Eduardo Beltranena presented on feed research, during a breakout session at the 2022 Banff Pork Seminar.
Feed cost is very high now for many Canadian hog producers, in large part due to the 2021 drought across the prairie provinces. This was explained by Eduardo Beltranena of the University of Alberta during the ‘Feeding’ breakout session at the 2022 Banff Pork Seminar. Beltranena conducts research on reducing feed costs for hogs with colleagues Malachy Young and José Landero at Gowans Feed Consulting and Miranda Smit, formerly with Alberta Agriculture, Forestry and Rural Economic Development.
“Feed is 65 to 75 per cent of total production cost and hogs consume 85 per cent of it,” said Beltranena. “Among the most important things you can do are reduce feed energy, include soy or canola expellers instead of liquid oil, immuno-castration, reducing vitamins and trace mineral supplementation, and feed alternative ingredients such as hybrid rye, fava bean and canola coproducts. Savings from implementing these strategies can add up to $22 per pig.”
There are other strategies that reduce feed cost, but they have less of an impact, he suggested. They include feeding phytase instead of mono- or di-calcium phosphate, shipping gilts heavier than barrows, reducing feed particle size, making feeder adjustments to reduce feed wastage and timely removal of suboptimal pigs not to overcrowd hogs prior to first pull, as they near market weight. Together, these actions can typically provide additional savings of $8 per pig.
Increasing feed intake by reducing feed energy
By subtracting feed cost from income per hog, Beltranena’s team found that feed cost per hog is less when feeding a diet representing 2.1 versus 2.4 million calories per kilogram.
With colleagues, Beltranena has conducted several commercial trials reducing the energy density of western Canadian pig diets – diets that are cheaper. They found that by reducing net energy level from 2.4 to 2.1 million calories per kilogram, pigs consumed more feed to maintain caloric intake but weight gain was similar. So, while feed efficiency was lower as a result of feeding reduced net energy diets, overall profit was $10 higher per hog eating cheaper diets.
In terms of feed components, starch propels hogs to grow, and in western Canadian diets, starch comes mostly from cereals. Beltranena explained that with the very high prices right now for barley, wheat and oats, growers have turned to corn from eastern Canada.
“Luckily, there was a bumper corn crop in Quebec and Ontario,” he said. “This has really saved the western Canadian pig industry.”
However, he urged pig producers to consider feeding alternative, locally grown feedstuffs and industrial co-products. New European rye hybrids yield about 30 per cent more than conventional rye and 20 to 40 per cent higher than Western spring wheat. Fusarium and ergot disease are lower in these fall-planted hybrids, because they produce vast amounts of pollen and flower earlier. They are, therefore, not challenged by lack of summer rainfall, making it more difficult for fungal spores to enter the stigma and affect grain formation when crops are stressed.
Beltranena and his colleagues have done a trial with hog diets, replacing one-third, two-thirds or all the wheat with hybrid rye grain. There was no effect on feed cost per hog or feed cost per kilogram gain, nor was there a reduction in dressing percentage, because rye has fermentable soluble fibre instead of woody-type, insoluble hull fibre.
“Rye can completely replace wheat in hog diets, but we recommend including an enzyme mix if rye replaces more than 50 per cent of wheat in diets,” he said. “In our trials, we added an enzyme cocktail to all diets and canola oil to increase the energy level of the rye diets. That increased diet cost, but even so, profit per hog was higher at the high rye inclusion level with the enzyme cocktail.”
Regarding sources of feed protein, Beltranena noted that canola and soybean meal costs are high, but pulses – particularly yellow peas and fava bean – remain important alternative protein sources for western Canadian hog producers. Pulses contribute about twice as much starch as protein, so they price into diets effectively. He added that dried distillers’ grains with solubles (DDGS) from both wheat and corn also provide more available phosphorus than intact grain. Also, camelina and hemp cake may represent economical protein and fat sources in the future.
Beltranena also indicated that, while the cost of the immuno-castration vaccine Improvest is equal – providing a feed saving of around 15 kilograms per male pig – there are additional benefits to producers. These are four to eight per cent faster gain to market weight, no cryptochirids, greater pig livability, lower dressing percentage because of the testes remaining intact, but greater carcass weight. Shoulder, loin and ham weight increase, reducing backfat and belly fat. He pointed out that the treatment of gilts with Improvest is new, allowing them to grow more like barrows after the second injection, eating more but getting to market weight sooner.
Other actions to reduce costs
Beltranena was recognized during the second plenary session of the Banff Pork Seminar as this year’s recipient of the George R. Foxcroft Lectureship in Swine Production. Foxcroft passed away in December 2021. During his own presentation, Beltranena honoured Foxcroft, his long-time mentor and friend.
Among other more minor feed cost reduction strategies, Beltranena indicated producers could regularly check if feeders need adjustment.
“Feed wastage of two per cent equals 15 tonnes of feed falling through slats into slurry pits for 1,000-head barns per year,” he said. “Reducing particle size by 100 microns improves feed conversion by more than one per cent. That’s $1 feed saving per hog. Try a screen hole that’s down a size to what you’re currently using. Watch for feed bridging as it may occur in bins and feeders, or flex augers may have difficulty handling slightly more powdery mash.”
Pork Commentary, March 7th 2022 Jim Long, President-CEO, Genesus Inc.
Markets were rocked by Geopolitical issues this past week. Lean Hog Futures declined. Corn – Soybeans jumped. Oil – Gas jumped. Stock markets fell.
Our Observations
Despite Lean Hog Futures falling near $5, Friday the Iowa – S. Minnesota Cash Lean Hog price jumped $8.95 to $105.37. Talk about prices going separate ways. Future fantasy market down almost $5 – real market of actual hogs up $9.
Feed prices are increasing significantly. Talk about inflation. Both Ukraine and Russia are large grain exporting countries. Can grain move? Will crops in Ukraine get planted? Things moving fast and no one knows.
U.S. market hog numbers continue to run below year ago with 7.8% less year to date. Hog weights 0.5 lb. heavier. Hogs not backed up.
U.S. Pork Exports are down 21% year to date. Mexico exports have increased 43%, the only country year to date not a negative. Mexico has imported almost 50% of U.S. Pork Exports, 102,000 MT of 206,000 MT total. With lower U.S. lean hogs going to market it is expected there to be less pork to export. U.S. consumer buying power is greater than all.
