Pork Commentary, October 19th, 2020 Jim Long, President-CEO, Genesus Inc.
Successful Farming yearly does a list of the Top 40 swine producers in the U.S. It’s a regional survey compared to the Global Mega Producer list that Genesus sponsors which covers the world.
What we found interesting in this year’s U.S. Powerhouses list is the decrease of the total sows by 61,475. We expect this is the first time the list has decreased since it has begun. The 61,475 decrease also doesn’t include the 55,000 Maxwell Foods is liquidating as their name wasn’t included in the 2020 list although they were on the 2019 one.
The USDA on the September 1st USDA Hogs and Pigs Report indicated the U.S. sow herd expanded last quarter. We totally disagree. We believe the herd has decreased. The drop in the Pork Powerhouses sow numbers is another example of what has happened to our industry. Financial losses cut inventory, big doesn’t make you immune from the realities of the marketplace.
Of note U.S. sow slaughter continue to run at liquidation levels, over 65,000 a week. A few weeks over break-even in finishing hogs gives help and some hope, but not filling the massive hole created by the pandemic debacle.
Certified Duroc
Thanks for the feedback last week in regards to our commentary on Certified Duroc. Your comments supported our belief that greater Domestic Pork Demand can be unleashed by producing pork that meets and exceeds consumers’ taste and flavor. It will be a challenge but as pork producers we are used to challenge. As an industry we need to put the marketing disaster of “The Other White Meat” program behind us and focus growing domestic per capita consumption. Ford move on from Edsel, we need to move on from “The Other White Meat” program.
“Failure is simply the opportunity to begin again, this time more intelligently.” – Henry Ford
An example of the mindset of our industry that we have to overcome was a discussion last week with a U.S Packer representative. He explained that they sort the best pork for Japanese Export (Best pork is redder and more marbling). They then do another sort for some foodservice. The leftovers go to the U.S. domestic market.
This mindset will never increase domestic consumption. What other business knowingly send lower quality product to its major customer? It’s like U.S. consumers are second class citizens. Maybe if the best pork is redder pork and has more marbling, we should figure out how to have more of that type of pork to grow demand. Would it be a Common Sense Revolution producing a product that meets consumers demand for taste and flavor, more domestic demand will increase producer profits.
To clarify from some questions we had last week re qualification for Certified Duroc Program. You must use an NSR registered Duroc boar to legally use Certified Duroc Label. We were asked if this precludes PIC and DNA Durocs from label use. Some had been told by PIC and DNA that there Durocs would soon qualify, indeed there were efforts to have rules that would have allowed their participation. It’s obvious the success of the Certified Angus Beef program has swine genetic companies wanting rules diluted so they could be part of Certified Duroc. In the end the breeders of NSR reconfirmed that only NSR registered Durocs qualify for use in the Certified Duroc Program.
Durocs that cannot prove they have a purebred history will not, Mongrel Durocs will not. PIC and the like will be able to join if and when they have a purebred registered Duroc in NSR. Genesus produces Globally 83,000 registered purebred Durocs annually. We believe that to be a true Duroc it needs to have the lineage proof that registered Durocs program affirms. Many Durocs of breeding companies are not pure but synthetic lines with other breeds mixed in. Of the world’s major Genetic Companies only Genesus has a program for all breeds that affirms registered purebred breeding stock. To reiterate to be part of the Certified Duroc Brand you must use an NSR registered Duroc.
“If you are not a brand, you are a commodity.” –Philip Kotler
By: Everestus Akanno, PhD., Geneticist, Genesus Inc.
The success of pig genetic improvement programs depends heavily on the continued generation, collection, and analysis of industry-wide data from both the nucleus and commercial settings.
These data come from a variety of sources including progeny test facilities, packing plants, nucleus and commercial barns, and DNA laboratories (Fig. 1) which are typically characterised by a fast-paced work environment where data generation and collection happen quickly and continuously and people may not have data accuracy as their top priority, thus, creating room for possible errors. In addition, advancements in technology and computation have allowed for automation of data generation and integration into a remote database which can reduce potential errors. Nevertheless, questions still exist on the quality and validity of industry-wide data for comparing cohorts, evaluating genetic merit, and making selection decisions.
What is data integrity?
In the context of genetic improvement programs, data integrity is defined as the extent to which data collected on an individual is complete, consistent, accurate and reliable for genetic evaluation purposes. According to guidelines provided by International Council on Animal Recording (ICAR, 2018), a complete and accurate record on an animal should have the following attributes:
Animal identification – The animal should be properly identified using any suitable identification methods.
Parentage verification – The parentage of the individual should be verified and trackable.
Dates of recording – The dates of birth and dates of measurements should be complete and accurate.
Phenotypic values – The value of the animal record of production or performance level should be within allowable published baselines for the traits and breed.
Systematic effects – Factors known to be associated with the record of performance for an individual should be noted and properly documented.
Issues with data integrity in pig production
Data collection and interpretation form the foundation for the many decisions made in the pig industry. Generation of significant amounts of data has become a normal part of the pig genetic improvement business, especially with the advent of genomic technology. However, human errors and failure of automated systems can compromise data integrity. Examples of potential issues with data integrity include but are not limited to the following:
Mislabelling of samples (e.g. for genotyping purposes).
Poor handling of samples during storage which may result in missing data.
Incorrect animal identification.
Incorrect assignment of parentage.
Error in data entry.
Failure in automated measurement systems leading to inaccurate measurements or a break in timed measurements (e.g. individual feed intake equipment).
Inaccurate ultrasound recording from inexperienced or untrained technicians
Efforts to mitigate these issues will go a long way to improve the quality and integrity of data used for genetic evaluation, thus, leading to more accurate estimation of genetic merit.
Measures to improve data integrity in genetic evaluation systems
As previously noted, mistakes in parentage assignment and in the linking of data (genotype or phenotype) to the right animals in the recording system can be very disastrous and undermine the predictive power of the genetic evaluation system. The most important key to data integrity is people. Staff that have a keen interest in and understanding of the importance of quality data are the most valuable resource to ensure data integrity. Therefore, data integrity needs to be frequently monitored by keeping a close eye on the following areas:
Data from various sources need to be verified and interrogated before integrating into the database.
All software that supports data collection, data processing and data reporting need to be regularly validated.
Access to the database should be restricted to individuals responsible for data collection and management.
All persons involved with data collection and analysis should be trained and maintain certification, as appropriate.
Quality control measures should be in place and automated to identify potential errors in data entry.
Data usage and analysis should include steps for identifying, visualising, and filtering erroneous data.
As a leading global pig genetic company, Genesus Inc. takes data integrity very seriously. Our dedicated staff consider data integrity as the highest priority. We continuously monitor data integrity and have established measures for identifying and excluding erroneous data from entering the database. In addition, the Genesus Genetic Team is continuously researching and developing novel approaches for improving the quality of data used in the estimation of genetic merit, thus, delivering the best genetics to our customers.
Pork Commentary, October 13th, 2020 Jim Long, President-CEO, Genesus Inc.
