LIVESTOCK MARKETS: Demand, profitability driving U.S. pork industry expansion
Strong profitability and rising global demand are creating a strong incentive for U.S. pork processors to expand capacity. The impending increase in demand for hog supplies will create favorable terms for producers, while intensified competition among processors could lead to a short-term compression in packer margins, according to a new report from CoBank.
“U.S. pork packing capacity will increase 8-10% by mid-2019, when five processing facility construction projects are complete and fully operational,” said Trevor Amen, an economist with CoBank who specializes in animal protein. “Hog production is expected to increase 2-4% in both 2017 and 2018 to meet the demand for more supplies, with the bulk of the increased production coming from small to midsize pork producers in the Midwest.”
CoBank reported that three new state-of-the-art pork processing facilities with the capacity to process more than 10,000 hogs per day are currently under construction. Two of the facilities are being built in Iowa and one in Michigan. Two smaller plants with daily capacities of less than 5,000 head are being renovated in Missouri and Minnesota, CoBank noted.
“As each of the new projects comes on line, hog supplies will adjust upward,” Amen said. “Transitional market conditions such as these typically come with increased price volatility over the short term, and bargaining leverage will shift in favor of producers as the expansion of hog supplies catches up with processing capacity.”
However, lean hog prices may soften until a new market equilibrium is established and an increase in exports fills the demand gap, he added.
Exports remain critical
According to the report, the success of this substantial increase in processing capacity and hog production hinges largely on continued global demand for U.S. pork. While 2017 exports through April were up 15%, total annual exports for the year are expected to increase 5-8%. An additional increase of 3-6% is expected in 2018. Exports have been a boon to the industry, but the potential risk of export disruption carries severe consequences, CoBank warned.
“Continued global demand for U.S. pork will be a critical factor as the market adjusts over the next two years,” Amen said. “Domestic consumer demand has been very strong, and we expect that to continue. However, prospects for a further boost in domestic demand are limited. Therefore, export markets will have to absorb the production increases.”
U.S. producer access to foreign markets will be critical to preventing a domestic supply glut as well as deterioration in margins for both producers and processors, CoBank said.
Processing facility upgrades to continue
To remain competitive, the report said processors must continuously upgrade or replace existing facilities to implement new technology, including automation and mechanisms that ensure compliance with stricter food safety standards.
“Historically, initial losses in new or expanded plants are inevitable, and packer margins are typically narrower than pre-expansion, but margins improve and normalize following the transition period, and processors are better positioned with efficiency gains and an improved ability to customize production,” Amen said.
Longer term, pressure could persist for older plants as aging technology inhibits efficiency gains. Eventually, the cycle of replacing older infrastructure will reach its next phase, and new investments will take the place of retired capacity.
FSIS proposes to import poultry products from China
As part of the 100-day plan between China and the U.S. announced earlier this year, the U.S. Food Safety & Inspection Service (FSIS) has published a proposed rule to amend the poultry products inspection regulations to list China as eligible to ship poultry products to the U.S. from birds slaughtered in China. China is currently allowed to export processed poultry products to the U.S. only if the products are derived from poultry slaughtered in the U.S. or in other countries eligible to slaughter and export poultry to the U.S.
“FSIS is proposing this action because the agency has reviewed (China’s) laws, regulations and poultry slaughter inspection system as implemented and has determined that (its) poultry slaughter inspection system is equivalent to the system that the United States has established under the Poultry Products Inspection Act (PPIA) and its implementing regulations,” the FSIS notice stated.
The National Turkey Federation (NTF) urged a swift completion of the process in order to resume normal trade between the two countries. In January 2015, China issued a blanket ban on all U.S. poultry over issues related to avian influenza.
“NTF believes today’s notice regarding the importation of cooked chicken from China is an essential first step in the process of restoring normal exports of U.S. turkey and all poultry to China. In 2013, the U.S. exported more than $70 million worth of turkey meat to China, but that trade has been suspended for more than two years now,” NTF said.
When the 100-day plan was initially unveiled, National Chicken Council (NCC) president Mike Brown said the announcement was “a positive development and a testament to the Administration’s work to break down some of the existing obstacles that have been preventing U.S. chicken from regaining access to the Chinese market.”
“NCC and our members support free and fair trade,” Brown continued. “In order to be effective, free trade must operate as a two-way street. I am optimistic that, as our negotiators continue the dialogue with China, U.S. broiler access issues will be resolved expeditiously.”
The June live cattle futures market tumbled downward this week from the higher prices seen over the last month. Nearby contracts closed lower Monday and Thursday at $128.35/cwt. and $122.50/cwt.
