1.yis.u pe>:rk q~a,:r~e:rly

1.YIS.UPe>:rk Q~a,:r~e:rly

Vol. 6, No.2 "Information for an industry on the move!" 2001

Transferring The Family Swine Farm Business to the Next GenerationRoger Betz, SW MI Farm Management Agent

Michigan State University ExtensionAllbusinessesandtheir ownersgo througha normallife Talkto One Anothercycle. Like people, a business has to have a start, go A first critical step for the family members, includingthrougha growthphase, a maturation andmaintenance spouses, is to have open, honest, and continualphaseand an exitingphase. A swine farm business can communications.Manytimesfarnilymemberssimplydooftenbe complicatedbecausethesephasesareoccurring not talk to one another about what their goals are andatthesametimeforthe differentgenerationsandowners howtheymightbe accomplished.involved.Theyoungergenerationistryingto get a start,and the senior generation probably has significantlydifferentand contrasting personal and business goals.Othersiblingsinvolved,or not involved,add additionalcomplicationsand considerations. Obviously,this caneasilyleadto stressfulbusinessandfamilysituations.

Income and estate tax consequences of various businessproperty transfer strategies add to the complexity inachievinga successful business transfer.An advantage forthe buyer may be a disadvantage to the seller and visaversa. A successful inter-generational business transferhas to meet each family member and generations' goalswhile at the same time minimizing the total income andestate taxes paid for the family as a whole. As a result ofthe new tax law signed June 7th,2001 by President Bush,

gift tax and estate tax planning became more c<?mplexandchangesto manyplans shouldbe considered.

Swine farm family members should have a basicunderstandingof these issues to improve the ability tocommunicatewithinthefamilyandtooutsideprofessionalswhomaybe providingassistanceatvariousstages.

The following is a quote from Luke Gentz, FFA Memberfrom S1.Joseph County, Michigan, speaking at the 2001Farm Family Enrichment Conference, sponsored bySuccessful Fanning magazine and Bayer: "] want toshare one thing I've learned from talking to other FFAmembers," he said. "When] ask if they plan tofarm,many say they don't know if their parents want them

to join the business. 'My parents never talk about it, 'they say. ] ask if they talk to their parents about it,and they stry 'No '. So, the kids don't think their parentsare interested, and the parents don't think their kidsare interested Go home and get busy talking to eachother," he urged

With effective communication, family members gain anunderstanding and appreciation for each other's goals andpossible strategies and methods. Family members maydiscover that the personalities and goals are different and(or) finances are such that the likelihood of continuing thebusiness beyond the current generation is not desirable or

I What's Inside ..,

(Continued on page 2)

Transferringthe Family Swine Farm Business to the Next Generation p. 1Farm Medication Plan p. 4Quality Assurance p. 5Farm Medication Plan p. 6Vaccinationand Management Schedule p. 7LivestockWelfare Regulations? The Time is Now! p. 8The Frequency of the Porcine Stress Gene in Texas Show Pigs p. 9

This newsletter is edited by:Ronald Bates

MSU Extenstion Swine Specialist(517-432-1387) [email protected]

and Debbie MillerMSU Office Assistant III

feasible.ThedecisionmaybetomaintainexistingbusinesssizewithJuniorhavingoff-farmemploYmentuntil "dadretires". What are other familymember's thoughtsandaspirations?Dothe childrenwhohave leftthe farmwantto comeback? Whataretheirexpectationson inheritanceissues? Whatwouldmom anddad liketo havehappen?Isthenextgenerationreallyinterestedinafanninglifestyle?It certainlyisusefulforall involvedtohave somelevelofunderstanding on these and other individual familymembers'goals.

Financial Involvement ofYounger GenerationThejuniorgenerationshouldbecomefinanciallyinvolvedearly. There is a heightened awareness, interest, andexperientiallearningwhenyourpersonalfinancial''well-being" is directly affected by management decisions,capitalinvestments,weather,hogprices,andotherfactorsoccurringon thefarm. Juniorwillhavemoreenthusiasmandambitioncriticalto aswinefarmatayoungerage,butmay lose this drive, as he/she gets older and morecomfortable "drawing a salary or working for wages".Juniorshouldbe involvedandmakedecisions,whiletheseniorgenerationis"stillaround"tominimizehighlyriskyandwrongdecisionsthat coulddestroythebusinessand(or)family.

