Brumm Speaks Out

The USDA Quarterly Hogs and Pigs report will be released at 2 pm this afternoon. Everyone is looking for a continued decrease in the US breeding herd and smaller numbers in all weight categories in the kept for market inventory. Assuming these expectations are met, Dr Ron Plain at the University of Missouri is predicting 2^nd quarter hog prices in 2010 to be in the $67-70 range for carcass prices. While not wildly profitable, this price will stop the severe erosion of equity that has occurred the past 2 years for many producers.

The past few days I’ve been looking at the European pork industry in preparation for a series of talks in the next few months, and it is interesting to see how they compare to the US industry for such things as cost of production and production challenges.

According to the USDA Foreign Ag Service, 43% of the world meat consumption is pork, with beef at 27%, boiler at 23%, lamb and goat at 5% and turkey at 2%. This suggests that the long term demand for pork is very good and the prospects of continued international trade being important to our profitability will continue.

The Eu-27 countries (formerly called the European Common Union) lead the world in pork consumption. In 2007, they averaged 94.2 lb (carcass wt) of pork per capita. This compares to 65.8 lb per capita consumption in Canada and 65.6 lb US consumption.

The largest producer of pork in Europe is Germany. In 2008, they slaughtered 54.8 million pigs, just under 50% of what was slaughtered in the US. Their industry is becoming very much like the industry of the Midwest – fewer sows and more imports of weaned pigs.

In 2009, Denmark will export approximately 7.2 million weaned pigs, primarily to Germany. This is a 38% increase over 2008 and represents a major change in the Danish industry. As a result of the increased exports of weaned pigs, the Danes have closed one slaughter plant and will export over 1 million pigs for slaughter in other countries (primarily Germany).

To put the Danish export number in perspective, 2008 was the peak year for importation of Canadian feeder pigs when US producers imported 6.77 million pigs. It appears that the final importation number for 2009 will be in the range of 5.2 million, a considerable reduction.

The biggest challenge EU-27 pork producers face are the various mandates that they must adhere to in their production processes. The Dutch face the biggest challenges due to the limits on land availability for manure application. One recent economic study suggested that the production right to grow pigs (think of it as a quota) is currently priced at $290 per fattening space and $790 per sow place. This means if a producer wants to grow, they must buy a production right from another producer who will quit or reduce production by a given amount. This production right expense is in addition to all of the other mandatory expenses including such expenses as no antimicrobials in diets, control of ammonia discharge into the atmosphere, etc.

The total expense for compulsory measures in 2007 was estimated to add $13 per cwt carcass weight to the cost of production for Dutch producers with this expense growning to $17 per cwt carcass by 2013. In 2013 the compulsory measures expense will be an estimated $8 per cwt carcass in Denmark and $7 per cwt carcass in Germany.

Next to China, the EU-27 member countries are second largest pork producers in the world. However, when you consider the challenges they face in increased cost of production from such items as mandatory production practices, one can be safe is stating that their producers will not be a position to compete against US and Canadian producers in the world market.

While many argue that the whims of the export buyer are part of the reason we had such high financial losses the past 2 years, one can’t argue with the fact that the world is coming to our door to buy our product. Our future is clearly tied to the world’s preference for pork as the meat of choice. It’s nice to see that those that have survived the past 2 years may be in a position to once again enjoy the financial rewards of this position.

Two weeks ago I spent 2 days in northeast Nebraska making site visits and doing producer meetings. My visit began the day after the ‘big storm’ and snow drifts were up to the eaves of the buildings on the 2 sites I stopped at. As I write this week’s blog, another storm is forming in the southwest, with the governor of South Dakota already declaring an emergency situation in advance of the storm.

While too late for these storms, it is a good time to think about your emergency preparedness plan for your production site(s). I know many of you have an emergency plan as part of your environmental permit. This plan often involves details on how you will deal with manure spills, lagoon or dike failures, etc.

What about your plan for electricity failures? In the event a heavy snow or ice takes down electric lines servicing your facility, are you prepared? While we all like to think yes, the reality is that I continually run across sites where an electric system failure will result in a major hardship.

Let’s start with the alarm system at the site. Is there a telephone signal to the alarm? Sounds like an obvious question, but I have been on sites where a grower or owner says they didn’t know there was no phone signal until something happened, or they went to use the fax machine and had no signal. Do you test the alarm on a routine basis to be sure it dials out, and do those on the calling tree know what to do when the call comes?

