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National Hog Farmer Weekly Preview
September 6, 2010
In this issue:
  Packer-from-Packer Buyer Provision is a Bit Murky
  A Closer Look at Sow Herd Parity Structure
  Livestock Competition Workshop
  Consumer Perspectives Are Key Part Of Pork Board Budget Talks

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.


A Closer 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 28 PW/MF/Y.

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.


Livestock Competition Workshop
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.


Consumer 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 strategic plan:


Sept. 9, 2010: Midwest Swine Nutrition Conference, Indiana Farm Bureau Building
Indianapolis, IN
for more information contact:

Sept. 13-16, 2010:International Symposium on Air Quality and Manure Management for Agriculture, DoubleTree Hotel Dallas
Dallas, TX
for more information contact: Sharon McKnight by phone (269) 932-7033 or e-mail

Sept. 15, 2010: Midwest Pork Conference, Hendricks County Conference Complex
Danville, IN
for more information contact:



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.

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. Click here to see how NPPC is working for you.


The August 15 edition of National Hog Farmer magazine focuses on swine care and housing. Feature stories include an Iowa farm’s vigilance to reduce preweaning mortalities by 5% in just six months, a trial studying free-access gestation stalls, high-tech screening of sows for lameness, and the reappearance of swine dysentery. These stories and more may be found at

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


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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