With U.S. Pork Cut-outs Friday $1.03 and Lean Hog prices near that number, Packer Gross margin doesn’t look good. We expect Pork Cut-outs will need to increase for Lean Hog prices to go higher.
Europe
European Commission last week released data indicating the European sow herd has declined 4% (-400,000) to 10.8 million head. This is from December 2020 to December 2021 – a reflection of the financial losses incurred. The biggest losers are Poland -20%, Germany -7%, Denmark -3%, France -4%. We expect the financial losses since December 1st have decreased further the Europe sow herd with another 150-200,000 as losses continued from $20-50 per head until now. We also expect that the sow losses are underestimated as inventory reports always seem to miss fast inventory change either expanding or contracting. Recently USDA missed the sow inventory decline in the USA for more than one quarter.
A sign of European Commission overstating inventory is the rapid price increase of slaughter hogs in the last few weeks. For example, on January 27th Spain’s market was 1.03 Euro/kg, March 3rd 1.23 Euro/kg. At 1.03 losing $30-40 per head. The March 3rd price will decrease losses to $10-20 per head. Spain feed prices, like the USA, jumped last two weeks.
To us, the only reason hog prices have jumped is Europe’s supply is down, a reflection of sow liquidation. We understand Gross Packer margins are not good, a sign of Packers chasing a lower number of hogs.
Markets
We have written several times that in our opinion the three major swine production blocks in the world: North America, Europe, and China have production declines at the same time creating an unprecedented supply decline which will lead to very strong prices.
So far North America already seeing production declines and higher prices. Out of nowhere, Europe prices jump 20% in a month. We expect the front end of even lower production. China prices are still dismal with losses continuing at $50 per head. We expect all of a sudden in the second quarter China prices will jump as supply of hogs decline from liquidation. At that point over 75% of the world’s production will be lower. We expect strong prices for a sustained period.
This coming week we will be speaking to swine producers at the annual Kalmbach Feeds Agribusiness Conference in Columbus, Ohio. We will report our observations next week.
Last week we attended the Illinois Pork Expo held in Springfield, Illinois. Our observations.
Illinois is the third-largest U.S. state with sows of 590,000. Iowa and North Carolina are first and second in sow herd numbers.
The Expo had meetings beginning in the morning then the trade show started at noon. This was followed by a reception buffet held in the middle of the trade show area. The concept worked well as everyone stays and socialize in one area. We believe it is really important that the social aspect of our industry is encouraged. As an industry, we have less people selling to less people, with the venues to meet others in our industry getting more limited. Pork shows are one of the last venues to get that done. Illinois Expo format goes a long way to help facilitate the challenge. We want to recognize and thank The Parks Companies for sponsoring the evening reception.
Illinois has two major hog-producing groups that make up the 590,000 sows: Carthage Veterinary Service and The Maschoffs. They are both World Mega Producers.
Illinois Expo continued to reaffirm our observation, there are next to little new sow barns being built.
PRRS and PED are active in Illinois. Lots of empty finishers. There are a lot fewer hogs than last year.
We appreciate some of our readers who stopped by our booth to discuss our commentary. Some quite passionate. When you are being compared to the late Rush Limbaugh and his say as it is approach, the bar has been raised.
Labor issues for producers and packers are real with most looking for more people to reach proper staffing levels. The lack of labor is hurting productivity levels for producers and packers. This is a reality not only in Illinois but all over the USA – Canada.
Prolapses, Dead Sows, High Wean to Finish Mortality are all issues facing Illinois producers like everywhere else. All factors cut productivity and numbers of hogs to market.
Other Observations
The Lean Hog Futures dropped from contract highs as the Ukraine – Russia conflict rocked the market.
The real market end of the week had National Daily Base 53-54% 98.56 lb. and USDA Pork cut-outs 113.32. Both holding strong – a reflection of supply-demand.
Two integrators announced in the last couple of weeks their exit from producing their own genetics. The Maschoffs and Olymel, a major packer in Canada, both have announced they are ending their independent genetic production. What this confirms to us is that if you are not a dedicated global genetic company you don’t have enough critical mass and technology to make it a worthwhile venture. At Genesus we only do swine genetics, we are not a packer, feed company, chicken breeder, cattle breeder. We are all in on swine genetics. Everyday make a better pig and get it sold. Our risk mitigation is doing business in 38 countries and genetic production in 11.
10 – 15 years ago at the Illinois Pork Expo there probably were 15 swine breeding stock exhibitors. This past week there was five that matter. The same five that are in most of the world today. It’s been a war of attrition, continually get better or die.
Summary
Illinois Pork Expo dialogue reaffirms our belief in the lack of hogs going forward. The multiple effects of high feed prices, labor issues, disease, smaller sow herd, prolapses, generational change, lack of new sow barns, are all adding up to less hogs. Prices will stay strong relative to history for at least a year.
The 2022 Banff Pork Seminar welcomed only about one-quarter of the in-person attendance as in 2020 and in years prior. Full vaccination against COVID-19 was a requirement for those present.
To jab or not to jab: be it due to on-farm herd management practices or public health concerns, the world is looking for ways to prevent antimicrobial resistance and also overcome a global pandemic. For hog farmers, immunization of pigs and people is improving health and welfare one shot at a time.
During the 2022 Banff Pork Seminar, two presentations related to vaccines highlighted the important role they play in pig production: one by grad student Alison Jeffery on an encouraging development related to managing Streptococcus suis and one by veterinarian Cordell Young on how to maximize your farm’s vaccine program.
While these presentations were video-recorded for virtual participants, those fully vaccinated against COVID-19 were able to attend in-person. This requirement underscores the significant – however heavily debated – role that vaccines will likely play in all industries going forward.
Strep suis vaccine development moves ahead
Alison Jeffery presented on her award-winning Strep suis vaccine research, during a breakout session at the 2022 Banff Pork Seminar.
Streptococcus suis is found in most jurisdictions with well-established pig industries. These bacteria include 29 serotypes or variants and are zoonotic, meaning they can be transferred to humans. For pigs, infection affects the upper respiratory tract, and controlling its spread is usually done with antibiotics. Both sick and healthy pigs can be carriers, and in piglets, there is a risk of arthritis, meningitis and sudden death.
