Thursday, April 18, 2024

2022 Good Times Coming

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2022 Good Times Coming

Pork Commentary, January 3rd, 2022
Jim Long, President-CEO, Genesus Inc.

We are at a New Year. Like most in our industry, we are optimistic. Our industry has by its very nature evolved into a collection of optimistic participants. We are all the survivors of the huge consolidation of the last three decades. Thousands of producers have left our swine business throughout the world primarily because they didn’t have the capital and or courage to go on. Optimism is part of the courage. We can all list the issues that can make things go wrong in the pig business: disease, markets, costs, labor, environment, etc. The list is daunting, but we all still go on because we are optimistic and, in some sense, we have no choice but to forge ahead defying the list of obstacles to success.

A few years ago, we heard a large producer say re our industry “The women and children are dead, all that is left are the warriors.” Sums up where we are. For many of us, our Journey has had its challenges but we continue on with the spirit of optimism. We look to 2022 with optimism, because we are optimists.

Future

The last few months in North America, Europe, and China producers have been losing money. It’s the first time that the three largest producing areas in the world have all been losing money at the same time. Collectively our calculation has the three areas losing $2.5 – 3 billion U.S. a week. History tells us when producers lose money you have less pigs in the future. We believe history will repeat itself. This time the collective decrease in hog production due to financial losses will be unprecedented.

Charlie McVean, the legendary trader from Memphis used to say “wait until the dog hits the end of the chain.” That’s where we are today, liquidation has happened in USA with no expansion in sight; Europe and China have been for months liquidating at high levels. Sometime in 2022 when their liquidation levels push hog numbers down, the dog will hit the end of the chain. Then we expect hog prices in many parts of the world will match or exceed their highest price ever. Last year in the U.S. there were many weeks over $1.20 lean lb. Why would we not expect that price to be surpassed? There are less lean hogs in U.S. this year by summer there will be less hogs in the rest of the world. The U.S. future market today in the mid 90’s is significantly undervalued.

2022 – Here We Come

In our opinion before 2022 is over we will all consider the year as one of the best years ever. Less Hogs lead to higher prices. We will achieve profit levels unprecedented. Observation – our strengths are our weaknesses. We are maybe optimistic to a fault. But as Elon Musk says; “I’d rather be optimistic and wrong, than pessimistic and right.”

To all have a great 2022. The journey continues.

Pricing pigs in a disease crisis

Andrew Heck
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Pricing pigs in a disease crisis

By Bijon Brown

Editor’s note: Bijon Brown is the Production Economist for Alberta Pork. He can be contacted at bijon.brown@albertapork.com.

Whether African Swine Fever (ASF) breaks in the U.S. or Canada, the situation would be a disaster. With the discovery of ASF in the Caribbean, U.S. officials are paying close attention to their overseas territories, like Puerto Rico.

The impact of African Swine Fever (ASF) on markets in Asia and Europe continues to be a tale of woe for the global pig and pork industries. With ASF’s arrival on the doorstep of the Americas – in Haiti and the Dominican Republic – we are reminded just how close it is to the continental U.S. and Canada.

The discovery of ASF in either the U.S. or Canada would mean significant losses of pigs, pork and, ultimately, profits for the entire industry, including farmers and meat packers. To mitigate these possible economic impacts, we must take a closer look at how our national industries are linked and what some of our options are.

Canadian pig and pork markets are highly dependent on the U.S., as dictated by hog pricing data collected by the U.S. Department of Agriculture (USDA), which informs hog prices paid to producers by export-certified ‘federal’ packers overseen by the Canadian Food Inspection Agency (CFIA). As of September 2021, Canada had exported nearly 300,000 metric tonnes of pork to the U.S., in addition to nearly four million weaners and more than one million finishers, breeding stock and cull hogs. These cross-border movements have generated more than $500 million in revenue.

In contrast, just over 150,000 tonnes of U.S. pork made its way to Canada during that same time, and Canada is not a major importer of live hogs. The sheer size of the U.S. market dwarfs the Canadian market, which is why it is even more important for the Canadian industry than the U.S. industry to evaluate its position in response to ASF. This poses an interesting dynamic if ASF enters either of our countries, significantly impacting Canadian producers and packers either way.

What to expect if ASF enters the U.S. first

U.S. hog prices would tumble in the event ASF enters the country, which would also have a dramatic impact on prices paid to Canadian producers. Canadian packers, however, may stand to gain.

The U.S. consumes about three-quarters of the pork it produces, and the remaining one-quarter is exported. In the event ASF enters the U.S., the country would still be awash with pork.

The U.S. hog price is quite responsive to the pork export price. Specifically, a one per cent fall in the price of pork exports is expected to lead to a 2.4 per cent decline in the price of hogs. This, however, is an incremental relationship characterizing the impact of small changes in the export price.

For an abrupt loss of the export market, alternative approaches would be required. Almost overnight, U.S. pork prices could fall by one-quarter, without even considering the price effect of excess supply sitting on the domestic market – unable to be moved outside the country. Hog prices are even more volatile than pork prices, so the shock to the hog price would be even more significant. Nevertheless, this price drop is not expected to be permanent, as producers would adjust to the new pricing signals they face and ease production. In time, domestic demand will take care of some of the excess supply, and markets will stabilize, albeit at a lower price.

Since Canadian packers rely on U.S. prices, it is expected that Canadian hog prices would fall sharply even though ASF had not entered Canada. Such a price drop in the immediate term would be a great benefit to Canadian packers, as they would be able to purchase market hogs at ASF-weakened prices and sell the pork at a premium on the world market. Producers, on the other hand, would be left to bear the immediate burden. However, if such conditions lasted for any length of time, many independent producers would be forced to quickly exit the industry, which would seriously dwindle available hog supply for packers. As such, the medium- to long-term outlook would be bleak for everyone.

What to expect if ASF enters Canada first

With 70 per cent of Canadian pigs and pork bound for global markets, a widespread export ban would close international borders immediately.

If ASF enters Canada before the U.S., our industry picture will be even darker for producers and packers, as our export-dependent supply – representing about 70 per cent of all pig and pork production in the country – would be left without an end destination. With domestic Canadian pork consumption of around 800,000 tonnes per year, it would take more than two years to get through one year’s worth of production. Consumers would need to more than double their consumption of pork to overcome this surplus – completely unreasonable.

Managing the crisis from a pricing standpoint – which is only one part of the much larger puzzle – would require significant adjustments at all levels of the value chain, but especially at the producer level. Supply regulation would be required swiftly, as well as a robust price support program to help the industry navigate the prospect of near-total decimation.

The relationship between U.S. and Canadian hog prices is a one-way street. ASF in Canada would not impact U.S. prices, and the market signal would actually prompt U.S. producers to increase production to fill the gap left by the absence of international Canadian pork exports. Inversely, Canadian producers would need to make substantial cuts to production, in response.

Canada, being an isolated market, would therefore require a domestic price to reflect the new situation. Currently, there are no mechanisms available to collect domestic pricing information provincially or federally. Without a handle on domestic prices, government support would need to kick in, if producers and packers have any hope of recouping losses. Even so, compensation rates would need to be tied to current market prices, but if there is no way to collect this information, governments would have no basis on which to assess the scale of losses. Urgent attention, therefore, ought to be placed on creating transparent pricing information.

