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Dale Miller, Editor,
National Hog Farmer
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Market Preview
Labeling Law
Creates Confusion
To say mandatory country-of-origin labeling (MCOOL) is
“off and running” would be an overstatement. “Off and
stumbling” would be more appropriate but the key word is off. MCOOL
is now required – sort of – and the entire meat complex is trying to
conform to the rules, whatever those are. Do you detect a bit of
uncertainty here?
The MCOOL law and the U.S. Department of Agriculture’s (USDA) interim
final rule to implement it became effective Sept. 30. It has been
adopted and exhibited at retail stores to varying degrees since that
time. Some stores have everything in place; others have little in
place. Some have clear, concise labels. Others have labels that cover
all possibilities and will probably not pass muster at some point.
There is good reason USDA said up front that it would use the initial
six months as an education period.
Pork packers are trying to decide how to handle MCOOL, and part of their
difficulty is they are trying to hit a moving target, or at least an
evolving one. The current version of MCOOL, passed as part of the 2008
Farm Bill, is much more manageable and, in my opinion, reasonable than
the version initially included in the 2002 Farm Bill. What boded to be
a daunting record-keeping system has been reduced substantially. USDA
has agreed that affidavits from people with first-hand knowledge of the
origin of animals will suffice as proof of origin. The number of
potential labels has been reduced from five to four for meat products.
Marketing 'Issues' Remain
But "issues" remain. They revolve primarily around how much flexibility
the system provides for allowing pigs born in the United States to "fill
out a slaughter run" that includes some pigs born in Canada and fed in
the United States.
First, let’s review a primer on the labels and the apparently-accepted
vernacular of Labels A, B, C and D:
-
Label A – Product of the USA. This product must come from animals
born, raised and slaughtered in the United States. Note that is a
one-way statement. The law does not say that all animals born, raised
and slaughtered in the United States must carry this label.
- Label B – Product of the USA and Country X. This product is from
animals not exclusively born, raised and slaughtered in the United
States, OR from animals born or raised or slaughtered in the United
States, but NOT animals imported for immediate slaughter (i.e., both
born and raised in another country). The second part of this definition
was new in the 2008 Farm Bill, and it allows pigs born and raised in the
United States to be included in this label.
- Label C – Product of Country X and the USA. For product produced
from animals imported for immediate slaughter – i.e. Canadian market
hogs.
- Label D – Product of Country X. For imported meat products.
These always had to be identified at the border. The new law requires a
label at retail, even for fresh meat products, which were not
necessarily labeled in the past.
Debating Label Flexibility
The rub, of course, has come with Label B. Just how much flexibility is
allowed under the rule? Or, more importantly, how much did Congress
intend to be allowed under the rule? Some packers saw the rule as
permission to include as many U.S-born-and-raised pigs as they wanted
and had moved forward with plans to only use Label B.
Two weeks ago, USDA said this was, in fact, what neither they nor
Congress intended and told the meat trade that they could use Label B
only for product that was produced on a “production day” when both
U.S.-born and Canadian-born pigs were processed in the plant. That
still provides flexibility to fill out a day or a shift of primarily
Canadian-born pigs with U.S.-born pigs, but it does not give carte
blanche permission to label product from U.S.-born pigs with the
multi-country label.
An obvious solution would be to make sure you have a few Canadian-born
pigs in the slaughter each day or each shift. But there are rumblings
that this may not be acceptable either; that "intent of Congress" thing
enters in, where we only seem to know after we start trying to do,
something what the law actually says.
Five Predictions
It’s still not clear what will happen but here are my thoughts –
for what they are worth:
-
Canadian market hogs are in a VERY tough spot. Production from them
will have to carry a unique label – "Product of Canada and the USA"
– and that would create three sets of products in some plants. I look
for U.S. companies to virtually stop buying these hogs.
- Some companies will stick to their “U.S. pigs only” stances but
others will compromise. Imports of Canadian feeder pigs have fallen
back to levels considered “normal” before the exchange rate- and
feed cost-driven surge of late 2007 and early 2008. We will still
import about 7 million of these pigs in ’08, 7.3% more than last year.
