Brumm Speaks Out

This week I was a speaker at the Iowa regional swine seminars sponsored by the Iowa Pork Producer Association and Iowa State University. While the industry still is reeling from the loss in equity the past 2 years, at every meeting site there was some optimism that the worst of the bleeding may be over for now.

Another sign that producers are optimistic is the price of SEW pigs. The spot market for weaned pigs has been around $50 or higher since the first week of this year. The weighted average in the USDA weekly price report was $41 per pig this week, $4 per pig higher than last year and $5 per pig higher than the 9 year average price for early March.

The same relatively high prices are being paid for 40-50 lb feeder pigs. At the same time, there are reports from production systems that they are beginning to receive calls from growers who don’t have a source of pigs identified for the next turn of the barn.

These high prices suggest that the buyers of the pigs sure believe the futures price for summer and fall hogs will remain. The calls suggest fewer pigs in the market this summer and fall.

At the same time, it appears that the US sow herd sell-off has almost stopped. The spot market for cull sows peaked at $75 a few weeks ago, with the average bid around $65. This is quite a turn around from the $18-25 bids of just a few months ago. Sells of gilts have told me that gilt orders this past month have exploded.

When we add this up, it appears that the pig numbers in the upcoming hogs and pigs report will be relatively stable when compared to the December numbers. The US sow herd will most likely be relatively stable, while the Canadian herd that will be counted on April 1 can be expected to show a continued decline.

The cloud in the optimism for the US producer is the export situation. The stalemate continues between US poultry sources and the Russians over use of chlorinated water for rinsing birds during the slaughter procedure. Russia accounts for 24% of US poultry exports, with a majority of this as chicken thighs (dark meat). In 2002 when Russia last disrupted their importation of US poultry, the price of pork and beef in the US meat case dropped sharply as poultry producers offered thigh quarters for well less than $1 per pound retail price.

I am at the American Association of Swine Veterinarians annual meeting in Omaha. At the same time, the National Pork Board and the National Pork Producers Council have just wrapped their annual meetings in Kansas City.

A hot topic at both meetings is the idea of a national PRRS eradication effort. At Pork Forum, the Minnesota Pork Producers offered a resolution calling for discussion to begin about what might be involved in such an effort.

As one thinks about a possible PRRS eradication effort, several thoughts come to mind.

 First – there is no question that PRRS is costing the US industry a lot of dollars. These dollars are not only associated with all of the mortality and morbidity issues, but also with prevention efforts such as filtration systems, high temperature drying of transport vehicles, etc.

Second – a national effort will take the involvement of the Federal government. Right now, PRRS is not a disease that must be reported and herds that are PRRS positive are not subject to any type of quarantine. Thus, we cannot even identify all of the locations that are PRRS positive or truly quantify the extent of the virus in the US pig population.

Third – the eradication of PRV (pseudorabies) was done with the assistance of marker vaccines. So far, the ability of the PRRS virus to mutate rapidly has prevented the development of an effective vaccine. The possibility of a gene-deleted vaccine that can be used to identify vaccinated animals from infected animals remains a dream for the industry. If a gene-deleted vaccine isn’t available, it will take innovative methods by producers, veterinarians and scientists to come up with alternative methods to accomplish what the gene-deleted vaccines allowed the PRV effort to do.

Fourth – there are pilot area wide eradication programs going on in Minnesota and Michigan. These programs have documented the fact that with a voluntary eradication effort, there must be 100% involvement of all production facilities in the eradication area. In areas of minimal pork density, this is easier to do than areas such as NW Iowa.

Fifth – a topic that will surely arise in any eradication effort will be reimbursement for forced sales or depopulations. Again, with PRV eradication, there were dollars available to assist producers with forced depopulations to clear up stubborn pockets of the virus. With the current federal government deficient problems, making such a program a priority of our legislatures will be a tough but necessary sell.

