Brumm Speaks Out

This week I have had calls and conversations with producers from several locations in the Midwest regarding pits foaming thru the slats. While I’ve had an occasional call or conversation with a producer regarding the phenomenon in past years, the large number in one week is causing me to think about possible causes and solutions.

The callers have had 2 basic questions – what is causing the pits to foam and what do I do about the foam?

Let’s think about what is happening in manure pits. They are full of actively growing microorganisms that are giving off by-products of their metabolism as they feast on the ready source of nutrients available in the manure. Because the pits lack oxygen, the by-products of this metabolism are not always ‘user-friendly’, a polite way of stating that the by-products often have an offensive smell to many people.

If there was sufficient oxygen present in the pit, the by-products would be such things as carbon dioxide (CO₂), nitrates (NO₂) and sulfur dioxide (SO₂). Because of the lack of oxygen as the final electron acceptor in the metabolic process, we end up with by-products such as methane (CH₄), ammonia (NH₃) and hydrogen sulfide (H₂S). While ammonia is water soluble as ammonium (NH₄⁺) if the pH is lower than 7.0, the other 2 products are gases that are emitted from the pit.

In a typical pit, when these gases erupt from the pit surface, they often form tiny bubbles that readily burst. However, in the pits that are foaming, something is causing the surface tension of the water surface to change. This means the thin layer of surface water atoms that forms the bubbles now has sufficient electrical and chemical bonding ability to cling together.

The increase in foaming in late fall is most likely a function of increased biological activity in the pit due to warmer conditions. The pits have had all summer to accumulate heat, and while there may have been some foaming occurring all summer, with the pit nearly full prior to fall pumping, foam is now coming up thru the slats into the pig zone. If we think about it, the pits are probably at their biological activity peak in late September and early October. I suspect that the foaming problems will decrease as the pits cool with the return of cold weather to the Midwest.

The immediate solution to the problem is to add a surfactant to the surface of the pit.  An option would be the use of crop oils such as the ones routinely added to herbicide sprays. These disrupt the bonding and don’t allow the formation of the bubbles that make up the foam.

As to the cause of the increased foaming, are the pits more biologically active resulting in a greater release of gases from the pit, or is the surface tension of the pits different today? I don’t know the answer to this, but I think the answer may be related to our changing dietary ingredients.

In conversations with nutritionists in the past few days, everyone cites the increased use of distillers grains (DDGS) and the recent wide-spread use of phytase. Is their increased usage related to the foaming problem or is the foaming due to another variable that we haven’t accounted for? For example, I don’t know how crusting of the pit surface is affecting foaming – is foaming worse in pits that have a minimal crusting on the surface?

Last week Statistics Canada released its estimates of the October 1 Canadian pig inventory. At the same time, USDA and Statistics Canada released a joint report estimating the combined inventories using the September 1, 2008 USDA estimates for US inventories.

The combined Canadian and US breeding herd is now estimated at 7.663 million head, 97% of the estimate 1 year ago. This is the first time the breeding herd has declined for 2 quarters versus the year previous since the summer and fall estimates from 2003.

The kept for market category is estimated to be 72.556 million pigs, 100% of 1 year ago. This is the first quarterly report that did not show an increase over 1 year ago since the fall of 2005.

The estimates for both the breeding herd and the kept for market inventory suggest that we will continue to have a plentiful supply of pigs in coming months. While the Canadian breeding herd is down just over 6% from 1 year ago, the US inventory on September 1 was down only 1.6%. In the past months, I have been at sites or seen pictures of on-going construction for over 13,000 new sow spaces in the US. All of this suggests that the majority of the reduction in North American inventory will continue to occur in Canada.

The obvious question – will Canadian’s sell off sows fast enough and deep enough to make a difference in our market numbers? In part, the answer will depend on how COOL is implemented in the coming months. In the western cornbelt, we continue to import large numbers of Canadian born feeder pigs. Except for the week of July 4, 2008, we have imported over 100,000 Canadian weaned and feeder pigs every week since January 1, 2007. Over this almost 2 year period we have averaged over 128,000 imported pigs per week into US production facilities.