To date, vaccines against Strep suis have been ineffective, but research from the University of Montreal, led by Alison Jeffery, has found that applying an autogenous sow vaccination program increases maternal antibody levels in piglets up to five-weeks-old, depending on the serotype.
Autogenous vaccines rely on isolating bacteria from an individual herd, rather mass production for use on all herds. Whereas conventional vaccines are strictly used to help prevent community transmission or reduce the severity of infection, autogenous vaccines can also be use therapeutically, which is a major advantage for producers.
The process involves the recognition of Strep suis clinical signs in a herd, followed by collecting infected tissues for sending to a vaccine development lab. Development takes place rather quickly and is fairly cost-effective, relative to potential losses due to spreading illness.
“The vaccine induced a significant increase of antibody levels against all serotypes in gilts, compared to placebos,” said Jeffery. “Post-mortem sampling and bacteriology are very important to correctly identify the cause of death in field trials and herd health management.”
Post-weaning piglets are most at-risk of Strep suis infection, but previous research suggests that injecting piglets directly with two doses of autogenous vaccine did not have any effect on improving antibody levels, which hypothetically would have provided those individuals with a better chance at staving off infection. Previous studies relied on autogenous vaccines produced by a single company, so Jeffery decided to look elsewhere for her trial. The newly developed test vaccine was administered to one group of gilts, while another group remained unvaccinated. Then, piglets born to both groups were compared for immune response.
The study results are impressive but will require a deeper dive to fully characterize the clinical protective effect during the nursery period.
“The strains used for autogenous vaccines are isolated on the farm where the outbreak is occurring, so some strains could be more pathogenic than others, and that could have a big effect on the success of an autogenous vaccine from one farm to the next,” said Jeffery. “The herd history with Strep suis could also contribute.”
Using antibiotics to treat Strep suis may appear effective at dealing with clinical signs of illness, but in addition to concerns over antimicrobial resistance, this approach makes it is difficult to identify which serotype of Strep suis is in a herd or if the clinical signs belong to a Strep suis strain at all.
“It can be uncomfortable to ask farmers to move from antibiotics to a vaccine program, because they can see it right in front of them – you can see if the animal gets better,” said Jeffery. “But I think, over time, vaccination programs are going to save producers time and money, as antibiotics cost a lot each year, and now with different regulations worldwide, antibiotics may not be an option we can use easily in the coming years.”
Moving away from antibiotics presents challenges and opportunities, but thankfully, a separate presentation at Banff provided some helpful advice.
Optimizing your on-farm vaccine program
Cordell Young presented on a range of issues related to the successful integration of a vaccine program for hog herds, during a breakout session at the 2022 Banff Pork Seminar.
Cordell Young is a partner with Precision Livestock Veterinarians. Young recognizes that vaccine programs are not always cheap, but that their value goes well beyond the price tag.
“Vaccines cost money, unfortunately,” said Young. “They cost probably 40 to 50 per cent of the total veterinary costs for a pig producer in a year. If we’re spending that money, we need to make the most of it, and if we’re not, we’re probably making a bad investment.”
Vaccination offers a wide range of benefits over simple treatment, from total cost to duration of protection, versus the possibility of causing zoonotic disease outbreaks or contributing to antimicrobial resistance and further eroding public trust in the hog sector. That is a lot for any individual producer to consider, but it is vital for the industry to recognize.
And while the benefits are extensive, proper handling and administration of vaccines is important for producers to learn. Improper usage can lead to a host of problems related to animal and human health or could simply render vaccines ineffective, which would equal wasted time, money and effort.
“First of all, start with the right needle. If you go with a half-inch needle into a sow, you’re likely going to inject that vaccine into fat, and it won’t absorb,” said Young. “Alternatively, if you go with an inch-and-a-half needle into a piglet, you are more at risk of breaking the needle and putting the entire industry at risk of political and food safety challenges.”
For vaccines that are ingested through feed or water, other considerations should be made as well.
“These are live vaccines which we cannot use with any other medication or water treatments in the path of those vaccines for 72 hours before or after,” said Young. “They’re great products, and it’s great to be able to put a vaccine through water, but we can kill these bugs. They’re pretty weak bugs in general. Watch the time.”
Freezing is another threat to vaccine stability. They should be stored between two and eight degrees-Celsius – ideally in a refrigerator exclusively dedicated to vaccines – and it is useful to periodically verify the temperature using an infrared laser thermometer. Prior to administering the vaccine, Young suggests letting the product come to ambient temperature overnight, but producers should be careful not to overheat vaccines, as this could cause proteins to become denatured, rendering them ineffective.
Not only correct storage of vaccines, but also vaccine equipment, like syringes, matters. Equipment should be cleaned, dried and covered for optimal performance and to prevent the inadvertent injection of residual harmful bacteria into your herd, which is counterintuitive, but a lot more common than some might assume.
“Bacteria are in these syringes, and we’re seeing resistance,” said Young. “Clearly, just by the fact that they’re there, with syringes containing Class 1 antibiotics, and then we’re injecting that into potentially every pig in a group.”
Every farm is different, and every vaccine program should be tailored to your operation. By closely monitoring your own program, through observation and record-keeping, success should follow.
“Unfortunately, it is a reality that no vaccine will work 100 per cent, providing 100 per cent immunity or protection, and for an unlimited duration of time,” said Young. “However, we want to do everything we can to optimize the response to vaccination to get the most out of our investment.”
COVID-19 vaccines are making meetings possible
A less-familiar sight in recent years: producer meetings in some regions are returning in-person, with COVID-19 protocols in place.
As the industry becomes increasingly eager to move beyond COVID-19 restrictions, the call for re-introducing in-person producer meetings grows louder; however, this has proved challenging, given competing ideas about the situation at hand.
The Government of Alberta’s Restrictions Exemption Program (REP), which was first implemented in September 2021 and removed in February 2022, stipulated three conditions for large-size in-person gatherings: full vaccination status, a privately paid negative test result or a medical exemption. Further to this, some venues chose to uphold stricter measures, as was the case with the Banff Springs Hotel, where the Banff Pork Seminar was held. Only fully vaccinated attendees were permitted, regardless of test results or potential exemptions.
Alberta Pork’s semi-annual meetings, taking place in mid-March, mark the two-year anniversary of the initial introduction of restrictions in the province. This year’s meetings will once again take place in-person across the province, after last year’s semi-annual meetings and the two previous annual general meetings (AGMs) were entirely virtual.
