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Dale Miller, Editor,
National Hog Farmer
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Market Preview
Forecasters Predict
10-15% Drop in Pork Exports
“What are exports going to do this year?” I get
that question a lot these days as producers, packers and processors,
knowing the huge role that exports played in 2008, contemplate what is
almost certainly the first year-on-year export decline in 18 years.
Note: The first year of this growth period, 1999, was not a record year.
That year exports were larger than those of 1998 but not those of 1997.
Thus, we have just completed our 18th year of export growth but only
our 17th-consecutive record year of increases in pork exports.
The two biggest, most widely watched, long-term models of U.S.
agriculture are USDA’s Baseline Projections and the FAPRI Baseline
Forecasts from the Food and Agricultural Policy Research Institute at
the University of Missouri and Iowa State University. The USDA
Baseline, released in February, predicts that U.S. pork exports this
year will fall by 11.2% from 2008 levels. FAPRI’s forecast, which is
being released this week, pegs the year-on-year decline at 14.6% this
year. Interestingly, another USDA publication, the February edition of
the World Agricultural Supply and Demand Estimates (WASDE) pegs 2009
pork exports at 15.2% smaller than last year.
It appears that the modelers think exports will decline by 10 to 15%.
Since exports accounted for almost exactly 20% of U.S. production in
2008, this decline would leave 2 to 3% more pork on the U.S. market this
year.
Comparing Pork Export Trend Data
All of this talk drove me to look at monthly pork export data since
1990, to see what trends would suggest, and how the surge in 2008
compared to those trends. What I found, I think, is pretty interesting.
I hope you agree.
Figure 1 shows the actual data as well as four separate trend lines.
The first trend encompasses all of the data, including 2008. It is a
polynomial function that accounts for the accelerating growth rate of
U.S. exports. But even using an accelerating export rate, this
function’s prediction for 2009 exports is 7.3% lower than for those of
2008 – due to the huge surge last summer.
The three other trends all apply to subset time periods. The first is a
pre-NAFTA (North American Free Trade Agreement) trend from 1990 through
1994. Average monthly exports during this period were 27.86 million
pounds. Interestingly, though the slope of this line is less (flatter)
than the other trends, the compound annual growth rate (22.6%) is the
highest of the sub-periods. The reason: It doesn’t take much unit
growth to get a high growth rate when exports are relatively low. And
due to those relatively low average export amounts, the coefficient of
variation (CV) of exports (ie. the standard deviation divided by the
average) is high at 22.8%. What appears to be stability is actually a
function of the size of the business at that time.
The second trend runs from 1995 through 2003, and is different from the
earlier trend, primarily due to NAFTA. Average exports were 103.77
million pounds per month and, even though the unit growth was faster
(ie. the slope is steeper), the compound growth rate slowed to 10.4% per
year. The period saw higher unit variability, but a lower CV (relative
variability) of 13.9%.
The third trend begins in 2004 and runs through 2007. Discovery of BSE
(bovine spongiform encephalopathy) in the United States in December
2003, and tariff rates going to zero between NAFTA signatory countries
and trade agreements with Central America, Russia and Australia, all
contributed to the shift. Average exports jumped to 228.8 million
pounds per month and, even at these higher unit levels, the growth rate
increased to 12.1% per year. While variation in unit terms certainly
increased, relative variability actually fell again with the CV for this
period being just 11.7%.
So what does all of this mean for the future? - It appears that
the long-term, polynomial function provides a very rosy forecast for
2009 due to the influence of the 2008 surge. But even if this trend
does hold, 2009 exports would be 7.3% lower than in 2008.
-
Throwing out the 2008 data and using the 2004-2007 trend suggests that
2009 exports will be roughly 3.9 billion pounds, 16.8% lower than in
2008.
- Based on the ’04-’07 trend, the data suggested that
the 2008 trend in exports would have been 3.557 billion pounds, 13.3%
higher than in 2007. So the 2008 surge added 1.111 billion pounds to
2008 exports.
And what if China/Hong Kong had just bought their “normal” amounts
in 2008? Figure 2 shows where exports would have been had growth in
exports to China/Hong Kong from September 2007 through November 2009 had
been linear – just a straight line connecting the two months. The
interesting result is that, even without the surge to China/Hong Kong
last year, U.S. pork exports would have been 31% larger than in 2007.
If we can hold onto only that growth this year, the forecasts of an
export decline may be far too pessimistic.
Click to view graphs.
Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com
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Swine Health Preview
Influenza Subtype
Trends
We have summarized data from our respective diagnostic
laboratories (Iowa State University and the University of Minnesota) in
many prior issues of this newsletter. Kent Schwartz, DVM, at Iowa State
has been an advocate of pooling our data to get a more composite view of
disease trends. The data presented this month is a first step in that
direction.
Schwartz provided influenza subtyping data from the group working with
Kyoung-Jin Yoon, DVM, and Bruce Janke, DVM. We pooled this with data
from the group in Minnesota working with Marie Gramer, DVM, for an
overview of the trends for influenza subtypes for Iowa and Minnesota.
The resulting combined database includes 2,283 subtyping results for the
five-year period from 2004 through 2008 (Figure 1).
These data provide information on some trends that have been observed in
the field: a general decrease in the proportion of
H3N2 influenza subtypes in
both Iowa and Minnesota over the past five years and an increase in the
proportion of H1N2 subtypes
in 2007 and 2008.
Data Limitations
Although we believe the general trends, these data do not represent true
prevalence values, so care should be taken with interpretation. First,
these subtype results are from cases submitted for diagnostic evaluation
rather than samples for purposes of determining the prevalence. Second,
subtyping is not successful in all of the cases where influenza is
diagnosed. In this data set, definitive subtyping was available in less
than 10% of the cases with a positive PCR result for influenza. Thus,
even though we have a large database, there is potential for bias in the
results.
Subtype Variant Trends
Many variants within each subtype have emerged over time and are also
tracked. In this case, the data set is from Minnesota cases only (for
now, at least). Charts presented in Figure 2 break out the trends for
H1 variants over time in four states where we had
sequence data on at least 200 H1 subtypes. Data
for Iowa, Illinois and North Carolina farms are only available for
2006-2008. There are even more limitations on these data, as sequencing
is performed on an even smaller subset of the PCR positive cases, often
related to problem herds that may not represent the general population.
With those limitations in mind, it is interesting to note a higher
proportion of cases in Illinois and North Carolina of the Indiana-like
swine influenza virus, in addition to other differences among the states
over a three year period.
Figure 3 illustrates the distribution of H3
variants in the same four states over the same period. Each state has a
slightly different pattern, with a recent increase in the proportion of
Cluster III cases in Illinois and North Carolina, a decrease in
Minnesota and an apparently stable Cluster IV variant population in
Iowa.
Variant Impact
Monitoring changes in the swine population for influenza variants is
important for ongoing management of respiratory disease in pigs.
Developing a stronger understanding of regional differences in the
influenza populations will provide important information for more
targeted disease control. Pooling data will be an important tool for
improving this understanding. We appreciate the efforts of Schwartz to
forward this goal.
Click to view graphs.
Jerry Torrison, DVM
University of Minnesota Veterinary Diagnostic Laboratory
torri001@umn.edu
Legislative Preview
President Obama
Releases Budget
President Barack Obama released his proposed $3.6
trillion budget for fiscal year 2010. The budget outlines the
administration’s priorities for health care, education and energy
independence. The administration plans to cut the deficit it inherited
in half, from $1.3 trillion to $533 billion, by the end of President
Obama’s first term. The budget will include pay-as-you-go budgeting.
This is a very aggressive budget. More details concerning the budget
proposals will be released in April.
Agriculture & Fiscal Year 2010 Budget — The
administration’s proposed budget for the U.S. Department of
Agriculture (USDA) proposes more investments in child nutrition, food
safety, rural development and renewable energy. The budget also
proposes implementing a limitation of $250,000 in farm payments. The
most controversial proposal is the phasing out over three years of
direct payments to producers with sales revenues of more than $500,000.
This proposal was not well received by key congressional agricultural
leaders and farm and commodity organizations.
Highlights of the administration’s budget:
- “Provide over $20 billion in loans and grants to support and
expand rural development activities, including small businesses,
renewable energy and telecommunications.
- Include a $50 million
increase to address deferred maintenance on the most critical health and
safety infrastructure within our national forests.
- Support the
implementation of a $250,000 commodity program payment limit. The
payment limit will help ensure that payments are made to those who most
need them.
- Reflect the president’s commitment to wildfire
management and community protection by fully funding suppression costs
at the 10-year average, establishing a discretionary contingent reserve
for wildfires, and including program reforms to ensure fire management
resources are focused where they will do the most good.
- Fully
funds the Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC) to serve all eligible individuals.
- Include $1
billion per year for the Child Nutrition reauthorization.
- Support a pilot program to help increase senior participation
in the Supplemental Nutrition Assistance Program.
