Brumm Speaks Out

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.