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Prairie Swine Centre is an affiliate of the University of Saskatchewan
Prairie Swine Centre is grateful for the assistance of the George Morris Centre in developing the economics portion of Pork Insight.
Financial support for the Enterprise Model Project and Pork Insight has been provided by:
Changing Business structure of the North American hog industry
Posted in: Economics, Pork Insight Articles by admin on June 5, 2017 | No Comments
Combined US and Canadian pig inventory in December 2015 was 81.6 million including 7.24 million head kept for breeding compared to December 2007’s inventory of 79.1 million pigs including 7.71 million kept for breeding. Productivity of the North American swine herd continues to grow with pigs saved per sow increasing from 9.16 in 2006 to 10.3 in 2015. US annual pork production by carcass weight has also increased by 2.5 billion pounds from 2007 to 2015.
Managers and investors need validated information on new technology now more than ever, they also require transparent supply chain economic analysis of the impacts of technological innovation, demand shifts, demographic changes, seemingly unrelated market effects and policy changes. There appear to be large opportunities for further precision management, another genetic revolution and entrepreneurial innovation. Time allows presentation of only a few ideas today. The need for educational conferences is continually increasing. Pig industry research and educational institutions are and will be investments that generate huge ROIs for producers and allied industry.
MAKING WEAN TO FINISH WORK
Posted in: Economics, Pork Insight Articles by admin on May 12, 2017 | No Comments
Wean-to-finish facilities have proven to be very popular with Midwestern US producers.
A reasonable estimate is that at least 40% of all pigs weaned in the US are weaned into wean-finish facilities. The popularity is driven by less lender risk versus financing a ‘nursery moved to finisher’ set of facilities, less pig movement, less cleaning of facilities and more flexibility in the timing of pig movement if the pigs are stocked at anything more than single stock (generally 7.2 ft2 (0.67 m2)/pig). Making it work means aggressive use of zone heating for three seasons of the year, careful selection of feeders and drinkers to accommodate both newly weaned pigs and slaughter weight pigs and attention to ventilation details. The labour challenge is that a producer or contract grower starts pigs in facilities once every six months in WTF facilities versus every seven to eight weeks in a swine nursery meaning their skill level in dealing with fallout pigs, scours, respiratory challenges, etc. may not be as sharp, especially if pig arrival coincides with planting or harvest activities. If a portion of the pigs are removed at 6-10 weeks post wean due to overstocking, record keeping for the pig flow can be challenging since weights are not recorded for the pigs remaining and often not recorded on the pigs relocated. If the pigs are split into multiple facilities the record challenges are compounded making identification of management weak-links much more challenging.
Microbiological hygiene shows to be an essential step towards a more sustainable and efficient feed to food production cycle. It combines the interests of the farmer, food industry and society in a positive manner. To optimize feed utilization, good hygiene practices are of essential importance. Specialized synergistic blends of acids make sustainable feeding more available, they are easy to implement and highly efficient. The addition of organic acids to liquid feed can be used as a means of increasing the biosafety and maintaining nutritional quality of liquid feeding and liquid feeding systems ensuring good animal performance.
BENCHMARKING 2013 NURSERY, FINISHING, AND WEAN-TO- FINISH CLOSEOUT PERFORMANCE
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Reporting results from analysis of the MetaFarms’ Finishing Manager database that show averages for nursery, finishing and wean-to-finish closeouts. For 2013, the dataset included over 17,000 anonymous and confidential closeouts, all based on a standardized set of business logic and calculation algorithms, which allows our analysts and users to make apples-to-apples comparisons of performance across and within companies using this software.
There is a performance penalty associated with the 10-11 lb. Average Start Weight category but relatively less than in nursery groups. Groups with lower start weights tend to stay on-feed longer, have more sub-standard (lightweight) pig sales and fewer market hog sales as a % of all sales, lower feed cost/lb gain, and higher medication costs per pig.