While the COVID-19 pandemic is not over, arriving at an endemic situation – where the virus is still present, but stable in terms of case numbers, and more predictable – is a worthwhile and hopefully achievable goal made possible by eventual widespread immunity. Time will tell, but the longer we live with COVID-19, the greater the push will be to accept vaccination as industry-standard, as everyone – vaccinated or not – loses patience with restrictions.
Vaccines are no miracle cure, but they help
Vaccines are a key component of PigCARE – a pillar of the Canadian Pork Excellence (CPE) program. Thanks to quality assurance, global pork buyers trust that Canadian producers are ‘doing the right thing’ when it comes to animal welfare, biosecurity and food safety.
Whether for pigs or people, vaccines have the ability to save lives. And for producers, money. But they are neither perfect nor magical, which is why biosecurity measures on-farm and safety measures like masking and physical distancing at meetings are still necessary, even if not everyone agrees on their application. Being safe, rather than sorry, is a reasonable approach when minor inconveniences can protect against potentially life-threatening outcomes.
Perhaps nothing else besides vaccines have created more controversy recently, whether that relates to preventing antimicrobial resistance or supporting public health. Regardless of how they are used, or what anyone believes on a personal level, vaccines are likely the future for the Canadian hog industry and the world.
Editor’s note: Bijon Brown is the Production Economist for Alberta Pork. He can be contacted at bijon.brown@albertapork.com.
Brett Stuart’s commodity market commentary was shared live, via video, for in-person and virtual guests at this year’s Banff Pork Seminar.
Human and animal disease, inflation and eco-consciousness all have a role to play when it comes to hog market trends in 2022. Brett Stuart, an analyst with Global AgriTrends, delivered a presentation during the first plenary session of the 2022 Banff Pork Seminar on the hog industry’s economic outlook for this year, highlighting some key challenges and opportunities facing producers.
COVID-19 not going away just yet
COVID-19 continues to be a recurring nightmare. It has brought the global economy to its knees, impeding productivity and the movement of goods and services for more than two years. The latest variant, Omicron, seems to be less lethal but more highly transmissible relative to the other strains of the virus.
“This thing is going to last a lot longer than people think,” said Stuart. “But I expect the severe effects will fade in 2022.”
The lives lost and long-term health complications associated with COVID-19 could have a lingering impact on the domestic labour pool for years and decades to come. Unions have taken advantage of labour shortages to push for higher wages at a time when business revenues have been down. With fewer people showing up to work, the government response in Canada and the U.S. – where Stuart is based – has mostly involved throwing money at the problem.
“It’s the world’s largest macroeconomic experiment. The wildfire is COVID-19, and the fire bomber is the U.S. Congress,” said Stuart. “And it isn’t just the U.S.; economies around the world, and governments, have done the same thing… When does the party end? The party doesn’t end until the money runs out. And there’s a mountain of money.”
Getting low on cash? Print more! It sounds simple, but the COVID-19 financial response is pushing the economy toward inflation, which touches many aspects of the hog industry.
The amount of money circulating in the economy grew significantly during the pandemic. In Canada, money supply grew by almost 30 per cent to roughly $1.3 trillion. This accelerated stimulus was necessary to keep the sputtering economy from stalling in mid-flight. The surge of money supply, combined with low interest rates, generated increased demand, especially in 2020.
What were considered everyday activities pre-pandemic – such as eating out, travelling and attending large-scale events – came to a halt as COVID-19 restrictions were put into place. With consumers looking for ways to keep spending, attention was diverted to home buying, home renovations and other isolated forms of activity. This placed pressure on product and service inventory levels, and with the supply chain on life support, significant bottlenecks were created. Ultimately, high demand and significantly constrained supply had to be resolved by higher prices, generating inflation.
By spring of last year, inflation awoke from its decade-long slumber and has been ballooning ever since. Canadian inflation soared to a 30-year high of 4.8 per cent in December 2021, some 1.8 to 2.3 per cent above the Bank of Canada’s target rate. With inflation this high, many analysts were expecting our central bank to raise interest rates in January 2022.
Instead, rates were kept steady, mainly due to the economic concerns stemming from the spread of Omicron. The Bank of Canada did, however, hint that rates will be increasing in the future, which could be as early as March. For producers with variable interest rates on their debts, it may be a good time to consolidate that debt into a low, fixed rate, as five to seven rate hikes are expected this year alone in Canada and the U.S.
“Interest rate hikes put increased pressure on consumers,” said Stuart. “That’s a BB gun approach to a big problem.”
An interest rate bump is only half of the response to inflation; the other half is getting the economy’s output to increase. This is largely outside of the central bank’s control, but without getting goods moving and people working again, there is a real risk that interest rate increases could trigger another recession, which could result in lower interest rates again.
The general theme of inflation in 2021 held true even for the hog industry, albeit for slightly different reasons. Hog margins eroded toward the second half of the year, due to higher farm input costs. For the livestock sector, much of that is represented by feed costs.
From a global perspective, grain prices could remain somewhat elevated this year, as a drought in Brazil and tensions between Ukraine and Russia intensify. Ukraine, being a significant exporter of corn and wheat, could have grain shipments heavily curtailed as a result of military conflict. This means tighter global supplies and higher grain prices. China’s role in the phenomenon has also become elevated.
“Hog prices in China fell 70 per cent last year. Corn didn’t,” said Stuart. “Until that Chinese corn price breaks, be very careful believing you’re going to get cheap corn this year.”
China has also been stockpiling grain and fertilizer. The country is one of the largest producers of nitrogen and potassium fertilizer but chose to ban exports late last year through to at least June this year. For more than three years, African Swine Fever (ASF) has been stubbornly flaring up and dying down in China, which has caused pig and pork prices and supply to rise and fall out-of-control.
China remains a mystery
With reduced supply but increased demand, curtailing imports does not seem like the logical move. But for China, unique political considerations are always at play.
Internationally, the wild card in the pack is China. China is such a significant player in both the hog and grain markets that its actions can singlehandedly change global prices. Over the past few years, China has used its ability to influence the market by manipulating supply, demand and prices in its favour.