Last week the U.S. sold 60,200 metric tonnes of pork. The highest amount this year and the highest since early 2019. We expect the closing of German exports to Asia due to ASF is giving underlying support. Last week China sales were 29,000 mt. the fifth-highest amount this year. We expect to see continued strong export sales over the coming months as Asian demand and loss of German pork pulls more sales to USA-Canada.
Other Observations
The miracle of the fall of 2020 continues.
On August 18th October lean hog futures were 51¢ lb. Last Friday they closed at 78.125¢. That’s a $55 per head appreciation. Going from losing $30-35 a head to a profit of $20-25. What a turn around. Not anytime too soon. Some producers who 6 weeks ago were ready to pull the plug now see a future.
So many were discouraged by the constant drumbeat of the chicken littles who were telling them the negativity of the futures. They were ready to give up.
Case in Point last week we received the latest Iowa Producer Magazine from Iowa Pork Producers Associations.
Chicken Little 1 – “It’s shackle space that will dictate pig prices moving into the future, not the pig supply.” With that he said “it will likely be 8-10 quarters before the profit looks much better.”
Comment – No wonder producers were depressed and had little hope – 8-10 quarters?
Chicken Little 2 – He also thinks “the pork industry doesn’t see a recovery until at least 2022.”
Two Chicken Littles preaching doom and gloom as recently as a magazine delivered last week.
The funny thing is our check off dollars get used for there “experts” to give us know nothing crap.
“Talkers are usually more articulate than doers, since talk is their speciality.”-Thomas Sowell
The Tragedy of Pork Consumption
Since the ill fated “Other White Meat”program was launched 20 years ago, pork per capita consumption has flatlined. This despite total U.S. meat and poultry per capita consumption increasing by 30%. The reality is our Pork Industry has lost domestic market share. This has led us to push for exports as an “opiate” for expanded pork production.
The “Other White Meat” program was a push to make us like Chicken. A cheaper product. It must be the only marketing program in the history of advertising that tried to compare your product to a cheaper option. Bizarre. Obviously, the “Other White Meat” program failed a billion dollars (Check off) of producer money went into this losing plan.
The quest to make lean lean like chicken took away marbling that leads to taste. Loins and hams that once led the pork cut-out in price now languish behind bellies, ribs, shoulders. The destruction of loin and ham values (half the carcass) has hurt the profits of our industry for years. Consumers vote with their money. Not only they have decided to buy more other meats and poultry, they are voting bellies, ribs and shoulders which have more marbling and better taste. This is what’s winning the consumer dollars and preferences. Big Taste is the driver for repeat consumer purchasing. It’s been calculated if each American ate pork one more time a month it would lead to 7 million more hogs domestically consumed. That would be reliable domestic consumption and not one dependent on the vagaries of exports and the political issues that affect its reliability.
It’s one thing to rail against what’s wrong, but it’s more important to find solutions to unlock U.S. domestic demand. We all are aware of the run away success Certified Angus Beef and what it’s done for beef consumption and cattle producers. Fortunately for the pork industry the National Swine Registry (NSR) has trademarked “Duroc” for U.S. meat case. The Certified Duroc Program will be an option for producers, packers and supermarkets to use a program that through legal verification can brand a product that like Certified Angus not be a niche product but one that resonates to all consumers.
The best part of the Certified Duroc Program is that NSR stringent legal trademark requirements ensure that only Verified NSR Registered Durocs can qualify for use of the Duroc label. This quality control measure will ensure purity of the Durocs that will deliver the Big Taste and Flavor. Unfortunately for some Genetic companies i.e. (PIC, DNA) what they call Durocs won’t meet these stringent NSR trademarked requirements.
It’s a bright new day. A vehicle from NSR to drive domestic demand through a universal available Duroc brand with quality attributes for taste and flavor. Genesus is proud to be a member of NSR and have a Certified Duroc that will deliver Big Taste and Flavor needed to enhance domestic demand. As an industry, consumer demand ignited by Big Taste and Flavor is a pathway to better profits.
The Fall 2020 edition of the Canadian Hog Journal is here! I was first introduced as the incoming editor of the Journal in the Fall 2019 edition, so this makes it my official first anniversary.
While every new edition is an exciting accomplishment for me personally and professionally, more importantly, it is an opportunity to advocate for this industry that supports tens of thousands of jobs, millions of Canadians and billions of global consumers.
We should all take time to appreciate the good things in our lives, but I feel compelled to digress a bit. The 2020 calendar year certainly has felt like an eternity for all the wrong reasons, no thanks to where we find ourselves as a sector, and producers are still facing a long-term negative pricing situation. Being so close to this issue myself, from an investigative point-of-view, it can be mentally draining. Still, that feeling pales in comparison to the ongoing stress producers must manage on a daily basis.
It is my sincere hope that all industry representatives, including magazine editors, are doing the right things to help you navigate this storm with as little hardship as possible. That is our goal and duty. Our collective success or failure has wide-reaching implications for many people.
In the Summer 2020 edition, we continued to provide coverage of shared value concerns across the entire Canadian pork supply chain. And while it would appear there are some positive outcomes to certain discussions, lingering issues and adversarial relationships can be difficult to overcome. Drilling down on shared value, this edition considers the balance of marketing power between producers, processors and retailers, and how that has changed over time. Despite the discomfort, producers must keep fighting for fairness.
Processing plant protests continue to be a platform for animal activists, but now, support for farmers and truckers is starting to receive attention, as shown in this edition’s coverage of recent rallies.
On the disease management side, we provide an overview of activities taking place on the national level to combat African Swine Fever (ASF). While value-sharing and other contentious issues can divide stakeholders, ASF represents a universally respected threat, and we all have to be on guard.
On the food side, consider an expert’s opinion on COVID-19’s impact on meat retail. While grocer profits are up, so are consumer prices, thanks to more Canadians eating at home.
Research in this edition covers a study of genetic disease resilience in grow-finish pigs, how science is taking a bite out of feed costs and the cost of sow exercise.
Readers are always encouraged to drop me a line at andrew.heck@albertapork.com. I want to share your views in our ‘Letters to the editor’ section. Dialogue and understanding are the only way we can move forward, and we need a stronger chorus of voices to speak up if we wish to be heard. As it stands, it would seem our messages are getting lost somewhat in a world with so many competing interests, whether those represent ‘priorities’ or not. When push comes to shove, many may soon find out the hard way that food is not only a priority but likely the top one.