Finally – I think it is time to begin discussion of a possible national eradication effort. I think our industry can overcome the challenges of such an effort but it will take many years to do it. Every year that we delay the beginning of discussions is a year that we delay eradication of the disease in the US herd.

At every meeting where I talk about the ‘Dufus Factor’ I ask for a show of hands of who in the audience has been involved in removal of dead pigs from a production facility following a power outage. I have yet to do a meeting where no hands have been raised. This suggests that as an industry we don’t pay enough attention to our power outage safety equipment at production sites.

In almost every instance of pig death, the cause of death is heat, not ‘suffocation’ as most commonly think of the term. With fast growing pigs in a finishing facility, total heat production (both latent and sensible heat) can be almost 1000 btu/hr/pig in late finishing. When you model thru this much heat output, you quickly realize that you have less than 30 minutes from a power failure until you need to have emergency heat relief mechanisms in place.

These mechanisms are generally stand-by generators or sidewall curtain drops. I still come across too many sites where the back-up is a pto-generator. In theory these are adequate, but can they be in place and operating within 30 minutes of a power failure? If you rely on a pto-generator, can you always get to the site with the generator operating within 30 minutes? Even if you attend an out-of-town basketball game or attend a church dinner in the next community?

If you rely on curtain drops, do you test them at least 4 times per year to be sure they function correctly? If you test them and/or they operate in a power failure, do you maintain a written record as proof that the system was functional? This written proof of maintenance of the emergency system can become very important in the event of an insurance claim.

If you have an automatic start generator, you cannot use the generator’s hour meter as proof of the system working. The hour meter only proves the generator ran, not whether the transfer switch worked.

Does your alarm system work? I continually come across alarms at sites where there is no dial tone to the alarm, or the grower/owner says he has had times of no dial tone. There is no excuse of this failure and a lack of a dial tone could constitute negligence on the part of a contract grower.

If you have 3-phase power to the site, are all 3 legs of the 3-phase alarmed? I am aware of 2 instances where only 1 leg was alarmed and pig deaths occurred with no alarm call.

This past week I spent time in southwest Ontario, traveling with a swine veterinarian and presenting at a couple of producer meetings. On Tuesday of this past week, the January 1 pig inventories for Canada were also released by Statistics Canada.

While those of us in the swine industry in the US have been living with losses for the past 2 years, these losses so far have not translated into closure of very many swine production facilities. In Canada, it’s a different story.

The Canadian inventory peaked on October 1, 2005 at 15.205 million pigs. On January 1, 2010 it stood at 11.630 million head, a 23.5% drop. On January 1, 2005, there were 1.634 million head in the kept for breeding category, with this number falling 18.3% (299,000 head) to 1.335 million head on January 1, 2010.

The largest share of this decline in inventory has occurred in Ontario. Pig numbers in Ontario declined from 3.105 million pigs on January 1, 2009 to 2.868 million head on January 1, 2010, a 7.6% decline in inventory in 12 months. From their peak inventory numbers in 2006, Ontario producers have reduced total inventory almost 1 million head, with a 100,000 head reduction in the breeding herd. Their industry has contracted almost 25% in the past 3 years.

As we were driving around I saw several 2-400 sow farrow-finish sites sitting empty. At the meetings, all of the producers were seeking answers to questions about their future.

Compared to US producers in the Midwest, the future does not look very clear for Ontario producers. While they are excellent producers and have risen to the challenge of getting more pigs with less expense, there are several location and trade issues that they must overcome.

In Ontario, over 50% of the pigs are slaughtered at the Maple Leaf plant in Burlington. This plant was for sale by Maple Leaf at one time and there is continued concern about its long term future. All other slaughter plants are very small and could not absorb Ontario’s production if the Maple Leaf plant were to close.

Ontario is east of Chicago and has a net positive basis relative to Chicago for corn. While Iowa and Southern Minnesota producers typically price corn at -$0.30 to -0.40 below Chicago, Ontario producers typically price it at +$0.10 to +0.30.