Withprofitable farms and larger estates, spreading theprofitovermoretaxpayersandreducingthe comparablesize of the senior generations' estate can substantiallyreduce income taxes and estate taxes. Commitments,opportunities,andexpectationsaremoreclearlydefmedwhendocumentsaredrawnandsignedindicatingfinancialobligationsandresponsibilities.

Ownership of AssetsThejuniorgenerationprobablydoesnothavethefinancialstrengthto own(buy)ahighpercentageof all assets,butas discussed above, it is important to be significantlyinvolvedfinancially.Theseniorgenerationoftendoesnotwantto giveup controlofthe assetsthat theyhave spenta lifetimeaccumulating,particularlyrealestate.Thefuturesuccessofthebusinessdependsdirectlyonthe "workingassets" including sows, gilts, crop production, feedinventories,andmachinery. Therefore,these "workingassets" are often the first assets to transfer to thejuniorgeneration.It isbetterforJuniorto own(buyingor lease-to-own) 100%of these"workingassets",versus20% ofall the assets including land and buildings (if using a

partnershipor LimitedLiabilityCompanytransfertool,have the partnershipor LLCbuy these"workingassets"from Senior and then have Junior own 50% of the

partnershipor LLC). This leavesthebuildings,landandotherrealestatein fullownershipandcontrolofthe seniorgeneration. Cash or share rents can be establishedforthe use of these assetsand provide income to the seniorgeneration.Thisprovidesflexibility,incometaxsavings,andfutureincomeforthe seniorgeneration. Lt

Over time,the real estateshouldbe transferredtoJuniordependingongoals, fmancialsituationsand incomeandestatetax considerations.Provisionsneedto be madein

WillsandTrustagreementsto givethejunior generationan appropriateopportunityto obtainownership/controlofthese assets, particularly for those assets that areanintegralpart ofthe operation.

Profit

Obviously, the swine farm business must make sufficientprofit to provide a reasonable family living for both thesenior and junior generations and still allow for businessgrowth. Without sufficientprofit, goals are not met, peoplebecome unhappy, family structure is lost and businesssuccession is not achieved. Monitoring only cash flow(taxableincome) most likelywillbe misleading. Realprofitand "earned net worth change" may be much higher orlower than taxable income. Meaningful accrued incomestatements showing the actual profit ofthe businesses andbalance sheets for both Junior and Senior should be

maintained each year and shared with family membersinvolved in the business. Annual adjustments to rents,leases, wages and other flexible payments can be madeas feasible and appropriate. The MSUE Telfarm recordand business analysis system,utilizing income tax records,accrual income statements, cash flow statements, and networth statements, is designed to help producers makeandmonitorfmancialandmanagementdecisionsonthefarm.

Strategies to Save TaxesStrategies to transfer business assets should first achievefamily goals and second minimize the tax implicationsforthe family as a whole. All too often, families and advisorsfocus strategies only on the income tax issues and perhapsestate taxes. Inventories of feed, growing crops, supplies,machinery, livestock, buildings, and land need to be

(continued on page 3)

considered, but probably separately.A balance sheet withboth market and cost-basisvalues and with detailed listingsof assetsbecomes an effective communication device for

family members and professionals assisting with thetransfer. It is essential in helping to understand what isbeing transferred and to develop the best strategies tominimize taxes. Both income taxes and estate taxes need

to be considered. The MSUE Telfarm system providesthisinformation.

Inventories and other current business assets can be sold

with a bill of sale. The sale proceeds will be Schedule Fincome to the seller and a Schedule F expense to thebuyer. This unpaid bill can be paid over time dependingon cash flow and tax considerations. Depending on goals,financialsituations and tax implications, often these assetsaretransferred using gifting strategies.

