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Pork Commentary: National Pork Industry Conference Report

by 5m Editor
24 July 2009, at 10:57am

CANADA - This week's North American Pork Commentary from Jim Long.

You did not have to look much beyond the agenda of the National Pork Industry Conference to see an industry if not in retreat at least one that is playing in defence rather than attack.

Agenda

  • Euthanasia (not sure pig or producer)
  • Sow housing (group versus stalls)
  • Meat safety
  • Corn Ethanol (government moonshine)
  • Bankers and financing challenges (running out of money)
  • Whistle blowers for policies (PETA infiltrators)
  • Environment (cap and trade)
  • Animal welfare (PETA, HSUS)
  • Washington Administration (lack of government support for livestock)
  • Risk Management (code for trying to limit losses)
  • Profit picture (lack of)
  • Swine Flu (H1N1) or (CNN disease)

Cooperating Sponsor

To start we wish to commend the Graham- Shields Strategic Forums for organizing an excellently run conference. They can’t help it that we have an industry that one senior packer executive characterized as "the worst ever for producers." About 600 people representing 60 per cent plus of the USA industry attended.

Observations

  • There was a banker panel. Mark Greenwood from Ag Star recommended the liquidation of 500,000 to one million more sows in Canada – USA to get the industry profitable. Take home message to us: we are on our own, cash is king. Don’t expect help from banks. They don’t want to foreclose on farms as they worried what they would do with them. We never thought producers would be made to feel sorry for bankers. It was enough to make a statue cry.

  • From what we can determine from discussions producers on average have lost about 65 per cent of equity in the last two years. 65 per cent of producers outside of bank covenants with about 20 per cent really outside covenants. It's ugly.

  • The banker panel encouraged the idea of group liquidation and group market organization. We are not sure if it was socialistic but we had a sense that when we were in Russia there is more free enterprise than the borderline collusion that was being proposed. All a waste of time. We are an industry of thousands of individuals or groups making individual decisions. It is not going to change. When the story of organized chicken liquidation is put forward the story fails to mention the largest USA chicken producer Pilgrim Pride went broke. That’s not exactly planned supply management. You run out of cash, you liquidate. It is not complicated. We are afraid it’s like the Bruce Willis movie "Last Man Standing" keep shooting until the end.

  • The tone and atmosphere of the conference was negative. People who own hogs are scared. They have lost money and all are looking for hope. In our opinion there was little said at the conference that would send people home enthused and positive. The brutal facts of the market place compared by topic upon topic of industry challenges were in the most part disheartening.

  • One positive we picked up talking to producers from all across North America was the general belief that the corn and soybean crop is in good shape and lower corn prices below $3.00 per bushel are helping out losses. There is no fear of crop failure or suddenly higher grain prices.

  • John Ferrell, Deputy Under Secretary for Marketing and Regulatory USDA spoke and took questions. He has a great career in politics. When asked about the Corn Ethanol effect on livestock the convoluted non – answer was classic. Politics as usual. He probably couldn’t wait to get back to the cocoon of Washington as fast as he could. As he said they have a lot of meetings in D.C. Unfortunately, Mr. Ferrell did not come across as a champion of US livestock production.

  • We met with several members of the National Pork Board. We have to give them credit; they are prepared to be engaged. They face a huge challenge with the huge losses – producers are encountering. We hope they can step up and provide leadership for our reeling industry. They have the mandate and the funding.

  • On a self serving note, we are really happy. A week ago, a Genesus customer, Good Hope (we like customers with positive farm names) received the award from Canada’s largest meat packer Maple Leaf Foods for having the highest lean meat percentages for 12 months at Canada’s largest plant located in Brandon Manitoba which processes give or take 4.43 million head per year.

Good Hope’s Championship Results:

Average carcass weight: 93.21 Kgs (257 lbs live weight)
Average back fat: 14.6mm (.57 inches)
Average Loin Depth: 63.5mm (2.48 inches)
Average lean meat percentage: 62.38 per cent

Genesus Purebred Duroc boars bred to Genesus F1 Landrace/Yorkshire females generated the winning numbers. No PayLean was fed to Good Hope’s hogs. Genesus delivers more pigs and better pigs. Congratulation Good Hope!

Summary

The National Pork Industry Conference reiterated the negative attitude we sense throughout the industry. There is little optimism; there is little faith in the future. Attrition of the sow herd continues. There is mostly doom and gloom.

Markets are driven by supply – demand and psychology. There is little to boost market from psychology. Swine flu (H1N1) continues to be used in the media. The reputation of our industry name being associated with death is not a demand driver. Pork meat sales have to overcome the first objection "will pork kill our customers" they certainly start in a hole. It is a huge negative to price enhancement and market momentum.

One disappointment we had at the conference was the lack of positive solutions. It’s supply/demand. Supply is being cut. The America we believe in is one of optimism. Offence versus retreat. If you want to increase demand, you have to sell. Add salesmen, advertising, and a market that pushes demand. Sitting around wringing your hands feeling sorry for yourself waiting for the phone to ring doesn’t work. The pork industry we thought we knew was aggressive. We travelled the world. There is no better place in the world to raise hogs and process pork. We have the people, knowledge, scale, feed, land, genetics, capital, packers, and logistic ability to compete economically with any swine industry in the world. We have huge advantages. We know it is tough. We are all losing money but let’s rather than think smaller think the American way. Sell, sell, sell! Push back into export markets. Work on developing more food service demand. It’s not just supply but demand. A small percentage increase in exports or domestic demand coupled with smaller supply is price enhancing. The contraction proponents as the only solution are defeatist. They have no vision other than retreat. We need to push and sell. It’s not only supply. Offense not defense! Forward not retreat!

"Damn the torpedoes full speed ahead!" That’s the America we know.

Good Hope Farms with No.1 Award in the Canadian Pork Industry

Maple Leaf Foods, Canada’s Largest Meat Company, at their annual producer banquet on July 15th 2009 recognized long time Genesus Customer, Good Hope Farms with No.1 Award in the Canadian Pork Industry:

BEST CARCASS for a Calendar year at Maple Leaf

BEST CARCASS out of 4.43 million market hogs that Maple Leaf processes per year at there Brandon Manitoba Plant.

Genesus Congratulates Good Hope Farms for these award winning results.

Genesus Duroc Boars and f1 Yorkshire/Landrace Females generated this winning data.