The Canadian dollar is very strong relative to the US dollar. In Ontario, the only risk protection is US markets so any currency fluctuation must be included in the risk. With a strong Canadian dollar and weak US dollar, anything priced in US dollars becomes very expensive. Said another way, anything paid for in US dollars becomes worth less when converted to Canadian dollars.

Canada has approximately 30 million people, with the majority located within 50-75 miles of the US border. With a pig herd that is 1/6 the size of the US herd, and a population that is less than 10% of the US, this means they are very dependent on exports for profit. The strong Canadian dollar versus the US dollar means US producers can sell identical products in export markets for less money, making US pork a preferred product because of price.

While many of the Ontario producers I visited with intend to remain in production for now, they are not optimistic about the opportunities for youth to return to the family farm with pig production as the base enterprise. When the current production facilities reach the end of their productive life, many producers will close the door on pork production.

It’s the middle of February and I’ve lost count of how many times I’ve shoveled my driveway. Winters grip has been harsh this year, and it looks to remain for a few more weeks.

It’s one thing for me to complain about clearing a driveway when I live in town. It’s been another story for producers and their employees this winter as they have daily faced the challenges of keeping driveways open and assuring bin access for feed trucks. when you spend 4+ hrs several days a week moving snow it becomes a long winter.

I was made aware of this constant challenge several times in the past few weeks as I worked in our research barns and had discussions with several nutritionists. The good news for the pigs is that are confined inside where the temperatures are relatively warm and they don’t have to climb snow drifts to access feed and water and the water is not frozen, etc.

To those industry critics that want us to revert to the ‘old’ ways of rearing pigs, I remember well the ‘old’ ways. They involved pigs with frozen backs during transport, frozen teats on sows coming into the farrowing house, pigs with prolapes from piling into straw packs, etc. The best example of the ‘old’ way is a comment by a long time veterinarian friend who witnessed the industry conversion from outside lots to confinement.

He told me one time that in the ‘old’ days, he knew he would spend his time repairing prolapses on growing pigs on days the wind was from the southeast as the possibility of pigs staying warm and dry in ‘Cargill’ facilities was minimal on these days. He contrasted that veterinary effort with the challenge of today where pigs are relatively warm and dry and the challenges are in determining herd health practices for prevention of disease. As a person trained in animal health and concerned with their welfare, he much preferred the confinement option for the growing pig.

Our failure in the animal welfare debate has beena failure to help critics understand how much we’ve improved the well being of pigs by our current production practices. Maybe it’s time we dug out pictures of the ‘old’ days to help this generation of critics understand what they are asking us to revert to.

Last fall I departed from my weekly blog about pigs to share with readers the decision my wife and I were making regarding placement of Elizabeth in a group home. This week I want to depart once again to share with you how this process is coming along.

Liz has been living in a group home with 2 other girls for 4 weeks now, and appears to be adapting very well. So well in fact that when we return her to her residence after a visit to our home, she immediately tells us to leave.

The staff at the home have been very good in learning how to work with Liz, and in turn Liz has been very good at testing their patience and creativity. The staff are all relatively young females with lots of energy who don’t like to sit around, so they are always doing something with the girls that live in the home. In the 4 weeks that she has been in the home, Liz has gone clothes shopping, bowling, shopping, petting animals at Pet Expo, shopping at the mall, shopping at WalMart, etc. Needless to say Liz loves it.

What made me really realize how different our life has become without Liz in the home occurred this morning. When Liz was living with us, the school bus was at our door at 7:10 am. This meant I had to always have the driveway wheelchair clean by 7 am. At 3:30 pm another round of shoveling was necessary in order to get the wheel chair up the driveway and into the house when she returned home. While I still shoveled snow this morning prior to 7 am, it was with a different sense of urgency and attention to detail.

Jan and I want to thank all of you who have sent us notes, or otherwise communicated your cares, concerns and best wishes. So far it does appear that we have made the right decision regarding Liz’s future.