ALL U.S. packers cannot quit buying these pigs cold turkey. (It’s a
bad pun but it fits.) The U.S. packing sector cannot run efficiently on
7 million (over 6%) fewer pigs, especially when 2 million imported
Canadian market hogs may already be removed from the supply.
- The rules and interpretations still allow more flexibility than we
once thought would exist. Couple that with the fact that packers
collectively still need those 7 million pigs, and I think it is now
unlikely that these pigs will be discounted heavily and, perhaps, not
discounted at all.
- A key indication that imported Canadian feeder pigs are not a huge
problem is the fact that the numbers are staying near those “normal”
levels. Hog feeders and packers are pretty rational people who have a
reasonably good handle on what this situation might entail. And armed
with that knowledge, they have continued to buy these pigs. I don’t
detect a lot of alarm in that, especially since the interim final rule
was published. Live hogs imports from Canada can be found in Figure
1.
- Thank your lucky stars you’re not in the beef business. Assuming,
of course, you aren’t. And if you are, have fun!
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com
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Production Preview
Lameness Tops
Welfare Concerns
Ranking welfare concerns is a difficult topic in swine
production. Though there has been much emphasis on evaluating whether or
not different circumstances are contrary to the welfare of pigs, it has
been more difficult to rank the importance of different detrimental
conditions. It is difficult to rank welfare concerns as they cover a
broad range of concerns about the state of the animal, and the
prevalence of conditions vary from farm to farm.
Yet welfare concerns must be ranked on the basis of effect and
manipulability. Farming is an economic exercise that must use resources
as efficiently and effectively as possible. This includes the
application of resources to the welfare of animals. Incorrect
application of resources compromises the competitive capability of the
farm and the welfare of the animals on the farm. For sows, lameness may
be one of the more important, if not the most important, welfare concern
in our sow population. Here are some reasons to consider.
Curtis (2008) argues that a central focus of welfare management should
be on performance measures, as these measures are a function of the
welfare state of the sow. Taking this position a step further, the
extent of the insult should correlate with the change in sow
performance. In our studies, we have not seen a common insult to the sow
that has as profound an effect upon reproductive performance as the
existence of lameness.
Lameness is mediated through higher levels of removals, both directly
through culling or death due to lameness, but also indirectly through
removals due to poor reproductive performance. As well, we see poor
performance in sows that have been diagnosed as lame if they remain in
the herd. This combination of effects results in a relationship of
lameness and productivity that cannot be replicated with other common
conditions.
The relative importance of pain is extremely subjective. Webster’s
five freedoms suggest there are a number of adverse conditions for pigs.
They range from hunger and thirst to frustration to pain. There has been
some work on operant behavior in sows concerning hunger and boredom, but
little has been done on the subject of pain. Yet, it is evident from sow
behavior that considerable resources will be used to avoid painful
scenarios.
The delivery of lame and downer livestock to sales barns and slaughter
plants has been a focus of concern in the past year. This increased
concern and scrutiny has resulted in a discount of lame sows when they
are delivered to markets, but it has also resulted in an increased focus
on the management of lame sows within the herd.
One real concern is that it appears group housing often increases the
likelihood of lameness. The challenge is the lack of a simple, single
factor answer to the improvement of welfare. As mentioned, the
improvement of the welfare of sows has to be performed within the
confines of economic realities.
We believe the financial effects for the owner, the enjoyment of the
herdsman or herdswoman, and the welfare of the sow in regard to the
effects of lameness are underestimated. When such opportunities arise
for win-win scenarios, these should be followed, emphasized and
proclaimed by the swine industry.
John Deen, DVM, Leena Anil and Sukumarannair S. Anil
The Swine Veterinary Group, University of Minnesota
deenx003@umn.edu or sukum001@umn.edu
For PigCHAMP.com
Editor’s Note: For all your agricultural news,
markets and commentaries, go to www.farms.com.
Legislative Preview
Ban Processed
Meats in Schools
The Physicians Committee for Responsible Medicine’s
“Cancer Project” has submitted a petition to the U.S. Department of
Agriculture (USDA) to ban processed meats in the school lunch program.