A sale(by Senior)of raised swinebreeding livestockistreatedaslong-termcapitalgains(ScheduleD,whichhaspreferentialtax ratesof8% or 20%(forassetspurchasedpriorto 2001),andarenot subjectto SocialSecurityandMedicare taxes 15.30%). The purchase (by Junior)becomesa depreciableasset with the expense taken onScheduleF. ScheduleF expensesreduceordinarytaxableincome (10%, 15%, 27%, 30%, 35% and 38.5% taxrates)and alsoreducetaxable Social Securityearnings.Thecombinationsofthe2to 18.5-pointpreferentialcapitalgainsrate advantageplus the 15.3%Social Securitytaxsavingscan lead to a 17.3to 33.8 percent financialgainforthe familyon every dollar worth of raised breedinglivestocktransferredin this manner.Sincethe breedinglivestocksaleislong-termcapitalgain,an installmentsalemethodcan be used to spread Senior's gain over time.Interestincomeisunearnedordinaryincome(notsubjectto SocialSecurity)but the interest expensefor Junior isdeductedonScheduleF,againsavingsignificanttaxesforthefamilyas awhole.

Machinerysales are subject to depreciation recapture(ordinaryincometax rates)inthe yearof sale,evenif themoneyisnotreceived.Therefore,whenthereissubstantialrecapture,a "leaseto own"transfermethodis oftenused.Therent expense is a deduction on Schedule F and theincometo the parents (ifthe parents are not a partner ormember in the LLC that rents the machinery) can beunearned ordinary income, taxed similarly as interestincome,savingthe SocialSecuritytax.

Land sales are taxed as long-term capital gains (for thegainabovethebasisandheld5years)andthe installmentsale method can be used. But, the buyer cannot deductthe purchase price, only the interest on the debt. Eventhough interest may be the major portion of paymentsduringthe earlyyears,this transactionwillprobablyleadto increasedtaxableincomeforthe familybutthestrategymayhelpachievefamilygoals.

Until the year 2010, assets that are obtainedthrough aninheritance receive a "stepped-up" basis to the valuepassed through the estate (usually fair market value).Depreciableassetscan thenbe depreciated(again)fromthisvaluecreatinga substantialtax savings.Depreciableassets includemachinery,breedinglivestock,buildings,andmostimprovements.

Under the new law, this "stepped-up" basis would belimitedonceestatetaxesarecompletelyrepealedin2010.A decedent's estate would be permitted to increase thebasisof assetstransferredby up to a totalof$I.3 million.The basis of property transferred to a survivingspousecan be increasedby an additional$3 million. Thus, thebasis ofpropertytransferredto a survivingspousecouldbe increasedby a totalof$4.3 million.Howeverthenewestate tax law,just passed, reverts back to prior 2001rules inthe year 2011withoutan actof congress.

Inventoriesoffeed, calves, livestock,and crop suppliesalsoreceivean inherited"stepped-up"basis(fromspousetoo) and can be deducted on Schedule F. This is oftenmissedon incometaxreturns.

ConclusionsTherearemanyconsiderationswhentransferringthefamilybusinesstothenextgeneration. Successfultransferstakeseveralyearstodevelopandsuccessfullyexecutetheplan.The sizeof the estateaffectsthe strategiesthatshouldbeused. Familiesneedto startearlyinthisplanningprocess.Usually this is only done once in a lifetime, socarefullydeveloped strategies are important. The results of aneffectivetransfercan be very rewardingfmanciallyandemotionally for both generations. Assistance fromprofessionals who work in this area and understandagricultural"issues are recommended to help familymembershave thebestpossiblechanceof reachingtheirgoals.

Farm Medication PlanDr. Barbara Straw, DVM

Michigan State University Swine Extension Veterinarian

TheNationalPork ProducersCouncil (NPPC) intro- Pork Producers Association (517-699-2145) andducedthe PorkQualityAssuranceProgramSMin 1989 Michigan StateUniversityExtension. (517-353-9831).as amanagementeducationprogram to assistproduc- A post card is included in the PQA booklet for you toers inadoptinggoodmanagementpracticesin the complete and mail to NPPC to record you as a PQAhandlinganduseof animalhealthproducts.Itsgoalsare LevelIIIproducer.Youwill thenreceivea certificateandtoprovideconsumerswith a safeandwholesome billfold PQA card. Once registered, every two years,product,eliminateviolativedrugresidues,andavoid NPPC will automaticallysendyou a new PQAbookletcarcassblemishes.Producersmustbe PQA certifiedin whenit istimetorecertify.orderto sellpigs to Farmland,Hatfield,Hormel,andSwiftpackers.Otherpackersare stronglyencouragingPQAcertification.

