Packer-from-Packer Buyer Provision is a Bit Murky
One of the surprises in the proposed Packers and
Stockyards Act rule from Grain Inspection, Packers and Stockyards
Administration (GIPSA) was the prohibition of packers from buying
animals from other packers. No one really expected this action by GIPSA
and its underpinnings are a bit murky.
The packer-from-packer buying prohibition is included in the rule
ostensibly to prevent packers from signaling their intents for the
larger market by their “bids” and “asks” regarding these animals
sold directly to one another. Figure 1 shows the number of hogs sold
through the various pricing/transaction methods. Packer-Sold hogs
(i.e., hogs raised by a packer but sold to another packer) accounted for
5.98 million head in 2009. That is 5.8% of the barrows and gilts covered
by the mandatory price reporting system. These numbers have been
trending slowly downward since 2006.
Industry contacts estimate that 2 to 2.1 million of these hogs are those
sold by Smithfield Foods’ Utah and Colorado operations. Those hogs
move primarily to Farmer John (owned by Hormel Foods) in Los Angeles.
How do these prices compare to those of other hogs? Figure 2 shows the
average weekly prices of the animals sold under each method. It’s a
pretty busy chart, but I think you can see that the Packer-Sold pigs
(light blue line) is generally at or above the level of the other prices
– especially the negotiated and swine/pork formula hogs.
Figure 3 shows these same data in another way – as a differential.
The lines represent the price of Packer-Sold pigs minus the price of the
respective pricing methods. Packer-Sold pigs are sometimes lower-priced
than Other Market Formula (OMF) and Other Purchase Arrangement (OPA)
hogs primarily because those two pricing methods depend on other markets
– futures prices (which represent different time frames) in the case
of OMF prices and feed ingredients in the case of OPA. Packer-Sold pigs
are almost always higher-priced than the two other methods, which are
oriented to the spot market.
Look at Sow Herd Parity Structure
The Swine Management Services (SMS) Benchmarking database
has grown from 150 farms and 250,000 females six years ago to 770 farms
and 1,300,000 females today. We have some key production data on U.S.
and Canadian breeding herds dating back to January 2005.
As the database has grown, we have seen changes in the size of the farms
that rank in the Top 10%. When the database was started, the Top 10%
was dominated by farms with less than 800 sows. In the past year, there
have been many large farms that are averaging 27-29 pigs weaned/mated
female/year (PW/MF/Y). This has changed the makeup of the Top 10%
farms. There are 77 farms in the Top 10%, with an average size of 1,143
sows. One of those farms has over 5,000 sows and is averaging more than
Chart 1 shows the trend in average parity over the last six years,
moving from 2.4 in 2005 to 2.7, currently. The Top 10%, 25%, 50% and
All Herds average is determined by pigs weaned/mated female (PW/MF).
During 2005 to 2007, the Top 10% farms had an average parity just over
2.7, indicating older females are needed to gain a Top 10% ranking. Over
the last 2+ years, all farms have allowed their sow herds to grow older.
However, this aging may have been driven by economics rather than a
goal to move parity average higher.
The Department of Justice//USDA livestock competition
workshop in Ft. Collins, CO, was the largest of the four workshops held
so far this year with estimates of 1,500 in attendance. U.S. Attorney
General Eric Holder and Secretary of Agriculture Tom Vilsack opened the
session. Secretary Vilsack continued his past comments regarding
consolidation in the meatpacking industry and the need for transparency
and fairness in the marketplace. There was a wide variance of opinions
with some producers stating their concerns about the unintended
consequences of the rule, such as negative effects on value-added
programs, more vertical integration, and government involvement over
free-enterprise. Proponents of the rule argued that there needs to be
more fairness and transparency in the marketplace. They noted the top
four cattle packers control 80% of the steer and heifer market.
Additional concerns included fewer buyers and greater power of the
packers. Prior to the workshop, the National Pork Producers Council
(NPPC) and the National Cattlemen’s Beef Association (NCBA) held a
press briefing expressing their opposition to the proposed Grain
Inspection, Packers and Stockyards Administration (GIPSA) rule. NPPC
President Sam Carney said, “As written, the GIPSA rule would limit my
ability to sell hogs. It's a solution in search of a problem. The
markets work, and we don't need the government trying to 'fix' it. The
GIPSA rule is overly broad and very vague. It would inject uncertainty
into the market, stifle innovation, and lead to less, not more,
competition in the livestock industry." R-CALF and other proponents of
the rule also held an event the night before the workshop. The next
DOJ/USDA competition workshop will be held in December in Washington, DC
to focus on the retail sector.
Perspectives Are Key Part Of Pork Board Budget Talks
When the National Pork Board meets on Thursday (Sept. 9),
consumer perspectives of pork and pork production will be a central
focus of their deliberations.
More than 50 pork producers will meet to help guide the investment of
Pork Checkoff dollars into consumer information, research and producer
education programs. The programs are crafted to help producers offer
consumers safe, affordable, quality pork products.
Earlier this summer, the board’s producer-led committees identified
the following three major goals to achieving the board’s new five-year
Sept. 9, 2010: Midwest Swine Nutrition
Conference, Indiana Farm Bureau Building
for more information contact: www.swinenutritionconference.com.
Sept. 13-16, 2010:International Symposium on Air
Quality and Manure Management for Agriculture, DoubleTree Hotel Dallas
for more information contact: Sharon McKnight by phone (269) 932-7033
or e-mail email@example.com.
Sept. 15, 2010: Midwest Pork Conference, Hendricks
County Conference Complex
for more information contact: http://www.indianapork.com/MidwestPorkConference/
NPPC works diligently to protect and promote the interests
of America’s pork producers who in turn provide safe, nutritious pork
to domestic and foreign markets, generating thousands of jobs and more
than $30 billion of gross national product to the U.S. economy.
to see how NPPC is working for you.
According to a head-to-head trial1,
LINCOMIX® (lincomycin) is equally as efficacious for
ileitis control at 40 g/T as Tylan® is at 100 g/T. That
means you’ll spend a whopping 40% less for comparable results. Contact
your veterinarian or your Pfizer Animal Health representative to learn
1. Data on file, Study Report No. 768-9690-0-CPC-97-002, Pfizer
How can Compost-A-Mats clear up scouring litters?
For more info click here
- Upon identifying scouring piglets, place a Compost-A-Mat
directly under a heat lamp in the farrowing crate.
- This will create a clean and warm area for piglets to dry up and
help overall farrowing house performance.
- The Compost-A-Mat should remain in the crate for seven days or
until piglets have stopped scouring.
- At this point, the Compost-A-Mat will contain fecal material and
can be broken down for feedback.