If the number of Canadian pigs into US facilities declines, I would expect the demand for US born pigs to replace these pigs will increase. Fixed costs for wean-finish facilities are large, and the demand for the manure from a production facility now adds almost $20 per pig space to the value of the facility. This suggests that US producers are not facing the same economic decision as their Canadian counterparts. It appears to me that US producers will continue to be slow on selling off the breeding herd in response to low prices, with the Canadians continuing to loose inventory more rapidly.

I have just returned from participation in the fall meeting of the Ontario Association of Swine Veterinarians. A great group of swine professionals who are very worried about the future of the swine industry in Ontario. Challenges in Ontario include access to markets with the largest slaughter plant in the province up for sale.

With the plunging of the Canadian dollar relative to the US dollar in the past month, prospects for international trade are better than they were this summer for the Canadian industry. At the same time, the strengthening US dollar is making it harder for US pork products to compete in international markets.

I think many of us fail to realize how important currency exchange rates have been to our strong export sales. The best way to explain this is to use the current Canadian situation. In early summer, the Canadian Loony was valued as high a $1.08 per US dollar. Last Friday, it was down to $0.78 per US dollar.  Now assume that you are selling a Canadian product into the US market. In June, if you sold $100 worth of Canadian product to a US market, you received just over $0.92 US dollars in payment. On Friday, for the same $100 of Canadian product, you would receive $1.28 US dollars.  Quite a swing in income! On the other hand, if the US buyer had only $100 to spend, he could buy $1.08 worth of Canadian product in June and only $0.78 last week.

The Globe and Mail is the nationally distributed daily newspaper of Canada. On Saturday, the headline was ‘One Way to Boost Prices is to Cut Supply’. In the article, they were talking about copper, oil and other minerals that are a major source of value into the Canadian economy. At the same time, they were discussing the impact of the declining Loony on their overall economy.

Our industry is linked to the world economy. Right or wrong, the production decisions in the US must be made in light of such things as exchange rates, inventories in other countries, etc. The strengthening US dollar is making it more difficult to market our excess production via export markets. At the same time, other countries are valuing the US dollar relative to other currencies as being a safer place to invest monies. This means the US economy, even with our concerns about the cost to the economy from the Wall Street and financial bailout, appears to the rest of the world to be one of the best places to invest.

When the October 1 Hogs and Pigs inventory is released by Stats Canada later this week, we will have a somewhat clearer picture of the progress Canadian and US producers have made in ‘boosting prices by cutting supply’. In light of the export market challenges associated with the increased value of the US dollar, along with the financial market impacts on the US and world economy, I suspect we have a ways to go yet to make the supply and demand equation profitable for either Ontario or US producers..

Here in southern Minnesota, the corn harvest is in full swing. This morning on the local radio station’s farm show, seed corn representatives were citing test plot yields of 220+ bu/acre. Given the many weather challenges of this growing year, these yields are remarkable.

Along with very good yields, the crash in the financial markets appears to have removed many of the speculators from the commodity markets. No longer are pork producers faced with purchasing corn at $6-8/bu or soybean meal at $400/t. This past week I was at a producer’s site where he confirmed that he had purchased all of his estimated soybean meal needs for the next 12 months at $260/t delivered price. Again, just 2 months ago this was thought to be an impossible price objective.

On the other side of the equation, cash expenses for growing feed grains remain high. In late August, it was projected that the cash costs associated with growing an acre of corn in the upper Midwest were going to be in the range of $450 per acre for 2009. Add to this as much as $300 per acre in cash rent payments, and even with a 200 bu/a yield you have costs of $3.75/bu.

In the past few years, under the previous US Government Farm program, cash costs to grow corn were often more than the cash market. Government payments made up the difference via a variety of programs. The net result was livestock producers could purchase feed grains for less than the cost of production.

The current Farm program makes this scenario less likely, as the ‘target’ prices are nowhere near the current costs of production. With the current cash corn price very near the estimated cost of production, it appears that the new ‘norm’ for feed grain prices for swine production will be in the range of $3.50-$4.50 per bu. The only thing that will change this is a bursting of the ‘ethanol’ bubble that may result in deflation in rural communities.

