What's new on National Hog Farmer?
2007 Swine Research Review
- Variation:
You Can Manage It, But You Can't Avoid It
- Birth
Weight Effects on Postnatal Growth
- Consistent,
Targeted Nutrition Improves Efficiency
- Small
Steps To a Turnaround
- Current Issue:
Managing Variation
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Market Preview
Expect Congress to
Override Farm Bill Veto
It appears that we now have a 2008 farm bill approved by
both houses of Congress. The president has promised a veto, but the
majorities in both houses were far beyond the levels required to
override a veto. Some Republicans may switch sides to support the
president, but observers think the override is a certainty. See last
week’s North American Preview at www.nationalhogfarmer.com
for details on hog marketing impacts.
USDA announced yesterday that it would publish the final rules for the
reauthorization of the Livestock Mandatory Reporting Act of 1999 (the
enabling legislation for the mandatory price reporting system) on May
15, and that the mandatory reporting systems would once again be in
effect in July. Pork packers have reported all of the required data on
a voluntary basis since the law expired in September 2005. Kudos to
them for doing so, as that has prevented market disruptions and provided
us with a usable, continuous series of price and volume data.
The bad news is that we are now 2-1/2 years into a
five-year reauthorization. Get set to do this all over again in
September 2010. Anyone want to bet on whether any lessons have been
learned in Washington?
Pork Exports Stay Strong
Last week’s export data were another shot in the arm for the U.S. pork
industry. See Figure 1 for carcass-weight-equivalent export data by
destination. Note that Japan returned to its spot atop the list of U.S.
pork destinations with a record-high month. March shipments totaled
122.2 million pounds – 23.3% higher than one year ago. It takes a
very big number to account for a 23% year-over-year change in shipments
to Japan! Year-to-date (YTD) shipments to Japan are up 7.7%.
Exports to China/Hong Kong cooled a bit from their torrid paces of
January and February, but were still nearly three times larger than they
were in March 2007. YTD shipments to China/Hong Kong are over four
times what they were just one year ago!
Russia is the other fast-growing market for U.S. pork – at least in
percentage terms. March exports to Russia were 107% higher than last
year and YTD shipments now stand at +141%.
Pork trade with Mexico continues to recover. March shipments were 11%
larger than last year, leaving YTD trade fractionally higher. Should
business with Mexico just remain stable for the next few months, it will
be a marked improvement over last year when the volume of shipments
plummeted as corn prices rose. It will not take much in terms of
performance to improve upon last year from here on out!
Figure 2 demonstrates the role that the weaker U.S. dollar has played in
our recent export performance. It shows the U.S. pork cutout value in
terms of the Canadian dollar and the Euro.
Relative to these two major competitors, the U.S. cutout value has
fallen by nearly 50% since 2004. Part of that decline is comprised of
the drop in actual cutout value from $81.89 on May of 2004 to $65.55 in
April 2008, the last observation in the graph. That decline, though,
is only 20%. The remainder is accounted for by the change in currency
value.
It doesn’t take a Ph.D. economist to know that selling something is a
lot easier when the price is lower. U.S. producers and packers are
definitely benefitting from that fact now. The challenge will be to use
this opportunity to build business relationships to the point that they
will endure on the day when the dollar strengthens and we no longer
enjoy such an advantage.
When will the dollar strengthen? Probably when energy prices abate.
Note, I did not say, “When energy prices go back to where they
were,” since I doubt that is ever going to happen. Some decline in
oil prices, though, would mean far fewer dollars flowing out into the
world economy and, thus, would increase the value of the dollar relative
to other currencies. A reduction in the federal budget deficit would
also help, but I don’t hold out much hope of that regardless of who
wins the White House this fall.
On May 3, Warren Buffet told the annual meeting of his investment firm,
Berkshire Hathaway, that he expects the dollar to remain weak for most
of the next decade. I was a bit shocked by that, but I have to admit
that Warren has been right many, many times in his career. I respect
track records greatly, so I have to put some credence in his statement.
If true, Buffet’s prediction is good news for pork producers and not
very good news for anyone planning foreign vacations.
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com
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Production Preview
Antibiotic Usage
Data Needed
Based on a report from a colloquium of experts in the
American Academy of Microbiology that gathered to discuss “The Role of
Antibiotics in Animal Agriculture,” better estimates of antibiotic
usage are needed. The group says this will involve a system of
collecting data with standardized elements definitions.