“A Chinese shortage of 18 million tonnes of pork drove them to import a whopping only five million tonnes of pork,” said Stuart. “They could’ve imported much more. In fact, if you watched our markets in 2020, it was like China bought just enough pork off the U.S. and Canadian markets that it did not affect the price. They’re fine going without.”
Throughout 2021, Chinese hog prices were at or below the cost of production, after having been the equivalent of $300 per hog in 2020. Given that plummet in price, rapid liquidation of domestic hogs followed. To help create a bit of breathing room, the Chinese government cut pork import permits, restricting supply and providing some level of price support.
China’s ‘hog hotels’ – ironically, constructed in response to ASF – could well be ideal disease breeding grounds.
“The ASF story in China is far from over,” said Stuart. “I question whether the mega-farm concept really works. I think they’re going to prove that may have been a bad idea. It isn’t just ASF in China; it’s a raft of every swine disease known.”
As China struggles mightily with ASF, the disease continues its march west in Europe as well, infecting more barns in Germany and, most recently, Italy. These outbreaks have effectively taken Germany and Italy out of the export market. As the economic impact of this disease continues to escalate in Europe, Stuart believes government financial support may be required to get the European Union (E.U.) out of this crisis.
“I think the E.U. swine sector is headed for contraction in 2022,” said Stuart. “I think there’s going to be some talk and lobbying for a bailout – there’s going to have to be some government money.”
But when it comes to using cash as a bandage solution for ASF, it begs the question as to how much the industry and governments have learned from this approach to COVID-19. For at least two months prior to the pandemic, we in North America watched the COVID-19 devastation rip through Asia and Europe, but we did nothing proactively to stop it from coming to here. Will this happen with ASF, even if slower?
With ASF now on the doorstep of mainland North America – with cases popping up in the Caribbean – prevention efforts must be increased in an attempt to keep ASF out of Canada and the U.S., specifically. Whether prevention succeeds or fails, the world needs a cure.
ASF preparedness is top priority
VIDO-InterVac has been awarded funding to develop an ASF vaccine, which remains elusive worldwide. For all of the planning to mitigate and manage ASF, vaccine development could be the winning ticket.
A great deal of work has been done on crisis response and the emergency protocols that must be in place if ASF is found in Canada. This includes establishing zoning agreements with trading partners, drafting biocontainment measures to isolate potentially affected farms and developing protocols for the destruction and disposal of pigs. These are all very important, but rather than waiting for the disease to arrive, novel solutions should be sought to address the virus itself.
Many countries around the world have been working on ASF vaccines, but to date, none have been proven effective or safe. In January 2022, the Vaccine and Infectious Disease Organization (VIDO-InterVac) at the University of Saskatchewan received $140,000 in funding for preliminary work related to the development of an ASF vaccine. This is a good start, but it is clear that not enough resources have been dedicated toward staving off this impending crisis that would wipe out the Canadian hog industry.
In August 2021, the Government of Canada established a partnership with Moderna – a leading COVID-19 vaccine developer – to build a state-of-the-art vaccine production facility in Canada. Perhaps a when a suitable ASF vaccine is found, such a facility could be used to quickly ramp up production.
If ASF enters the U.S. wild boar population, it could cost around USD $50 billion to rectify. Even though the Canadian industry is much smaller than the U.S., spending millions to prevent ASF would be way more practical than spending billions to in response to its arrival in our countries. As such, it may be worthwhile for the industry and governments to invest more heavily in vaccine development and treatment option research, rather than risk being stuck with the cost of ASF clean-up.
Methane joins carbon as climate evils
Methane is the latest climate change menace for agriculture, joining carbon dioxide. This year, Alberta and Saskatchewan hog farmers will be punished even more for it, with no other options.
At the beginning of January 2022, the Canadian price on carbon dioxide emissions increased to $50 per tonne, placing further strain on cost of production, as hog barn heating fuels are not exempt from the levy.
A study by Alberta Pork and Sask Pork, conducted nearly a year ago, assessed the carbon tax impact for farmers to be between $1.06 and $1.32 per hog in 2021, growing to between $1.32 and $1.65 per hog in 2022. That is no small amount, considering everything else hammering away at profitability.
The Governments of Alberta and Saskatchewan issued a constitutional challenge to the carbon tax before the Supreme Court of Canada in March 2021, which ultimately failed. In October, the Trudeau government doubled down and confirmed its support for the United Nations’ (UN) ‘Global Methane Pledge,’ which is poised to have significant implications for global agriculture. The plan is to cut methane emissions by 30 per cent below 2020 levels by 2030. This means that producers may be motivated to rethink strategies related to manure management and barn heating, to remain viable.
“The new war on global warming is a war on methane,” said Stuart. “If you go after methane, look who you get to go after: livestock.”
Stuart pointed to the work of researcher and professor Frank Mitloehner of the University of California-Davis as an example of how the story of methane has been distorted or misrepresented when it comes to the impact of livestock on the environment. Mitloehner – a prolific presenter and social media influencer within animal agriculture – published a lengthy podcast in December 2021 covering the issue.
“Globally, there are 560 teragrams of methane produced and 550 teragrams of methane reduced. In other words, there is a significant atmospheric removal of it. What that means is that there’s a process that kills methane. And why nobody reports about it, I don’t know,” said Mitloehner. “This whole climate discussion around livestock is more of an opportunity than a liability.”
The opportunity, according to Mitloehner, is for animal agriculture in the developed world to curb methane output, which could have a significant effect on reducing global temperatures. As an example, in California, dairy farmers can increase their revenue by around 50 per cent by covering their manure lagoons and capturing the renewable biofuel produced, which can be used to power farm machinery and trucks. Here in Canada, it might make sense to encourage the adoption of similarly innovative strategies.
Unfortunately, despite attempts to clarify the narrative, we have seen limitations placed on hog barn expansions in Europe for this very reason. The UN’s pledge is a clear signal that the hog industry needs to be proactive in measuring and reducing methane emissions to remain competitive.
Stuart estimates that, by 2040, the world will be short 23 million tonnes of pork. For producers who are able to withstand the war on methane, victory could mean higher hog prices and more profits spread across fewer global players. It may be an opportunity to get ahead of the pack and be an industry leader.
The horizon is hazy with signs of hope
Although Stuart sees a few short-run challenges to the hog industry, he also sees the light at the end of the tunnel. Business diversification and continued innovation are keys to a robust business model. The aim should be to develop new international markets while satisfying existing international customers and working to grow domestic pork consumption.