Last week Smithfield announced the permanent closure of the John Morrell slaughter plant in Sioux City, Iowa. At both the Minnesota Pork Congress and the Iowa Pork Congress, the Manitoba Pork Producers had a booth where they were interacting with producers on a variety of topics, including the impact of MCOOL on their industry.

Both the Mexican and Canadian governments have filed a claim against the US in the World Trade Organization. Many expect a full hearing on this claim later this spring, with a ruling sometime this summer or fall.

In the mean time, the number of Canadian born feeder pigs that are coming to the US has dropped dramatically. In 2007, 6.77 Canadian feeder pigs (pigs weighing less than 55 kg) came across the border to US finishing sites. In 2009, this number dropped to 5.1 million pigs and it appears the number will be even smaller in 2010.

The vast majority of these pigs go to Iowa and southern Minnesota sites. This concentration of Canadian feeder pigs in the region will continue as Tyson is the only major packer which has continued to sign purchase agreements with owners of Canadian born pigs. The best information that I can locate suggests that Iowa is the final destination for over 60% of all Canadian born feeder pigs, with another 20+% going to Minnesota, and 4-5% going to both Nebraska and South Dakota.

Prior to MCOOL, the John Morrell plants in Sioux City and Sioux Falls killed a large number of Canadian born and raised pigs. In 2007, there were 2.60 million slaughter barrows and gilts imported into US slaughter plants. This number dropped to only 550 thousand barrows and gilts in 2009. This change in slaughter barrow and gilt imports represents approximately 2% of our yearly kill.

The Sioux City John Morrell plant had an estimated capacity of 14,000 pigs/day when killing on a double shift. This amounts to about 3.5 million head per year capacity so the loss in Canadian born pigs is more than this plants estimated capacity. As the number of Canadian pigs declined, along with the very recent reduction in the US born pigs available for slaughter beginning this spring, pressure on the packing industry to match capacity with supply had to be an issue. Whether the closing was Sioux City or some other location, it appears that market forces are working to match capacity with supply.

For the short term, the closure of the Sioux City plant won’t have much of an impact on prices due to the expected decline in pig numbers. Steve Meyer of Paragon Economics, Inc. estimates that the US slaughter capacity is currently in the range of 431,000 hd/day when corrected for the plant closure. As the US industry works to regain the equity it lost the past 2 years, it doesn’t appear to me that we will have slaughter numbers approaching this capacity for several years.

Another winter storm is predicted for this weekend in the upper Midwest. By now, many producers are getting tired of winter. Between the very cold temperatures for the first few weeks of this year and the continued snow and ice accumulation, it has been a long winter.

A few weeks ago I wrote about reports of several roofs collapsing on production facilities in Minnesota after the Christmas day storm. At the Minnesota Pork Congress, I talked with several company representatives who were aware of additional barn roofs that have failed since that storm in Iowa and Minnesota.

One of the big unknowns at this time is whether there are common factors in the roof failures. Are there certain structure designs or installations that are more at risk of failure? For example, are 100 ft wide double wide wean-finish barns more at risk than 80 ft wide barns? Are double wide barns more at risk than single wide barns? Does the type or location of ridge vents (when considered relative to barn orientation to wind) alter snow loading enough to be a factor? Are older barns more at risk than newer barns?

At the 2009 Minnesota Pork Congress, Dr Dwaine Bundy, emeritus professor of Ag Engineering from Iowa State University gave an excellent presentation about some of these issues. His slides are available at http://www.mnpork.com/producers/seminars.php

In a effort to help extension ag engineers better understand the problem this winter I am using this weeks blog to ask for readers help. If you had a roof collapse, or know of a specific facility that had a roof failure this winter, please reply to this blog with some of the above information, including location of the barn. Your response will not be posted as all responses to this blog must be approved by me for posting. Rather than replying to the blog you may also contact the ag engineers directly with reports of failures.