Letters to the editor
In reply to “Producer-packer tensions threaten viability” (Summer 2020)
“Why aren’t Canadian pig farmers seeing any benefit from the record-high pork export prices and volumes processors are benefiting from? The prices we receive for our animals are at a decade low. The pricing system is broken and needs to be fixed ASAP, or there will be no pig farmers left in Canada outside of Quebec.” – Mick O’Toole, Neerlandia, Alberta
In reply to “Producer-packer tensions threaten viability” (Summer 2020)
“Western Canadian producers could perhaps benefit from a pricing system like Conestoga has in Ontario, where their producers were being paid more than $2 per kilogram in mid-July, while others across the province were being paid $1.20, which is roughly $0.60 below cost of production. I have also heard about multiple producers sending their financial statements to packers like Sofina to try and get better prices, since the packers are making money like crazy right now.” – Jeremy Van Dorp, Woodstock, Ontario
In reply to “Producer-packer tensions threaten viability” (Summer 2020)
“This really looks like the end of the western Canadian independent producer as a previously viable part of our agricultural output. The circumstances are what make this almost unbelievable – that a commodity with increasing worldwide demand cannot be produced economically because of local pricing structure, rather than logistics, climate or other more obvious variables.
“This is a very western Canadian problem, and it saddens me to see independent producers choosing to downsize or exit the industry. Clearly there must be a space for all viable production. With the loss of one part of the sector, we lose production in the short term and the value of agri-business diversity overall. Not everyone can be, or desires to be, a global megaproducer, but both indeed have merit for different reasons. And there should be room for both, if both can find ways to access fair value in their product.” – Brent Taylor, Drumheller, Alberta
Editor’s note: Bijon Brown is the Production Economist for Alberta Pork. He is currently collecting and analyzing cost and pricing data to improve producer success. He can be contacted at bijon.brown@albertapork.com.
All business relationships contain a balance of power. In the western Canadian hog industry, over time, the power has swung from an equitable place for both producers and packers, to favouring packers and retailers.
Most will likely agree that a united front for producers is now more important than ever before to address the hog pricing situation. Concepts such as single-desk selling have largely gone by the wayside, as ambitious farmers more than two decades ago sought to outpace others around them, putting collective action aside in favour of high-octane capitalism. It was a good time to be in hogs, if you could compete, but since then, much has changed.
When the single desk was disbanded in Alberta, as an example, individual producers were now left to negotiate with a few packers, which became even more disproportionately skewed as the years went by. The tables have turned, and the negotiating power now resides with the packer. With very little government oversight on economic practices, packers have used this power to their advantage.
Packer power suppresses price
Lower hog prices, higher farm expenses and general inflation have all contributed to financial difficulty in the industry.
Cost of production is on the rise, along with overall inflation, but hog prices paid to producers have not increased. With the removal of the single desk, packers’ market power has driven down the ‘real price’ of hogs, which is the price that accounts for changes to the general cost of living. This has resulted in a considerably worse financial situation for producers.
In Alberta, the hog price index closely tracked the farm expense index until 1996, the year single-desk marketing ended. Since then, there has been a clear and growing divergence between the price and expense indices. Expenses in 2019 were more than twice what they were in 1996, while on the revenue side, the hog price in 2019 was lower than what it was in 1996. The same relative trend can be observed across the prairies.
With so few packers in western Canada, they can dictate the price in the contracts offered. Packers influence price through their ability to segment producers by individualizing agreements. This may be done by giving some producers more favourable rates or premiums than others based on volume, proximity or on any other desired basis. The inclusion of confidentiality clauses in contracts is also a component of market power. Market price uncertainty is generated because true prices are kept hidden. If producers cannot determine the true market price, how can they adequately negotiate better prices?
Improving prices requires greater unity
Negotiating power stems from producers’ ability to come together. The more producers are divided, the more power they give to packers, and the less control they have over prices.
How can producers unite? The notable and most effective option is to pursue the establishment of a single desk. Instead of being able to play hundreds of producers against each other, packers would need to deal with only one marketer that has producers’ best interests in mind, first and foremost.
The adoption of a single desk could shift the balance of power back to producers, resulting in a hog price that is more consistently favourable, though government support for this concept may be long gone. As an alternative to using the single desk, producers could consider coming together and forming marketing groups, some of which already exist.
A marketing group could sell and coordinate the distribution of hogs to the plants. For example, Hutterite colonies in Alberta currently make up more than 40 per cent of the industry’s core producers and own nearly half of all sows on-farm. If colonies were to form a marketing cooperative, then this could increase their bargaining power. Consolidated producer marketing means that a few packers would now be forced to compete on price for a larger volume from one source.
Packers’ economic model is driven by the number of hogs they can process in a day. Because they are still operating under-capacity in western Canada, the more hogs they can process in a day, the greater their profitability. If producers returned to collectively marketing their hogs, volumes would be more important to packers, and they would need to be competitive in their pricing to maintain their volumes.
Quebec pricing model shows promise
Producer unity generates a more sustainable pricing model for Quebec producers.
The Quebec pricing model is perhaps the best example we have in Canada of successful consolidated marketing power.
Hog price discovery in Quebec has been governed since the early 1980s by the Quebec Hog Producers’ collective marketing plan, where producers collectively negotiate a sales agreement with packers. The Régie des marchés agricoles et agroalimentaires du Québec, which regulates marketing plans in Quebec, recently upheld the previous cut-out formula in which the cash price can vary within 90 to 100 per cent of the cut-out price.
Two things have contributed to better prices in Quebec: single-desk marketing and an objective arbitrator to mediate the situation when there is no agreement between both sides. Provinces outside Quebec have neither a single desk nor an arbitrator. Having a single desk makes it possible for an arbitrator to review proposals from both producers and packers. When producers come together with one voice, they can create a better pricing environment.
Producer unity creates a platform for change
Greater producer power can lead to a more equitable share of value in the supply chain. With more power, producers can negotiate changes to contracts.
The main consideration in contract pricing is the source of base prices. Currently, hogs in Canada are priced based on U.S. hog prices, which U.S. packers are required to report to the U.S. Department of Agriculture (USDA). While the hog industries in Canada and the U.S. are integrated to a degree, pricing suffers due to this unnatural linkage, especially when political gamesmanship and trade disputes are considered.
U.S.-influenced hog pricing can be a detriment to the western Canadian producer if the numbers are manipulated. The main argument in favour of U.S. pricing is that Canada competes with the U.S. in the global market, so it makes sense to measure ourselves against this large competitor. The method works, but only if fair pricing and cut-out value are considered on an even playing field.
The North American pricing model is broken. U.S. price signals have been impacted by politics, government subsidies and continued structural change. A made-in-Canada pricing solution that incorporates our export differences may be the only sustainable way forward if U.S. signals continue to distort the picture.
Producer-packer unity strengthens the entire industry
While much attention is paid to the relationship between the producer and packer, a third player, the retailer, should not be forgotten when it comes to understanding price disparity.
USDA data going back to 1970 shows how, despite predictable market fluctuations for producers and packers, on the retail side, value for pork has shot up nearly 500 per cent, which is not consistent with the price for pigs or wholesale pork. While the U.S. system is fundamentally different from how we should measure ourselves in Canada, it is the best existing benchmark we currently have.
Since 1970, pork retail margins have risen much faster than producer margins and even processor margins.
In 2019, most American farmers received less than $1 per pound for their pigs, while processors received nearly $1.50 per pound of wholesale pork. Meanwhile, retailers received close to $4 per pound for packaged pork sold in-store, and consumers have been paying upwards of $8 per pound, in some cases, to take that product home. The situation in Canada is very similar in that regard.