For the Canadian and U.S. hog industries, COVID-19, ASF and climate concerns reign supreme as threats this year, but threats are only as powerful as they are allowed to be. By getting ahead of these issues as much as possible, producers and packers can still find signs of hope on the hazy horizon.
The Banff 2022 edition of the Canadian Hog Journal is here!
This year’s Banff Pork Seminar was truly like none other, employing an in-person and virtual hybrid model. With the rise of the COVID-19 Omicron variant, a sense of anxiety prompted the seminar’s advisory committee to take a closer look at the logistics of returning to a completely virtual format, weighed against the risks associated with reneging on certain financial commitments.
Fortunately, the organizers were able to stick with their original plan, and the in-person portion was conducted with the health and safety of participants in mind, thanks to the seminar facilitators and Banff Springs staff who did a superb job of ensuring everything was conducted according to protocol.
Pig and pork market outlooks for the coming year are always popular presentations at Banff. This year, Alberta Pork’s Bijon Brown provided his analysis of Brett Stuart’s insights, which cover a broad base of topics like global finance, African Swine Fever (ASF) and climate concerns.
I took it upon myself to cover two less-than-comfortable subjects: public trust and vaccines. They are both massive and complicated in nature, and producers will definitely have competing opinions on the topics – all of which are valid, in my opinion. I respect that and encourage your feedback. Dialogue is the cornerstone of the Banff Pork Seminar, which celebrated its 50th anniversary this year, and I have included a historical look back at the event, the Canadian pork industry and Banff itself.
Vincent ter Beek, editor of Pig Progress, made the long trek from the Netherlands to attend the seminar and deliver the closing plenary session, covering his foray into agriculture. For me, it was an exciting opportunity to meet someone so accomplished and recognized within the industry. I even managed to have a quick chat with him and capture a selfie of us, which is shown on this page. Ter Beek’s presentation is also covered in the public trust piece that I penned.
Treena Hein, one of the Canadian Hog Journal’s long-time dedicated freelance writers, dug into a presentation on Canada’s ASF Executive Management Board (EMB) to ascertain producers’ place within the bigger picture. She also covered a presentation on using alternative feed ingredients and strategies for keeping costs low.
On the side of herd health and management, our partners at Fast Genetics and PIC provided their advice on the best ways to incorporate breeding technologies into your operation and tips on how to use performance variation data to your advantage.
Stewart Skinner, a hog farmer and mental health advocate, provided his response to a presentation on farmer stress, from his own perspective as someone who struggles with depression and anxiety. Healthy coping strategies and looking out for each other remain the most important thing for producers to keep in mind, even beyond farming considerations. Everything else stems from there. The Canadian hog industry is better with you in it, and Skinner proposes that more needs to be done to move past basic awareness of mental health in society toward a more concrete approach to offering – and funding –specific support mechanisms for farmers across the country.
Share your thoughts on this year’s seminar and this edition of the magazine with me by email at andrew.heck@albertapork.com, and you could see your words appearing in our Spring 2022 edition, in May! Your comments, suggestions and ideas for topics to cover are always appreciated.
Pork Commentary, February 21st, 2022 Jim Long, President-CEO, Genesus Inc.
The reality of the market tells the story.
Iowa – Southern Minnesota Lean Hog Prices
February 16, 2021
69.71
February 21, 2022
97.61
Lean hog prices up 28 from a year ago or over $60 per head.
Every lean hog contract from April 22 – April 23 reached new contract highs last Friday as the sharp money in Chicago and beyond catch-up to reality of a hog supply that is significantly lower than the USDA and Chicken Little Economists expected. June leads the way with Friday close 118.675. On November 1st, June was 91.50 – a gain of $60 per head.
Supply of hogs will continue to be cut by what appears to be significant PRRS and PED breaks. We hear it every other day, producers deciding to quit farrowing for a myriad of different reasons: disease, labor shortage, older tired facilities, tired owners, price of corn (for some they have to buy, for others, they can sell), generational turnover. We see nothing happening to increase pig numbers going forward.
Prices week ending Feb 19th, 2022
U.S. Pork Carcass Cut-out
$1.15 lb.
U.S. Choice Beef Cut-out
$2.67 lb.
U.S. Composite Whole Chicken
$1.25 lb.
U.S. Turkey
$1.21 – $1.36 lb
We read where Chicken Littles were worried about Pork Cut-outs getting uncompetitive price-wise. Looks like Pork is still very competitive relative to other competitors. Beef is almost 2.5 times Pork. It’s our only Red Meat competitor.
The ones who worry about Pork Cut-out competitiveness should go to the mirror. Maybe if they produced Pork that had a better eating experience they would recognize that consumers vote with their money. Why is Beef 2.5 times the price of Pork? Simple answer. Taste – consumers pay more for that eating experience.
Other Observations
In the United Kingdom, producers continue to have a massive struggle to get hogs slaughtered. There is a huge backlog of pigs. A combination of Brexit and Covid issues has created a huge shortage of labor for packing plants. The UK government has committed to fast track foreign workers, so far the program hasn’t been overly successful.
The combination of lack of slaughter, high feed costs, and lower hog prices has put most producers below cost of production for several months. Reports from the UK indicate that up to 10% of the sow herd is liquidated or in the process. It is a terrible situation for producers, with no short-term solution in sight.
China – New Hope is a major Hog Producer, Feed and Food Company
New Hope has reported 2021 annual swine division results separate from whole company. New Hope is a Public Company with annual 2021 results below.
New Hope 2021 Results
1 million sows
12.930 million pigs marketed
Pigs marketed divided by number of sows = 12.93 PSY
Financial loss New Hope Swine Division 2021: 10.3 billion RMB ($1.6 billion U.S. Dollars)
Loss per sow: $1600
Loss per pig marketed: $126.44
We expect not much joy in Mudville. Let’s assume New Hope swine division is indicative of the whole China industry. 42 million sows total reported. Over $60 billion loss total for the year? Loss of over $1 billion per week? Losses continue at this clip, no way there is no major liquidation ongoing.