Consumershavebecome increasinglyconcernedabouthowtheuseofanimalhealthproductsbyproducersaffectsthe safety of their food. Producers can do their part toretainthe highlevelofpublictrustby developinga PQAplan for their farms that assures appropriate andresponsibleuse of animal health products. In addition,followingPQAguidelineswillallowporkproducedintheUnitedStatesto be competitiveinthe worldmarket.

The Pork QualityAssurance Program uses hazard analysisand critical control (HACCP) strategies to: 1) Identifyhazards inthe use of animal health products, 2) Find criticalcontrol points, 3) Establish critical limits, 4) Monitor, 5)Take corrective action if monitoring reveals results outsidethe critical limits, 6) Keep records, and 7) Verify that theHACCP plan is working correctly.

Initial Certification:PQAverifiersincludeveterinarians,agricultureextensionpersonnel,andagriculturaleducators.Ifthis is your firstcertification,make an appointment to meet with one ofthese people and complete the PQA booklet, "PorkQuality Assurance, a Program of America's PorkProducers,LevelIII." (nextpage).Whilenotrequired,itis oftenhelpfultohave theinitialcertificationdoneonthefarm.A farmvisitallowstheverifiertoobservefacilities,animals, andhealthprocedures in order to better assessthe appropriateness of the vaccination and medicationschedulebeing used. Obviouslythe veterinarianwho isalready familiar with your herd is a good'resource toprovidePQAtrainingandevaluationofyourcurrentfarmdruguseprogram.PQAbookletsandcontactinformationforotherPQAverifiersare availablefromthe Michigan

RecertificationProducers who have previously been certified shouldannuallycompletethe QualityAssuranceChecklist(seep.5) and update their farm drug use protocols. Thenrecertifywitha verifiereverytwoyears.

Annual Review The followingthree formsarehandytouse in an annual review of farm procedures and forevaluatingthe use of animalhealthproducts.It's a goodidea to set aside some time to get togetherwith all fannpersonnel to review the topics in the QualityAssuranceChecklist.Make sure that everyone is familiarwiththeHACCP programs that are in place, revise existingprocedures to improve efficiencyand compliance,andanswerany questionsthatarise.

Recertification Recertification is required every twoyears. If your veterinarianroutinelyvisits the farm,youmaywanttorecertifyduringaregularfarmvisit.Anotherway to recertifyisto completethe followingthreefonnsandhavethemreviewedbyyourverifier.Yourverifierwillconfirm that the scheduling of routine procedures andwithdrawalpracticesare adequateto avoidresidues.Forexample,itmaybe convenienttovaccinatesowsjustpriorto weaning, but since certain vaccines have a 30-daywithdrawal, they may have to be given when sowsareplaced into the farrowing crates in order to make surethat sowsthatare culledafterfarrowingcomplywiththewithholding time. Also your verifier may suggestlessexpensive or more effective treatments than you arecurrentlyusing.For example,ivermectinis an excellentdewormeraswellas mangecontrolproduct,butifmangeis not present other dewormers are considerablylessexpenSIve.


~.Quality AssuranceSM"'I"

Quality Assurance Checklist

On our farm, a program is in place to:

0

0

0

0

Identifyandtrackall treatedanimalsMaintainmedicationand treatmentrecords

Properlystore, labeland accountfor all drugproductsandmedicated feeds

Obtainanduse onlyveterinaryprescriptiondrugsbasedon avalidveterinarian/client/patientrelationshipVCPR maintainedwith:

Educateall employeesandfamilymembersonproperadministrationtechniquesandwithdrawaltimes

Use drug residue testswhen appropriate

Establishanefficientandeffectiveherdhealthmanagementprogram

Provideproper swinecare

Follow appropriateon-farmfeedprocessingandcommercialfeedprocessorprocedures

CompletethisQualityAssuranceChecklistannuallyandrecertifyeverytwoyears

0

0

0

0

0

0

Signed Date

LII

If.