Better usage data will enable properly designed and science-based
effective intervention and mitigation strategies. Other recommendations
include:
- Additional economic studies: What are the costs and the
benefits of antibiotic use? What are the costs and benefits of growth
promoters? What is the cost of alternative management or production
practices that might decrease the need for antibiotic use? Economic
studies should also be conducted on the outcome of antibiotic use. For
example, what is the cost of antibiotic resistance in terms of excess
mortality, morbidity and treatments?
- Appropriate research studies to evaluate the impact of prevention,
intervention or control strategies on antibiotic resistance are needed.
- Dissemination of judicious use/prudent use guidelines among
end-users and veterinary professionals. More proactive educational
efforts are needed.
- A better understanding of selective factors or pressures on the
development of resistance. What is the role of the environment?
- Additional studies on the transfer of resistance in vivo, such as
the transmission between microbes in animal habitats. Population-based
approaches, the use of naïve populations, marker strains, or strains
containing reporter genes might be useful in experimental studies.
- Successful educational programs can reduce improper antibiotic use
and decrease the possibility of antibiotic resistance. Studies that
evaluate the impact of these programs are vital.
- Determine where gene reservoirs are developed, maintained or
amplified, particularly when the origin of resistance may not be found.
This research data will provide useful hypotheses for interventions or
control.
- A consensus on the measurement standard of antibiotic resistance,
for example, genotype vs. phenotype. Resistance measurement depends on
the specific pathogen.
- More research on the role of surveillance including National
Antimicrobial Resistance Monitoring System (NARMS), with improvements in
areas of sampling strategies, funding and laboratory tools. We need to
continue to strive to make the systems responsive to changes in emerging
organisms, temporal trends and the interaction of multiple factors
affecting resistance.
- Quantitative risk assessment to evaluate antibiotic resistance and
provide information for policy and decision-making. New approaches are
needed to fill identified data gaps more quickly and coordinate
researchers and data. Microbial risk assessment is still relatively new
and needs continued improvement in quantitative methodology.
- Veterinarian involvement in decisions about antibiotic drug use,
in recognition of the potential financial cost to producers.
- New approaches for alternatives to antibiotics, not only in
product development, but also in rethinking animal production and
management practices.
- Studies on how to interpret antibiotic resistance transfer on
several levels; that is, the transfer of genes, bacteria, then among
larger populations, such as humans and animals.
Certainly, the issue warrants further discussion and we welcome your
feedback on this topic.
JoAnn Alumbaugh
Farms.com
joann.alumbaugh@farms.com
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Legislative Preview
Congress Passes Farm
Bill
In very strong bipartisan votes, the House of
Representatives and the Senate passed the “Food, Conservation and
Energy Act of 2008.” The House vote was 318-106 and the Senate vote
was 81-15 with a majority of both Democrats and Republicans supporting
the bill in both chambers. Some of the highlights of the $289 billion,
five-year bill are:
- Mandatory Country-of-Origin Labeling (COOL) – Mandatory
COOL for meat, chicken, fruits and vegetables will go into effect.
- Interstate Shipment of State-Inspected Meat – The legislation
provides for the interstate shipment of state-inspected meat. Many
state departments of agriculture have advocated this for decades.
- Packers and Stockyards Violations Report — USDA shall submit an
annual report by the Grain Inspection, Packers and Stockyards
Administration (GIPSA) that will detail the number of investigations
into possible violations of the Packers and Stockyards act. The report
will detail the length of time that investigations are pending with
GIPSA, USDA’s General Counsel and the Justice Department.
- Average Crop Revenue Election Program (ACRE) – Producers will
have the option, beginning with the 2009 crop year, to participate in a
state-level revenue protection system.
- Rebalances Target Prices and Loan Rates – The bill adjusts loan
rates and target prices of existing commodities beginning with the 2010
crop year.
- Adjusted Gross Income (AGI) Eligibility Test – To receive farm
program benefits, an individual’s non-farm income may not exceed
$500,000. If farm income exceeds $750,000, an individual will no longer
be eligible to receive direct payments.
- Disaster Assistance – Establishes a permanent disaster
assistance program.
- EQIP – Provides an additional $3.4 billion for the Environmental
Quality Incentives Program (EQIP).
- Conservation Stewardship Program (CSP) – CSP is focused on
incentivizing new conservation, while simultaneously rewarding producers
for achieving high levels of stewardship and addressing priority
resource concerns in their area. The program will enroll nearly 115
million acres by 2017. This was formerly called the Conservation
Security Program.
