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Pork Commentary: National Pork Industry Conference Report

by 5m Editor
21 July 2010, at 10:35am

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

Last week we attended the National Pork Industry Conference (NPIC), which was held at the Kalhari Resort, Wisconsin Dells, Wisconsin. Genesus was a sponsor, here are our observations:

  • The NPIC had its largest attendance in its multi – year industry. This year’s location was closer to attend for Mid – West participants than the Lake of the Ozarks where it had been held prior years. Also, Wisconsin Dells is very family friendly as it bills itself as the Water park capital of the Mid – West. We would not argue that point, as there seemed to be water parks everywhere. The conference will be held in Wisconsin Dells next year.

  • Larry Graham and Glen Shields drove the conference professionally and on time with strong support from their wives. Organising NPIC is their business and it was run very business-like.

  • There were five speakers whose main focus was the threat of Animal Rights activists. They were all good speakers – they all gave the same message. As an industry we are being threatened by activists such as the Humane Society of the United States and PETA. We have to fight them and there is little room for negotiation. The activists raise money from continual confrontation. The activists like HSUS raise $120 million a year. The principals at the top make good money doing what they believe. Formidable foes.

  • One of the most effective counter – balances was the choose 2 choose video that we were shown. It is aggressive as it highlights our belief in freedom and the choice of consumers to choose what they eat. Go to www.choose2choose.com to watch the video. To sell and defend an idea you can’t play defense all the time – a positive message that takes us from defense against the HSUS or PETA is more effective than playing defense all the time. You never sell a product sitting waiting for your competition to define or out hustle you.

  • Another interesting point was that in a culture where pets are treated like members of the family it is easier for HSUS and PETA to get the point across that gestation stalls are bad. Their approach is we just want to give pigs some freedom. Its incremental erosion of our production system. They win the argument when we try to defend. They are winning, California in a vote just recently, and now the alleged leaders of Ohio Pork Industry have made a pact with the devil to agree to a timeline on the elimination of gestational crates. No fight. As Neville Chamberlain said ‘We will have Peace in our time.’ As he negotiated away the Sudenland in 1938. We know that was not the solution. ‘An appeaser is one who feeds a crocodile hoping it will eat him last.’ Winston Churchill.

  • The greatest advantage we have is Americans love meat. They eat more per capita than they have in history. People don’t want to give it up. We can’t let a small vocal minority disrupt the food chain that has evolved over 2 millenniums. Unnatural and Un American. Choose 2 choose look at it. Offence not defense.

Earlier we pointed out five speakers on Animal Rights. Too many – they were all good but it was overkill. None of the five to the best of our knowledge own livestock. They get paid to speak. They are good at it. They too like HSUS and PETA get money from the issue. I doubt if any of them would have paid their own way to the NPIC.

Bob Toubert of New Horizon Farms, a producer with 11,000 sows farrow to finish in Southern Minnesota gave an interesting talk on Risk Management. It was detailed and you could sense the effort, intelligence, and dedication that has gone into the hedge programme for Hogs and Feed over the last seven years. We were impressed. What we were surprised with was with all the effort and obvious commitment the seven-year hedge programme generated $3.00 per market hog more profit than cash spot hogs and feed. Not that $3.00 is something to sneeze at but we are not sure $3.00 per head hedge return is a panacea for survival as we hear some financial institutions proclaim. At the end of the day the real winners are the brokers doing the trades. Not to be cavalier but for many, adjusting feeders can get $3.00 a head more money over seven years.

  • Mark Greenwood, a banker with Ag – Star spoke. Mark pointed out that Ag – Star has clients that are quite financially strong who made money over the last low period. Break even for average producers are $65 - $67 lean per pound. Some of Ag – Stars producers made $18.00 per head since 1 January with their break evens down to 62 – 64 cents per pound lean. Early weans cost of production is under $32.00 with some producers in the high 20’s. The producers with the highest profit margins are the ones with lower feed costs, lower mortality, better A.D.G. and lower feed conversions. High health pays. He explained sow units in today’s market in a bio – secure area is $800 per sow, others that are non bio – secure are $400 per sow.

  • Mark Greenwood sees big challenges for the South – East producers (North Carolina) with corn 80 cents a bushel higher than the Mid West. He believes the model for the future will be farrow to finish with bankers giving little support for farrow to wean producers. That contract growers have “lived off the producer’s too long.” There will be greater risk and lower returns for contract growers going forward. He sees little value in nurseries in todays wean to finish models and sees little support from bankers for nurseries.

  • Steve Meyer an economist spoke at NPIC. Producers making money. There has been liquidation and little sign of expansion. Chicken production is up 3 per cent year to date. Beef production is up year to date. Pork production is down. Steve Meyer’s future price prediction was current lean future prices for each month going forward. It must have taken a lot of analysis to get to those numbers.

Summary

The NPIC conference was worth the time and money. Producer’s attitudes are much better than a year ago (as if they wouldn’t be). What bothers us as much as it did last year was speaker upon speaker fear mongering – what is wrong with our industry? With almost no speakers having one personal dollar invested in it. Last year several speakers spoke on the need for massive sow liquidation to save us. This year animal welfare. There appears to be a need for balance. Where is the discussion on what is good about our industry? What about driving demand? How to grow ourselves? We are being inward, playing defense. We were recently in Brazil. We were told in the next ten years Brazil could add one million sows. We found a can do attitude. One of offense not navel gazing. The heart and soul of American producers is positive. Our perceived leadership defensive. We have travelled the world. Seen each and every major pork producing country. There is no better place to produce pork now and in the future. Our biggest handicap is a shaken confidence.

Quote: ‘We never look back. We just figure there is so much to look forward to that there is no sense thinking of what we might have done. It just doesn’t make any difference. You can only live life forward.’ Warren Buffet – The Tao of Warren Buffet.