- Reflect the
president’s commitment to supporting independent producers through
improved enforcement of the Packers and Stockyards Act and investing in
the full diversity of agricultural production, including organic farming
and local food systems.
- Reflect the president’s commitment to
fiscal responsibility by reducing direct payments to the largest
farmers, reducing crop insurance subsidies, eliminating cotton storage
credits, eliminating funding for the Resource Conservation and
Development program and reducing funding for overseas brand
promotion.”
Vilsack Outlines USDA Priorities — At USDA’s Outlook Forum
last week, Secretary of Agriculture Tom Vilsack outlined President
Barack Obama’s three goals for USDA. The priorities for the agency
are: - To make sure that America’s children have more
nutritious food.
- To do everything USDA can to expand energy
opportunities and the capacity of land, farm and ranches to produce
alternative forms of energy and fuel.
- To make sure USDA is
working hard at doing the research necessary to allow, over time,
agriculture to transition away from its rather significant dependence
today on fossil fuels.
The administration’s proposed budget reflects these priorities.
Bipartisan FDA Food Safety Bill — Senators Dick Durbin
(D-IL), Judd Gregg (R-NH), Ted Kennedy (D-MA) and Richard Burr (R-NC)
introduced the “FDA Food Safety Modernization Act” that will give
the Food and Drug Administration (FDA) new authorities, tools and
resources to reform the nation’s food safety system. Senator Durbin
said, “Over the last year, we’ve seen major recalls of peanut butter
spiked with salmonella, spinach laced with E-coli and chili loaded with
botulism. These are not isolated incidents and are the result of an
outdated, under-funded and overwhelmed food safety system. Today’s
bipartisan bill will improve the FDA’s ability to prevent food-borne
illness outbreaks and ensure FDA responds quickly and effectively when
outbreaks do occur.” The legislation has a number of goals:
Improves our capacity to prevent food safety problems -
Hazard analysis and preventive controls: Requires all
facilities to have in place preventive plans to address identified
hazards and prevent adulteration, and gives FDA access to these plans
and relevant documentation.
- Access to records:
Expands FDA access to records in a food emergency.
- Third
party labs and audits: Allows FDA to recognize laboratory
accreditation bodies to ensure U.S. food testing labs meet high-quality
standards and requires food testing performed by these labs to be
reported to FDA. Allows FDA to enable qualified third parties to
certify that foreign food facilities comply with U.S. food safety
standards.
- Imports: Requires importers to verify the
safety of foreign suppliers and imported food. Allows FDA to require
certification for high-risk foods, and to deny entry to a food that
lacks certification or that is from a foreign facility that has refused
U.S. inspectors.
Improves our capacity to detect and respond to food-borne illness
outbreaks - Inspection – Increases FDA inspections
at all food facilities, including annual inspections of high-risk
facilities and inspections of other facilities at least once every four
years.
- Surveillance – Enhances food-borne illness
surveillance systems to improve the collection, analysis, reporting and
usefulness of data on food-borne illnesses.
- Traceability
– Requires the secretary of Health and Human Services to
establish a pilot project to test and evaluate new methods for rapidly
and effectively tracking/tracing fruits and vegetables in the event of a
food-borne illness outbreak.
- Mandatory recall –
Gives FDA the authority to order a mandatory recall of a food product
when a company fails to voluntarily recall the product upon FDA’s
request.
- Suspension of registration – Empowers FDA
to suspend a food facility’s registration if there is a reasonable
probability that food from the facility will cause serious adverse
health consequences or death.
Enhances U.S. food defense capabilities – Directs FDA to help
food companies protect their products from intentional contamination,
and calls for a national strategy to protect our food supply from
terrorist threats and rapidly respond to food emergencies.
Increases FDA resources – Increases funding for FDA’s food
safety activities through increased appropriations and targeted fees for
domestic and foreign facilities.
The bill has been endorsed by the Grocery Manufacturers Association and
the National Restaurant Association.
P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.
Pork Industry Calendar
March 24, 2009: Livestock Manure
Management Conference workshop, sponsored by the University of Illinois,
Knights of Columbus Hall, Effingham, IL; register by calling (800)
345-6087. Access the conference brochure at http://www.livestocktrail.uiuc.edu/manure/.
March 26, 2009: Livestock Manure Management Conference
workshop, sponsored by the University of Illinois, Wise Guys Bar &
Grill, Princeton, IL; register by calling (800) 345-6087. Access the
conference brochure at http://www.livestocktrail.uiuc.edu/manure/.
Click
here to get National Hog Farmer's complete pork
industry calendar.
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