While those of us buying feed grains for livestock production recall fondly the days of $1.80/bu corn, I think we can all agree that a return to that price level won’t happen. What we also don’t want to occur is a return of the farm crisis of the 80’s that devastated so many rural communities. As the US and world economic markets struggle with the current crisis, this becomes a distinct possibility.

With propane at $2/gallon, many producers have begun inserting ‘Tekfoil’ or similar materials between the bird netting and emergency drop curtains in cold weather. The question that needs to be asked – how tight can these emergency drop curtains be sealed and still maintain the emergency ventilation protection?

One way to estimate this number is to examine a curtain sided finishing facility measuring 41 x 200 ft housing approximately 1000 growing pigs. This number of pigs within this building dimension translates into 5 pigs per foot of building length.

A 5 mph wind against the long side of the building is 440 ft/min in velocity. With a 1 ft opening on both sidewall curtains, each 1 ft of length in the building receives 440 cfm of exchange, assuming 100% of the wind velocity is transferred thru the curtain openings. With 5 pigs per ft of facility, this becomes 88 cfm/pig.

This suggests that ‘Tekfoil’ type products, when installed, need to stop a minimum of 6” from the top of the opening in a 40 ft wide facility to ensure emergency relief for any curtain that has an ‘emergency’ drop function (magnetic relay or override thermostat) associated with it’s installation and operation.

In the case of double-wide facilities (80’ wide barns) there are 10 pigs per ft of barn length, so a minimum opening of 12” is needed to maintain an emergency ventilation rate at 5 mph.

For barns with 50 ft wide rooms, the number of pigs per ft of facility length increases to 6.1 for single wide and 12.2 pigs for double-wide facilities. A 1 ft opening on curtains translates into 36 cfm/pig on double wide facilities.

This cfm rate translates into effective heat removal for 50 lb pigs whenever outside air temperatures are less than approximately 65F. At the other end of the weight scale, this amount of emergency ventilation translates into effective heat removal for 200 lb pigs when outside air temperatures are less than approximately 50F.

Because of issues associated with even distribution of the ‘Tekfoil’ materials, etc. in sidewall curtain openings, I suggest that producers who rely on these curtains for emergency ventilation keep at least 12” of curtain open for the emergency function, regardless of building width.

By now, many of the readers of this blog have had time to read and digest the numbers in last Friday’s USDA Hogs and Pigs report. In addition, many of you have seen my interpretation of the report which keyed on the on-going changing structure of the US industry. At the same time, USDA continues to tweak the COOL regulations that became effective on Tuesday.

With all of this as background, the demand for large groups of high quality weaned and feeder pigs to fill production facilities in the upper Midwest continues. I’m sure the sharp decline in feed grain prices this week, which reduced the feed cost to grow a pig from weaning to slaughter by more than $15 per pig or almost $6/cwt gain, will also spur further demand.

Smithfield announced this past week that effective in April, 2009, all pork products from their packing plants will be labeled as US born, grown and processed. This means that producers who currently are filling facilities with Canadian born pigs (124,000 pigs in the week ending September 27, 2008) will no long have a market at a Smithfield plant.

It appears that the US will end the year importing approximately 7.2 million feeder pigs (pigs weighing less than 55 kg). While the pace of Canadian imports may slow due to fewer pigs being born in Canada, there is nothing in the available data to suggest fewer pigs will be imported due to COOL. This suggests a remixing of market destinations for many in the upper Midwest region. It appears that Smithfield will have to become somewhat aggressive in sourcing US born pigs to fill their slaughter needs, while producers who have traditionally sold Canadian born pigs to Smithfield plants will have to forge new marketing arrangements with other US plants.

At the same time as this shift in marketing arrangements is occurring, Iowa and southern Minnesota and Indiana remain in a growth mode relative to other US states for pigs to fill facilities. On September 1, 2008, USDA estimated that Iowa now has 29.9% of the US kept for market inventory, or 18.7 million pigs. Minnesota is number 3 with 11.4% or 7.1 million growing pigs. Indiana, a state where the governor has announced his support to double the number of pigs, now had 5.4% of the growing pig population or 3.4 million head. All of these states continue to grow in their share of the US industry.