I will pull together these responses and forward them to Dr Larry Jacobson at the University of Minnesota (jacob007@umn.edu), Dr Jay Harmon at Iowa State University (jharmon@iastate.edu), Dr Steve Pohl at South Dakota State University (stephen.pohl@sdstate.edu) and Dr Rick Stowell at the University of Nebraska (rstowell@unlnotes.unl.edu). Together, this group will try and identify whether there are any patterns to these failures and what barn owners can do to reduce the risk of a future failure.

It may be that this group comes up with no common factors. On the other hand, they may be able to develop a list of conditions such as ridge ventilators installed in a specific pattern or direction relative to the storm or an age estimate of risk or something else that increases the risk of a catastrophic snow load on the roof.

This afternoon I had the opportunity to participate in a webinar sponsored by AgStar on the topic of world trade and the pork industry. The presenter was Brett Stuart from globalagritrends.com.

A couple of items in the presentation and resulting discussion caught my attention. First, Brett presented UN/FAO data that suggested that by the year 2030, total food production in the world will need to increase by 40% to keep up with population growth, with growth up by 70% by the year 2050. At the same time, total land use for agriculture is predicted to increase only 13% worldwide.

A second trend that Brett shared with the group is the 9% decline in US per capita meat (beef, pork and poultry) consumption in the past 3 years. Some of this is most likely due to the recession’s impact, but some is also due to the move by many younger Americans to a vegetarian or vegan lifestyle.

In 2009, between 20 and 25% of all of the pork produced in the US was exported. Because of the weak US dollar, and our very efficient production system, US pork is the low cost leader in pork exports (sort of like WalMart for grocery store sales).

My question this week is – if US per capita meat consumption continues to decline, what kind of ‘social license’ will producers need to be able to continue as a leading export country? If US consumers eat less meat, will those with social agendas (such as HSUS, Peta, etc.) put in place enough restrictions on our production abilities that we are no longer world leaders?

One only has to look back at England’s rapid decline to see how fast this can occur. In the 1970’s and early 80’s, England was the country the world went to when looking for new technology. Today, their industry is only 54% as large as it was 20 years ago. English produced pork in the meat case is more expensive than product from Denmark, Germany or other EU-27 sources. England went from the position of being a net exporter to becoming a major importer of pork in less than 20 years.

I’m writing today’s blog from a motel room at one of the casino’s in Council Bluffs, Iowa where I’m waiting for roads in southwest Minnesota to open.

Another winter storm is raging in the Midwest, meaning another week of disruptions to feed deliveries and deliveries of pigs to slaughter plants. We had several loads of pigs from our research barns delayed until next week. I’m sure many of you reading this blog are having similar problems.

As a result of the Christmas storm, we lost the roofs on at least 5 hog barns and 5 poultry barns in Minnesota. In most cases, snow drifting and unequal weight loads on rafters were the cause. Today’s new snow and more drifting will add to the stress on rafters.

In conversations with 2 structural engineers, there are 2 problems with the snow loads. One is the risk of immediate failure of the rafter due to the unequal loading on the roof, which is what happen on Christmas weekend. The other concern is long term fatigue of the structural members due to the snow loads.

If you live in the upper Midwest, engineers advise that you take a look at the snow loads on your roofs. If it looks ‘deep’, they advise you figure out ways to remove some or all of the snow load relatively soon. In the case of barns in southern Minnesota, producers on may sites have been up on roofs with shovels and other devices to get the snow off the roofs. I heard of one case at a sow unit where they took a snow blower up on the roof.

In all cases, if you are up on the roof, use caution. What some were doing for safety was to push snow from the upper levels off the roof, leaving some along the edge. The reasoning was that some snow along the roof edge would slow/stop a fall from the roof in the case of slippage.

The rafters and supporting bracing of roof members in our facilities were designed by structural engineers to carry a specified snow load. The problem with high winds is that the snow load isn’t uniformly distributed on the roof members, meaning there are points on the roof where the load is more than they were designed to bear. So far the only solution that I’ve been able to identify is to clean the roofs, almost always by hand.

Could be a long winter.