QualityAssurance"

a program ofAmerica's Pork Producers

1997 EDITION.--..--Ln&llI

Commitment to Quality

Farm Medication Plan

Date completed

11M, SQ, IN, Water, Feed2DT = Disease Therapy, GP = Growth Promotion, SP = Stress Periods, DP = Disease Prevention

Product Name & Dosage Preslaughter DrugProduction Stage. Concentration Routel (cc, g/ton, etc) Withdrawal Purpose2

(days)New Stock Isolation

Breeding

Gestation

Prefarrow

Lactation

Creep

NurseryRoomRoomRoomRoomRoom

Grower «100 lbs)RoomRoomRoomRoomRoom

Finisher (l00 lbs tomarket)

RoomRoomRoom

RoomRoom

--

Vaccination and Management ScheduleDate completed

11M, SQ, IN, Water, Feed

Product Name When Given / Person PreslaughterProduction Stage & Procedure Dosage Routel Age Done Responsible Withdrawal

(davs)Gilts

Prebreeding

SowsPrebreeding

Boars

GiltsPrefarrow

SowsPrefarrow

BabyPigs

Pigs atWeaning

Grower(40-100#)

Finisher(100# - Market)

. -

Livestock Welfare Regulations? The Time is Now!Ronald O. Bates, State Swine Specialist

Michigan State University Extension

Europehasbeenundergoinga livestockmanagementrevolutionwiththeimplementationoflivestockwelfareregulationsthat,amongotherthings,disallowssowstobe kept in stalls. Theseregulationsalsodictatestockingrates,amountof exposureto natural light,timeonpasture for cattleand sheepandother livestockmanagementpracticesthatsocietybelieveswillimproveanimalwelfare.

WithintheUnitedStates,lawsgoverninglivestockwelfarehave, forthe mostpart, onlyaddressedanimalcrueltyandanimalhandlingduringslaughter.TypicallyU.S. laws havenot addressedroutine,on-farm,livestockmanagementpractices. However,that ischangingandchanginginwaysthatwasnotentirelypredictable.At thistime,regulationsareprimarilyoccurringintheformofproductionspecificationswithintheretailsector,whichisthenprecipitatingchangesinlivestockmanagement.

Muchhas beenmade of McDonald's Corporationspecificationsto eggproducersthat supplyeggs andeggproductsto McDonald's restaurants. Specifically,McDonald'swillnotpurchaseproductsITomproducersthatpracticebeaktrimmingor artificiallymanipulatemoltinginlayinghens. In addition,eggproducersmustallowlayinghens an averageof72 sq. in. of cage spaceand4 inchesof feeder space. Furthermore,McDonald'sCorp.is implementinginspectionofpackingplantsto ensurehumanehandlingof animalsthroughtheharvestprocess.This is oneof few caseswhere the retail sectorhas dictatedchangeinproductionpracticesto the livestocksector.

On theheelsofthis decisiontwo othernational

companieshavemovedforwardwiththeirownspecificationsforthe productionoflivestock andlivestockproducts. In a recentannouncement,BurgerKingCorp.will,throughtheAmericanMeatInstituteAuditprogram,verifYhumanehandlingofcattleandpigs throughthe harvestprocess. A similarprocesswillbe institutedforchickenharvestcompaniesusingtheNationalChickenCouncil'sguidelines.

BurgerKinghas alsoestablishedspecificationsfor layerhenhousingandmanagement. Hens shouldnotbedebeakedand if they are,producers must submitadebeakingprotocoland have it approvedand onfilewithBurgerKing.Alsonomoltingmanipulationcanbepracticed.In addition,hens musthave an averageof75sq. in. (higherthanMcDonald's) offioor space,twowater drinkersper cage,a conveyorfeedingsystem,andbe able to standupright in all areasofthe cage.BurgerKing's specificationsalsoaddressairqualitywithinlayinghenfacilitiesandstatesthatammoniaconcentrationcan not exceed25partsper million.