August feeder cattle futures also fell this week. Nearby contracts closed lower Monday and Wednesday at $151.55/cwt. and $146.125/cwt., respectively, but recovered some of the losses by Thursday’s close of $147.075/cwt.
For the beef cutouts this week, Choice and Select were both lower at $249.74/cwt. and $220.53/cwt., respectively.
June lean hog futures were mixed this week. Nearby contracts closed lower Monday at $81.975/cwt., and despite posting some gains Tuesday and Wednesday, they also finished lower Thursday at $82.050/cwt.
Pork cutout values were mixed Thursday. The wholesale pork cutout was lower at $94.90/cwt. Loins were also lower at $91.36/cwt. Hams and bellies were higher at $70.04/cwt. and $166.10/cwt., respectively.
Hogs delivered to the western Corn Belt continued to climb this week, closing at $81.41/cwt. on Thursday.
The U.S. Department of Agriculture reported the Eastern Region whole broiler/fryer weighted average price at $1.1034/lb. on June 9.
According to USDA, egg prices were unchanged, with steady trade sentiment. Offerings were adequate, and supplies were light to mostly moderate. Demand was moderate in most areas and moderate to good in California.
Large eggs delivered to the Northeast were lower at 62-66 cents/doz. Prices in the Southeast and Midwest were lower at 61-64 cents/doz. and 54-57 cents/doz., respectively. Large eggs delivered to California were lower at $1.05/doz.
For turkeys, USDA said the market was mostly to barely steady and, in some instances, weak. Offerings have been mixed but mostly moderate. Demand has been light. Prices for hens and toms were unchanged at 94 cents to $1.03/lb.
Source URL: http://www.feedstuffs.com/markets/livestock-markets-demand-profitability-driving-us-pork-industry-expansion
Guide moves animal handling practices in right direction
I just received a press release from my friends at the North American Meat Institute (NAMI) regarding the 20th anniversary edition of the “Animal Handling Guidelines,” and I’m of two minds.
For one, it represents two decades of remarkable advances in improving the welfare of livestock. I was there when edition No. 1 first hit the streets and remember the controversy it created. Fortunately, most people who originally viewed it with alarm have now accepted it as the right thing to do.
On the other hand, I have to ask, “What took so long?”
It’s a petty complaint, I guess. Driven in part by the Animal Handling Conference — an annual event in Kansas City, Mo., that has been a tremendous influence in both spreading the “gospel” as well as advancing the cause — the industry has moved light years ahead in its practices since the late 1990s.
The original guidelines were written by Colorado State University professor of animal behavior Dr. Temple Grandin, working with NAMI’s Animal Welfare Committee. She developed the industry’s audit system, too, in 1997.
According to the NAMI press release, “Dr. Grandin said, ‘You manage what you measure.’ By measuring objective criteria like animal vocalizations, falls, the use of prods to move animals, effective stunning and other objective criteria, she argued that (meat) plants could evaluate their animal handling practices, identify problems and drive continuous improvement. The institute agreed with her view and invited her to write it.”
“It’s been wonderful to watch meat plants embrace the audit throughout the last two decades and to see the measurable improvements that have occurred in animal care and handling,” Grandin said. “Together with our annual Animal Handling Conference , the audit has helped elevate the importance of good animal handling and professionalized the role of those who handle livestock during transport and at the plants.”
Adele Douglass, executive director of Human Farm Animal Care, a leading animal welfare nonprofit that counts Grandin as a board member, acknowledged Grandin’s role in improving the care and handling of livestock. She noted that “Grandin’s knowledge and influence have been significant factors in the progress we’ve made over the past 20 years.”
Important changes in the 2017 edition of the guidelines include a small boost in the efficiency of captive bolt stunners: The acceptable stunning accuracy score has been increased from 95% to 96%.
Plants that use carbon dioxide stunning or head-only reversible electric stunning should consider auditing insensibility both prior to bleed and on the rail.
Perhaps feeling the pressure to highlight the rules for handling non-ambulatory livestock — there have been several widely reported scandals in the past few years — the guidelines placed more emphasis on insisting that ambulatory livestock should never be moved over non-ambulatory livestock.
Reacting to another problem that has proven newsworthy recently, the transportation audit will now ask whether the plant had documented training for its employees on properly receiving animals. Training must also lead to a significantly reduced acceptable level of prodding at unloading — from 25% or less to 10% or less.
The bottom line: The public is becoming more aware of how food reaches the table. Any form of animal abuse, real or imagined, will not be tolerated.
NAMI’s more aggressive approach to the problem, as shown in the 20th edition of its handling guidelines, is a perfect rallying point for a concerned industry.
*Chuck Jolley is president of Jolley & Associates, a marketing and public relations firm that concentrates on the food industry.
