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Waning
Flu Scare Deepens Financial Woes
It appears that the H1N1 influenza scare is dissipating,
but not before it has wreaked havoc in pork and hog markets, and left
pork producers and packers in an even deeper financial bind. The damage
has been significant, especially when piled on top of what has happened
over the past 18 months.
Figure 1 shows price and value changes from Friday, April 24, the first
day of the H1N1 influenza news, through Wednesday, May 6. The impact,
of course, is heaviest in the market for pigs priced through negotiated
trades. That price bottomed (hopefully!) on Tuesday at $50.84/cwt.
carcass, $10.24 lower than on April 24. That decline took nearly $22
off the value of each pig sold through negotiated trades.
The impact on all producers has been less since a minority of pigs are
sold through negotiated trades, and prices determined in other manners
are not as sensitive as negotiated prices. The “All Purchases”
section of Figure 1 shows the weighted average price of all
producer-sold pigs on the dates shown. These include swine/pork market
formulas, which tend to move with the negotiated prices, but lag them by
a couple of days due to multi-day averages used in many contracts. They
also include other market formulas, which are almost exclusively tied to
Chicago Mercantile Exchange (CME) lean hogs futures, and other purchase
arrangements which are largely comprised of cost-plus contracts. Prices
from these two methods do not move with negotiated prices. These prices
have fallen by $7.59/cwt. carcass.
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Focusing
on Farrowing Rate
Farrowing rate is one of the Key Performance Indicators
(KPIs) used in the Swine Management Services’ (SMS) database. It also
has one of the flattest KPI bell curves (Chart 1).
Farrowing rates range from less than 64% to 94% for the most current
52-week period that data has been summarized. The top 10% of farms
averaged 88.5%, while the bottom 25% averaged 78.1%. All farms in the
SMS database averaged 82.9%.
There are three main variables that impact the success of a
mating/service – the sow or gilt, the semen quality, and the skill of
the person doing the insemination. We refer to these variables as the
SMS Fertility Triangle (picture 1).
If all three variables have a 90% success rate, you will achieve a 73%
farrowing rate. To get a 90% farrowing rate, all three variables must
be successful 97% of the time – which doesn’t leave much room for
error.
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Pork
Producers Ask USDA for Help
The National Pork Producers Council (NPPC) is asking USDA
to help the U.S. pork industry deal with the negative effects of the
H1N1 flu outbreak. NPPC indicates the flu outbreak has accelerated
losses of $17.69 per hog marketed as of May 1. NPPC is asking USDA to:
- “Implement a USDA purchase program for $50 million of pork
products to help boost cash hog prices. Products can be put into federal
emergency food programs, food pantries, senior/elderly feeding programs,
hunger programs and other non-commercial food channels.
- Urge
President Obama to work with U.S. trading partners to remove all
restrictions on exports of U.S. pork and pork products and to maintain
U.S. pork export markets around the world.
- Develop a
comprehensive surveillance program for swine diseases, which will
provide an early warning for emerging diseases that affect human and
animal health.
- Provide for mandatory premises and animal
identification, which would be necessary for an effective surveillance
program.
- Work to keep open the border between the United
States and Canada – in the wake of a report that pigs on a Canadian
pork operation contracted the H1N1 flu from a worker – to allow hog
movements.”
International Organizations Say Pork is Safe — The World
Health Organization (WHO), the Food and Agriculture Organization (FAO),
World Organization for Animal Health (OIE) and the World Trade
Organization (WTO) released a joint statement stressing the safety of
pork products and rejecting bans on pork imports from countries with
human cases of H1N1 flu. The groups said: "In light of the spread of
influenza A/H1N1, and the rising concerns about the possibility of this
virus being found in pigs and the safety of pork and pork products, we
stress that pork and pork products, handled in accordance with good
hygienic practices recommended by the WHO, FAO, Codex Alimentarius
Commission and the OIE, will not be a source of infection. To date
there is no evidence that the virus is transmitted by food. There is
currently therefore no justification in the OIE Terrestrial Animal
Health Standards Code for the imposition of trade measures on the
importation of pigs or their products."
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Farm
Bureau Calls for Funding Pork Purchases
The Agriculture Department should make additional
purchases of pork using the Section 32 program to help provide stability
to the pork industry, suffering from lost markets due to the recent
outbreak of the H1N1 influenza A virus,
according to the American
Farm Bureau Federation (AFBF).
AFBF President Bob Stallman requested the Section 32 aid for pork in
a letter sent Thursday to Agriculture Secretary Tom Vilsack.
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May 27 - 29, 2009: PORK 101; Texas A&M University,
College Station, Texas
Registration Contact: AMSA member
services at 800-517-2672 or information@meatscience.org.
Web Site: http://www.pork101.org.
June 2, 2009: Swine Handling & Transport Forum, Des Moines
Marriott-Downtown,
Des Moines, IA; sponsored by National Hog Farmer, National Pork
Producers Council and National Pork Board. For details, go to
www.pork.org.
June 3-5, 2009 World Pork Expo, Iowa State Fairgrounds, Des
Moines, IA. For
details go to: www.pork.org.
FULL ARTICLE
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Swine Handling & Transport Forum – Des Moines Marriott
Downtown – Des Moines, IA – June 2, 2009
The forum will provide pork producers, swine handlers and transporters
with current information about the handling, transportation and
marketing of pigs. Presented by the Pork Checkoff, National Hog
Farmer and the National Pork Producers Council. Visit pork.org for more information.
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