Swine Grist
A PERIODIC NEWSLETTER PRODUCED BY GRAND VALLEY FORTIFIERS VOLUME 22, ISSUE 3 | FALL 2020
Dear Friends, While we faced significant challenges living with COVID-19 precautions and low pork prices this summer we were blessed with a summer of warm, beautiful weather. Some parts of Ontario (including where I live in Brant County) dealt with very dry conditions for the month of August. We know there are areas that were hit much harder with drought conditions and so we’re thankful for those who did receive rain in time. As we move into fall, we pray all producers will enjoy a safe and productive harvest. Yesterday we were reminded of how quickly an accident can happen as a farmer was killed while bringing his soyabeans into a local grain elevator. Please take time to operate safely and carefully this fall as all life is precious. Ian has written a very interesting article considering the macro view of pork prices and what could be done to modify our pricing mechanism. We thank Dr. Greg Wideman of Southwest Vets for his PRRS update and Gerry Friesen for his article on mental health on the farm and the importance of taking that seriously. We hope you enjoy this issue of the Grand Valley Swine Grist and have a safe and successful fall harvest. Sincerely, Jim Ross, Founder & Chairman
CANADIAN HOG PRICING SEPTEMBER 2020
by: IAN ROSS President & CEO, Grand Valley Fortifiers
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ith the lackluster and sometimes abysmal prices that Canadian pork producers have experienced over the past two years, the topic of live hog pricing methodologies has resurfaced in earnest. Certainly, this important topic comes to the fore every time there are non-cyclical, protracted times of low pork prices. Once pork prices recover to long term average prices or higher, the pricing methodology topic typically falls out of favour as producers refocus on production volume and efficiency gains to maximize their profits in “good times”. With the view that one should never waste a good crisis to make significant and often difficult change and recognizing that numerous fundamentals have shifted over the past five years, we believe the time is now to agree on new ways to price Canadian hogs for the long term benefit of producers, packers and marketers of pork. As the industry re-approaches this contentious and complicated topic, producers and packers need to set aside the historical malaise of distrust, displeasure and even antagonism that has existed and embrace the reality that everyone at the boardroom table are business people that need each other to have a profitable and financially sustainable future for the long term. Certainly, in the Prairies, where most federal packing plants have been functioning at around 70% capacity for at least a decade, the shortage of hogs has curtailed profits, additional investment and the seizing of expanding, profitable pork marketing opportunities. The embracing of multi-site pork production systems in the 1990s, allegedly for production efficiency gains, was also driven by the inconsistency of supply of hogs to packers and this inconsistency of supply has encouraged a great deal of integration to occur in the North American pork industry. GRAND VALLEY FORTIFIERS PO Box 726 Cambridge ON N1R 5W6 1-800-567-4400 grandvalley.com
The irony of the Prairie province situation is that the apparent hog shortage vis a vis the slaughter and processing capacity has not translated into higher prices for this region’s hog producers. “Producers in Saskatchewan and Alberta tend to receive the lowest price among Canadian provinces. Currently, there is high level of dissatisfaction with the price discovery process among Western Canadian producers, as producers are perceiving that packers are consistently making profitable margins on hogs, while feeling that these are not being shared fairly with them based on their reading of the consistent negative price differential with Eastern provinces. All available market information received by hog producers in Western Canada point to a rather one-sided price discovery system benefiting packers. This translates into an unwillingness to invest and expand production, even in the Hutterite colonies, which are among the lowest-cost producers in North America” (Gira, 2019, p.13). And so, the Prairie province hog shortage continues. More recently, some western packers are offering low interest or interest free loans to producers and colonies, encouraging them to invest in new, larger barns to expand production on the condition that they sign 10 – 15 year supply agreements using similar hog pricing mechanisms that they have employed for decades. On the other side of the board room table, it is fair to say that the primary producers of pork have not shared in an equitable percentage of the value of the final products that are sold both domestically and internationally. And this reality is worsening. “Over the last five years, the packing sector has been capturing a larger share of pork value in the US (Gira, 2019).”There has been huge consolidation in the Canadian livestock industry (even in the supply managed sector) with thousands of farmers getting out of meat and milk production over the last three decades. Family farms are getting much larger (and multi-site) but with the consolidation of the packing and retail industry, these much larger farms are still not large enough to effectively negotiate supply agreements individually and yet, with the loss of the provincial marketing boards’ mandates this is exactly what independent pork producers are asked to engage in. And so, individual producers