Nearly six per cent of product found in retail meat cases is wasted at the store level. This means, of the $4 retail price, approximately $0.24 is discarded. It may not seem like much, but if we could eradicate the waste and spread this benefit across the value chain, producers could receive almost $12 more per hundred kilograms of meat produced if just $0.04 of that $0.24 was passed back to producers, with the remaining savings benefitting other stakeholders.
What would drive such an incentive for change? One such impetus comes from producers and packers working together to lobby for consumer buy-in, as eliminating waste is known to be a consumer concern. Consumers should consider where their meat originates and whether their dollar is going to the right place – to pay hard-working Canadian farmers for the end-product that is possible only because of a longer-term commitment to raising pigs.
Taking the next steps toward fair pricing
When it comes to generating positive change across the value chain, greater producer action and packer collaboration are needed.
Producers need to ask: What steps do I need to take to shift the power back to an equitable place for both producers and packers?
Shared value, or lack thereof, has been on the minds of many producers these days.
In the Summer 2020 edition of the Canadian Hog Journal, we introduced the work taking place behind the scenes between western Canadian provincial pork producer groups and processors: “Producer-packer tensions threaten viability.”
In mid-May, the pork producer organizations in B.C., Alberta, Saskatchewan and Manitoba issued a joint invitation to executives from Donald’s Fine Foods, Maple Leaf Foods and Olymel to have an open and frank discussion on the state of the industry, and to work for solutions that create shared value for producers and processors.
“We appreciate the opportunity to engage in these conversions, as well as the time committed to the discussions,” said Darcy Fitzgerald, Executive Director, Alberta Pork. “We look forward to seeing tangible outcomes, and we will keep producers updated as the process continues.”
Initial meetings with all three packers took place virtually in mid-July and early August, with further commitments made to conduct additional meetings in the future. Following the meetings with Donald’s and Maple Leaf, the producer groups released a summary of their discussions and findings, which received a great deal of attention from across the supply chain. The initial meeting with Olymel was conducted following the release of that summary, approximately one month after the provinces had met with Donald’s and Maple Leaf.
Olymel demands CPE, rejects Quebec-style pricing
The Quebec pricing model has been looked upon favourably by many in the hog industry across Canada, but processors have been reluctant to adopt it.
Notably absent from the meeting between the western producer groups and Olymel was Réjean Nadeau, President & CEO. However, Casey Smit, Vice President, Swine Production, Western Canada and Ian Moon, Manager, Hog Procurement, Western Canada were available to provide an overview of the company’s 2021 contract.
In late June, Olymel introduced its new contract, which includes a split between 50 per cent of the HM-LM201 price plus 45 per cent of the PK0602 cut-out value. A wider grid index and premiums are also offered on top of the calculated price. The contract addresses producer desires for cut-out value inclusion and helps reduce the negative pricing valleys, but the use of an index factor, common to most packers, takes away some of the price peaks, as does using only 90 per cent of cut-out in the formula.
A large caveat, however, is that the Olymel 2021 contract requires producers to be certified under the Canadian Pork Excellence (CPE) program. In western Canada, especially Alberta, CPE adherence remains very low following two years of deliberation between producers and packers, as highlighted in the Winter 2020 edition of the Canadian Hog Journal: “Quality assurance brings value, but who pays?” Training on CPE has not yet been delivered at all in Alberta, and it is being slowly introduced in Saskatchewan and Manitoba. The process takes months for producers to become fully certified, which could jeopardize their eligibility for the contract in the immediate future.
On a positive note, the new formula would only require a small change to create large gains and improve the industry outlook. For Olymel’s 2020 contract, also reflected in the 2021 contract, the company introduced bonuses for carcass weight, loin depth and proximity to the Red Deer plant. The proximity bonus has no official distance cap; however, it was suggested that anywhere farther than approximately 600 kilometres from the plant (about as far east as Swift Current, Saskatchewan) would not receive full compensation on distance. The 2021 contract increases the five-year average price over the 2020 contract price by $0.07 per pig.
Further to the contract discussion, the producer groups were disappointed to learn that Olymel had effectively shut the door to any consideration of supporting a ‘Quebec-style’ pricing system in western Canada, which could help alleviate some of pricing woes producers are experiencing.
The Quebec model uses an average value between a whole carcass value and the USDA cut-out value, taking a percentage of each to arrive at a final price. In Quebec’s 2019 to 2022 marketing agreement, that amount is a 50 per cent of each the whole carcass and cut-out. However, since the start of the COVID-19 pandemic, an ongoing dispute between Olymel and Les Éleveurs de porcs du Québec (Quebec Pork) has resulted in an adjustment, which currently uses 65 per cent of the whole carcass and 35 per cent of the cut-out. The decision to make the adjustment was the result of processor pressure.
Maple Leaf arrives prepared for serious discussion
Cost of production acts as a benchmark for determining profitability. Even at a generous $185 per pig, the picture is not pretty for producers.
Prior to Maple Leaf’s meeting with the western producer groups, the company issued a letter to its producers offering $20 per pig for 13 weeks if an extension of one year was added to their current contracts. This interim help is appreciated but will not address the systemic pricing problem for producers in western Canada nor the large pending financial shortfall projected until May 2021.
During the meeting, some attention was paid to the western provinces’ cost of production figures. Because there are nuances between Alberta, Saskatchewan and Manitoba, a round number of $185 per pig was chosen as a benchmark to demonstrate producer losses across the three jurisdictions.
Maple Leaf officials questioned why the benchmark was set that high, but for the provinces, the number was an appropriate median between a rare, low-end cost of production at $165 per pig versus a more common, high-end $200 or more per pig. Anecdotal evidence from Manitoba suggests some highly efficient producers fall within that low-end range, whereas data recently collected in Alberta shows many producers sit closer to the high-end range.
The initial meeting with Maple Leaf proved to be an important extension of an olive branch between the two sides. Much discussion centred around competitiveness challenges for both producers and processors relative to their U.S. counterparts.
For processors, the Canadian producer’s disadvantaged spot also puts hog buyers in a tougher situation compared to U.S. processors. A main difference, however, is capacity: in the U.S., prior to temporary plant shutdowns due to COVID-19, processors were nearing 100 per cent capacity, with slaughter and export volumes at record highs. In Canada, the same cannot be said for capacity, despite a similar trend among U.S. and Canadian pork exports.
Due to increased supply in the U.S. this year, prices have been depressed. While that reality conforms to the laws of supply and demand, we have seen the reverse effect in Canada, where supplies have been lower than packer demand, but pricing is telling producers to reduce supply or even exit the industry, in some cases. For producers, in addition to negative pricing signals, an added difficulty surrounds the Canadian federal government’s lack of financial support relative to what U.S. producers have received in the past three years.
While shared challenges were discussed, so was market potential. Maple Leaf believes its corporate initiatives – such as ‘raised without antibiotics’ status and ‘carbon neutrality’ – have benefited the brand in the eyes of consumers. Producers, likewise, take care to adhere to quality assurance measures, though it is often unclear how those efforts translate into value back to the producer. Many producers would say the value is absent without any tangible strides to reward the production behaviours that brands are built upon.