There are definite effects of Days-on-Feed on wean-to-finish performance, and you can read the data as saying longer days-on-feed are a consequence of the associated biological performance. Groups with more days-on-feed have higher mortality, much lower average daily gain, higher (worse) feed conversion, and lower feed intake (ADFI). It’s counter-intuitive but groups with higher days-on-feed also have lower feed medication costs. It appears that in wean-to-finish groups, producers have more ability to use time to their advantage, i.e. allow slower-growing groups to remain on-feed until the group reaches a realistic target market weight. In contrast to finishing groups, the Average Start Weight in wean-to-finish groups is not the biggest driver of DOF. Instead, it’s more about lower feed intake and lower ADG.
Wean-to-finish groups with higher mortality levels have much lower out weights even though they are on-feed much longer (more Average Days-on-Feed). They sell a higher percent of sales as sub- standard (lightweight) pigs and a much lower percent as market hogs. They have the ‘high- mortality’ cluster of biological effects: lower average daily gain, higher (worse) feed conversion, lower feed intake, higher feed cost/lb gain, and higher medication costs.
DYNAMIC OPTIMIZATION OF PRODUCTION TO MARKET CONDITIONS
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Pork producers have been used to constant evolution in rapidly changing markets in order to maximize profits. Least cost formulation is readily used to minimize feed costs for a defined set of performance expectations. Does feeding pigs the cheapest feed always provide the best financial returns? Will feeding diets that minimize feed efficiency return the cheapest feed cost or highest profit? In some situations, yes, but in many cases not. Market conditions that swine producers operate in will continue to constantly evolve. In order to be successful producers will have to be aware of theses changing market conditions and dynamically optimize their shipping and feeding strategy to maximize profitability, not only daily gain, feed conversion or looking at the lowest feed cost per ton. To perform this operation, strategic utilization of integrated simulation models, with the capacity to optimize, can play a significant role in choosing the best strategy for the moment.
TRADE STOPS HERE! HOW TRADE BARRIERS UNDERMINE CANADA’S INTERNATIONAL COMPETITIVENESS
Posted in: Economics, Pork Insight Articles by admin on May 11, 2017 | No Comments
In 2014, Canada exported $3.7 billion in pork products to 100 countries around the world. Over 90 percent of Canada’s pork exports are going to just ten countries, including the U.S., Japan, Russia, China and Mexico. Exports are now driving the growth in Canada’s domestic pork production. The Canadian hog industry has significant opportunities abroad, particularly in the wake of the many new trade agreements Canada has or is negotiating with major pork markets including the EU and Japan. However, Canada’s pork industry must have a solid and strategic understanding of international trade; including the mechanics and benefits of international trade deals and the perils and disruptive impact of trade barriers imposed by our major trading partners, in order to maintain its competitiveness in international markets.
PED – A CANADIAN UPDATE
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Porcine Epidemic Diarrhea (PED) was first identified in Canada January 22, 2014. Since that first case, two strains of PEDv and Porcine Delta Coronavirus (PDCoV) have been identified. Four provinces, Ontario, Quebec, PEI and Manitoba have had cases on farms. The following information is an update, describing the PED and associated coronavirus situation in Canada as of March 2015.
So far the Canadian PED story is a good news story. The epidemic has not mirrored the one in the United States. It is estimated that over 50% of the U.S. sow herd has been exposed while less than 1% of the Canadian sow herd has been exposed. There are some explanations. Canada has focused control, containment and elimination efforts on all phases of pork production while the US focus was primarily on sow herds. The feed risk was identified very early in the Canadian epidemic and measures were taken to reduce this risk. High risk points of contact have been contained more effectively and because growing pig sites have been identified packing plant contamination has been more manageable. Finally, the Canadian industry had almost a year to prepare after the disease had entered the U.S.
ECONOMICS: GRAIN AND HOG OUTLOOK
Posted in: Economics, Pork Insight Articles by admin on May 10, 2017 | No Comments
Rapid growth in U.S. ethanol production produced very high grain prices during 2006 to 2013. This caused a great deal of financial stress for livestock and poultry producers. Slow growth in ethanol production combined with record corn harvests in 2013, 2014 and 2016 have pushed down feed prices and aided livestock profits. The death of nearly 7 million baby pigs from the PED virus reduced hog slaughter and pushed 2014 hog prices to record highs. Since then hog numbers have increased and prices decreased. The outlook for 2017 is for record hog slaughter and prices slightly below the breakeven level.
