in Des Moines. To read the full story, go to: http://nationalhogfarmer.com/mag/wpx2010-new-product-tour-0715/.

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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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