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ThePigSite Newsletter - 3 June 2013

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ThePigSite
Monday 3rd June 2013.
Jackie Linden - ThePigSite Senior Editor

Jackie Linden
Senior Editor


Shuanghui-Smithfield Agreement Grabs Industry Attention

Shuanghui International of China and Smithfield Foods have agreed to a “strategic combination”. The new leading global pork enterprise will have greater access to the large and growing Chinese market and retain world-leading food safety and quality control standards.

Smithfield Foods, Inc. and Shuanghui International Holdings Limited last week announced that they have entered into a definitive merger agreement that values Smithfield at approximately US$7.1 billion, including the assumption of Smithfield's net debt.

With its base in the US, Smithfield Foods is the world's leading vertically integrated pork processor and hog producer.

Shuanghui International is the majority shareholder of Henan Shuanghui Investment & Development Co., which is China's largest meat processing enterprise and China's largest publicly traded meat products company as measured by market capitalisation.

Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Shuanghui will acquire all of the outstanding shares of Smithfield for US$34.00 per share in cash.

C. Larry Pope, president and chief executive officer of Smithfield, commented that it is a great transaction for Smithfield stakeholders, American farmers and US agriculture. It will be business as usual - only better - at Smithfield, he added.

Shuanghui chairman, Wan Long, commented: "The acquisition provides Smithfield the opportunity to expand its offering of products to China through Shuanghui's distribution network. Shuanghui will gain access to high-quality, competitively-priced and safe US products, as well as Smithfield's best practices and operational expertise. "

Commenting on the announcement, one leading market analyst said that the full impact on the US pork industry of the merger is not yet known.

Purdue Extension agricultural economist, Chris Hurt, stressed that the agreement still has to be approved in both countries and he warned that the merger is not without risk. Large corporations do not always adapt to rapidly changing global markets and there may be a negative reaction by US producers and consumers, he said. Furthermore, the differences in social and political policies could prevent the merger being finalised.

Other analysts have indicated the deal could be a significant development for US exports. Steve Meyer and Len Steiner of CME Group report this could be the largest Chinese purchase of a US company to date; one estimate puts the value of Smithfield Foods at US$7.1 billion.

They point out that Shuanghui intends to leave Smithfield’s management in place and has no plans to make changes in Smithfield’s operations, while the latter’s CEO, Larry Pope, has said that the company would not close any facilities and will leave all employee agreements in place.

Finally, Meyer and Steiner say that while Smithfield is the top US packer and pig producer, these a drop in the ocean compared to China’s pig numbers and pork production and consumption.

Turning to other news, Finnish meat group, HKScan, has acquired Swedish Nordic Genetics, giving the company exclusive rights to Nordic Genetics' NG Hampshire genetics, which form the basis for the well-known Swedish pork, Scan Piggham.

Russian meat processor, Cherkizovo Group, has reported a net loss of US$600,000 despite an eight per cent increase in sales for the first quarter of 2013 compared to the same period last year.

CEO Sergei Mikhailov, explained that it was an extremely challenging period for all meat manufacturers in Russia, with grain prices reaching historic highs in February while pork prices declined throughout the quarter.

“Even the most efficient industrial pork manufacturers, including Cherkizovo, were forced to sell hogs below production cost,” he said.

 


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This Week's Articles and Analysis

Starter Pig Amino Acid Requirements to Gut Health Concerns
Formulation of starter diets for weaned piglets to lower-than-usual lysine decreases the requirement for expensive protein sources while having minimal effect on performance but it is crucial to pay attention to the levels of other amino acids relative to lysine, according to the K-State Swine Nutrition team of Mike Tokach, Bob Goodband, Joel deRouchey, Steve Dritz and Jim Nelssen. They were addressing the 2013 Kansas Swine Profitability Conference.

Gilt Management: Service to Farrowing
Gilt performance is a key element towards the productivity of the herd with between 20 and 25 per cent of production from gilts at any time. Investing in their future is essential, according to number 33 in the 'Action for Productivity' series from BPEX.

Investigation and Characterisation of Pathogenic and Molecular Differences in Atypical Brachyspira Clinical Isolates
Polymerase chain reaction assays (PCR) have failed to identify some isolates (Brachyspira spp.) causing swine dysentery (SD) and Dr Eric Burrough of Iowa State University is caaling for a more consistent and accurate test than PCRs to confirm all potential clinical SD diagnoses.

Investigation of Viral Diseases of Swine in the Republic of Haiti
Following a field and laboratory investigations, a multi-national group of researchers has assessed the risk of introducing a whole range of viral diseases from the Republic of Haiti into the North American pig population as high.

Danish Pig Research Centre Annual Report 2012: Nutrition 3
The 2012 Annual Report of Denmark's Pig Research Centre describes the latest progress on sow feeding, including extra feed in pregnancy, feed conversion rate and ketosis.

Application of Animal Welfare Standards in Intensive Production Systems Using the Assessment Protocols of Welfare Quality
The Welfare Quality assessment system is a reliable and practical tool for the evaluation of the welfare status of finishing pigs in an intensive system, according to new research from Germany.

Investigating and Resolving Fly Complaints
A eight-step process of resolving complaints is outlined by the UK's Environment Agency in its publication 'Fly management: how to comply with your environmental permit'.