Donald’s willing to work toward producer equity
During Donald’s Fine Foods’ meeting with the western producers groups, the company announced that it would operate a floor price of $1.40 per kilogram per pig over a four-week period to help address the current pricing situation while further options are considered for the future. An additional four-week period was announced thereafter, for a total of eight weeks. While this extra cash infusion is welcomed, unfortunately, the losses for producers continue to accumulate at a significant rate with little long-term support on the horizon.
Donald’s offerings amount to an extra $20 to $25 per pig in the short term, but there is no change to the current formula going forward. Donald’s formula is based on the Maple Leaf Signature 4, with the additional benefit of having transport costs fully covered. This helps ensure Donald’s maintains its largely out-of-province hog supply.
HyLife leads when it comes to producer support
HyLife was not included in the recent shared value discussions, given the company’s proactive steps to working with producers. While all western Canadian processors are looking to expand, HyLife is taking a balanced approach.
When it came to extending the shared value meeting invitation to packers, HyLife was excluded, albeit not out of disrespect. From the perspective of many producers, especially those who sell their pigs to HyLife, there is a lot of promise on the horizon for cooperation.
In April, HyLife met with the company’s independent producers to discuss the creation of a new hog pricing formula – one which utilizes the existing Chicago Mercantile Exchange (CME) whole carcass price, along with a new index factor, premium structure and weight-based grid, as well as incorporating a window price using USDA cut-out prices.
Concerned with the springtime shutdowns of pork processing plants in the U.S. due to COVID-19, HyLife decided to cushion volatility in the CME and cut-out price by implementing the new formula in a phased approach: If the CME price is between 90 and 100 per cent of the cut-out, then CME is the default, but if the CME price is greater than 100 per cent of the cut-out, the default is 100 per cent of the cut-out.
HyLife’s transition to favouring cut-out pricing is a clear demonstration that some processors in western Canada are willing to adapt in a way that is profitable for all. By implementing its new formula, HyLife is also demonstrating its willingness to address producer pricing concerns and strengthen relationships with producers who supply the company’s hogs. All things considered, HyLife’s new formula amounts to an estimated $20 per pig increase, indefinitely, over the previous formula.
Producers push for greater transparency
One of the major stumbling blocks in the pursuit of shared value so far has been transparency – between producers, processors and retailers.
In early March, Alberta Pork introduced the concept of a pricing calculator for producers in attendance at the organization’s semi-annual meetings across the province, with much encouragement expressed for the initiative. Not long after, work was undertaken to develop the tool, which is now allowing producers to compare their existing contracts with hypothetical conditions offered by other processors.
In mid-July, an eagerly anticipated hog pricing calculator was made freely available on the Canadian Pork Council’s (CPC) website. The calculator uses pricing formula data compiled in-house by Alberta Pork, based on U.S. Department of Agriculture (USDA) mandatory reporting, which is also the basis for Canadian prices. Further work is currently taking place to refine the accuracy of some metrics. In only the first three weeks following its launch, the calculator had been used more than 1,000 times by website visitors from across North America.
While red meat costs have surged, poultry and plant-based protein costs have decreased. At this Real Canadian Superstore in Edmonton, in mid-July, President’s Choice brand frozen ‘chickenless breasts’ were similar in price to boneless, skinless real chicken breasts, albeit seemingly less popular.
Based on data from Agriculture and Agri-Food Canada (AAFC), comparing 2019 and 2020, processors’ export profits were up 25 per cent, collectively earning those companies more than $440 million or $28 per pig extra over the previous year. Meanwhile, for retailers like Loblaws, both profits and costs grew as a result of COVID-19. In the first quarter of 2020, Loblaws generated $240 million of revenue, compared to $198 million during the same period in 2019.
Going forward, the CPC and its provincial members hope to continue working to develop new initiatives to highlight issues not only for industry stakeholders but the general public as well. Suffice to say, the processing and grocery businesses have been very lucrative in recent months.
Typical summer pricing bump non-existent this year
In July 2020, China imported more than double the amount of pork as in July 2019, which itself was double the amount of pork imported in July 2018. Producers have not benefited from this incredible growth.
In most years, summer pig prices experience a boost due to increased domestic consumer demand, among other reasons. This year, while the increase in demand was palpable both domestically and internationally, prices for producers did not respond nearly as positively as they did for other supply chain partners.
In China, lingering issues like African Swine Fever (ASF) resulted in sky-rocketing meat prices for Chinese consumers – a phenomenon that was exploited to its full potential by all global pork players in the race to fill the enormous and growing Chinese protein gap.
Domestically, as locked-down Canadians started cooking at home more frequently compared to pre-COVID times, grocers raked in the profits, while restaurants and other food service providers generally suffered due to forced closures and public hesitation.
Various factors including North American meat plant temporary shutdowns helped drive up retail prices for pork and beef, to the tune of 30 per cent higher than this same period in 2019. To make matters worse, in August, Walmart and United Grocers – a national food procurement organization representing many major retailers – imposed new ‘supplier fees’ that are designed to breed competition and exclusivity when it comes to stocking products. As a result, the Canadian Federation of Agriculture (CFA), Food & Consumer Products of Canada (FCPC) and other organizations joined forces to raise concerns about the potential impact of the fees, which are considered arbitrary and unreasonable, threatening the affordability and security of Canada’s food supply.
In September, Walmart also eliminated its price-matching program, a long-time hallmark of the company’s commitment to keeping prices low for consumers. The move comes at a time when unemployment is at a decade high across Canada and has more than doubled in some provinces.
Government support still desired, albeit cynically
For most producers, consumer pricing surges either internationally or domestically were merely a slap in the face as margins remained submerged in a sea of red ink. These pricing woes have been met with a substantial non-response from the Government of Canada.
While the feds continue to insist that producer support is being effectively delivered, no meaningful publicly available data has demonstrated just how much money has actually reached producers’ pockets, and the government has given no indication that further comprehensive support is forthcoming any time soon, despite renewed calls from the Canadian Pork Council (CPC) to make adjustments to AgriStability’s payout levels. Given the long-term depressed pricing situation, it has come to a point where many producers have lost so much equity that any further losses are incapable of triggering an AgriStability payout.
On separate occasions earlier this year, the CPC had asked for the AgriStability reference margin to be increased from 70 to 85 per cent, along with a request for an ad hoc payment to producers at $20 per head – both of which were summarily rejected. As such, outgoing federal ag critic John Barlow did not mince words in expressing his disappointment with the efforts of Marie-Claude Bibeau, Minister, Agriculture and Agri-Food Canada:
“Minister Bibeau has to pound her fist on that cabinet table saying, ‘You know, enough is enough! Canadian agriculture needs attention – needs should be a priority, and we need to step up.’ That’s her job. Right now, I don’t think she has the clout at the cabinet table. If she did, we would see an assistance package already announced.”