The direct hog price impact is just one angle of the larger financial impact. The shock to the system will increase the anxiety levels of lenders who may want to call outstanding balances to be repaid and cut off existing credit lines. Financing is the lifeblood of many farming operations, and if these supports disappear, it would create substantial difficulties for many businesses.

Sooner than later, price transparency discussions need to take place. Governments already have experience dealing with this kind of mass crisis, given the COVID-19 income support response, but will they be open to talking ASF? It is worth considering that COVID-19 has affected millions of Canadians, while ASF’s impact, however terrifying for our industry, would be much smaller in its reach. It is incumbent upon pork industry stakeholders to act now, rather than wait for solutions to fall into place.

Producer-packer risk-sharing may be optimal

By working together, Canadian producers and packers can find solutions to the ASF pricing problem, but not without price transparency.

Recognizing that few good pricing options exist for the Canadian industry in the event of an ASF outbreak, even in the U.S., our national industries could continue to operate under the existing framework, or employ a risk-sharing model backed by government support for transparent pricing information, or implement a price floor for hogs to prevent a rapid decline that would cripple farmers financially.

If everything stays the same, prices will continue to be based on what happens in U.S. markets. The only support to producers would be voluntary hog price insurance or business risk management programs like AgriStability. Current hog price insurance premiums are considered prohibitively high, and uptake of hog price insurance has suffered, as a result.

Even if AgriStability were to be triggered, provincial and federal governments may have the option of introducing a price floor, which would soften the blow of losses. Price floors are not new; in fact, they were used in the U.S. during the Great Depression. A price floor in the case of ASF would not require government funding but rather legislation that dictates hog prices cannot fall below a minimum threshold for producers. Importantly, Canadian packers would not suffer from this kind of support to producers, as U.S. packers would be absent on the global market, providing considerable leverage for Canadian exports, which would spell higher pork prices.

But what would be the ideal price floor to protect producers while also ensuring packers can continue to profit? Establishing an effective price floor requires transparent, Canadian-based hog pricing data. By sharing revenue more equitably across the value chain, governments can have confidence that our industry is doing everything it can to defend itself, rather than looking for handouts.

As an alternative to price floor legislation, the industry could, perhaps, come together and solve the problem without government intervention. If producers and packers could agree to share the revenue and risk from pork sales, many of the potential hurdles to insulating the industry against losses in the event of ASF would disappear naturally. Such an arrangement would correct the hog pricing signal mismatch between the linked U.S. and Canadian markets, and it would facilitate more equitable distribution of profits while satisfying government.

Zoning could alleviate some pressures

Zoning agreements are important in the event ASF enters Canada, but it remains to be seen whether they will be honoured. Image © S.C. Jiang.

Zoning is the unsung but somewhat unreliable hero of ASF preparedness. Many efforts are being made to negotiate zoning agreements with Canada’s major pork-trading partners – including successful ones with the U.S., European Union (E.U.), Vietnam and Singapore – but notable liabilities still remain with important countries like China and Japan, especially. China’s track record in this regard is predictably poor for any country that finds itself impacted by ASF, but Canada’s long and trusted relationship with Japanese buyers is one that our industry is keen to preserve.

In the case ASF enters the U.S. first, Canada would been seen as an easy outlet for surplus U.S. pork. It could be expected that a flood of U.S. pork would arrive in the Canadian domestic market. Given the pricing linkage, this would actually help alleviate the dip in U.S. pork prices, positively impacting U.S. hog prices and consequently helping Canadian producers a bit.

In the case ASF enters Canada first, producers in non-infected zones would still be able to ship pigs to packers, and that pork could continue moving into the U.S. Likewise, the movement of weaners and culled hogs, primarily, would be allowed. However, it would be unsurprising to see a significant price discount for Canadian shipments, which would still result in major losses across the value chain. Despite that reality, zoning arrangements may help the cause of ASF recovery, but this assumption relies on these agreements being honoured in the time of actual crisis, which is never guaranteed.

The time to act is now

Through the introduction of price floors, zoning agreements and other work being done to prevent and prepare for ASF, profit- and risk-sharing options are on the table for the Canadian pork industry if hog price transparency is established.

It is worth noting that the expectation of government support should not be the default position of the industry in the event ASF arrives. A more workable approach is to seek solutions internally – among industry stakeholders – to ensure that ASF’s devastation does not spell our complete demise. Urgent action is needed.

Poland’s lessons for Canadian pigs and pork

Andrew Heck
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By Andrew Heck

No longer the daunting, forbidding country it once was, Poland’s meat industry is geared toward increasing production and developing emerging markets for its pork. Warsaw’s ‘Old Town,’ seen here, is actually a complete reconstruction after the city was levelled, in 1944.

From the widespread destruction of the Second World War to decades of forced isolation and repression behind the Iron Curtain, Poland has suffered through miserable times more than once in the past century alone. But now, this once-closed country has pulled back the drapes for business in many sectors, including meat.

Since joining the European Union (E.U.), in 2004, just 15 years after the country formally transitioned to democracy, in 1989, Poland has come a long way to developing its principal industries, especially agriculture. What was once driven by the need to fill production quotas to satisfy the power appetite of a strict government has grown into a blossoming, innovative and global system eager to integrate and compete with the world.

But with African Swine Fever’s (ASF) continual spread between Eurasian wild boar and farms of varying size, the Polish hog sector continues to face ongoing threats to production, processing and export. COVID-19 has created additional setbacks, and lingering political turmoil is always a threat.

To the west, Germany sets the hog price, and to the east, Russia remains an important but complicated pork-buying market. A dark and tragic past still haunts Poland, and to this day, it would seem that larger, more imposing forces still have a major role to play in the country’s trajectory – even in agri-food.

Unlike Poland, Canada does not have to carry so much historical baggage when it comes to doing business, even at a time when many Canadians are re-examining certain aspects of how our nation came to be. However, much like Poland, Canada has always been required to punch above its weight when it comes to being recognized on the world stage.

So how do the Polish and Canadian pig and pork industries stack up? A side-by-side look at the two countries reveals some crucial insights into where Poland has been and where Canada could be going.

Polish producers find themselves in a tight spot

During the ‘Meat with European Quality’ study tour, in November 2021, Polish government officials met with Canadian and American journalists at the federal agriculture ministry’s offices in Warsaw.

The Polish Union of Producers and Employers of Meat Industry (UPEMI) represents the country’s hog farmers before the E.U. Since 2005, the organization has grown into a full-scale advocacy group representing producers and managing their national quality assurance program. One could liken the group to the Canadian Pork Council (CPC), with a broader scope to cover multiple livestock commodities.

“ASF and avian flu are the biggest challenges for us,” said Wieslaw Rosanski, President, UPEMI. “The number of hog farms in Poland has been cut in half since 2014, when ASF first arrived here. Many smaller farmers are unable to recover and restart their operations after ASF forces them to depopulate.”

While the number of hog farms in Poland has rapidly decreased, the hog herd continues to grow, thanks to the rise of increasingly larger farms. But farm expansion, for many, is limited by certain factors. As a result, the sense in the Polish industry is not entirely positive for producers, who see too many threats that are not translating into opportunities.

“Hog prices are good, but that is not enough,” said Rosanski. “If farmers feel like they can be shut down at any moment, the risk is not worth it.”

Government financial support is available to compensate producers for losses due to ASF culling activities, but loss coverage alone is not enough to support long-term operational sustainability.