Ian Ross, President | Jim Ross, Chairman | David Ross, VP & CMO Dr. Martin Clunies | Bruce Schumann | Adam Totafurno, Monogastric Nutritionists Michael Peckover, Publisher
have been forced to rely on formula prices and USA based metrics to discover a price for their hogs – pricing mechanisms, metrics and formulae that over the last five years have less and less relevance to domestic and international value of the pork that they produce on their farms. In the midst of all of the inequity of producer margins, Ontario producers had a wakeup call in 2014 when Quality Meat Packers fell into bankruptcy and overnight, the province lost 35,000 weekly shackle spaces. This wakeup call was repeated in 2020 with the temporary shuttering of and capacity reductions of numerous North American meat packing plants due to COVID 19 cases within processing plant staff. The fact of the matter is that producers need functional, efficient, expanding and, yes, profitable meat packing plants and meat packing plants need producers to efficiently produce quality hogs that provide pork that meet or exceed the expectations of domestic and international markets, ideally with attributes that differentiate this pork from competitive (often US) commodity pork. Finally, meat companies need to effectively market Canadian pork both in North America and overseas, successfully seizing markets that increase the value of the product. Certainly, the expansion of sales of Canadian pork in Japan is a success story in this regard. On the topic of live hog pricing, there has been a great deal of discussion about the incorporation of the USDA cut out value into a pricing formula. “In the meantime, about a third of the hogs may be sold under a contract whose formula has a cut out component. More and more contracts have a cut out component”(Gira, 2019). Certainly, under the new provincial government mandated formula, Quebec producers have been experiencing higher prices due to the incorporation of a cut out value component. “Ideally, the cut out price reference must reflect – as much as possible – the markets of Canadian pork packers. There is no existing official cut out model for Canadian pork nor any published cut out price. In the absence of a Canadian pork cut out price $380 in the foreseeable future, a US cut out price reference should $330 be used, considering that US $280 packers are direct competitors of Canadian packers on all their $230 markets, both domestic and $180 foreign, and assuming there are $130 no significant differences in cuts between US and Canada. $80 2-Jan 6-Feb 5-Mar 2-Apr USDA cut out prices cover the sales of US pork in the US but also sales in Canada and Mexico, so they are really a North American price. The cut out price for the carcass does not account for packaging, and labour costs incurred by pork packers, nor does it account for by-product revenues. Consequently, an adjustment is needed to recognize that meat packers must cover operational costs (and achieve profits). As a result, setting the share of the cut out price going to producers could be done by relying on data from the US, which supports a 90% - 95% share (assuming operating costs of $15 - $25/head and a drop value of $5/head). (Gira, 2019, p.17-18).“ We believe that simply moving from a US based live hog reference price (CME, Western Corn belt, etc.) to a USDA cut out reference price is short sighted. With foreign exchange rate risks, and the impacts of USA based domestic expansion, trade wars, disease and an overweighting of US pork in certain markets, it won’t be long before the USDA cut out value is misaligned with the value of Canadian pork, especially in high value markets like Japan. Already, we are told that the (growing) volume of six piece cut pork destined for China is not included in the USDA cut out value because this is not a traditional N.A. based carcass cut approach. Any warming of the new cold war between USA and China coupled with an outbreak of ASF in Germany, and