Progress is slow and overdue but welcomed
In August, Alberta Pork publicly reported that a number of prominent commercial hog producers were actively undergoing a reduction in breeding stock at a minimum of 25 per cent of their herds, and, in some cases, as high as 50 per cent.
“If something doesn’t change dramatically, and soon, we’re going to see the coming year look like the last five,” said Andrew Dickson, General Manager, Manitoba Pork. “The industry is going to continue to integrate, which will result in independent producers becoming landlords – unable to afford their own operations and instead leasing barns to packers.”
As shared value discussions move forward, involving a greater number of producer and packer representatives, working collaboratively, the pricing situation will not be solved overnight. It will take a constant, concerted effort on the part of all stakeholders to drive meaningful change for the entire industry.
As we take a closer look at ourselves and where we want to be, consumers too are noticing us, often for unfortunate reasons. Especially since COVID-19, our less-glamorous side has been ripped open wide for all to see, while the positive work we do to secure Canada’s food supply has often been ignored.
For processors and retailers, it is likely easy to get wrapped up in playing public relations defense in these situations, and for producers, it is equally easy to get wrapped up in financially charged offense against value chain partners.
We all have a role to play in keeping this industry viable. For some, that objective may still seem very attainable, but for others, it is looking less so. Realistically, if any part of the value chain weakens to the point of breaking beyond repair, we are all going to be in trouble.
Pork Commentary, October 5th, 2020 Jim Long, President-CEO, Genesus Inc.
ASF in Germany
Does this sound familiar – last week the German pig industry asked for government action to increase slaughter capacity. Covid-19 plant restrictions and ASF have caused havoc. At current slaughter levels, there are 50,000 extra hogs not being handled. Feeder pig prices have been cut in half severely impacting Danish and Dutch producers who sell to Germany. Slaughter hog prices have declined to 1.27 Euro a kg which is below cost of production with now over 30 ASF findings in Germany the loss of Asian export markets will be in all likelihood more than 2 years.
USDA Cut-outs
USDA cut-outs hit $1.00 a lb. last Thursday morning. Germany’s loss of Asian markets appears to us to be underpinning U.S. pork and hog prices. It’s not just China, but Japan, Korea, Philippines, Vietnam that the U.S. and Canada will benefit from Germany’s misery. With lean hogs in the 70’s in October, solid domestic and export demand, liquidation cutting numbers into 2021. Why can’t we believe lean hogs won’t blow by the 80¢ they are now on lean hog futures next summer. 90¢ – $1.00 is not an unreasonable destination. Hope so – we all need to backfill the hole created over the last while.
Maximized productivity and profit.
The productivity of the world sow herds continues to increase. As the Global Genetic Industry consolidates to four main Genetic Groups – PIC, Topigs-Norsvin, The Danish groups and Genesus, the technology we have brought collectively to bear has pushed not only competitors out of the way but increased litter size. IE USDA report from Dec quarter 2018 – 10.58 litter to June 2020 – 11.04 pig per litter. Below is a comparison of Genesus – Pig Champ database total 365 herds. As you can see by results below Genesus not only has more pigs, heavier pigs but significantly lower sow mortality. Unlike European Genetics the robust structure of Genesus sows keeps them in production and brings full sow salvage value while delivering high productivity. All add up to why Genesus has a world-leading female to maximize productivity and profit.
Pork Commentary, September 28th, 2020 Jim Long, President-CEO, Genesus Inc.
On Thursday just after the USDA September 1st Hogs and Pigs Report was released, I was talking on the phone discussing the report. After the call, my son Spencer who was near and heard much of the dialogue, exclaimed “the report Defies Logic.”In my mind, that’s the perfect summary. Why?
USDA Breeding Herd expanded in the quarter. Went from 6,326,000 to 6,333,000. Absolutely absurd to believe this happened. We were expanding when the industry was losing $40 per head. Anyone who knows the industry just laughs at this. Sow slaughter in the quarter was 105,000 more than the same time a year ago. Last year in the quarter USDA reported an increase of 21,000 in the breeding herd. This year according to USDA 7,000 increase.
According to the USDA report, while we were expanding the sow herd in the quarter, we were farrowing 3% less sows while the pig crop was 1.254 million pigs less than a year ago. No wonder there are empty finishers in the country as this decline is just under 100,000 less pigs a week.
Farrowing projections in the fourth quarter are 5% less than a year ago. A projected decline of 145,000 litters. That’s about 1.6 million fewer pigs if correct. Don’t forget the chicken little ag economists who were projecting a few weeks ago more market hogs in 2021 than 2020. What amazes us is all of our and your hard-earned check off dollars get used to pay for this chicken little drivel.
In the June 1st report, the USDA reported 4,041,000 more hogs in the 50 lbs. – market inventory than the same time a year ago. That was a lot of hogs and that information has hung over the market for many weeks. The vested interests that benefited from depressing the hog price parroted this report and it was effective to keep hog prices at a terrible level.
Last Friday it was 117 days from June 1st. Since June 1st the USDA has reported 44,399,000 hogs marketed this year. Last year the same time frame 42,760,000. The arithmetic tells us in the 117 days from June 1st the U.S. has marketed 1.639 million more hogs than a year ago same time frame.
The USDA on June 1st reported over 50 lbs. – to market there were over 4 million hogs. Where did 2.4 million hogs go? Did they ever exist? If 2.4 million hogs are backed up, we should see heavier slaughter weights. National Daily weight last week 207.8 lbs. a year ago 211.13 lbs.
To our question where did they go? Well the USDA reports on September 1 that were 10% more hogs over 180 lbs. then a year ago (1,270,000 more). Then of course we should see significantly more hogs to slaughter since September 1st and or hog weights higher over a year ago. Last week the U.S. slaughtered 14,000 less head then a year ago and they were lighter weights.
A packer told us last week “If there are 10% more hogs, they must be well hidden.”
Last Thursday 53-54% lean hogs were 74.22¢ lb., a year ago 54.89¢ lb. That’s plus $40 per head. It must be phenomenal demand a $40 price increase from packers with 10% more hogs available.
Another interesting point at the USDA report of 10% more over 180 lbs. is that the 50 -119 lbs. category is 3% less than a year ago. So according to USDA, it will go from 10% more than 3% less in maybe 30-45 days? That’s a huge change in such a short time frame.
Summary USDA September 1st Hogs and Pigs Report “Defies Logic”
The trend is clear less pigs are coming no matter what the USDA reports says:
the sow herd did not expand last quarter.
pig crop was down – farrowing projections down.
the lean hog price is stronger currently than anytime in 2020. No one pays more than they have too and we would include packers in that category. Hogs $40 a head higher than a year ago.
there are no backed up hogs, weights are lower than a year ago. Lots of finishing barns empty looking for feeders.
U.S. Pork Cut-out 90¢ lb. plus, Germany cut off from Asia due to ASF, will pull more North American pork to Asia plus last week during a virtual conference in Spain it was reported further exports to China from Spain will be limited due to already full freezer space.