“We have an algorithm, and it is used to determine how much should be paid to a farmer, based on current market conditions,” said Ryszard Bartosik, Secretary of State, Polish Ministry of Agriculture and Rural Development. “This can be difficult for us when farmers have poor accounting, but we do as much as we can. Our government also supports farmers in ASF zones who are not positive but are affected anyway and are unable to sell their hogs.”

For Polish producers, the market value of culled hogs is determined using an average of three calculations: one created by a government-appointed estimator and two by third-party auditors. However, in 2018, nearly 20 per cent of ASF-affected Polish farmers did not receive compensation, due to biosecurity non-compliance. In 2019, that number actually doubled to 40 per cent of otherwise-eligible farmers.

Whole-herd culling in an ASF outbreak places considerable financial strain on any affected producer.

In the event ASF were to break in Canada, affected Canadian producers would have similarly justified concerns when it comes to compensation, along with an expectation that necessary biosecurity protocols are in place to stem the spread of disease.

In Alberta, a calculator is being developed to address costs related to destruction and disposal, as a way to effectively and efficiently allocate resources in an outbreak. For instance, if only one farm experiences an outbreak, that may be relatively easy to contain, assuming the disease is detected early enough. But if 10 farms are affected, a whole new set of considerations and prioritizations may be in order.

“The calculator is being designed so that it can be used universally by producers of all sizes and production types,” said Javier Bahamon, Quality Assurance and Production Manager, Alberta Pork. “We are developing this tool independently, to get ahead of any potential problems or delays if ASF arrives in Canada, which would be an incredibly stressful situation for many reasons.”

In Poland, the typical methods for performing euthanasia are electrocution or lethal injection, though the E.U.’s preference is the use of gas, which is being employed in Germany, currently. Hogs culled on-farm are transported to a central disposal plant, which incinerates most carcasses or uses burial sites in the case that an outbreak is too large to handle through the plant. The entire process from start to finish is overseen by government officials, with secondary support provided by UPEMI.

In Canada, the Pan-Canadian Action Plan on ASF is supported by national and provincial stakeholders and contains four main pillars, including ‘Preparedness Planning,’ under which a depopulation and disposal working group operates. As part of this collaborative effort, Alberta Pork has been providing ongoing training to producers. The training involves teaching the basics of incident response, along with how to use captive bolt guns to perform euthanasia. The guns are provided free-of-charge by Alberta Pork. Nearly 80 of the province’s 300 commercial farms have received training so far, with plans to increase that rate to cover as many premises as possible.

“Equipping producers to handle a culling situation is very important for us,” said Bahamon. “By providing them the tools and knowledge to prepare for this circumstance, we are trying to build the confidence that they are ready to react to a disease issue.”

Getting ahead of any potential outbreaks seems prudent, especially when considering what is driving the spread of ASF in Poland: wild boar. Canada, too, has a wild boar problem, which could encourage disease transmission here as well.

Poland’s love-hate wild boar saga

At the Dwór Mościbrody hotel restaurant, a former hunting lodge, this Eurasian wild boar trophy proudly adorns the wall. In Europe, these animals have been responsibly pursued as game for ages, but in North America, the practice adds to their number and spread, making the problem worse.

Wild boar hunting has long been an important sport tradition in Poland. The country’s abundant forest coverage creates the perfect habitat for boars to thrive, and carefully coordinated, controlled hunts are still an attractive activity in the country. Despite this, direct contact between Poland’s wild boar population and mostly small farms has proven responsible for the devastating spread of ASF there and in certain countries mostly to the south and east – but, since September 2020, in Germany as well.

In Canada, the growing problem of invasive, non-native wild boar at large has been plaguing farmers and landowners for some time, and it is getting worse. Wild boar were originally imported for game farming and fenced hunting purposes. Unfortunately, that plan backfired, and our country now has on its hands a truly complicated situation. Whether native or a pest, wild boar and their hybrids with domestic pigs can serve as an effective vector to spread disease.

Some prominent industry stakeholders believe that wild boar, in addition to international transport, could combine to bring ASF to North America. It may be only a matter of time, which is why swift action is needed. The goal of eradicating wild boar in North America is an attempt to protect not only livestock and crops but also to prevent widespread environmental degradation.

“Last year, our board of directors committed $400,000 to wild boar eradication in Alberta,” said Brent Moen, Chair, Alberta Pork. “We have seen just how destructive wild boar can be, and we want to do everything we can to support the total eradication of wild boar in Canada.”

The situation in Poland represents a need for ecological balance, given that the species is a part of the natural environment. However, industry stakeholders are wary of attempts by animal activists to prevent the implementation of measures used to safeguard farms against wild boar.

“Some people are very concerned about how we manage wild boar,” said Jolanta Ciechomska, Manager, Quality Assurance for Food Products (QAFP), UPEMI. “But we have to protect our farms. Before any uninfected farm sends pigs to a slaughterhouse from within an ASF control zone, our government’s veterinary inspectors must verify that the herd is healthy.”

Poland’s QAFP System, overseen by UPEMI, can be compared to the Canadian Quality Assurance (CQA) and Animal Care Assessment (ACA) programs, or the incoming Canadian Pork Excellence (CPE) program. On-farm, the QAFP System stipulates standards for feed rations and welfare, namely. However, unlike on-farm programs in Canada, Poland’s QAFP also covers poultry and animal transport, in addition to hogs.

Government veterinary inspectors play an important educational role, in addition to a regulatory one, for farmers and truckers. Veterinary inspectors ensure biocontainment measures, such as farm fencing, are adequate. E.U. regulations adopted in the last decade have aimed to bring all members states up-to-speed with modern, international expectations of meat production, which includes a critical food safety component. Not only government inspections, but regular audits by importing officials from countries like Germany and France, confirm that Polish pork exports are free of ASF.

On the side of a road near Gródek, biocontainment signage warns: ‘Attention! African Swine Fever Affected Area.’ Image © Mikołaj Grycuk.

CanSpotASF is the Canadian surveillance program that tests farms and packing plants on a risk-based level, rather than a regularly scheduled or randomly prescribed basis. No such program exists in Poland; however, the country’s veterinary officials must provide a daily report to the World Organisation for Animal Health (OIE) to indicate any new ASF cases. OIE is responsible for defining ASF infected zones globally. For Canada, zoning agreements with foreign partners are key to ASF preparedness before the situation potentially becomes desperate.

Since 2014, more than 500 on-farm cases of ASF have been discovered in Poland, with more than 100 occurring in the past year. While very alarming on its own, it is unsurprising, given that the country has detected tens of thousands of cases in its wild boar population over the same span of time. Even if industry facilities are not actively tested for ASF, carcasses of deceased wild boar are gathered to test for the virus, and the number climbs frequently.

Canada’s battle with wild boar is well underway, but critics of eradication or those who doubt the severity of the problem should seriously heed Poland’s example of how these creatures can wreak havoc on the entire sector. If the Canadian industry can avoid repeating this lesson, no price is too high, and no measure is too extreme.

Polish processors eye market expansion

The Mościbrody Meat Processing Plant performs all activities from slaughter to primary processing to further processing of packaged smoked sausage products sold by national distributors under the company’s own brand and under private grocery labels.