Spain will see US six piece cut carcass export volume grow exponentially. In this scenario, the positive impact on demand and value of US pork may not be reflected appropriately in the published USDA cut out value. If we could witness the breakdown of the historical producer/packer relationship antagonism and usher in a new era of collaboration and transparency, is it inconceivable that an equitable percentage share of the hog meat value for producers could be solidified nationally? In our minds, this percentage share would be applied to hog pricing packing plant by packing plant across the country. Thereby, the packing plants that are able to produce the best pork products and market them most successfully would be assured of hog supply and they would also be able to direct producers to produce the type of hogs with the right attributes for the markets that they are focused upon. In this scenario, would we require government regulation to “force” packers to truthfully report the wholesale meat values achieved through their plants or simply establish a national equitable percentage share for producers? If we have any hope of moving live hog pricing in the directions ONTARIO CKG DW that are being discussed in this PRODUCER BREAKEVEN article and in many boardrooms USA - CAD/KG and farm kitchens across the QUEBEC CKG DW country, we must, as an industry move from seeing packers and yes, even neighbouring pork producers as competitors or even enemies. 7-May 4-Jun 2-Jul 6-Aug 3-Sep In recent years, much has been written about collaboration across industries, the impact of globalization, consolidation of industries, abundance vs. scarcity thinking, finite thinking vs. infinite thinking. Simon Sinek discusses these topics in his 2019 book, The Infinite Game. “To succeed in the Infinite Game of business we have to stop thinking about who wins or who’s the best and start thinking about how to build organizations (and industries) that are strong enough and healthy enough to stay in the game for many generations to come. The benefits of which, ironically, often make companies (and industries) stronger in the near term also (Sinek, 2019, p.7).” Recognizing that almost 70% of Canadian pork is exported – we are an extremely export dependent industry. The impact of geo-political, and macro economic forces very much outside of our control are felt by Canadian producers and packers alike. More than ever before, we need to see collaboration between producers and packers, recognizing the inherent need for each other in order for each to have a profitable and sustainable future for generations to come. n Groupe Ageco Gira, “Made in Canada” Hog Price, December 2019 Simon Sinek, “The Infinite Game”, 2019
Swine Grist SOUTH WEST VETS PRRS OVERVIEW, AUGUST 2020
by: DR. GREG WIDEMAN Veterinarian, Southwest Ontario Veterinary Services
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he year 2020 has been memorable for many reasons, starting with the COVID-19 impact on our lives and its disruption to slaughter capacity, demand and distribution in the food system and its resulting impacts to the live hog price. In addition, we have been experiencing a very challenging year with PRRS infection in the Ontario pig industry. To date in 2020 South West Vets have diagnosed over 80 new cases of PRRS; this is already significantly higher than the 69 cases diagnosed in all of 2019 and 73 diagnosed in 2018. Two worrying trends are evident: first, there are several more virulent new strains of PRRS spreading in the province; second, the risk period for infection has spread into the summer months of 2020. For the past 5 years the most common strain of PRRS in Ontario has been identified by the RFLP ‘1-1-1’, which is short-form for a specific, repeatable section of the viruses’ genetic code. Many farms who were infected with # of Breaks of Most Common this strain saw mild signs. Not so with PRRS Strains Identified in 2020 the three strains currently increasing in prevalence throughout Ontario - ‘1-30-1’, ‘1-8-4’ and ‘1-3-1’. With these strains, weaned pig output can fall to zero for a number of weeks during the outbreak; sow mortality has been observed; and weaned pigs are extremely challenging to raise, with high nursery and finisher losses and higher medication costs. In addition, PRRS infection of sow herds has been so disruptive during this troubled economic time in the industry that some herds have implemented a depop/repop when their herd health status changed, as it made the most sense long term financially.
How are these strains spreading?
We believe that the #1 way these strains of PRRS have spread is through aerosol transmission. Many cases of neighbourhood spread are suspected given sites in proximity are breaking one after the other. This supports the demonstrated value of air filtration systems being seen in France and now in the US Midwest. Movement of infected pigs continues to be another important source of infection. New live animals should always be given an effective quarantine period prior to entry, and testing efforts should be reviewed to ensure health status is known prior to movement. We believe visitors to barns, especially those bringing equipment and tools, need to be carefully supervised. We recommend that the site owner or manager make it a priority to meet with visitors prior to them entering the site to review biosecurity requirements and identify any risks for infection that may occur.
What is South West Vets doing to help?