While we all talk about suffocation as a cause of death in the event of power failure, the real cause is most often heat. Today’s market weight pigs are producing over 850 btu/hr of heat in a combination of sensible heat (air temperature) and latent heat (heat involved in evaporating moisture). In the event of a power failure at a site, you have about 30 minutes to begin the process of heat removal for market weight pigs unless your barn has curtain sides that leak a lot in windy conditions. For smaller pigs, you have about 1 hour before conditions begin to approach those that cause death.

For those with on-site standby generators, have you verified that the transfer switch works? What about fuel quality? This past week I learned of a site that lost pigs 2 days after the power went out when the fuel filter gradually plugged on the generator due to old fuel in the tank.

For those that use a tractor driven generator at a site and the site is remote from where the tractor is housed, how long to drive to the site and connect the generator? If you are alone, how will you return from the site if you have to leave the tractor hooked to the generator?

For those with curtain sided barns, in the event of a power outage, the curtain should drop. The good news, pigs won’t die from heat. The bad news, they will drop even in a blizzard. Some producers uncouple the automatic drops on the north/west curtains in very cold weather. If this is done, be sure the curtain on the remaining sidewall can drop at least 2 feet. On a 50 ft wide facility, opening one curtain only 1 foot may not remove enough heat from the facility to prevent pig death loss if you can’t get to the site in less than 1 hour.

On Monday of this week I received an email from an 11 year old niece. In it she asked for my support of her efforts to help the less fortunate in the world. Included in the email was a link to a website that gave a list of 10 actions youth can take to help combat world hunger. While there were many worthwhile activities in the list of actions, number 1 on the list was ‘become a vegetarian’.

Obviously I don’t agree with this action. I replied to my niece with a short note on why animal agriculture is part of the solution to world hunger, rather than the cause of world hunger. Her reply back – I hadn’t thought about that.

My niece is a very caring young person who is developing into an individual who will make a difference in people’s lives in the future. However, the ready access to mis-information that she readily accepted as ‘good’ for humanity is something that we should all be concerned with.

Fortunately for my niece (at least in my opinion), I had ready access to information that broadened her horizon. How many youth around the world are making life changing decisions such as vegetarianism based on what they believe to be good causes?

In the case of the email linkage my niece sent me, I tracked down the source. It was part of a website in Australia that promote vegetarianism, and cleverly hid the message as among a long list of behaviors and actions that few would disagree with.

The National Pork Board is very active in the effort to educate consumers (including youth) on the role of animal agriculture and pork production in the world economy. However, increasingly it will be up to each of us to take every opportunity, such as I did with my niece, to educate people one-on-one about what we do and how we do it.

All of us need to become familiar with the role of animal agriculture in feeding the world so that at every opportunity we can make one more young consumer say – I hadn’t thought about that!

Winter has arrived in southern Minnesota, and with the coming of winter the realization that propane expenses will be increasing. While every production facility tries to keep the facility set point as low as possible (approaching the lower critical temperature), there are numerous other ways that propane can be wasted in production facilities.

This past week I was working with a production system at their farrowing sites. One of the unit managers said he had turned down the variable out-put furnaces in his farrowing rooms for more even heating. However, when he finished washing a room, the furnace ran almost 100% of the time during the Thanksgiving break. His question was – do I need to turn up the furnace output so it doesn’t run so long?

After further questioning, it was determined that each farrowing room had a 100,000 btu furnace installed. When the variable output valve was turned down, output now is in the range of 60-65,000 btu. Each farrowing room is equipped with an 18” variable speed fan for stage 1 ventilation. The particular fan installed in this facility is rated at 4,440 cfm when operated at 0.05” static pressure. Assuming the controller is configured correctly for this fan (correct motor curve selected), when set at 50% minimum speed, this fan is ventilating at approximately 2,200 cfm. With 24 crates in each farrowing room, this is 92 cfm/crate, well above the Midwest Plan Service recommended minimum rate of 20 cfm/crate.

When the room was empty, the unit employees kept the minimum ventilation fan operating to dry out the room prior to placement of females into the crates. Assuming a 68F shut off point for the room furnace, 45F outside air temperature and 2,200 cfm of fan exhaust, the heat loss estimate from the farrowing room due to the operation of this fan becomes:

= 1.1 btu/hr/cfm/F  x  2,200 cfm  x (68F – 45F)

=  55,660 btu/hr

Since each gallon of propane equals approximately 92,000 btu, the operation of the minimum ventilation fan was consuming 0.61 gal of propane per hour.

With the furnace output at approximately 60,000 btu/hr, the furnace had to run 93% of the time to keep up with the heat loss from the ventilation fan. The issue in this case was not furnace sizing but rather operation of a ventilation fan in an empty room.

At $1.50/gal for propane, leaving the ventilation fan operate in the empty room cost $22/day.

How many times have you done something similar in your facilities?