Just prior to ASF entering Poland, in 2013, the country sent more than 20,000 metric tonnes of pork to China, but that market has been closed since 2014. In contrast, Canada normally sends 10 times that amount to China annually. While Poland may not be on the same footing as Canada in that regard, it is widely acknowledged within the global pork industry that China holds the keys to a lot of market influences. And, for Canada, the hypothetical, long-term closure of the Chinese market in the event of ASF should be considered a red flag, especially following the situation experienced starting in mid-2019, when a dispute over veterinary certificates – largely fuelled by political tensions – caused the Canadian industry to hemorrhage money for several months.

For Polish processors, Asian marketplaces are much less important than those inside the E.U.

“Our preferred markets are Germany and Italy. We send primals and further-processed products there,” said Adrian Moskwiak, Director, Mościbrody Meat Processing Plant. “We have some advantages and disadvantages for our business, but we are working hard to expand our operations.”

Like Mościbrody, in Canada, most major pork packers have recently announced significant building projects, optimizations or acquisitions. Examples include HyLife’s construction of new barns, Maple Leaf Foods’ construction of new plants, Olymel’s restructuring of plant shifts and Sofina Foods’ purchase of foreign subsidiaries.

However, a major sticking point for any meatpacking company’s success, whether in Canada or Poland, is the availability of labour. As in Canada, Polish packers rely on a steady stream of reliable workers from abroad to fill their needs. Given political ties and labour market trends, many of Mościbrody’s workers arrive from neighbouring Ukraine and Georgia (a small country south of Russia).

In addition to the technical components of operating safely during COVID-19, packers are at the mercy of hog prices, which are set by the German market. In Canada, federally inspected packers rely on data from the U.S. Department of Agriculture (USDA) to develop pricing formulas, using a combination of whole carcass and cut-out values.

“We consider the Polish market important too, of course,” said Moskwiak. “For Polish retailers, products from certain countries have better reputations than others. German products are often avoided, but products from the U.K. are favourable. This includes pork. We would like Polish people to buy Polish pork, but poor consumer education means that many people are unsure of where their meat comes from.”

‘Eating local’ may be relatively easy in Poland versus Canada, in some ways, but price and protein availability continue to wield the most power over consumers.

Pork is king on the plate in Poland

‘Goodvalley’ brand sausages are distributed in Poland, Ukraine, Russia and Denmark, aimed at sustainability-conscious consumers. Seen here at SPAR in Warsaw, an independently owned grocery store belonging to a Dutch chain. The packaging includes a QR code that conveys information related to traceability.

Poland loves pork. Not only in the sense of utility – as an accessible, affordable, nutritious and tasty protein – but also in the sense of national pride. Most Polish culinary delicacies involve pig products one way or the other, served up in the form of soups, stews, sausages and dumplings, with plenty of rye bread, potatoes, mushrooms and – yes, vodka – to cleanse the palate and keep dinner conversations interesting.

Unlike Poland, if ASF were to arrive in Canada, it is almost impossible to see how we could ‘eat out way out of the problem.’ With 70 per cent of all Canadian pigs and pork produced ending up on the export market, it would be a monstrous task to think that the Canadian public could put a dent in the stockpile of pork that would result if our foreign markets suddenly closed their doors.

Currently, Poland exports close to 30 per cent of its produced pork, about 80 per cent of which ends up in other E.U. states. Given domestic demand, Poland remains a net-importer of pork. This is a major advantage to overcoming the constraints of ASF zoning, which differs greatly from the situation in Canada.

Today, Canada has a population of just over 38 million, while Poland sits closely at just under 38 million. The average Canadian currently consumes less than 20 kilograms of pork per year, while the average Pole consumes about twice as much. While Poland already has ASF, the country’s strong pork-eating culture leaves the industry with some options when export market options are curtailed. It would be incredibly optimistic to believe Canada has the same cards in our hand to play. Poland has an additional supplementary benefit, which is funding from the E.U. to promote the consumption of European food products.

While supermarkets have become the dominant manner of selling pork to home consumers in Poland, some still frequent local butchers for high-end domestic and imported products. This store, Befsztyk, also accepts online orders, for delivery.

“While Canada’s pork export markets are certainly a hallmark of our success, we are also working with our provincial hog producer boards to increase the proliferation of Canadian pork at the domestic retail and foodservice levels,” said Jeremy Yim, Director, National Marketing, Canada Pork. “As time goes on, Canadians are becoming more interested in creative ways to use pork, which is driving Canadian end-users to provide new offerings and experiences for customers.”

Much work has been done by Canada Pork for the last three decades to support the competitiveness and sustainability of the Canadian pork value chain, including the promotion of domestic pork consumption. But despite these worthwhile efforts, it is almost certainly not enough to counter-balance any potential trade disruptions and domestic over-supply of pork if ASF were to break.

Essentially, while Canada and Poland are similar in size and can lay claim to having robust pig and pork sectors, one is poised to effectively ‘live with’ the ASF situation (Poland), while the other is seriously threatened by the thought of it (Canada). Increased globalization both helps the industry flourish financially and has the capacity to end it altogether.

Poland and Canada’s connected reality

Warsaw’s bustling financial district is the backdrop for the former ‘Palace of Culture and Science,’ commissioned by Joseph Stalin, in 1952, completed in 1955, when Poland was under Soviet influence. The country has changed dramatically since then.

The Polish and Canadian pig and pork sectors share some notable features but are also distinguished by some vast differences. All in all, both jurisdictions are working hard to gain much-deserved global recognition.

When it comes to managing swine disease, Poland’s ASF crisis may not appear nearly as bad as it is. Remarkably, the Polish industry has been able to quietly continue operating under what has basically become an endemic situation for ASF in that country. Surely, if Canada were to face the same conditions as Poland, a much different result would be the consequence.

For Canada, the industry has operated under a free market economy since the beginning, and Canadians have long been fortunate to enjoy certain rights and freedoms that Poles, at one time, could only dream about.

Nevertheless, both the Polish and Canadian industries have demonstrated their willingness to work with partners across the value chain, even if some hiccups cause occasional problems. For Poland and Canada, strong, ambitious pig and pork sectors have plenty of chance to thrive, and the coming years should spell room for growth.

Winter 2022 – Editorial

Andrew Heck
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Winter 2022 – Editorial

The Winter 2022 edition of the Canadian Hog Journal is here!

I am relatively fresh off of a trip to Poland as part of the European Union’s (E.U.) ‘Meat with European Quality’ study tour, intended to give journalists from Canada and the U.S. an inside look at the country’s meat industry. I was invited to take part in the tour, along with several other magazine editors and freelance writers from across the continent, with diverse backgrounds in food processing, restaurants and hospitality. For me, it was an incredible opportunity to gain insights from an agriculture perspective and wave the flag for our own national industry.

How do the Canadian and Polish meat sectors stack up, especially as it relates to managing African Swine Fever (ASF)? And how do these countries’ foodservice sectors compare, with a focus on COVID-19 impacts and cultural exchange? I have tried to tackle both topics in this edition, which was a lot of fun to write and hopefully just as interesting to read.

How will ASF affect pig and pork pricing in the event it arrives in North America? Whether the virus is found in Canada or the U.S., strategies will be needed to defend the industry from financial collapse. Learn more about what some of the possibilities are and how they can be achieved.

Following a successful virtual event last year, the Porc Show – which usually takes place in-person in Quebec – replicated its digital format again this year, with a focus on market development, controlling on-farm costs and animal welfare issues. As expected, the event went off without a hitch, delivering the best experience possible for participants.