Source URL: http://www.feedstuffs.com/commentary/guide-moves-animal-handling-practices-right-direction
DEED: 6 Minnesota companies honored for export activity
5 other firms recognized for attracting foreign direct investment to Minnesota
The Minnesota Trade Office May 11 awarded the 2016 Governor’s International Trade Award to six Minnesota companies that have been successful exporters.
The companies were honored during the World Trade Month luncheon at the Hilton Hotel in Bloomington. They were selected for developing and growing a significant part of their business from exports, for increasing or maintaining jobs in Minnesota to support international sales, and for developing novel approaches for competing globally.
The 2016 winners are Digital Content LLC of Edina, Crown Iron Works Co. of Roseville, DCM Tech Inc. of Winona, Great Plains Processing of Luverne, Ralco Nutrition Inc. of Marshall and Top Tool Co. of Blaine.
Additionally, the Trade Office named five other companies winners of the Governor’s Foreign Direct Investment Award, which recognizes significant investment in Minnesota by foreign-based companies.
“These Minnesota companies illustrate how exporting or attracting foreign direct investment can help businesses compete globally,” said Commissioner Shawntera Hardy of the Minnesota Department of Employment and Economic Development (DEED). “I congratulate them for their global achievements and thank each of them for being models that can inspire other Minnesota businesses to pursue international trade.”
International trade is a key part of the Minnesota economy, with Minnesota companies generating more than $19 billion in sales from exports of agricultural, mining and manufactured products last year. Minnesota businesses exported 1,044 different products to 207 countries in 2016. Exports support almost 120,000 jobs in Minnesota.
The 2016 Governor’s International Trade Award winners:
Digital Content LLC, Edina www.bigjohngames.com
Crown Iron Works Co., Roseville www.crowniron.com
DCM Tech Inc., Winona www.dcm-tech.com
Great Plains Processing, Luverne www.gpp-co.com
Ralco Nutrition Inc., Marshall www.ralcoagriculture.com
Top Tool Co., Blaine www.toptool.com
The following companies were named winners of the Governor’s Foreign Direct Investment Award: Cirrus Aircraft Corp. of Duluth (Zhuhai, Guangdong, China), Global Kinetics Corp. of Minnetonka (Melbourne, Australia), La Costeña/Faribault Foods in Faribault (Ecatepec, State of Mexico, Mexico), Moventas in Chanhassen (Jyväskylä, Finland), and Sappi Fine Paper North America in Cloquet (Johannesburg, South Africa). All five businesses are owned by foreign parent companies.
HGA Architects and Engineers of Minneapolis was also recognized, receiving a Governor’s Certificate of Commendation for collaborating with the Minnesota Trade Office on many activities. HGA has hosted many diplomatic events over the years, including a gathering with U.S. ambassadors from Asia and an event with more than 70 leaders from Latin America and South America, both in 2015.
Bridging the gap between naturally produced amino acids and those needed for optimum condition helps improve health and performance, publishes gpp-co.com
http://gpp-co.com/) has launched a new product in the company’s lineup.— Research has been ongoing in regard to the roles of various nutritional elements in livestock health and performance. Recent studies place increased emphasis on the significance of amino acids in animal diets, particularly that of pigs. These studies were conducted from three key angles, all of which point to positive results from proprietary amino acid intake. In light of these findings, Briana Conrad of Great Plains Processing (
“At Great Plains Processing, we’re dedicated to being on the cutting edge of the feed industry,” said Conrad, “and we cover the full spectrum of feed processing needs. We have the facilities and expertise to produce both standard and custom liquid and dry blends. Our team continuously incorporates new developments into our processes and brings new ideas to our industry. Our latest product, GP Pro Plus is a high-quality nutritional supplement designed to deliver vital proteins and trace minerals as part of a balanced diet.”
Reports indicate amino acids are critical factors in development on the cellular level as well as sources of energy for proper organ function. They are also crucial to muscle growth and maintenance. As vital elements in metabolism, amino acids aid in breaking down other nutrients and distributing them throughout the body as needed. They likewise play a role in nutrient absorption during digestion.
Studies have shown links between amino acid deficiencies and weakened immunity. Insufficient amounts of lysine and other AA’s have been deemed particularly detrimental among young pigs from six to 12 weeks of age as well as those having been exposed to illnesses. Lastly, AA’s are believed to reduce the environmental impact of pigs’ waste by lowering nitrogen content. While 22 amino acids are vital to health and proper growth, pigs are only able to produce 10 of them naturally; those remaining 12 must be gleaned from food and supplements.
Further details about GP Pro+ along with Great Plains Processing’s other products and services are available via www.gpp-co.com.