China’s average market hog price last week 12.37 RMB/kg, significantly below estimated cost of production. We believe China sow herd began liquidating last July, it has continued unabated since then. We expect to see China’s hog marketings begin declining sometime in the 2nd quarter. At that point, there should be a price recovery. The liquidation level will create need for imported Pork in the second half of 2022.
Summary
U.S. lean hog prices continue to increase. How high will they go? We expect them to set record prices. They will get so high to a certain extent it won’t matter. The Chicken Littles have been wrong, they totally missed the devastation of the Covid crisis that has led to large sow liquidation and labor-affected productivity losses. Now high feed prices and huge increases in construction costs are limiting production further. Throw in disease, abracadabra – Less Hogs = High Prices.
We will be at the Illinois Pork Expo this week at the Genesus Booth #528. We will report on the show next week.
Editor’s note: Chantal Farmer is a research scientist at Agriculture and Agri-Food Canada’s Sherbrooke Research and Development Centre. She can be contacted at chantal.farmer@agr.gc.ca.
Modern piglet problems for modern sows
Figure 1: Typical dolphin-like head shape of intra-uterine growth-restricted piglets.
Intra-uterine growth-restricted piglets occur more frequently when litter sizes are large, making piglets more susceptible to death due to overcrowding in utero.
Low birth weights, lack of energy reserves and poor immune protection also leave piglets vulnerable, and this situation has become worse with the current use of hyperprolific sow lines. Assisting newborn and suckling piglets to maximize their survival and growth is essential, given the trend of increasingly larger litters.
Intra-uterine growth-restricted piglets are characterized by their dolphin-like head shape (Figure 1) and their reduced growth rate, resulting ina poorer capacity for ingestion and use of colostrum – a sow’s nutrient-dense milk that is available to piglets only immediately after birth. This is most important considering that the early intake of 250 grams of colostrum is crucial for the survival and growth of piglets.
Various nutritional strategies can be used in gestation and prior to farrowing to help suckling piglets, including supplementary feeding of arginine – an amino acid – in gestation, which may improve nutrient supply to the placenta and increase birthweight. Additionally, feeding a source of n-3 polyunsaturated fatty acids in late gestation – such as fish oils – to stimulate fetal brain development and vigor can decrease the interval between birth and first suckling.
Sow backfat thickness matters
Table 1: Mammary gland composition on day 110 of gestation for gilts fed various amounts of a gestation diet to achieve ‘low’ (12 to 15 millimetres), ‘medium’ (17 to 19 millimetres) or ‘high’ (21 to 26 millimetres) backfat at the end of gestation.
Recent findings have shown that body condition of gilts at the end of gestation must be considered to achieve optimal sow lactation performance (Table 1). A gilt that is too thin (with 12 to 15 millimetres of backfat at the P2 site of the last rib) on day 110 of gestation has less milk-secreting tissue in her udder than a gilt with 17 to 26 millimetres of backfat. This difference was achieved by offering varying amounts of feed throughout gestation (1.30, 1.58 or 1.83 times the maintenance requirements). Body condition is also important for colostrum yield. Sows with moderate body conditions (17 to 23 millimetres of backfat) produced more colostrum (4.0 kilograms versus 3.2 kilograms) compared with fatter sows (more than 23 millimetres of backfat).
Feeding during the transition period – starting on day 108 of gestation – has received quite a bit of attention recently. The amount of energy reserves of sows at the time of farrowing has a great effect on farrowing duration and on the incidence of piglet stillbirths and hypoxia – a state caused by insufficient oxygen levels in body tissues.
Lessons for hog farmers
Sow diet control and managing piglets during farrowing can help reduce mortality.
Maximizing the energy intake of sows prior to farrowing is important. This can be achieved in various ways, such as increasing energy intake (to 33.8 megajoules versus 28.2 megajoules of net energy per day), feeding a readily available energy source, feeding a high-fibre diet to prolong energy uptake via hind-gut fermentation, or feeding sows three times a day. Farrowing duration and stillbirths have been shown to increase if a sow has not eaten in the 3.1 hours prior to farrowing.
Management strategies during farrowing and lactation are also needed to maximize piglet performance. Farrowing supervision and piglet assistance at birth – such as drying, placing close to a teat, providing an extra source of energy to low-birthweight piglets, split-suckling and cross-fostering – will help decrease piglet mortality.
Sows do not produce enough milk to sustain maximal growth of their piglets. A teat that is not suckled in first lactation will produce less milk in second lactation. First-parity sows should have all their teats suckled for the first 48 hours after farrowing to maximize milk yield in the next parity.
There must also be enough teats for all piglets in a litter, but if that is not the case, the use of nurse sows or providing artificial milk can help. Artificial rearing of a whole litter should be used only when piglets cannot be reared normally, since artificially reared piglets will grow slower than sow-fed piglets, taking five more days to reach market weight.
Pork Commentary, February 14th, 2022 Jim Long, President-CEO, Genesus Inc.
Go figure, less hogs leads to higher prices! For months we suggested lean hog prices would surpass 2021, seems we are on track.
Observations
U.S. Pork Cut-outs closed $1.0996 on Friday.
Year to date U.S. hog slaughter 10% less.
2022 =14,846,000 vs
2021=16,494,000.
We believe the USDA estimate of 4% less is overestimated. We won’t be surprised to see 8% less ongoing.
Iowa – S. Minnesota weight
February 6, 2021 = 288.3 lbs
January 29, 2022 = 290.3 lbs
February 5, 2022 = 289.1 lbs
Current weight at levels that don’t denote back up of hogs.
June lean hog futures closed Friday at 112.20, end of October they were 88¢ – a gain of $50 per hog.
A real reflection of lack of supply to demand. USDA cash early weans averaged last week $83.47 while 40 lb. feeder pigs $112.10. Kind of what happens when there were four months of under $20 for 40 lb. feeder pigs in 2020. Surest cure to low prices is low prices.
Iowa – S Minnesota lean hog price averaged Friday at $90.38. If pork cut-outs can stay near $110.00, as they were Friday, $1.00 lean hogs will be soon.
Less hogs, strong demand, all small pigs and market prices racing higher. No sign of expansion. The latest weekly sow slaughter is 62,000 which doesn’t indicate expansion. Cattle and Poultry prices strong. Pork is good value. 2022 is shaping up for a very good year. An industry damaged by Covid issues and abandoned by the USDA and NPPC on CFAP-1 top-up deserves a good run. It is here.