- FMD & MAP – The Foreign Market Development Program (FMD) and the
Market Access Program (MAP) continue funding at $34.5 million and $200
million, respectively.
- Biomass Loan Guarantees – The bill provides $320 million in
funding for loan guarantees for commercial scale biorefineries for
advanced biofuels. This program is to help commercialize cellulosic
ethanol.
- Ethanol Credit Modification – The 51¢/gallon credit for ethanol
is reduced by 6 cents in the year after which the 7.5 billion-gallon
threshold established in the 2005 Energy Policy Act is reached.
- Cellulosic Biofuels – A new, temporary production tax credit for
up to $1.01/gallon is established for cellulosic biofuels.
- Nutrition – Provides additional funding for food stamps, food
banks and nutrition programs.
The farm bill now goes to President George W. Bush who plans to veto it.
President Bush this week stated that he was “deeply disappointed” in
the farm bill conference report and that it falls short of the
administration’s farm bill proposal. He said, “If this bill makes
it to my desk, I will veto it.” After the House of Representatives
passed the bill, Secretary of Agriculture Ed Schafer said, "The
president will veto this bill, and I encourage members of Congress on
both sides of the aisle to support his stand for fiscal discipline and
the best interests of America's farmers and ranchers."
Showdown Next Week on Farm Bill — Next week will be the
showdown between the Congress and the president over the 2008 farm bill,
when Congress will vote to override the president’s veto. It will
take a two-thirds vote of both the House and the Senate. With the large
number of votes in support of the bill this week, supporters believe
there is a good chance Congress will override the veto.
Over 500 Groups Support Farm Bill — A broad coalition of 557
organizations representing general farm organizations, commodity groups,
specialty crops, conservation, nutrition, consumer and religious
organizations sent a letter to all members of the House of
Representatives asking them to strongly support the 2008 farm bill
conference report. The letter said, the farm bill makes “significant
farm policy reforms, protects the safety net for all of America’s food
producers, addresses important infrastructure needs for specialty crops,
increases funding to feed our nation’s poor, and enhances support for
important conservation initiatives.” Some of the groups signing the
letter included the American Farm Bureau Federation, National Farmers
Union, America’s Second Harvest, American Farmland Trust, American
Soybean Association, CropLife America, Farm Credit Council, National
Association of Conservation Districts, National Association of Wheat
Growers, National Corn Growers Association, National Cotton Council,
National Grange, National Head Start Association, National Milk
Producers Federation, U.S. Beet Sugar Association and USA Rice
Federation.
Meat & Poultry Promotion Coalition Support Farm Bill — The
Meat and Poultry Promotion Coalition sent a letter to the leadership of
the Senate and House Agriculture Committees stating its support of the
Livestock Title of the 2008 farm bill and urged members of the House and
Senate to support the bill. The letter stated the coalition was pleased
that the farm bill “does not include burdensome provisions, such as
the ban on packer ownership and more regulation of poultry processors.
We are also pleased that the country-of-origin labeling (COOL)
provisions provide producers, packers and retailers with greater clarity
and reduce many of the burdensome requirements contained in the COOL
provisions included in the 2002 farm bill.” The letter was signed
by the American Meat Institute, National Cattlemen’s Beef Association,
National Chicken Council, National Meat Association, National Pork
Producers Council and National Turkey Federation.
Rising Food Prices & Small Firms — The House of
Representatives Small Business Committee held a hearing on rising food
prices and their affects on the foodchain. The witnesses noted that
forces such as changing weather patterns, increased global demand for
food items in the emerging markets and record oil prices have created a
“perfect storm” and that “no single variable could have caused the
current situation on its own.” Witnesses included representatives of
the National Farmers Union, National Restaurant Association, American
Bakers Association, Grocery Manufacturers Association and Renewable
Fuels Association.
P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.
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Pork Industry Calendar
May 29, 2008:
PorkBridge "Large Group Pens and AutoSort Technology" remote
program via phone and computer, noon and 7 p.m. CST; contact: Mark
Whitney, (507) 389-5541, whitn007@umn.edu or click on www.extension.umn.edu/swine.
June 22-29, 2008: Advanced Swine
Production Technology Course, University of Illinois Campus, Urbana, IL;
contact: Gilbert Hollis, professor emeritus, Department of Animal
Sciences, phone (217) 265-9191, e-mail hollisg@uiuc.edu or go to http://www.livestocktrail.uiuc.edu/porknet/eventDisplay.cfm?ContentlD=9812.
Click
here to get National Hog Farmer's complete pork
industry calendar.
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