If USDA’s numbers are close to right, 2017 hog slaughter will be above 120 million head, up 3.3% from 2016, and a new record. For 2017 look for hog slaughter to be up 3.8% on a daily basis with 51-52% lean hogs averaging in the upper $40s/cwt live and Iowa hogs averaging in the low $60s/cwt on a carcass basis. We anticipate only a modest slowdown in herd growth during the second half of 2017. On average, hog slaughter drops below the year-earlier level 15 months after losses begin.
Financial losses by hog producers were modest in 2016 and are expected to be small again this year. Given corn prices under $4 per bushel there is no clear signal that producers should cut back the sow herd. USDA’s long term year forecast has U.S. farm prices for corn averaging between $3.50 and $4.00 per bushel over the next ten years.
Pork production is expected to increase at an average rate of 1.3% per year. Hog prices are expected to bottom in 2017 then steadily increase through 2026.
Sustainable Intensification -Banff 2017
Posted in: Economics, Environment, Uncategorized by admin on May 8, 2017 | No Comments
This lecture focuses on production efficiency and GHG emissions, stating that livestock will need to continue to intensify in order to be able to feed the expected population of 9 billion by 2050. Comparing USA to countries like Mexico and India where more animals are needed to produce equal amounts of product Dr.Mitloehner states that the US has fewer inputs and thus fewer impacts meaning that as livestock production intensifies its carbon footprint will decrease. His talk ends with the comment that there are 5 fundamentals for sustainable agriculture. 1.Financial, 2.Animal Welfare, 3.Food Safety, 4.Workers availability and well-being, 5.Environmental. He states that all five are required for sustainable agriculture not just focusing on environment.
Sustainable Intensification -Banff 2017
Brazilian Pork Production Challenges and Opportunities -Banff 2016
Posted in: Economics, Pork Insight Articles by admin on May 3, 2017 | No Comments
From 1960 to 2013 meat production of beef, chicken and pork in Brazil has risen by 1,363 percent.
Traceability is seen as a competitive requirement and is mandatory for the companies handling and processing food products. This is essential because of the direct link to risk, the traceability system “must be able to connect all the links in the chain with the ability to trace back from consumer to farmer,” says Cinara Milanez Shibuya Batista.
Management of disease outbreaks is of significant importance in Brazil. The country has a national swine health program to control, notify and action in cases related to pork production. Because of foot and mouth (FMD) issues in the last few decades in both swine and beef animals, Brazil has yet to regain access to some lost export markets. Because of this Brazil has adopted an extensive biosecurity program and places great importance on transparency and reliability within the system.
The country operates on a closed loop system. Its goals are to ensure better sanitary control, more income stability for the producer and income creation in rural areas.
The new measures appear to be working. In the last 15 years, Brazil has boosted its exports of pork by more than 600 per cent and has increased pork production by 40 per cent primarily in its southern states. This makes Brazil the fourth largest producer and exporter in the world exporting about 500k tonnes and making up about eight per cent of global pork exports.
Brazilian Pork Production Challenges and Opportunities -Banff 2016
Optimizing Feed and Farm Management to Market Conditions -Banff 2016
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Big picture decisions: efficiency vs. throughput
In large part, this choice depends on the state of the market. In bad times, the focus should be on efficiency in three main areas:
1. Managing cash flow through controlling costs, reducing
capital spending, renegotiating rental or expense
agreements or reducing cash dividend removal.
2. Extending or renegotiating loan terms.
3. Liquidating a portion of inventory to pay down debt.
When you’re making money, it’s best to maximize throughput and weights to reap as much profit as possible. In this scenario, market weights and sow inventory increase, as do diets with the inclusion of nutrients or ingredients to enhance growth rate. These changes should be made even at the cost of efficiency and price increases in order to maximize revenue. In leaner times, efficiency is king, as low efficiency animals are removed, market weights are lowered and diet costs are reduced to obtain the lowest feed cost per unit of gain.
Optimizing Feed and Farm Management to Market Conditions -Banff 2016