Other Observations
2021 was not a good year for many large producers in China. Their financial results are a combination of lower hog prices, higher feed costs, and productivity challenges from disease. Below are reported 2021 financial returns of Chinese Public Companies and the number of sows they report.
2021
Company
Yuan/RMB
U.S. Dollars
Number of Sows
Tianbang Group
-3.75 billion
-$590 million
380,000
New Hope
-9.1 billion
-$1.43 billion
1.0 million
Wens Group
-13.4 billion
-$2.11 billion
1.1 million
DBN
-340 million
-$53 million
230,000
Tecon
-680 million
-$107 million
120,000
TRS
-1.07 billion
-$168 million
120,000
AoNong
-1.18 billion
-$185 million
360,000
Zhengbang Group
-18.9 billion
-$2.97 billion
1.0 million
Total
$7.613 billion
4.2 million
The list of Chinese Public Companies with about 4.2 million sows appears to have had losses in 2021 of $7.613 billion U.S. dollars. Our Farmer Arithmetic equates this to an average loss of $1,812 per sow. Let’s assume this is about 10% of China’s sow herd (inventory reported to be 42 million). Could country-wide this equate to $70 billion? You think there isn’t liquidation of the sow inventory?
Of note, China hog prices still are low and losses continue at this pace. Our premise, financial losses in hog production leads to less hogs. Big financial losses in hog production leads to even fewer hogs. We believe China has been liquidating sows since last July. We expect in quarter 2 to see China hog slaughter numbers begin to drop year over year and prices rise.
Tough Markets Not Only in China
Genus PLC is the owner of PIC. PIC is a major part of Genus plc. PIC is currently the world’s largest Swine Genetic Company. Since September, or over about the last 6 months Genus PLC, which is a listed public company (GNS) on the London Stock Exchange, has seen its shares decline from 6070 GBP ($8230) to 3490 GBP ($4730) last week wiping out 100’s of millions of dollars in market value. It appears the institutional shareholders who have owned a large percentage of shares have decided to cash out.
We won’t surmise why investors are leaving. There is little public news other than some reports of a weak China market and insiders selling shares. Must be tough times for management to explain collapse in value of 100’s of millions of dollars in market cap. Genus Chief Executive compensation 2,075,000 GBP ($2.7 million), shareholders, we expect, want their share value to stop bleeding.
Pork Commentary, February 7th, 2022 Jim Long, President-CEO, Genesus Inc.
Last week lean hog futures reached $1.10 lb. Friday, June – July months closed over $1.09 lb. It’s been inevitable that the lean hog price would go higher up 20¢ lb. from the end of October ($42 per head). Reason is fewer hogs than even a year ago.
Our Observations:
Since the 1st of January year to date, U.S. hog slaughter is 11.1% lower. Just over 1.5 million head less.
Iowa – S. Minnesota hog weights
Date
Average Weight
Week ago
1/29/2022
290.3 lbs.
Two weeks ago
1/22/2022
291.5 lbs.
Year ago
1/30/2021
289.7 lbs.
Year over year hog weights 0.6 lb. heavier. Next to no change. In our opinion, indicates lower hog numbers, not due to hogs being backed up.
Last week the “who’s calling whom” scenario came more into play. Packers were looking for hogs. As hog numbers continue to decline the calling will become more frequent.
Reflection of supply-demand: USDA cash 40 lb. feeder pigs last week $105.00 a year ago $68. No one pays more than they have to. Lots of empty barns chasing pigs to fill them. What do you expect re supply when there are at least 300,000 less sows than peak sow herd? A decrease of 7.5 million pigs of weaned production.
PRRS – PED is rearing its ugly head knocking down supply and increasing demand to fill finishers.
After the Iowa Pork Congress, we traveled through the Midwest. What we observed is not only labor shortages in slaughter plants but the ongoing struggle for labor in swine farms and the implication of this reality. Not enough labor in many sow units is cutting productivity. Too many farms are short labor and this leads to normal productivity functions not getting completed. In nurseries – finishers we observe the same. We expect lack of labor could be cutting production by 2-3% coming from higher mortality in all phases of production and lower farrowing rates. We have knowledge of 5,000 sow units with only 7 employees working. A production disaster.
This lack of labor is also contributing to the lack of new sow units getting built or older ones getting started again.
Let’s compare 3rd quarter PigCHAMP Data from 2010-2019 (prior to Covid) and 2021
PigCHAMP Mean on 280 Farms
2010
2019
2021
Born/Alive/Litter
11.62
13.10
13.41
Farrowing Rate %
83.95
83.18
82.39
Pre-weaning mortality %
13.31
14.55
16.22
Pigs weaned per litter weaned
10.22
11.34
11.65
Sow Death Rate %
9.48
11.83
13.67
Pigs/Weaned/Female year
22.91
24.56
24.51
Our data doesn’t necessarily confirm our belief of lower productivity due to labor. It certainly shows a lack of productivity increase that had been a hallmark of 2010 to 2019. We believe the lack of productivity increase from 2019 to 2021 is the lack of overall labor. Born Alive litter size increased from 2019 to 2021 in line with Genetic progress. Lower farrowing rate and higher pre-weaning mortality are a function of husbandry (labor). Higher sow mortality leads to fewer sows farrowing, cutting farrowing rate. A consequence of Prolapses Is Coming.
Europe
Prices continue to be terrible for producers. Losses have ranged from $30 – $50 per head the last four months. Cull sow prices have been at record lows for 18 consecutive weeks. Sow liquidation is ongoing. Some Euro regions project a 10% decline of the sow herd. When the dust settles, less pork and price increases like the U.S. is experiencing.
China
We believe one of the consequences of large sow herd liquidation in China will be less corn imports. Last week China canceled 380,000 metric tonnes of corn (14.96 million bushels). China has bought 490 million bushels (this crop year), 137 million has been shipped. The U.S. Corn market expects China to buy the corn, this is propping up current corn prices. Seems China, if they need the corn, not in a hurry to take it, and obvious from last week’s actions, they can cancel. One thing for sure, don’t need corn to feed hogs that don’t exist.
Summary
U.S. hog price continues to move higher with less hogs coming to market. European and China sow liquidation means at some point in 2022 over 75% of the world’s hog production will be down at the same time – the first time in history for all three major world production zones.