How can producers manage risk in the coming year? Hub International – a global agri-business insurance brokerage – sheds some light on what to expect.

In research, learn about emerging concerns connected to the spread of Streptococcus suis and how promoting sow health can prevent the development of intra-uterine growth-restricted piglets.

Are you reading this magazine at the Banff Pork Seminar? If you are, track me down and say hello! And if you are not at the Seminar, not to worry – we will have coverage in our next edition, published in March.

If you are unable to find me at the Alberta Pork booth, or in the Banff Springs buffet line, or at a table in the Irish pub downtown, consider sending me an email at andrew.heck@albertapork.com. I am always willing to listen to your ideas and work to find a fit in the magazine.

USDA December 1st Hogs and Pigs Report

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USDA December 1st Hogs and Pigs Report

Pork Commentary, December 28th, 2021
Jim Long, President-CEO, Genesus Inc.

The USDA released its December 1st Hogs and Pigs Report last week. No surprise to us there continues to be fewer pigs year over year.

USDA December 1st(x 1000 head)
 2019202020212021/2020
Kept for breeding64716176(6276)6180100%
Market71,75771,13668,02196%
Under 50 lbs22,04821,98921,17496%
50 – 119 lbs20,63819,68019,18597%
120 – 179 lbs15,25615,79114,80994%
180 lbs and over13,81613,67512,85394%

The interesting thing about the USDA numbers is their continual revision in prior quarters down. Example, December 1st 2020 Breeding Herd reported December 2020 at 6.276 million, December 1st 2021 the 2020 December 1 Breeding Herd revised down to 6.176 million – a 100,000 sow decrease. The USDA projected in last year’s December 1st report that December-February 2021 sow farrowing would be 3.118 million – it ended up at 2.929 million, a difference of almost 200,000 sows at 11 pigs per litter over 2 million pigs underestimated. Lots of examples in other categories of USDA overestimating inventory and production. This underestimation has hurt producers in the pocket book by continually holding down pricing.

The USDA seems to be struggling with its inventory counts and projections. We expect this is continuing with the sow inventory and number of pigs that will come to slaughter in the next 6 months; both will be below what the report indicates. The good news is the report is bullish as is with all pig categories below a year ago.

Last summer lean hogs reached $1.20 lb., current summer lean futures mid 90’s. Our premise is that lower hog supply in 2022 compared to 2021 will lead to lean hog prices matching or exceeding 2021. Demand will be there as U.S. domestic economy continues to strengthen. Chicken and Beef prices are strong supporting Pork. Exports will continue at current levels with possible upside.

Compound the reality of fewer hogs in the USA with a major liquidation in China and Europe and we see total global pork production declining in 2022 compared to 2021. This will lead to higher prices in 2022 compared to 2021 in most if not all the world.

Our scenario paints a bright picture for 2022. Unfortunately, the decreased production comes at a cost to many individuals who are leaving the industry due to the financial consequences of pig prices below the cost of production. The Darwinian scenario of our industry continues to lead to further consolidation. It’s not better, it’s just what it is. None of us have the ability to resist the change, either we adapt or die. We have lived it in the Swine Genetic Industry. Ten – twenty years ago there were several more genetic companies than today. One by one they disappeared unable to adapt, compete, technologically or have enough capital. Now not more than a handful of Genetic companies compete Globally. Genesus is one of them and understands the pressure of the need for continual improvement. It’s amazing to see the improvements over the last few years in litter size, growth, meat quality, liveability, and feed utilization. To expect to be a Genetic survivor we need to accelerate our technological advancements. It’s a journey with no end in sight.

So, as we look at 2022, we see a good year. Hog prices will be strong with lower production in over 75% of the world’s pork production sector. The current high feed prices we expect will limit any quick expansion which could sustain higher hog prices for longer than might be normally thought.

We wish all the best for the year 2022. 

All our lives journeys continue.

Random Swine Observations

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Random Swine Observations

Pork Commentary, December 20th, 2021
Jim Long, President-CEO, Genesus Inc.

Last week’s U.S. slaughter was 2,645,000, a year ago 2.8 million. Down 5.8% in line with USDA projection of 6% fewer hogs.

Iowa – MinnesotaSlaughter weight (lbs)
12/11/2020290.8
12/4/2021291.8
12/12/2021290.4

Weights lower than a year ago. Weights declined 1.4 lbs from week before. This indicates to us market hog inventory is current to a year ago. The decline in hog slaughter year over year has nothing to do with backed-up hogs. The decrease in production is due to 300,000 fewer sows.

It’s just not lower sow numbers that are cutting pig production numbers:

  • Historic high sow and wean to finish mortality is lowering pig numbers. Dead pigs don’t get to market.
  • We expect the Prop 12 mandate of 24 sq. feet per sow will cut sow numbers in many units. This will lead to fewer hogs.
  • We traveled in Indiana and Ohio this past week. Lots of stories of PRRS 144 and high mortality in some finishers. Some reaching over 30%.

Packers are being challenged by lack of labor. Generally, they can get all the hogs killed but the cutting–processing that creates added value is being shorted. Saw a billboard in Indiana where a Packer was offering $34.43 per hour for maintenance workers. All these labor issues will lead to more automation. The challenge, finding skilled people to maintain the automation.

The lack of labor to added value to pork filters down to producers. Generally, more Packers have the more can slide down to producers. The Bigger the Pie the better chance for a bigger slice.

China produced a record grain harvest this year 682.9 million metric tonnes (27 billion bushels approximately), up 13.4 million metric tonnes. If we and the USDA are correct, that China will be down in pig production (USDA 14%; us 20%) in 2022. You would wonder how much corn they will need imported with 100 million less hogs. You would think China will find its own grain before they import.

China planted 117.6 million hectares (258 million acres) of grain, up .7%. Corn production was 272.6 million metric tonnes (10.74 billion bushels). Domestic corn in China is running between $10.50 to $11.00 US a bushel (2650 RMB/tonne). This contributes to China’s high cost of production for swine.

The National Slaughter Price in China last week was 16.83 RMB/kg ($1.19 U.S. lb.). China breakeven is estimated to be 21 RMB/kg ($1.53 U.S. lb.). The difference of 5 RMB/kg is a loss of 30¢ U.S.per lb. or about $60 – 75 per head. Sow herd liquidation continues in China. There will always be liquidation when producers lose money.

U.S. Chicken prices are quite strong. A year ago, U.S. weekly composite price 81.78¢ lb. last week $1.24 lb. A huge jump. This with slaughter numbers similar to a year ago. Higher Chicken prices should support higher hog prices. Pilgrim Pride had two chicken hatcheries heavily damaged in the Kentucky Tornados. Pilgrims has over 37 hatcheries in USA.

Summary 

We stay with our position that continual liquidation of the breeding herds in China and the European Union along with already lower U.S. hog numbers will lead to significantly less hogs produced in 2022 than 2021 in these three regions which account for over 75% of the world’s hog production. This will lead to hog prices higher in all global markets. We believe U.S. lean hogs will reach and surpass 2021 prices.

Merry Christmas 

My Father used to say “Don’t worry, Christmas will be here on the same day.” Never was sure what he meant by that saying. He passed away 21 years ago but the saying still resonates.

But as he predicted, Christmas will be here again on December 25th. This time of year, it makes you pause and ponder different points of life. This past week Spencer (one of my sons) and I travelled the eastern corn belt. Our visits almost exclusively were with families who are in pork production.

