Brumm Speaks Out

Yesterday, April 28, USDA and Statistics Canada released the April 1 Canadian inventories of hogs and pigs, and the combined March 1 US and April 1 Canadian herd numbers.

On April 1, there were 1,359,200 head in the Canadian breeding herd. This is down 15% from the high of 1,633,600 head on January 1, 2005. The kept for market inventory was 10,502,000 pigs, the lowest number since sometime in the late 1990’s.

The combined North American breeding herd stands at 7,394,000 head. This is off 4.8% from the peak of 7,763,800 head on March/April 1, 2002. The combined kept for market inventory is 69,880,000 head, down 5.95% from the peak of 74,241,800 at the end of the 2007 year.

On April 2 at the VitaPlus Swine Summit held at Morton, MN, Mark Greenwood from AgStar suggested that the US needs to reduce its total swine inventory by 2.5 million pigs to be successful long term (http://vitaplus.com/swine-summit.php). I don’t know if his estimate is correct or not, but it does suggest that liquidation will be ongoing.

The impact of ‘swine flu’ rumors and misinformation on futures prices and even local market hog prices in the past 2 days can’t be denied. I suspect that many producers who were thinking about trying to ride out the latest period of low to negative returns are now seriously considering an exit strategy. It takes a lot of optimism these days to remain in pork production.

As I write this week’s blog, the air temperature is 42 F with wind gusts from the NW up to 30 mph. However, by this weekend temperatures in the Mankato, MN area are predicted to be in the upper 70’s.

These changing weather conditions are a challenge for ventilation systems. As air temperatures rise, ventilation systems need to move an increasing amount of air to remove the same amount of heat produced by growing pigs. Readers of this blog who have tunnel ventilated barns can readily observe this point. Tunnel ventilated finishing facilities often go into tunnel ventilation mode (meaning they need more than 45-50 cfm/pig to maintain inside conditions) when pigs are nearing market weight and outside temperatures are in the mid to upper 50’s.

This need for heat relief in late April and early May always seems to catch producers unprepared. Many don’t consider heat relief for growing pigs to be an issue until mid-June since outside weather conditions aren’t ‘hot’ yet. However, the growing pig doesn’t care what outside conditions are when they are housed in confinement facilities. They react to the conditions provided by their care takers. If we don’t implement heat relief strategies until the calendar says it’s time or until we ourselves feel the need, the pigs will already have suffered a performance lag.

For curtain sided finishers, I generally recommend that wetting devices (misters/drippers) be set to turn on at 18 F above the room set point. If there are stirring fans used for additional heat relief, they should be set to begin operation at 15 F above set point. This means air movement is used to cool pigs first, and when air movement doesn’t result in pigs being kept within their thermal neutral zone, water is added as a source of evaporative heat loss. Every pound of water that is converted from a liquid to water vapor by evaporation results in 1050 btu of heat converted from sensible heat to latent heat.

In tunnel barns, the temperature settings for automatic wetting systems may need to be set slightly higher (20-22 F above set point) since these don’t turn on until all stages of ventilation are activated, meaning the air flow in the pig zone is often 350-450 fpm. This high rate of air flow results in very effective cooling of pigs when they have their skin wetted and are then allowed to dry.

This is the time of the year when ventilation systems in swine facilities are cycling thru many stages. The cycling of the various fan and curtain stages is totally dependent on how the controller(s) is set, and the location of the temperature probes connected to the controller(s).

This morning I was in finishers that were experiencing a tremendous temperature variation due to improper controller settings. This afternoon I received a telephone call from a producer with a relatively new barn who is experiencing tail-biting on the first 2 turns of the barn when the pigs approach 150 lb body weight.

In both cases, the producers had constructed facilities that didn’t come with owners manuals. As such, they were having to learn how to operate the facility by trial and error. The consequences of the trial and error was pig performance compromises.

At the 2008 Minnesota Pork Congress I did a presentation entitled “Hog Barns Don’t Come with Owners Manuals” that details many of the little things that happen in finishing barns. You can access this presentation at: http://www.mnpork.com/producers/2008/brumm2008.pdf

This past winter, my talk was on measuring and managing energy costs. This talk can be accessed at: http://www.mnpork.com/producers/seminars.php

The reason for citing these presentations is that they contain many of my recommendations for such items as set points, band width settings for variable speed fans, etc. Tail biting can be thought of as a discomfort syndrome, and having frequent large temperature swings in a facility, or forcing a pig to live in a barn where the inlets aren’t correctly adjusted often lead to tail biting and other behavioral vices.

In the case of the producers today, one had constructed a facility where the contractor had told him ‘I’ve got everything set right’ and left him to try and figure out what ‘right’ was. In the other facility, the set point temperatures were too high. This, combined with an inlet control issue resulted in conditions in the pig zone that were contributing to the tail biting.

The facilities we are constructing today are very advanced in terms of technology. The challenge many producers/growers/employees face is to fully understand how this technology works. While the general contractor often selects the equipment that is installed for the ventilation system, it remains the responsibility of the producer/grower/employee to fully understand how the system functions so that the end result is an environment in the pig zone that promotes rapid and efficient gain. All too often, there is no owners manual for these people to refer to and the end result if less than ideal pig performance.

In the past 2 weeks I’ve spoken at 6 different producer meetings in Iowa, Minnesota and South Dakota. At every meeting one of the topics of conversation around the refreshment table was ‘when will prices improve’.

As readers of this blog know, I don’t attempt to forecast prices. However, I do spend time thinking about the structure of the industry and who is making decisions in the industry.

As I think about the large numbers of pigs coming to slaughter (2.16 million last week), I can’t help but speculate on who will remain in the business of pork production long term. It appears to me that the weak link in the various production models in the US industry is the weaned pig for sale contract.

In this model, production of weaned pigs is a profit center, with the weaned pig supplier selling pigs to a wean-finish producer based on a contract. While intentions are always good by both parties when the contracts are signed, over time either the buyer or seller is always unhappy relative to quoted open market prices.

At the same time, this production system is most at risk from lenders, in that they are often financed independently. In a farrow-finish situation, the lender has a look at all costs associated with pork production and has participated in all financial decisions.

In the sale of weaned pig model, the lender for each segment makes a decision independent of the other. This suggests that if profitability doesn’t return to pork production in the near future, lenders to those purchasing pigs may be reluctant to continue to finance the purchase under the terms of the purchase contract. As I’ve heard more than one lender say – why should I lend you money for a guaranteed loss.

So far, purchasers of weaned pigs often have the advantage of growing their own corn for consumption by the weaned pigs and having the manure from the pigs fertilize the crop acres used to grow the corn. As one producer told me this winter – for years pigs financed my cropping habit, this year my crops financed my pig habit.

However, this financing of habits can only go so far. I think the chink in the armor of the ‘last man standing’ mentality of the swine industry is the weaned pig sale contract. Lenders will begin refusing credit to pig purchasers if the markets don’t improve relatively soon. This suggests that sow units based on weaned pig sales will be among the first to close their doors if we must liquidate more females in order to get a return to profits.