Contrast this with what’s happening in Illinois. Illinois ranks number 2 in the US for both corn and soybean production. Yet the state continues to very gradually decline in their share of the growing pig inventory. Illinois now has 3.95 million growing pigs in inventory, or 6.3% of the US total. On the other hand, their share of the breeding herd continues to grow. For rural communities that have corn and soybean production as their basic agronomic crops, this suggests that alternative markets are becoming more important to their usage than pork production once was.

With the large number of imported Canadian feeder pigs, the growing number of Illinois feeder pigs that depart that state, and the on-going importation of feeder pigs born in Oklahoma, Missouri and Nebraska, I often remind audiences that the big sucking sound they hear is the demand in Iowa and southern Minnesota for feeder pigs. The data available suggests that pork production will remain as a key economic driver in this region.

I’ve written earlier blogs on the cost of propane this winter and the estimated impact on production costs, especially for contract growers with fixed payment contracts. This weekend I had a question from a veterinarian and finishing manager for a production system regarding how much propane pilot lights use on furnaces.

This morning I had heard back from one of the equipment suppliers to the livestock industry. Their estimate is that a pilot light on propane fired brooders used in poultry housing is 0.41 gal/light/day. Another supplier suggests that pilot lights consume 1200 BTU of propane per hour or 28,800 BTU/day. Propane contains 92,000 BTU/gal so this estimate is 0.31 gal/light/day.

Either way we look at it, pilot lights add to the fuel expense in pork production. If I take an average of the estimates at 0.35 gal/light/day, and a producer leaves the pilot lights lit all year in furnaces installed in production facilities, this amounts to 128 gal of propane per year per furnace. At $2 per gallon, this is $256 per year in propane just to keep the pilot light going. Most wean-finish facilities have 2-3 furnaces per 1000-1200 pig spaces. At 3 furnaces per 1200 pig spaces, this becomes $0.64/pig space just to keep pilot lights going.

Wow – an real eye opener for hidden costs in pork production. Once again, attention to the little details can return big dividends.

As agriculture continues to evolve in the Midwest, the impact of this evolution on rural communities is increasingly becoming fodder for community discussion. At the core of the discussion is the often unspoken concern that rural communities are dying because youth are not returning to the communities. In any survey of rural communities that I’ve seen, the declining rate of youth returning to the community ranks high as a concern of the citizens.

One of the challenges rural communities face is that parents in rural communities often send their children to college with the expectation that they will have more opportunities as a result of having a college education. In addition, the often unspoken message is that the parents want the youth to succeed without having to ‘work as hard as we did’.

Add to this the fact that the rural youth often meet and marry a partner who doesn’t have rural roots or expectations. Upon graduation, it becomes a major lifestyle change for these partners (often wives) to move to rural communities where employment opportunities are less, where shopping and services are vastly different, etc. Finally, many rural community citizens fail to recognize that today’s generation of potentially returning youth have many more opportunities for employment and lifestyle than previous generations.

Gary Hachfeld, Ag Business Management Extension Educator at the University of Minnesota has compiled information from the Minnesota Farm Business Management programs and the Minnesota Farm Business Association regarding the cost of living in rural communities. In his studies, he has examined the cost of living as reported by cooperating families, and translated this cost into the number of livestock or acres for given commodities that it takes to earn this cost of living.

For 2007, the average cost of living for cooperating families in 24 south central and south west Minnesota counties was $74,804. This living expense was for an average family size of 3.4 persons and includes all non-farm capital purchases, taxes, investments, etc.

Gone are the days when a family could be reared on a ¼ or ½ section of land. Using the 5 year average net return, including government payments, Gary estimates that in 2007 the farm family would have to have approximately 464 acres of corn and 464 acres of soybeans or a total of 928 acres of row crops to meet this expense.

On the other hand, a contract finishing facility could equate to this living expense if a total 16,586 pigs were finished each year. This number of pigs doesn’t account for the current high value to a cash grain enterprise of the associated manure from the pork production enterprise. In 2007, it took 127 dairy cows to earn the average family living expense.