Today’s families are the survivors of the massive consolidation we have seen in pork production where some counties had over 100 farm families producing pork and now might have three. Producer families have survived and most cases prospered because of work ethic, courage, to compete passion, adaptation of technology, and family belief and togetherness. Indeed, we are proud of this industry.

To all, we wish you a Merry Christmas.

U.S. Hog Slaughter Numbers
Down Almost 6%

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U.S. Hog Slaughter Numbers
Down Almost 6%

Pork Commentary, December 13th, 2021
Jim Long, President-CEO, Genesus Inc.

The USDA reported 6% less pigs in U.S. inventory under 120 lbs. on September 1st count. Those are the pigs that are going to market now 100 days later. Last week the U.S. marketed 2,601,000 hogs; a year ago 2,755,000; down 5.6%. Seems USDA report of significantly fewer hogs is accurate. Week upon week of around 6% fewer hogs will be supportive to hog market as total pork tonnage decreases into a strong domestic market and record exports to Mexico.

The U.S. sow herd declined around 300,000 sows in the Covid debacle of 2020. Now there are less hogs and it doesn’t take an ag economist to calculate the reason. Less sows, less pigs.

In our opinion, there is little activity to grow the current sow herd. If anything, it’s some existing sow units that are empty and now being restarted. There is very minimal new sow barn construction. We don’t believe there has ever been much sow herd expansion during what would be termed high feed prices such as we have now. All of this compounded by the added fact, at current feed prices and current hog prices many are losing money, trading dollars at best.

Lean Hog Futures

The Chicago Lean Hog Futures Casino was in full evidence the past week. I.E. June Lean Hog Futures December 2nd $97.050, December 8th $92.950, December 10th $97.175. Up and down like a toilet seat. Not sure what made all the gyration other than money in and money out. Our thoughts, less hogs are here and will be in 2022. If we had $1.20 in 2021, not really hard for us to believe that we’ll be reached or surpassed in 2022 with even fewer hogs.

2022 – Sow Liquidation Convergent

We are staying with our premise that the three largest production areas in the world: North America, China, and the European Union with over 75% of the world’s pigs will be down in production in 2022.

There is liquidation in China. Latest official report from China was sow herd reduction of 1.2 million sows in the month of October. That’s Canada’s sow herd gone in 30 days. China’s hog prices have rebounded nicely from early October lows (11.5 RMB to 18.2 RMB kg). A jump of over $100 per head reflecting already lower hog numbers. China will be down 15-20% in pork production in 2022 vs 2021. Equivalent to over 100 million fewer market hogs.

European Union liquidation continues and official count December to June was near 250,000 fewer sows. Since June liquidation has accelerated as market prices went down and feed prices went up.

All in all, if correct this convergence of lower numbers could push hog prices to record highs.

CFAP 1 Top Up

Some members of Congress are fighting for pork producers to get the payments promised by the Secretary of Agriculture, Vilsack. Below is a recent letter sent by Vicky Hartzler, Member of Congress from Missouri to Secretary Vilsack.Thanks to a Missouri reader of our commentary for reaching out with this.


December 6, 2021

The Honorable Tom Vilsack

Secretary

U.S. Department of Agriculture

1400 Independence Avenue SW
Washington, DC 20250

Dear Secretary Vilsack,

I commend the United States Department of Agriculture (USDA) for their recent 

announcement issuing $270 million to eligible livestock contract growers who applied for pandemic assistance through the Coronavirus Food Assistance Program (CFAP 2) payments.

Despite this critical investment, I am concerned that United States pork producers, who are not contract growers, are continuing to experience ongoing financial burdens as a result of COVID-19 market disruptions. As you know, on January 15, 2021, USDA announced that eligible swine producers would receive additional assistance through a “top up” payment of $17 per head, increasing the total CFAP 1 inventory payment to $34 per head. However, since then, USDA has given no indication of when and how they will distribute the “top up” payment saying they want to “re-evaluate the program.” On July 13, 2021, USDA announced that up to $50 million in pandemic assistance funds would be provided to small hog producers who use the spot market or negotiated price. We have yet to see how these funds will be distributed as well. Pork producers are still feeling the economic hardships of the pandemic and look forward to USDA carrying out these programs.

On October 7, 2021, you testified before the House Agriculture Committee on the state of the livestock industry. In response, I submitted the following question for the record on October 15, 2021:

“Secretary Vilsack, for several months now USDA has held pork producers in the balance as they await a formerly promised “top-up” payment of $17 per head. Members and staff have requested additional information several times and to my knowledge, not received a clear answer. Can you please provide a specific update as to the status of these payments and details as to when U.S. swine producers will receive formal notice regarding this payment?”


As of December 2, 2021, this question for the record has still not been answered. With this in mind, I respectfully request answers to the following questions:

  1. When will USDA release guidance on how U.S. hog farmers can receive their promised “top up” payment of $17 per head as well as the $50 million for small hog producers?
  2. What modifications is USDA making to the “top-up” program as announced by the Trump Administration and what are these changes designed to accomplish?
  3. Hog farmers often cap out of the $250,000 payment limit quickly due to their higher volume of livestock. Will a new payment limit be issued for swine producers to better ensure producers receive adequate financial assistance?

I encourage USDA to support our hardworking farmers and provide them with the much-needed financial relief that was promised. I thank you for your timely consideration of this matter and look forward to working with you on this important issue.

Sincerely,

Vicky HartzlerMember of Congress

Now we have new NPPC CEO Osborne, let’s hope we see coordinated effort to get what is promised by Secretary Vilsack. Dairy, Beef, Corn, Soybeans etc. have gotten billions in CFAP 1 top up. Why hasn’t hogs promise been met? We implore the NPPC to fight for the 60,000 American hog producers they represent. Why are we being treated as second class farmers by the USDA administration? If you want CFAP 1 top up as producers, continue to contact your Senators, Congress, NPPC etc. It’s been promised. Hog farmers were hit hard by Covid just like other ag commodities, they were paid the CFAP 1 top up. A promise made should be a promise kept

Pork – Random Observations

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Pork – Random Observations

Pork Commentary, December 6th, 2021
Jim Long, President-CEO, Genesus Inc.

U.S. Pork Cut-outs last Friday closed at 81.47¢ lb., down to the lowest level for quite a while. 

Last week’s U.S. slaughter 2,667,000, down from a year ago 786,000 (-4%). U.S. slaughter continues to run below a year ago. 

U.S. Beef Cut-outs – Choice closed Friday at $2.74 lb. Beef carcasses are now 3.4 times the value of Pork carcasses. Obvious consumers prefer Beef as they pay several multiples more than Pork. Someday our industry will realize consumers will pay for taste and start producing Pork that has a better eating experience.

This past week I was with Ukrainian producers. We were in a retail store looking at Pork. We were comparing Genesus Pork featured in-store vs. other Pork. A lady walked up to buy. She bought the Genesus Pork at a higher price (French cut boneless pork chop). Asked her why and her answer “It tastes better.” A better eating experience will drive demand and price all over the world.

In Ukraine, hog price is 79¢ U.S. a lb. liveweight. A strong price compared to many countries currently. Profits running about $30 U.S. per head. Ukraine has had issues with ASF which has cut production. This has contributed to stronger hog prices. Ukraine has large grain production. No need to import feed. ASF limits the ability to export Pork as many countries have banned ASF positive countries Pork imports. 