According to the Cancer Project, this is a first step toward the
elimination of processed meats from the diet of all consumers. The
American Meat Institute Foundation noted that the U.S. Dietary
Guidelines and groups like the American Dietetic Association have
affirmed that “processed meats do play a role in a healthy, balanced
diet, providing protein and essential vitamins and minerals.”
Reduced Pork Exports — USDA’s World Supply and Demand
Estimates Report reduced its pork export forecast for 2008 by 125
million pounds to 5.318 billion pounds. The report also raised total
2008 pork production estimates to 23.550 billion pounds, compared to
23.495 billion pounds forecast in September.
Farm Bill Implementation — USDA this week gave an update on
the department’s efforts to enact the 2008 Farm Bill. According to
USDA:
Farm Programs:
-
1.725 million Direct and Counter-Cyclical Payments (DCP) contracts
enrolled to date. USDA is anticipating a total of 1.775 million
contracts for the 2008 crop year when all data is collated.
- $750 million in advance DCP payments to producers who requested the
advance funds.
- During the week of Oct. 5, 2008, the balance of $4.3 billion in DCP
payments were issued.
- USDA anticipates beginning the issuance of more than $1.1 billion in
advance DCP payments in December 2008. However, the bulk of that funding
will go out in calendar year 2009 as most producers do not sign up until
after the first of the year.
Conservation Programs:
-
Conservation program funding available in 2008 includes an additional
$200 million for Environmental Quality Incentives Program to help
farmers and ranchers nationwide solve natural resource problems; $150
million for Wetlands Reserve Program; and $7.5 million for Agricultural
Management Assistance.
- For fiscal year 2009, USDA will distribute $1.8 billion in
Conservation Reserve Program rental payments to participants across the
country.
Commodity Programs:
-
Announced payment limitation and payment eligibility provisions
applicable to commodity and conservation programs for the 2008 crop,
fiscal or program year.
- Announced provisions of the 2008 Farm Bill regarding marketing
assistance loans and loan deficiency payments for 2008 crops, cotton and
peanuts.
- Announced initial parameters for the fiscal year 2009 sugar program.
Established the fiscal year 2009 overall allotment quantity at 8,925,000
short tons, raw value, which is 85% of the estimated FY 2009 domestic
human sugar consumption.
- Announced provisions of the 2008 Farm Bill regarding 2008 crop loan
rates, schedules of premiums and discounts and other related activities.
- Training has been conducted for state and county officials about the
new farm bill provisions.
Record Federal Deficit — The fiscal year 2008 federal deficit
reached a record high of $454.8 billion. The administration cited the
slowing economy and the cost of the economic stimulus package as reasons
for the record deficit. The previous record was $412 billion for fiscal
year 2004. Some analysts are estimating the federal deficit for fiscal
year 2009 could reach $700 billion to $1 trillion. This will have a
major impact on the new administration’s spending priorities.
2008 Senate Races — With less than three weeks until the
election, there are now a number of Senate seats in play including three
members of the Senate Agriculture Committee – Senators Saxby Chambliss
(R-GA), Norm Coleman (R-MN) and Mitch McConnell (R-KY). The Democrats
are expected to pick up a number of Senate seats. The question remains
how many. The following Senate races are being carefully watched by
both sides: Alaska, Colorado, Georgia, Kentucky, Minnesota, New
Hampshire, New Mexico, North Carolina, Oregon and Virginia. Members of
the Senate Agriculture Committee who are up for reelection besides
Chambliss, Coleman and McConnell are Max Baucus (D-MT), Lindsey Graham
(R-SC), Tom Harkin (D-IA) and Pat Roberts (R-KS).
P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.
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Pork Industry Calendar
Oct. 29, 2008: Healthy Hogs Seminar,
Sampson Community College, Clinton, NC; contact: Morgan Morrow, North
Carolina State University at morgan_morrow@ncsu.edu.
Nov. 6, 2008: Employee Management Conference, Embassy Suites,
Cary, NC; contact: the National Pork Board by phone, 800-456-7675 or
fax, 515-223-2646.
Click
here to get National Hog Farmer's complete pork
industry calendar.
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