Concluded Conrad, “GP Pro+ contains a range of key nutrients, including digestible sources of peptides, amino acids and trace minerals. When incorporated into a balanced diet, it drives feed intake, leading to optimal growth, condition and health. We invite anyone interested to view the results of our field trials on our website or contact us for more information. Quality, safety and innovation are our top priorities, and this latest product in our lineup carries on our commitment to these values.”
About Great Plains Processing:
Established in 2000, Great Plains Processing has grown to become a global leader in custom spray drying and blending for the feed industry. The company’s services expand beyond manufacturing to include sales, distribution, logistics and warehousing.
Name: Briana Conrad
Organization: Great Plains Processing
Phone: (507) 283-4421
For more information, please visit http://gpp-co.com/
Release ID: 180324
Dave Dickson Memorial Golf Classic
Great Plains Processing will be fielding a team again at the 2017 event
.The date for this upcoming year is May 17 at University Ridge Golf Course in Madison, Wisconsin. The scramble format provides a fun environment for all skill levels so please join us and hopefully we can get together this upcoming May.
The Dave Dickson Memorial Golf Classic supports the University of Wisconsin – Madison dairy science department’s undergraduate student scholarship program. All proceeds go directly to the program to develop students growth and learning in the industry.
Number of certified organic farms up 13%
The U.S. Department of Agriculture announced new data indicating that the organic industry continues to expand domestically and globally, with 24,650 certified organic operations in the U.S. and 37,032 around the world.
The 2016 count of U.S. certified organic farms and businesses reflects a 13% increase between the end of 2015 and 2016, continuing the trend of double-digit growth in the organic sector. The number of certified operations has increased since the count began in 2002, and this is the highest growth rate since 2008.
Organic certification is an “opt-in” voluntary standard that is managed through a public/private partnership. USDA accredits and oversees approximately 80 businesses and state governments that directly certify organic farms and businesses. USDA provides a number of educational resources to help organic producers access this growing market. These include interactive videos that help candidate farmers understand how to get and maintain organic certification and fact sheets that explain the value proposition of organic certification and outline the standards in a clear manner.
The complete list of certified organic farms and business is available through the Organic Integrity Database of certified operations maintained by USDA-accredited certifying agents. Launched in 2015, the database discourages fraud by providing more accurate and timely information about operations certified to use the USDA organic seal. The database also supports supply chain connections between buyers and sellers of organic goods.
Laura Batcha, chief executive officer and executive director of the Organic Trade Assn., said the group “is thrilled and not surprised to see the strong growth in the number of certified organic operations in the United States and worldwide.” Organic certifiers reported record numbers of new applicants in 2016, the association added.
“That said, there are still significant gaps in the domestic production of feed grains. Achieving success in closing this gap will require dedicated attention and a long-term strategy,” Batcha said in an email statement to Feedstuffs.
Perdue’s confirmation set for April 24
Several Senate Democrats were reported to have placed a procedural hold on advancing the nomination due to some concerns, including Perdue’s stance on trade with Cuba.
The scheduled vote comes after the Senate Agriculture Committee held a confirmation hearing on his nomination on March 23 and held a vote out of committee on March 30.
A coalition of 16 agricultural organizations, led by the National Association of Wheat Growers (NAWG), sent a letter to Senate leaders urging them to bring up Perdue’s vote as quickly as possible. Despite the push from the agriculture industry to confirm Perdue the first week of April, the Senate will vote after its two-week recess on April 24.
“NAWG is pleased that leader McConnell has taken this important step and has set a firm date for a confirmation vote. The (U.S.) Department of Agriculture has been without a confirmed secretary for over two months,” NAWG said in its April 6 newsletter.
During the week, the Senate has been debating the nomination of Judge Neil Gorsuch to fill the vacant seat on the U.S. Supreme Court, which has consumed most of the floor time for the week. Additionally, the Senate Finance Committee was slated to hold a vote Thursday on the nomination of Robert Lighthizer to serve as the U.S. Trade Representative, but the committee vote was unable to move forward.
In their letter, the agricultural groups noted that USDA “has been without political leadership for over two months, longer than nearly every other Cabinet-level agency. The list of key domestic and international issues that need to be addressed by the secretary and his team is long and growing, particularly given the troubling economic conditions in rural America. In addition, it is important to U.S. farmers and ranchers that USDA be at the table as the Administration considers recommendations on (fiscal year) 2017 appropriations and on the (fiscal year) 2018 budget,” the letter said.
The Senate and House both will have two weeks of recess before they are back in session on April 24. They return with an April 28 deadline looming to pass a funding bill for the remainder of fiscal 2017 before the expiration of the current continuing resolution that’s in place.