• We are tracking every case of PRRS, looking for patterns of risk and biosecurity gaps. • Internally, we are holding routine PRRS case rounds involving all our vets and support staff to learn from cases and develop response and prevention plans. • We are seeking and testing novel treatments for PRRS and reviewing vaccination strategies for every farm to minimize risk.
What can producers do to protect their herds?
• Review all aspects of sow herd biosecurity especially entrance protocols for people, equipment, and live animals. • Consider transport and deadstock protocols. • Look for opportunities to improve live gilt quarantine/isolation. • Review PRRS immunization protocols for the herd. • When planning or building new sow facilities, consider neighbourhood risk and air filtration. n
THE ADDITION OF A TRANSITION FEED
by: VICTORIA SEIP Production Improvement Specialist, GVF
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hen developing a nursery pig feeding program, it is essential to keep in mind the developing digestive physiology of the piglet and its ability to utilize higher levels of cereal grains and soybean meal found in the later stage nursery feeds. When they finish what is generally a one phase transition feed budget the next step is a last stage nursery feed. A transition feed is defined as a feed that helps the pig adapt to diets of lower digestibility; fed following a starter pellet post-weaning generally at a 3-6 kg /pig feeding rate. If pigs are moved too quickly onto a lower inclusion, later stage premix (such as a BioForce™ Piglet 32), this can create a gap between what the piglet needs and can digest versus what it is being fed. If pigs are moved too quickly from a diet of high digestibility to one of a low digestibility, this can have an adverse effect on gut health of the pig resulting in reduced performance. The purpose of this trial was to investigate feeding an additional transition feed (BioForce™ 100) following the BioForce™ 180 to determine if this additional phase would help improve performance when moved onto the BioForce™ Piglet 32. Five-hundred and eleven pigs were weaned at ~24 days of age weighing 7.51 kg. Six rooms were used in this trial with two pens per room, one pen on feeding Program 1 and the other on Program 2. The two different feed programs can be seen in Figure 1. Figure 1: Two Different Side by Side Feeding Programs Feed Respond™ CT BioForce™ 180 CT BioForce™ 100 CT BioForce™ Piglet 32 CT
Program 1 (kg/pig) 1 4 — Balance
Program 2 (kg/pig) 1 4 3 Balance
Figure 2: Trial Results for 49 Days in the Nursery Feed # Pigs Start # Pigs End # of Days Start Weight (kg) 14 Day Weight (kg) 49 Day Weight (kg) Overall Weight Gain (kg) Livability (%) 14 Day ADG (g/d) 14 Day FCR 14 Day Feed Cost/Pig ($) 14 Day Cost/Kg Gain ($) 49 Day ADG (g/d)
Program 1 256 253 49 7.5 11.73 34.45 26.95 98.8 298 1.14 4.30 1.03 547
Program 2 255 249 49 7.47 11.44 34.93 27.46 97.6 283 1.1 3.97 1.00 557
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It took 6 days for most pens to consume their 1 kg of Respond™ starter pellet. In this trial, pigs were weighed at weaning, day 14 and at the end of the nursery. Feed per pen was monitored from the day of weaning up until all pigs had finished their transition feed (~ day 18). The results from these two feed budgets can be seen in Figure 2. Our hypothesis was that the pigs fed with the additional transition phase (2 kg more transition feed overall) would have more efficient and improved performance at the end of the 7 weeks in the nursery. This trial showed that the pigs fed the additional phase had an improved feed conversion two weeks into the nursery along with improved performance at the end. The value of gain with the extra 0.5 kg of weight gain for the pigs fed Program 2 can have an impact on overall days to market and the value of feeder pig leaving the nursery. These pigs performed very well throughout and were above gain targets at both 14 days and 49 days. In order to customize your feeding program to help your nursery pigs’ efficient transition onto their late stage nursery diets, contact your Swine Specialist to determine the best feeding program for your nursery. n
IMPORTANCE OF MENTAL HEALTH
by: GERRY FRIESEN Signature Mediation