Epidemiology and Control of Porcine Epidemic Diarrhoea Virus (PEDV)
Useful facts about the epidemiology and control of Porcine Epidemic Diarrhoea Virus (PEDV) from the Iowa Pork Industry Center.

Company News

World Pork Expo Expects 20,000 Visitors
US - Nearly 20,000 pork producers and industry representatives from 39 countries will be in Des Moines, 5-7 June, for the 2013 World Pork Expo.
Zoetis Launches Online Ordering Site
US - Finding time in a hectic veterinary practice to order animal health products from Zoetis just became faster and easier.
Zoetis to File Registration Statement; Comments on Pfizer’s Split-off Plans
US - Zoetis Inc. announced it intends to file a Registration Statement on Form S-4 with the Securities and Exchange Commission (SEC) in connection with the proposed exchange offer announced by Pfizer Inc. As part of the offer, Pfizer shareholders will be able to exchange all, some or none of their shares of Pfizer common stock for shares of Zoetis common stock.
Biomin Releases Latest Results of Mycotoxin Survey
US - Since 2005, Biomin has been conducting extensive studies documenting the occurrence of mycotoxins worldwide. The Biomin Mycotoxin Survey Program 2012 details once again the distribution of mycotoxins according to their region of origin and commodity type.
Market Reports

BPEX Weekly Export Bulletin - Week 22
USDA Agricultural Prices - May 2013
China Wholesale Prices - 31 May 2013
BPEX UK Pig Meat Market Update - June 2013
China Wholesale Prices - 30 May 2013
China Wholesale Prices - 30 May 2013
AHDB Pig Market Weekly - 30 May 2013
China Wholesale Prices - 29 May 2013
China Wholesale Prices - 28 May 2013

Global Pig Industry News

   United States

CME: Outlook for Livestock, Dairy and Poultry Unchanged
Hog Outlook: Shanghui Acquisition Needs Shareholder, Regulatory Approval
CME: Pork Merger Expected to Enhance US Exports to China
Report Highlights Consequences of Intensive Farming Practices
US Agricultural Trade Forecast Down but Still Record
Effects of Merger on US Pork Industry Not Yet Known, Says Hurt
NFU Concerned over COOL Retaliation
National Pork Board to Meet at World Pork Expo
US M-COOL Likely to be Discussed at World Pork Expo
CME: Corn, Soybean Plantings Behind Schedule
Focus Shifts to Soybean Planting Progress
CME: April Beef, Pork, Poultry Production Up Compared to a Year Ago
Saturated Fats Do Not Yield Better Bacon
Little Wiggle Room in Mandatory COOL
Iowa Swine Day 2013 to Address Valuable Production Topics
Hog Outlook: More Pork in Cold Storage in April Than Previous Month
Producers See Financial Gains in Learning about Ventilation Systems

   United Kingdom

Big Abattoirs Not Shouting Loud Enough
High Level Lobby Event Brings CAP Concerns to Fore
NFU Takes #buybritish Message to Millions
Imports 25p a Kilo Cheaper
Harper Adams Launches Scholarship Scheme to Support Pig Industry

   Canada

Draft Pig Code of Practice for Public Comment
Survey Shows Canada Remains Free of PED
Livestock Producers Encouraged to Discuss How Farm Animals are Raised
Fusarium Resistant Wheats Expected to Benefit Prairie Pork Producers
International Rules Must be Followed for World Trade to Work Properly

   Global

Shuanghui's Acquisition Deal Win-win for China, US
US Farmers Attack Smithfield Takeover
FAO/IFIF Feed Manual Published in Arabic
OIE Adopts New Chapters on Animal Health, Welfare
Smithfield and Shuanghui Announce Pork Merger
Farm Animal Diversity Declines as Accelerating Losses Threaten Humanity
Weekly Overview: European Pig Vets Discuss Swine Flu

   China

Chinese Pork and Poultry Problems Drive Beef Demand
China's May Inflation Forecast at 2.5 Per Cent
Local Pig Breeds in Decline in China
Tracking System Keeps Tabs on Livestock

   Russian Federation

Cherkizovo Plans to Increase Grain Harvest
Cherkizovo Reports First Quarter Loss
Pork Commentary: Russia Report

   Taiwan

FMD NEWS: FMD Outbreak in Taiwan Affects Pigs

   Dominican Republic

Dominican Republic in Drive to Become Leading Meat, Eggs Exporter

   Finland

HKScan Acquires Swedish Nordic Genetics

   Netherlands

Calculation of Antibiotic Use on Farms

   Denmark

EPP: Annual Conference Buzzes with Smithfield-Shuanghui Merger News

   Ireland

Minister Acknowledges Parliament’s Engagement on CAP Reform

   European Union

No CAP Deal Could Delay Reform for Years
EU Pig Prices: No Movement in European Slaughter Market

   Switzerland

Call for Sustainable Solutions to Feed the World

   Nepal

Livestock Growth to be Slow but Steady

   Belarus

OIE Reports PRRS Outbreak in Belarus

   Brazil

Brazil: Hog Markets


Events/Promotions

The Drost Project - A Visual Guide to Porcine, Pig Reproduction.
Biomin - Mycotoxins
Novartis Animal Health - Ileitis Guide
European Symposium of Porcine Health Management 2013


Sponsors

Pfizer Animal Health - Draxxin
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Partners

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On-line pig production training courses
ACMC Meidam GP Dam Line Gilt
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