It’s been a real tough grind financially and we producers have been subjected to “vested experts” pushing us to hedge at the low of the market because it wouldn’t go any higher. That was $45 head lower in mid-August. The good news there the reality is in the market and the price is higher and we expect further strength in 2021 market as hog supply runs below year-before levels.
“If I ever went to war, I would want pig farmers with me in my foxhole, they have a tremendous will to survive.”
Genesus genetics to Kazakhstan.
Recently Genesus delivered pigs to Leninskoe farm in Rudny, Kazakhstan. This is the first supply of Genesus genetics to Kazakhstan. Big part of Kazakhstan population are Muslims and do not eat pork with the country’s sow inventory only at about 12,000. Please find attached video showing the pigs arriving on farm in Kazakhstan. Big celebration on arrival
Pork Commentary, September 21st, 2020 Jim Long, President-CEO, Genesus Inc.
There are many items to observe this week:
ASF in Germany
Last week Germany found thirteen more cases of ASF in wild boars. More are expected. China, Japan, Philippines, South Korea, Japan, plus others have stopped all Pork Imports from Germany. German Pork can still move within the EU slowing the economic blow to producers. Market hogs, feeder pigs, and cull sow prices have all declined with the loss of export markets.
Export Sales of the U.S. the week prior to the German ASF totaled 50,600 metric tonnes (third highest this year) with China being 35,900 metric tonnes, the highest China week since April. We repeat these sales were before Germany was closed to Exports, Germany has sold well over $1 billion of pork to China this year. There is no doubt China will be aggressive purchasing U.S. pork as there is no larger supply of pork globally.
Supply-Demand in USA
A true reflection of supply-demand is U.S. pork-cuts. They closed Friday at 87.53¢ lb., up from the low 70’s a few weeks ago. If you had told people cut-outs would be over 87¢ in late September a few weeks ago they would have called you “nuts”. The chicken little ag economists were indeed saying a month ago no upside to the current price and that was over $30 la head less than today.
Last week National Daily Base Lean Hog Carcass weights – Monday-Thursday averaged 206.94 lbs. The week before 208.38 a year ago 211.68. So lower weights then the week before and a whopping 4.74 lbs. lower than a year ago. So much for hogs being backed up. Hog weights don’t decline if hogs are backed up.
Lots of reports of empty finishers from the field. Feeder brokers have more orders then they have pigs. Pig buyers resisting paying more but reality of supply to demand will lead to continual price increases in small pigs over the coming weeks.
Government Support Program for Pig Farmers
Trump administration announced a $23 per head CFAP payment Friday. Based on Highest Pig Inventory from April-August. Limit $250,000 per person, with 3 shareholders active can get max $750,000. Trump administration has supported pig farms with the 2 CFAP programs. In Canada the Trudeau government announced an imminent support program first part of May. Canadian producers are still waiting. Obviously, the U.S. government considers food security and supply of food for its population far more important than the Canadian government. In Canada, it appears the government thinks people can eat solar panels.
Global Pork Export Opportunities
An indicator of Global Pork Export opportunities is the prices of hogs in Export Countries. Brazil is an interesting observation as one of the world’s major pork exporters. On June 25 Brazil’s hog price was 39.44¢ USD lb. liveweight. On September 17 was 68.67¢ (91¢ lean) USD lb. A jump of over $75.00 per head. If a major global pork competitor’s hog price is 91¢ lean a lb. it’s a sign USA-Canada current prices can be sustained with possible upside.
GMO Food
Gene-Editing (GMO) continues to face a tough ride in the EU. Last week 90 NGOs sent a letter to the EU food safety commissioner asking not to legalise genetically-edited food production. In the hard-hitting letter, all the issues against GMO (Gene-Edited) are laid out. It’s hard to believe that the technology will get approval with so many interest groups and consumer questioning. For companies like PIC-Genus who have spent millions in GMO it must be challenging to observe the possibility of a zero-value investment. This doesn’t even cover Retail-Foodservice companies asking for guaranteeing source of pork non-GMO-Gene Edited. That’s a death sentence.
Last week we spoke at the Global Genetic Pig Improvement Summit (GPGS) in Qingdao, China. The conference invited the World’s Major Swine Genetic Companies. Genesus, PIC, Topigs-Norsvin, and Danbred spoke. There were several hundred attendees. Genesus currently has two super nucleuses in China at TQLS and Scandinavian Farms. At the conference, Jørgen Lindberg CEO of Scandinavian Farms discussed the reasons for switching from Danish Sourced Genetics to Genesus.
We also discussed our opinion of what we see is the direction of swine genetic development in China. China swine breeding herds have been decimated by ASF. There is a major need for globally competitive genetics to rebuild the industry. Genesus prior to ASF was supplying over 30% of all swine imported to China. Genesus has proven in China through numerous customer traits that lead to maximum profitability and its why we are the Genetic of choice.
More Pigs
Grow Fast
Tasty Meat
Easy to Manage
Don’t Die
China has lost possibly 15 million sows of production. The industry is rebuilding but it’s not going to happen in a minute. There are still ASF breaks. The USDA projects China will be at 80% of pre ASF production by the end of 2021. In the meantime, high hog prices ($2.35 USD lb.) with high profits will push expansion and pull pork imports into China. With Germany out of China’s import market the USA and Canada should see significant benefits.
“Good companies will meet markets. Great companies will create markets.” – Philip Kotier (Marketing Management)
Jim Long presenting at GPGSJørgen Lindberg CEO of Scandinavian Farms presentingYaping Gu, General Manager Genesus China on panel
After eight weeks of same price, Spain is still at 1.3 € per kg live weight, the lowest value of the last five years, except for 2018. As we can see in the table below the average price until this week is much higher than previous years. This is because we started from a remarkably high value at the beginning of the year. During the summer months, as usual, the carcass weights are lower, but still the heaviest in the last five years.
2016
2017
2018
2019
2020
MERCOLLEIDA PRICE
Average year
1.10
132
1.15
1.29
1.38
Week 1
0.95
1.13
1.02
1.04
1.49
Week 36
1.32
1.41
1.25
1.47
1.30
LIVE WEIGHT
Average year
109.3
108.2
111.3
110.5
113.8
Week 1
114.2
113.2
116.5
115.1
115.6
Week 36
104.2
105.5
106.1
106.6
108.1
Source Mercolleida
Even though there is now more demand than supply and the usual summer lower weights, the price has not risen due to lower pig prices in other European countries like Germany, France and the Netherlands.
The average year to date value difference between Spain and Germany is not significant, but at this moment this is visible 1,3€ in Spain vs 1.1€ in Germany (per kg live weight).
SPAIN
GERMANY
FRANCE
NETHERLANDS
Average 2020
1.38
1.35
1.26
1.29
Week 36
1.3
1.14
1.22
1.06
Traditionally fall brings lower prices, but this year all the schemes are broken, and now prices are expected to go up given the market situation.