BurgerKing's alsohas guidelinesforcattleandpigmanagement.BurgerKingdiscouragesbranding,wattlingandear notchingof cattle. If cattlearebranded,they recommendthat it be done only once,earlyin life andnever on the face. In addition,itrequiresthatall castrationanddehorningbe completedbefore arrivalat feedlotsor stockeroperations.

BurgerKing alsosupportsthe developmentofalternativesowhousingandwilltry andsupportporksupplierswho donothouse sowsin stallsduringgestation.BothBurgerKingandMcDonald's aresupportingresearchforalternativedrysowhousing.

Anotherrestaurantchainthathas launcheda meat

productinwhichanimalmanagementpracticesarespecifiedis T.G.I. Friday's. T.G.I. Friday's is amulti-nationalrestaurantchainthat has 706restaurantsin 53countries.Theynow offeranAll-NaturalAngusBeefBurger. Themeat for thisproductwillbe purchasedITomMeyerFoods,whichmarketsMeyerNaturalAngus. Cattle for this product are raised on theMeyers' Montanaranch. Cattlemanagementpracticeshavebeen certifiedunder the Free Farmedprograminstitutedby theAmericanHumaneAssociation.

Thesethree companiesarenot relying on stateorfederalregulationsto changeanimalmanagementpracticesthat areperceivedto improveanimalwelfare,but are wieldingtheirpurchasingpoweras the carrotto


causechange of management practices within thelivestock production sector. This may cause otherwholesale and retail entities to follow suit.

Governmentregulations for changes in animalmanagement practices that are perceived to improveanimalwelfare are also a possibility. In the state ofFlorida, a petition drive is underway to place areferendum on the ballot that would amend the state's

constitution and ban the use of gestation crates andtethers for sows. It appears that the petition will besuccessfuland the initiative will go before the citizens ofFlorida on next year's ballot.

Porkproducerswill faceeithergovernmentalregulationsorcustomerspecificationsthatwillcausechangein animalmanagementpracticesthataddresspublicconcernsof animalwelfare.Porkproducersshoulddeterminewhichpork chainsmayspecifychangesinproductionpracticesandhowthis couldchangetheirproductionandmarketingsystem.Furthermore,porkproducersshoulddeterminehowtheywantto addresspotentialgovernmentalregulationson animalwelfareissuesandmakesurethatpotentialchangesdo improveanimalwelfareanddonotoverburdentheproductionsector.

The Frequency of the Porcine Stress Gene in Texas Show PigsDr. Jodi Sterle, State Extension Swine Specialist

TexasA&M University

Theeffectsof the porcine stressgene havebeen and donot grow any faster thanNN animals. Pigsdocumentedfor thirtyyears. Like any othergene, a inheritinga singlecopy(oneinheritedfromeitherthecopyofthisgenecanbe inheritedfrom eitherparent, sireor the dam,but notboth; referred to as "Nn")thedamandthe sire. Animalsinheritinga copyof the exhibitcharacteristicsthatareintermediatebetweenstressgenefrom bothparents (referredto as "nn"), normal andstresspositiveanimals. A blood test isexhibitextremenervousnessandexcitability(including availablefor identificationof thepig's genotype(either''tailtwitching"whenexposedtoa stressfulsituation NN, Nn or nn).suchasbeingsnaredfor clippingor loadedon trailersfortransport)as well as inferiormeat quality. Themusclesfrom stresspositiveanimalsare oftenPSE, orpale,softandexudative. Themeat is lightpink tograyishwhitein color,doesnothold it shapewell andappearswatery inthe package. Thisconditioncausesthecarcassesto be classifiedas unacceptablequality.Carcassesdrip in the coolerand losemoisture,causingthemeatto be very dry when cooked. An Iowa StateUniversitystudyrevealed that over 95% of nn animalshadPSE. Additionally,over 15%of stresspositiveanimalsdiedwhilebeingmovedfromone locationtoanother.However,theuse of this genebecame popularbecausestresspositivepigswere2.7- 4.0% higher inleancompositionthantheirnormallittermates.Thisincreaseis due toboth an increasein musclingas wellasa decrease in fat. Researchers report that a sowwithtwo copiesofthis gene(referredto as "nn") willhavedecreasedlitter sizeandwill raiseup to one lesspigper litter less thannormal sows (referredto as"NN").Additionally,litterweaningweightsfromnnsowsaverageabout 10%lessthan littersfromnormalsows. Stresspositiveanimalstend to be smalleratbirth

