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Agrimarketing : June 2008
44 AgriMarketing ¦ June 2008 COVER STORY SAVING THE LIVESTOCK INDUSTRY by Lynn Henderson, Editorial Director Editor’s note: There is never a dull moment in the livestock industry. In light of the current boom in feed prices, we invited industry leaders to share their thoughts on how their sectors are coping with this new challenge. STATE OF THE CATTLE BUSINESS by Andy Groseta, President, National Cattlemen’s Beef Association (NCBA), Cottonwood, AZ W henever you hear someone talking about this being a “Golden Era” for U.S. agriculture, there’s usually a pork producer nearby who’s saying, “Whoa! Not so fast.” These are tough times for pork producers. Simply put, their input costs have doubled in the past year. With feed representing 65% of the cost of raising a pig, the break- even cost for that pig now exceeds $60 per hundred- weight. That means that during the first quarter of 2008, producers were losing as much as $30 to $50 per animal. As winter finally surrendered to spring, strong exports and improved domestic demand for pork sparked a bit of a rally in the hog market, although not enough of a rally to turn red ink into black. Without the industry’s continuing success in export markets, it could be worse. During February, the equiva- lent of one of every five hogs went to export markets. Total U.S. pork exports during the first quarter were up 41% in volume and 37% in value from the same quarter a year earlier, which was the beginning of a record year in which U.S. pork exports exceeded $3.1 billion. There are signs, however, that producers are beginning to reduce their breeding herds to slow growth. Prior to 2008, the U.S. sow herd grew between 1% and 2%, year-to-year, for 11 consecutive quarters. But compared to a year ago, the number of sows culled from herds was up 5.1% in the first quarter and up 15.3% during the first five weeks of the sec- ond quarter. Producers also appear to be reducing costs by sending slightly lighter animals to market. During the first week in May, the average weight for market hogs in Iowa/Minnesota, the largest hog-produc- tion region, was 264 pounds, four pounds below a year ago. Translated nationally, that’s a reduction of 6.3 million pounds. At the National Pork Board, Pork Checkoff resources are helping to develop value-added strategies so con- sumers will continue to put pork on their tables and in their refrigerators even as prices increase. With help from research underwritten by the Pork Checkoff, U.S. producers already are the world’s most efficient producers. That research on everything from feed efficiencies to better genetics continues. Pork producers represent the best of American agri- culture. They have navigated through difficult passages before and they will find their way through these tough straits. STATE OF THE HOG BUSINESS by Steve Murphy, CEO, National Pork Board, Clive, IA (more on page 47) T here is no question these are challenging times for the nation’s cattle producers, who face record-high oper- ating costs at every turn. Higher costs and slim margins are nothing new to the cattle industry. But it’s upsetting when you have so many factors working against you at once, and government pol- icy just piles on more challenges. Cattlemen can deal with the highs and lows of the grain market, and the nation’s renewable fuels policy certainly isn’t the only cause of higher feedgrain prices. But it is a major contributor, and the one our government has the most control over. So NCBA is working to achieve a more reasonable and balanced approach to renewable fuels that will not put livestock production at such a severe disadvantage. Cat- tlemen support development of alternative fuels as a means of achieving energy independence. However, we shouldn’t be building up one sector of agriculture at the expense of another. But we know these record-high operating costs aren’t going away anytime soon, so cattlemen need to get every dollar possible for each animal. That’s why NCBA is also fight- ing for free, fair, and reliable trade policies that will expand our global markets for U.S. beef. Growing exports is one of the best ways to improve the return we receive for livestock, and our farmers and ranchers can compete with anyone if we are given a fair opportunity. But too often we allow imports into our country duty-free, while allowing our trading partners to maintain outrageously high tariffs. Another key to improving the profitability of cattle pro- ducers is to operate as efficiently as possible. That is why NCBA is an industry leader in producer education pro- grams. We cover everything from chute-side techniques to pasture management to estate planning – all in an effort to improve the bottom line of our members. These programs are especially valuable for our younger members, for whom I have the utmost admiration and respect. Groseta Murphy
July August 2008
Canadian Agribusiness Employer Guide 08