When you look at these large numbers, you begin to recognize the challenge to youth returning to rural communities. New college graduates don’t have access to capital to begin farming 640 acres of land, especially considering that this coming year I’ve heard many estimates of over $400 per acre in costs to plant an acre of corn.

Livestock was often the traditional method used by our parents and grandparents to establish a farming enterprise. The challenge today is that many in rural communities are resistant to animal ag. Yet, the opportunity to construct and operate a contract swine production unit offers many young people the chance to invest in animal agriculture. This investment is backed by a 10-12 year production contract that allows the young family to borrow the necessary capital to enter into a farming enterprise.

If rural communities continue to resist animal agriculture, the data suggests that they will continue to decline in numbers. As Dave Hansen, former president of the Nebraska Pork Producers Association once said – it would only take 10-20 large farmers to farm all of Cedar County, Nebraska (280,000 tillable acres) – why should our rural communities even exist.

Without livestock, there is no need for a population base to support the agriculture system that feed grain farming is evolving towards. Without livestock, where are the opportunities for youth to return to rural communities and invest in their future?

While it is 9 days until the official end of summer, many producers and contract growers are already planning for winter management of production facilities. This planning includes contracting of propane supplies. At recent meetings, I’ve had producers quote $1.71/gal up to $2.20/gal as the price they have pre-paid for this winter’s estimated needs.

At every meeting, one topic of concern was the estimated impact of these higher propane costs on overall energy expense. For contract growers with a fixed payment, the increase in propane expense has a large impact on their overall cash flow.

Whether the production unit is a breed-wean site, a nursery site, finishing site or wean-finish site, I see several common mistakes repeatedly that result in higher than necessary propane expense. The biggest source of mistakes is ventilation controller settings. Producers, advisors, fieldmen, growers and managers often don’t have an understanding of how their ventilation controller really corresponds and controls the variable speed fan often used for winter minimum ventilation. This often results in the minimum speed setting in the controller being wrong, resulting in overventilation. This is especially true when the variable speed control is set by ‘listening’ to the fan and setting the speed so the fan ‘sounds’ right.

I recently bought a digital tachometer over the internet. With delivery charges, it was less than $40. I am using this tool to measure fan speed. As a rule of thumb, variable speed fans have 50% of their full speed rated output when the fan rpm is 65% of the full motor speed. This means a 24” fan that has a rated speed of 1050 rpm and 5800 cfm at 0.05 sp will have approximately 2900 cfm at approximately 680 rpm.

A second common controller error is to have the OFF setting for the furnace too close to the set point at which the variable speed fan increases speed. In general, the larger the furnace size relative to the space being heated, the greater the difference between the OFF setting for the furnace and the set point. Keep in mind that the perfectly sized furnace is one that turns off occasionally on the coldest day of the year. If it shuts off occasionally, it is keeping the facility heated, and there isn’t much temperature variation associated with the furnace turning on/off. However, if the furnace is greatly over-sized, it only runs for a short burst of time, with a corresponding large burst of temperature. This often results in the variable speed fan increasing speed shortly after the furnace shuts off. If this is happening in your facility, decrease the OFF temperature setting for the furnace relative to the set point. If your furnace has a variable output valve, turn the valve to the low setting. Leave it at the low setting until the furnace no longer can maintain temperatures.

I often see facilities poorly winterized. If large fans will be unused in cold weather, seal the shutters or replace the shutters with an insulated insert. This not only stops cold drafts, but also reduces or prevents condensation at the fan. I’ve seen a number of producers seal shutters effectively using a bubble-wrap insulation material.

Curtain holes need to be repaired. In a 1200 head wean-finish facility, if it is double-stocked at weaning, the total inlet area needed to meet the minimum ventilation needs of the newly weaned pigs is 7.5 ft². If there are 5 6”x6” holes in the curtains, this amounts to 17% of the total inlet needs, making temperature and draft management difficult.