A numberof symptomsget "blamed"on the stressgeneinthe showpig industry,includingdeathlossduringtransportand show,the excitablenature of someofthese animalsandpoor pork quality. However,withtheexceptionof theNationalBarrow Showprogeny test,littleinformationis availableaboutthe frequencyofthisgene in the showpigpopulation. In an effort to estimatethe frequencyof thisgene inthe showpigpopulation,blood sampleswere obtainedfrom the barrow carcasscontest entriesfrom the 2000and 2001 SanAntonio

LivestockExposition(SALE)and the 2000and 2001HoustonLivestock ShowandRodeo (HLSR). Thisincludedclasswinners,breedchampionsandreservebreed championsfrom SALEandthe firstand secondplacinghogsfromeachclass(includingbreedchampi-ons and reserves) from HLSR. A total of 193barrowswere tested for the stressgene. These animalsweretrulythe"bestofthebest"- thetop 193of20,603hogs enteredin these shows (less than 1%). Thequestionthat we attemptedto answerwas: Doyouneed the stress gene to win?


J-- - ..

At each of these shows, hogs are classifiedby a breedcommitteeandbrokenintoclassesby weightwithineach breed. No registrationpapers from breed asso-ciationsarenecessaryto show,howeverrepresentativesfromthe eightmajorbreedsareinvolvedinthe classifi-cationprocess. All carcasscontest animalsweretransportedto the TexasA&M Universitymeat lab forevaluation.Carcassdata,includingqualitymeasure-ments,were recorded 24 hours post-harvest. Thefrequencyof each genotypeis reportedin Table1.

I

Table1. Frequencyofthe normal (NN),heterozygous(Nn) and stresspositive (nn)genotypesof the classwinners fromthe 2000and2001 SanAntonioLivestockExpositionand the 2000 and 2001 Houston Livestock Showand Rodeo*.

Thegenotypicfrequenciesdidnot significantlychangefrom 2000 to 2001 as seen in Table2. Although itmayappearthatthe frequenciesremainrelativelystable,withdata fromonlytwo years,thisconclusionispremature.Fundinghasbeen obtainedforthe continuanceofthisstudythrough the 2002 show season in orderto expandthe data set.

*NN = normal,Nn = heterozygous,nn = homozygouspositivefor the stressgene.

Table2. Frequency (by year) of the normal (NN), heterozygous(Nn) and stresspositive(nn) genotypesof the classwinners fromthe 2000 and2001 SanAntonioLivestockExpositionand the 2000 and 2001HoustonLivestock ShowandRodeo*.

52.58%42.27%

5.15%

59.37%37.50%

3.13%

*NN = normal,Nn = heterozygous,nn = homozygouspositivefor the stressgene.

Totalcombineddata:NN = 107 barrows 55.44%Nn= 78 barrows 40.41%nn= 8 barrows 4.15%

Frequenciesby breed:

Breed number NN Nn nnChesterWhite!LandracelWhiteOPB 18 11 7 0Yorkshire 24 20 4 0

Hampshire 34 21 13 0

PolandChina/Spot 23 3 15 5Berkshire 12 6 3 3Duroc 33 17 16 0Crossbred 49 29 20 0

2000:NN = 51 barrowsNn= 41 barrowsnn= 5 barrows

2001:NN = 57 barrowsNn= 36 barrowsnn= 3 barrows

Inthecarcasscontests, SALEplaces the top sixcarcasses,and HLSRplaces the top ten. Therefore, 32hogshaveplaced in these four showsin the past twoyears.Ofthese, 16were normal (NN) and 16wereheterozygous(Nn). None of the placing carcasseswerellll. Carcassesare disqualifiedfromthe contestforfailingtwoofthefourminimumqualitystandardsforloinmusclecolor,musclefirmness,marblingorfatfIrmness.Ofthe 33 carcassesthat were disqualified,14wereNN(42.4%),18 were heterozygous (54.5%) andonewaspositive (3.0%). In other words, almost 60%ofthehogsdisqualifiedfromthe carcasscontest(basedonthesamecriteriathat is used inpackingplants andconsumerstudies)inheritedat least onecopy of thestressgene.