China National Hog price last week was 18.19 RMB/kg. It was 11.5 RMB/kg on October 7th. The increase is $1.15 U.S. a kg or about $140 per head. A strong indication of the drop in pig production in China. Our premise is “No one pays more than they have to.” We expect China’s hog price will continue to rise as the huge liquidation of sows due to terrible financial losses over the last eight months comes to fruition.

U.S. exports to Mexico achieved a new weekly record in the last report of 19,770 metric tonnes. China purchased 12,390 metric tonnes. As China’s hog price continues to rise, we expect U.S. exports to move higher. The U.S. has many slaughter plants approved for China exports. Canada and the EU have many plants not approved. 

NPPC New CEO

The National Pork Producers Council has hired a new CEO. His name is Bryan Humphreys. Let’s hope he can initiate a Common Sense Revolution. It was time for a change. The NPPC has failed to deliver the results that a 60,000 producer industry deserves. Beef, Dairy, Corn, Soybeans received billions in CFAP 1 top-up that was promised by Ag Secretary Vilsack to the Pork industry. NPPC has failed to push to get CFAP 1 top-up for producers. Let’s hope Mr. Humphreys can get the results and at the same time get fresh blood that works for Pork 

Less Pigs are Coming!

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Less Pigs are Coming!

Pork Commentary, November 29th, 2021
Jim Long, President-CEO, Genesus Inc.

The September 1st USDA Hogs and Pigs Report projected 1% fewer Hogs in the 120 lb. and over weight category. Actual slaughter has been less than the 1% projected. In our estimation, in the 90 days since September 1st the pigs over 120 lbs. should all be slaughtered.

Below official slaughter September-October – November not official yet.

Actual Slaughter
(million)

 20202021 
September10.65510.419 
October11.64410.746 
2-month total22.299 21.165-5%

USDA projected 1% fewer hogs over 120 lbs. In the official slaughter report September to October 5% less. Over one million heads less. We do not have November data yet. We see that hog weights are 1-2 lbs higher currently than a year ago so that could explain the 1% difference.

The September 1st 120 lb. and lower USDA category is now upon us. This September 1st category is 6% lower year over year. We estimate that it takes about 90 days for these pigs to go to market (13 weeks).

The USDA report showed the following inventory:

USDA September 1st Report
(x1,000)

 50-119 lbs.under 50 lbs.Sept-Oct Actual Slaughter 
202021,02023,14422.299
202119,75121,85521.165
Fewer Hogs Coming To Market-2.568

Our calculation if USDA is correct, could be about 2.568 million fewer hogs coming to market over the next 90 days (13 weeks).


Our farmer arithmetic: 2.568 million ÷ 13 weeks = 197 fewer hogs a week year over year.

Whatever the number is, if USDA even horseshoe close, we are seeing fewer hogs over the next few months year over year. No way that does not push pork cut-outs and hog prices higher.

  • U.S. pork cut-outs closed last Friday at 83.98ȼ lb.
  • U.S. Choice Beef Cut out closed Friday at $2.80 lb.

Beef Cut-out 3.5 times Pork Cut-out. Why? Consumers will pay more for beef. We will argue that consumers prefer the taste of beef. Taste matters. When will we help our profitability by producing what consumers want, a better eating experience? Some think it can be done by pretend Durocs with no better taste than cardboard-tasting Pietrains or their hybrid derivatives.


It is sad to see the missed opportunity. Our industry has to increase demand and margin by meeting consumers’ obvious taste preference and demand.

Europe

November 18th​​​​​​, European Pigmeat Committee released an inventory report from May-June. We have written about the financial losses in Europe cutting into sow inventory.

In the six months December 2020 to May-June 2021

E.U. Breeding sows
(x1,000 head)

Dec 202010,148
May/June 20219,909
Difference 239

The E.U. breeding inventory decrease in the first 6 months of 2021 is estimated at 239,000 sows. We expect that with financial losses continuing from June through the rest of the year, there will be about 300,000 more sows gone.

Some of the major liquidation countries
Breeding Sows
(x1000)

CountryDec 2020May-June 2021Difference
Germany 17141660-54
France1048938-110
Poland830748-82
Romania316234-82

Every day there are fewer sows in the EU. The sow price in Germany is 0.5 Euro a kg., the lowest in seven years, a reflection of sow slaughter. Small pigs and market hogs have low prices too.
Losses are being felt in almost all sectors. With ASF in Germany and Eastern Europe; as well as new environmental and animal welfare regulations, many producers see a dim future and are quitting.

Like every hog cycle, this one will run its course. When China renews larger pork imports because of its massive liquidation and with fewer hogs in the EU due to its own sow liquidation, prices will rebound nicely in 2022.

Gene Editing – GMO

We are receiving reports from China that the idea that approval of Gene-Edited (GMO) pigs (PRRS resistant) is in the offing is far from reaching a reality. It appears China Government is not interested in putting GMO pork into its food chain. GMO/Gene-Edited pork has a real issue with consumers’ acceptance.

As the Vice President of McDonald’s said at NPIC, “Don’t expect us to explain GMO/Gene Editing.” If there ever was a signal, don’t go what was it. When the world’s largest restaurant chain did one, far from elitist customer base, it is a warning that only the deaf and blind could miss.

Gene Editing/GMO death knell will be when a McDonald’s and/or a major packer announces all pork is and will be non-GMO/non-Gene-Editing. Regulatory approval won’t even matter at that time. It is over as most restaurant chains, retailers would fall over themselves to announce only non-GMO/ Non-Gene-Editing.

Instead as an industry, we need to work on the natural genetic selection of disease resistance to cut mortality.

The rabbit hole of Gene Editing-GMO has been a pipe dream of a public corporation owned by ventures and invested funds ran by people who never have bread a pig, farrowed a pig, or raised a pig. Sometimes what is best for the interest of an industry is not aligned with the interest of Washington lobbyists and directors/shareholders in a plush boardroom.

The bottom line: producing pork that consumers could be afraid to eat is not good marketing, it could destroy prices from cratering demand. Let’s hope a major retailer-packer-restaurant chain takes a stand to stop this path to industry suicide.


What do you think the majority of answers would be to this question asking a mother with young children “Would you purchase GMO/Gene-Edited Pork for your Children”?

Extruded canola meal: is it worth it?

Andrew Heck
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Extruded canola meal: is it worth it?

By Eduardo Beltranena, Charlotte Heyer, Lifang Wang & Ruurd Zijlstra

Editor’s note: All authors are researchers in the Department of Agricultural, Food and Nutritional Science; Faculty of Agriculture, Life & Environmental Sciences; University of Alberta. Zijlstra can be contacted at ruurd.zijlstra@ualberta.ca.

Introduction

Canola meal is often included in pig diets, but the extra step of extrusion adds cost.

Does extruding canola meal prior to feeding it to pigs make a difference? If you have been feeding extruded canola meal, you might like to consider whether the added cost of processing generates worthwhile benefits.

To determine the nutrient digestibility of extruded canola meal in growing pigs and assess its affect on growth performance in weaned pigs, we extruded solvent-extracted canola meal at increasing screw speeds, then fed extruded canola meal to these pigs.