Finally, don’t forget to verify the setting on the emergency mechanical thermostats. These thermostats are intended to operate heating and cooling devices in the event the ventilation controller is disabled from such things as lightning strikes, electric line surges, etc. The thermostat for the furnace should never be set closer that 5F to the controller set point. It may even need to be set more than 5F below depending on location of the mechanical thermostats within the animal space. I’ve seen instances where these were incorrectly adjusted and the furnaces were operated an entire heating season by these thermostats, with the variable speed fans often increasing speed to remove the excess heat produced by furnaces that were running too much.

Last week I sat in on a webcast from Iowa State University on the upcoming implementation of Country of Origin Labeling (COOL). Hosted by Dr John Lawrence, extension ag economist and Dr Jim McKean, extension swine veterinarian, the webcast dealt with the myriad of details associated with the September 30 implementation of this federal legislation. While controversy continues to surround this legislation, the fact of the matter is that it will become a fact of life for US pork producers.

Because final details of this legislation were not passed until this spring, USDA has just recently published the proposed rules for comment in the Federal Register. It is possible that the rules and regulations will be changed in response to the comments received.

In the meantime, these proposed rules are what USDA will be using to initiate the legislation.

The basics of the proposed rules and regulations is that USDA will require retail fresh meat cuts (loins, blade steaks, etc for pork) to be identified in the retail meat display of larger grocery stores. In the webcast John Lawrence estimated that 52% of the US market will be covered under this regulation.

The proposed regulations will require fresh meat cuts to be labeled by country of origin in one of four possible manners:

1)      Product of the US. This means the pigs were born, raised and slaughtered in the US.

2)      Product of the US and Country X. This means the pigs were born in country X (most likely Canada) and raised and slaughtered in the US.

3)      Product of Country X and the US. This means the pigs were born and raised in country X (most likely Canada) and slaughtered in the US.

4)      Product of Country X. This means the fresh pork was imported from country X (could be Canada, Denmark, Mexico, etc.). 

Every sale of pigs will require an affidavit attesting to the country of origin of that pig(s) or lot of pigs. In the case of sale to slaughter, this means someone with knowledge and access to records to verify the affididavit must sign - its not something you can have a barn worker or trucker do.

Many of the producers who read this blog have already had conversations with their packer regarding this legislation and the affidavit. At least 2 packers have stated they will not buy pigs that are not born and raised in the US, which basically means they will not slaughter pigs born in Canada and raised in the US. However other packers are still trying to decide how to implement this legislation.

It appears to me that a major factor in implementation of this legislation is the consumer. If the consumer is willing to pay $0.05/lb more for fresh pork labeled as ‘Product of the US’ versus fresh pork labeled ‘Product of the US and Canada’, we can expect many packers to make efforts to participate in this product. However, if the consumer does not distinguish in price between the labels, there will be limited demand by the packers for US born and raised pigs versus Canadian born and US raised pigs.

The key to this will most likely be the buying and labeling decisions of WalMart and Kroger. According to the Food Marketing Institute, in 2006 these 2 grocery chains represented 33% of all of the food dollar expenditures of US consumers. If they differentiate between country of origin labels in their advertisements and pricing, you can be sure other chains will follow. Because they are so dominant, you can also be sure that packers will respond to their lead.

However, on the flip side, it appears that the US production chain doesn’t expect the labeling at retail to impact production in a big way. I say this based on the 144,000 Canadian feeder pigs that were imported in the week ending August 30. US producers continue to set records for the number of Canadian feeder pigs imported to fill finishing facilities. In fact, at the current pace they will import over 7.1 million feeder pigs this year, up from the 6.5 million imported last year.This suggests that they feel confident that these pigs won’t be discounted by the packer at the time of sale sometime this winter, or that the delivery requirements (such as a specific day of the week or a specific plant if the packer has multiple slaughter plants) won’t cause them problems.

Having said this, be aware that everyone in the production chain will be involved in more paperwork as a result of this legislation. I urge every pig owner to contact their hog buyer to be sure they understand what type of paperwork will be required beginning September 30 to verify country of origin. Also, be aware that the legislation requires sellers to maintain normal business and production records to verify country of origin for 1 year in the event that a trace back from the retailer occurs. While chances are small that your farm will be audited, the chance and risk of fines is still enough to justify becoming familiar with the requirements of these regulations.