Evenmore startling was an increase in the number ofanimalsdisqualified due to carcass quality in 2001 ascompared to 2000. In 2000, 10 carcasses weredisqualifIedon carcass quality from both shows. In2001,23 carcasses were disqualified. This is analarmingtrend that cannot be attributed to the stressgene(PSE is caused by numerous factors; genotypicfrequencieswere similar between years; Table 2) andhasapotential impact on consumer satisfaction. Con-sumershave repeatedly shown a preference for darker("redder")meat in taste panels. Therefore, not onlywerea large number of these show pigs consideredunacceptable for the consumer, but most of theseinheritedat least one copy ofthe stress gene. Thequality issue needs to be addressed by the show pigindustIy.

Theswine industry has decided (although not unani-mously)to take steps to eliminate this gene. Most feelthatthe risks oflosing customers (especially in theexportmarket) due to poor pork quality (even whenproducingonly heterozygous animals) are not worth thebenefitsof increased muscling and leanness. TheNationalSwine Registry (NSR) has implemented thefollowingpolicies on the porcine stress gene: No knownstresspositive or stress carrier animals will be allowedtobe exhibited or sold at any NSR sponsored event.NSR also requires the DNA stress gene status of A.I.siresto be declared on all A.I. certificates issued for the

registrationoflitters. Additionally, all four of the majorbreedshave adopted policies that will require any pigfarrowedafter a certain date (1/1/00 for Yorkshire and

Landrace; 1/1/01for Duroc and 1/1/02forHampshires)foundto be a stress carrierto have itspedigreecancelled. The ChesterWhiteAssociationhasa similarpolicy. Conversely,in orderto increasegeneticdiversitywithinthebreed,the SpotAssociationopeneditsbreedregistryto includePietrains,aBelgiumbreedwithan exceptionallyhighfrequencyof the stressgene.

Back to the question, is the stressgene necessary towin? At two of the largestbarrow shows in the coun-try, the answer is NO. Over 55% ofthe top onepercent were free of the stress gene. While theremayhavebeen a timethat the swineindustrypropagatedtheuse ofthis gene,pigs free ofthe stressgene and ofdesirablegeneticmerit areavailabletodayto producethe heavilymuscled,lean carcassthatconsumers'desire.If the showpig industrywants to improveitsimageandthe qualityof theproduct it isproducingforthe dinnerplate,totaleliminationofthe stressgene isnecessary.

Fundingwasprovidedby the HoustonLivestockShowandRodeo, the SanAntonioLivestockExpositionandthe TexasCooperativeExtensionService. For moreinformation,please contactDr. Sterleat 979-845-2714or [email protected].

All comments andsuggestionsshould be directed to:

MICHIGAN STATEUNIVERSITY

EXTENSION

1. Jerry May,North Central Swine AgentFarm Records, Productions Systems(517) 875-5233 ~r2. Ron Bates, State Swine SpecialistMichiganState University(517) 432-1387

3. Dale Rozeboom, Swine Extension SpecialistMichiganState University(517) 355-8398

4. Barbara Straw, Extenstion Swine VeterinarianMichiganState University(517) 353-9831

C/11. Ithaca

5. Laura Cheney, Extension Livestock EconomistMichiganState University(517) 432-0089

8MSU

6. Roger Betz, Southwest District Farm Mgt.Finance,Cash Flow,BusinessAnalysis(616) 781-0784

6. Marshall

2001 GRAND CHAMPION TRUCKLOADAmerican. Swine Breeders Classic (National Barrow Show)

Bred, raised, & shown by MSU Students

Standinf: Maynard Hogberg, Dennis Peterson, Sarah Rust, Susan VanderKolk,Brandon Ogle, Bryan Metzger,Jeff Mafi. Kneelinf: Luke Rahe, Al Snedegar, Dave Edwards, Jeannine Grobbel, Tracy Copenhafer,Mark Hoge

1.yis.u pe>:rk q~a,:r~e:rly

Documents