The major difference between Spain and rest of Europe, is that Spain did not had closure of packing plants by the Covid-19. There has been processing limitation due to sanitary measures implemented, offset by the processing capacity growth observed earlier in the year, great efficiency, and closure of plants in the north of the EU.
From January to June 2020, despite the pandemic, processing of hogs has increased by 3.19% re number of hogs and 5.5% re weight.
2020
2019
20 vs 19 (%)
Hogs
27,612,665
26,758,873
+3.19
Tons
2,509,358
2,378,484
+5.50
Carcass weight (Kg)
90.88
88.89
+2.24
Source MAPA
As far as exports are concerned, we can say that in the first six months of 2020, “Extra-Community Exports” of the Spanish pork sector continue to exceed “Intra-Community Exports” in volume and value (54.5% in volume and 51.4% in value).
More than 74% of exports (volume and value) are distributed among eight countries: China (first place), followed by France, Japan, Italy and Portugal.
In 2019 – 663,892 tons were exported to China (27.2% of exports) with a value of 1,441,258 thousand euros (23%), while this year just during the first half of the year 539,627 tons were exported with a value of 1,192,379 euros
Tones
2019 January – June
2020 January – June
20 vs 19
Thousands of Euros
2019 January – June
2020 January – June
20 vs 19
China
260,652
22.1%
539,627
39.5%
107.0%
China
442,464
16.2%
1,192,379
33.3%
169.5%
France
154,421
13.1%
141,546
104%
-8.3%
France
407,521
14.9%
432,386
12.1%
6.1%
Italy
92,975
7.9%
108,556
8.0%
16.8%
Japan
248,052
9.1%
279,673
7.8%
12.7%
Japan
71,556
6.1%
66,283
4.9%
-7.4%
Italy
184,648
6.8%
237,382
6.6%
28.6%
Portugal
60,515
5.1%
51,374
3.8%
-15.1%
Portugal
171,548
6.3%
166,725
4.7%
-2.8%
Poland
43,627
3.7%
49,502
3.6%
13.5%
Germany
120,748
4.4%
126,713
3.5%
4.9%
Philippines
45,525
3.9%
31,796
2.3%
-30.2%
UK
108,697
4.0%
118,082
3.3%
8.6%
South Korea
46,415
3.9%
25,131
1.8%
-45.9%
South Korea
132,327
4.8%
90,815
2.5%
-31.4%
Total
1,177,834
100%
1,365,296
100%
15.9%
Total
2,729,051
100%
3,582,367
100%
31.3%
Source DATACOMEX
All this shows that 2020 is a good year for the Spanish pork sector, though there still is a lot of uncertainty because caused by ASF and the Coronavirus pandemic that is devastating the planet.
INTERPORC: The Spanish pork sector very committed to the environment
The Organization Interprofessional White Hog Agri-food (INTERPORC) stresses that the water footprint to produce a kilo of pork (meat or products) in Spain has dropped by 30% in recent years, with a total amount today of 5,950 liters, drinking water representing only 8%.
Spanish farmers are committed to reduce the water footprint by 50% over the next three decades within the goal of achieving a neutral climate impact by 2050.
Italian Market
In Italy, the market continues with sustained price increase. The certified pigs for Parma ham (176 kg average live weight) are at 1.468-1.498 euros/kg. Pigs out of Parma certification are priced at 1.286-1.316 € per kg. The 25kg feeder pig is priced at 64 euros.
There is a very dynamic demand, but supply is totally insufficient to cover it. The meat market is in a strong recovery, although the packing plants are still not making any money. That is why there is a lot of resistance to accept the maximum rise that producers are asking for.
U.S. Pork Powerhouses
Pork Commentary, October 19th, 2020
Jim Long, President-CEO, Genesus Inc.
Successful Farming yearly does a list of the Top 40 swine producers in the U.S. It’s a regional survey compared to the Global Mega Producer list that Genesus sponsors which covers the world.
What we found interesting in this year’s U.S. Powerhouses list is the decrease of the total sows by 61,475. We expect this is the first time the list has decreased since it has begun. The 61,475 decrease also doesn’t include the 55,000 Maxwell Foods is liquidating as their name wasn’t included in the 2020 list although they were on the 2019 one.
The USDA on the September 1st USDA Hogs and Pigs Report indicated the U.S. sow herd expanded last quarter. We totally disagree. We believe the herd has decreased. The drop in the Pork Powerhouses sow numbers is another example of what has happened to our industry. Financial losses cut inventory, big doesn’t make you immune from the realities of the marketplace.
Click here for the
TOP 40 U.S. PORK POWERHOUSES® 2020
Of note U.S. sow slaughter continue to run at liquidation levels, over 65,000 a week. A few weeks over break-even in finishing hogs gives help and some hope, but not filling the massive hole created by the pandemic debacle.
Certified Duroc
Thanks for the feedback last week in regards to our commentary on Certified Duroc. Your comments supported our belief that greater Domestic Pork Demand can be unleashed by producing pork that meets and exceeds consumers’ taste and flavor. It will be a challenge but as pork producers we are used to challenge. As an industry we need to put the marketing disaster of “The Other White Meat” program behind us and focus growing domestic per capita consumption. Ford move on from Edsel, we need to move on from “The Other White Meat” program.
“Failure is simply the opportunity to begin again, this time more intelligently.” – Henry Ford
An example of the mindset of our industry that we have to overcome was a discussion last week with a U.S Packer representative. He explained that they sort the best pork for Japanese Export (Best pork is redder and more marbling). They then do another sort for some foodservice. The leftovers go to the U.S. domestic market.
This mindset will never increase domestic consumption. What other business knowingly send lower quality product to its major customer? It’s like U.S. consumers are second class citizens. Maybe if the best pork is redder pork and has more marbling, we should figure out how to have more of that type of pork to grow demand. Would it be a Common Sense Revolution producing a product that meets consumers demand for taste and flavor, more domestic demand will increase producer profits.
To clarify from some questions we had last week re qualification for Certified Duroc Program. You must use an NSR registered Duroc boar to legally use Certified Duroc Label. We were asked if this precludes PIC and DNA Durocs from label use. Some had been told by PIC and DNA that there Durocs would soon qualify, indeed there were efforts to have rules that would have allowed their participation. It’s obvious the success of the Certified Angus Beef program has swine genetic companies wanting rules diluted so they could be part of Certified Duroc. In the end the breeders of NSR reconfirmed that only NSR registered Durocs qualify for use in the Certified Duroc Program.
Durocs that cannot prove they have a purebred history will not, Mongrel Durocs will not. PIC and the like will be able to join if and when they have a purebred registered Duroc in NSR. Genesus produces Globally 83,000 registered purebred Durocs annually. We believe that to be a true Duroc it needs to have the lineage proof that registered Durocs program affirms. Many Durocs of breeding companies are not pure but synthetic lines with other breeds mixed in. Of the world’s major Genetic Companies only Genesus has a program for all breeds that affirms registered purebred breeding stock. To reiterate to be part of the Certified Duroc Brand you must use an NSR registered Duroc.
“If you are not a brand, you are a commodity.” –Philip Kotler