In Canada, more than 20 million tonnes of canola seed is produced annually, and domestic crushing generates 4.6 million tonnes of canola meal. Canola meal is widely included in pig diets but has a lower energy value and contains less digestible amino acids (chain-linked building blocks of protein) compared with dehulled soybean meal, partly due to a greater content of water-insoluble, wood-type hull fibre that reduces the digestibility of energy and protein. This high-protein but fibrous feedstuff is a particular challenge for young pigs with immature digestive capacity.

Extrusion is characterized by a high shear force produced from a rotating screw with a narrowing flight, constricting the canola meal against the barrel and towards its exit hole, with the aid of added steam. The process is designed to disrupt the rigid cell walls of the canola seed hull and increase fibre solubility, as a result. Heat generated from the friction created by the process may cause canola proteins to break down and may also degrade glucosinolates (bitter-tasting, mustard-flavoured compounds). These bitter compounds could encourage pigs to turn their noses up to unextruded canola meal, reducing feed intake.

Methodology

The University of Alberta’s Agri-Food Discovery Place in Edmonton, home to the Wenger-brand extruder, manufactured in Kansas, used in the study.

To measure the effects of extrusion on canola meal, we extruded dark-seeded, solvent-extracted Brassica napus canola meal at three different screw speeds and fed these meals to growing and weaned pigs in two trials conducted at the University of Alberta’s Swine Research and Technology Centre (SRTC) in Edmonton.

The canola meal was sourced from Altona, Manitoba for the growing pig trial and from Lloydminster, Alberta for the weaned pig trial. The canola meals were extruded at the University of Alberta’s Agri-Food Discovery Place, also in Edmonton, using a single-screw extruder at three screw speeds: low speed, at 250 revolutions per minute (rpm) (CM-250); medium speed, at 350 rpm (CM-350); and high speed, at 450 rpm (CM-450). As the extruder screw speed increases, so does the specific mechanical energy and the shear force, which creates higher temperatures. Extrusion temperature was set from 80 degrees-Celsius in the first zone of the barrel to 100 degrees-Celsius in the fifth zone. The unextruded and extruded canola meal were then ground using a hammer mill fitted with a 2.78-millimetre screen.

In the first trial, eight crossbred barrows with an initial body weight of 68.1 kilograms (kg) (Duroc crossed with Large White/Landrace F1 from Hypor in Regina) had a T-cannula surgically implanted at the end of the small intestine to collect the material being digested. By comparing the undigested nutrients in collected feces, we could calculate the portion of microbial fermentation in the hindgut. We fed the pigs with one of four diets containing 50 per cent unextruded or one of three extruded canola meal samples in each of the four nine-day periods. Prior to feeding the canola test diets, we fed the pigs a nitrogen-free diet without any protein sources to measure the basal endogenous losses of protein and amino acids, which is a common process when studying standardized amino acid digestibility of feed ingredients; it helps account for gut enzyme secretions or microbial contributions to protein content in the gut content found in the small intestines of pigs.

In the second trial, 200 of the same type of pigs from the first trial were weaned in three groups at 21-days-old, randomly placed in 50 pens, with two male and two female pigs per pen at heavy and light body weights. Starting two weeks after weaning, pigs with an initial body weight of 8.3 kg were fed one of five experimental diets for three weeks. The five wheat-based diets contained 20 per cent soybean meal, unextruded or extruded canola meal, and were balanced for net energy by addition of canola oil and digestible amino acids, including supplemented crystalline lysine, threonine, methionine and tryptophan. Diets did not contain antimicrobials or growth promoters. Mash diets were mixed at the University of Alberta’s feed mill in Edmonton. Pens measuring 1.1 metres by 1.5 metres with plastic slatted flooring and polyvinyl chloride partitions were equipped with a dry feeder, providing four feeding spaces and a nipple drinker. Pigs had free access to feed and water. Rooms were ventilated using negative pressure, to help the pigs maintain a comfortable ambient body temperature, with 12-hour light and dark cycles.

Results

Short-term heating during extrusion did not cause protein damage compared to unextruded canola meal, as indicated by similar chemically available lysine content. Extrusion did not cause much change in seed hull fibre content, and it did not convert this mostly insoluble fibre to soluble fibre.

Figure 1: Proportions of protein and energy digested in small intestine (AID) and total tract (ATTD) or fermented in hindgut (AHF) of cannulated growing pigs fed diets with 50 per cent unextruded canola meal (CM) or extruded at 250, 350 and 450 rpm.
Figure 2: Digestibility of crude protein and key amino acids at the end of the small intestine in growing pigs fed diets with 50 per cent unextruded canola meal (CM) or extruded at 250, 350 and 450 rpm.

Extrusion, which may increase availability of denatured protein to the pig’s digestive enzymes, indeed increased small intestine digestibility of protein (Figure 1), digestibility of most amino acids (Figure 2) and reduced hindgut fermentation of protein. Extrusion did not affect small intestine or total tract digestibility of energy. Increasing extruder screw speed did not further alter protein and energy digestibility in growing pigs, indicating that the increased mechanical energy was not sufficient to open up the mostly insoluble fibre structure of the canola seed hull. The overall picture emerging from the present study indicates that extrusion processing at the settings applied did not disrupt the hull cell wall. However, extrusion did decrease the content of total glucosinolates by 14 per cent.

In weaned pigs, extrusion of canola meal decreased the total tract digestibility of protein by three per cent but not the energy value (data not shown). Increasing extruder speed did not further alter the total tract digestibility of protein and energy, and it did not change the digestible energy or calculated net energy. Given that canola meal contains approximately three times more insoluble fibre than dehulled soybean meal (27 per cent versus 8.5 per cent fibre), diet nutrient digestibility of extruded canola meal was upwards of six per cent lower than that of soybean meal.

Figure 3: Growth performance of weaned pigs fed diets with 20 per cent dehulled soybean meal (SBM), or 20 per cent unextruded canola meal (CM) or extruded at 250, 350 and 450 rpm.

Extrusion of canola meal did not affect feed intake, body weight gain or feed conversion in weaned pigs for the entire trial (Figure 3). Increasing extruder screw speeds linearly increased body weight gain in the first week and improved feed conversion for the entire trial.

Because we balanced the diets for equal net energy and several important amino acids, pigs fed diets with extruded canola meal did maintain feed intake and had similar body weight gain and feed conversion compared with pigs fed dehulled soybean meal diet for each week and the entire trial.

These results suggest the importance of adopting the net energy system for diet formulation of high-protein, fibrous feedstuffs like canola meal. As shown in growing pigs, extrusion somewhat increased the availability of amino acids; however, this increase in amino acids supply did not increase growth performance in weaned pigs.

Conclusions

Our study confirms that extrusion of dark-seeded, solvent-extracted Brassica napus canola meal increased small intestine digestibility of most indispensable amino acids in growing pigs, which provided to the pigs slightly more available amino acids from the canola meal. However, increasing extruder screw speeds and mechanical energy did not increase energy digestibility in growing pigs and did not improve growth performance in weaned pigs. Extrusion processing, considering its added cost, did not show benefits on growth performance of weaned pigs.

Acknowledgements

Funding for this project was provided by the Canola Cluster, sponsored by Agriculture and Agri-Food Canada and the Canola Council of Canada. Heyer acknowledges funding from the German Research Foundation.

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Canadian Hog Journal

Contact

Andrew Heck
andrew.heck@albertapork.com
(780) 491-3527

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