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hen I was young, growing up on a poultry and grain farm, farming was relatively easy. But over time farming has become a complicated business. It is no wonder that a survey of farmers done by Dr. Andrea Bitton-Jones showed that year over year farmers are feeling more stress. In “normal” times, and I am not sure what normal is anymore, hog and cattle producers deal with fluctuating markets, increased costs and thin margins. In dairy and poultry, production is based on demand and as that fluctuates our production fluctuates with that demand. Government policy has an effect on quotas, trade agreements impact our export markets and trade disputes reduce revenues. Then just about when you think you have it figured out along comes Covid 19 and lays waste to our best made plans. The marketplace for our product changes as Consumer trends change. Demand goes down. Processing plants are often in jeopardy as workers are at risk for the virus. The entire food chain has to adapt with farmers being the first to make changes. There is an irony in the fact that producers produce enough product to feed so many but often have a tough time feeding themselves. In spite of these demands on producers some things never change. Even when demand for our product decreases or low market prices happen our expenses stay the same. Payments to banks and creditors still are due. It could be argued that our work intensifies as we struggle to increase efficiencies, as we utilize any and all risk management tools to mitigate losses. To a degree we thrive in challenges thrown our way but it does take its toll. As stress increases our bodies and minds become weary. We find it difficult to function. Our behaviours have a tendency to change. Our expectations for ourselves increase. Our expectations for others increase. And as that happens, relationships suffer and our business suffers. I often talk about the never ending decisions that farmers have to make. There are so many choices available that decision making can become an arduous task. When the business is running smoothly, making decisions can be enjoyable. However when our business is experiencing challenges, stress increases and the decisions that have to be made are not as simple and, at times, can be business and life changers. Research has shown that in times of stress, individuals are more likely to overlook certain key information and rather make decisions based on past experience which, at the time, were the right ones. So as stress consumes us we have a tendency to make decisions for all the wrong reasons which leads to further stress. We may capitulate, making hasty decisions because we just can’t stand worrying about it anymore. We
go into denial, refusing to accept that some unpalatable trade deal or consumer demand will just have to be swallowed. We become obsessed with issues and can’t stop thinking about them. There is potential to become paralyzed, being unable to make any decisions because each one seems too fraught with danger. And, ultimately, we become desperate, looking for that magic bullet or miracle to get us out of our fix. First, for your business, it is important to find someone you can confide in. Our brains have the innate ability to send our thoughts in a myriad of directions often times completely out of control. There is a fine line between caring and worrying and sometimes that line becomes blurry. Then as we cross back and forth between what is real and what is perceived we become confused, a confusion marked by ideas and thoughts that are not our reality. As our stressors increase, it is important to make business decisions on the best, available information possible. That requires a deliberate effort to be aware of your situation and to have the ability to make rational choices for your business. Having a well thought through, clear business plan helps in moving the business forward. A qualified business advisor can help you talk through the challenges, provide ideas on meeting your challenges, and guide you as you formulate the future of your business. That way you can rest assured you made decisions based on good information which in itself will provide for some peace of mind. On a personal level it is also important to find someone you can talk to. Verbalizing our thoughts helps in sorting through the chaff and being able to focus on reality. Even if the listener does not provide advice but rather normalizes and validates your experience you will feel a certain relief. On top of that the chances are good that they are having similar experiences and through shared experience we have a better ability to cope. Always remember, you are not alone. The key to all of this is self-awareness. Be proactive when you feel stressed about life and work. Farm Credit Canada has a publication called Rooted In Strength which provides information and tools to better cope with stress. DoMoreAg also provides innumerable resources. I encourage you to check out these resources mentioned by searching them on-line. Be kind to yourself. There is hope and there is relief. n
Thought for the Day “For God has not given us a spirit of fearfulness but one of power, love and sound judgement.” - 2 Tim 1:7 “…There is no reason to live in fear when you have the mighty presence of the Holy Spirit within you. Fear will enslave you, but Christ has come to set you free. Ask God to free you from any fear you are experiencing and to open your eyes…” - An exerpt from Experiencing God Day by Day devotional by Henry T. Blackaby & Richard Blackaby