Pigs, Hogs, and Pork

US Swine Production is a 72 billion dollar industry

• Pork is the worlds most widely eaten meat• US per capita consumption – 52 lbs retail wt• Inventory of over 6 million sows • Commercial slaughter 104 million head• US is worlds third largest producer• 1 of every 12 hogs is exported

35

40

45

50

55

60

65

1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000

- Demand/Consumption

Per Capita Consumption, Retail Wt basis

2000 = 52.5 lbs

PorkFacts 2001/2002; USDA

-500000

-400000

-300000

-200000

-100000

0

100000

200000

300000

1987 1990 1995 1996 1997 1998 1999 2000

Trends in the Industry

- Exports

Net Pork Exports, Metric tons

PorkFacts 2001/2002; USDA

Where are the Pigs??Rank State Breeding Market Total ---------1000 hd -------------------- -------------------1 IA 1130 14270 15400 2 NC 1000 8800 9800 3 MN 580 5320 5900 4 IL 450 3800 4250 5 IN 330 2820 3150 6 MO 380 2670 3050 7 NE 395 2505 2900 8 OK 320 2100 2420 9 KS 165 1375 1540 10 OH 170 1330 1500 US 6209 53627 59837

ND Hog Inventory

0

50

100

150

200

250

300

350

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

All Breeding All Market

North Dakota Farrowings1000 head,

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

USDA/NASS, June, 2006

Canadian Prairie Hog Growth

Increasing Concentration, Integration, and Specialization

• Loss of 597,000 hog operations since 1980• Only 10% of hogs spot marketed• Top 20 “pork powerhouses” have 2.6 million sows

and account for over 40% of marketings• Over 70% of processing capacity by 5 packers• Multi-site specialized confinement production

systems integrating farrow-to-wean with wean-to-finish and market contracting

Total Hog Farms, 1000 farms United States

50.00

150.00

250.00

350.00

450.00

550.00

650.00

750.00

850.00

1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001

1970 = 871,2002001 = 81,130

Only 9.3% of the farms from 1970

USDA/NASS, June 2002

Share of Annual Hog Marketings by Size Category, 2000 United States

32

19

11 10 912

7

17 1712 12 12 13

17

27 5 7

10

18

51

0.00

12.00

24.00

36.00

48.00

60.00

< 1000 1000 -2000

2000 -3000

3000 -5000

5000-10000

10000-50000

> 50000

1988 1994 2000

University of Missouri, 2001

Total Hog Farms in North Dakota, 1000 farms

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006

USDA/NASS, 2006

Hogs sold on spot market

Number of All Cattle and Beef Cow Operations

Milk Cow Operations

Hog Prices and Production Costs

• Price trends reflect economic forces of supply and demand

• Feed represents 65-70% of the cost of producing pigs (hog to corn ratio)

• Tendency for a 3-4 year “hog cycle”• Tendency for seasonal fall lows• Over 70% of hogs sold on carcass merit basis• Low grain prices and new technologies have

contributed to reduced costs• Rising grain price, and inflation cause for concern

Returns per Head, IA Farrow to Finish

-30

-20

-10

0

10

20

30

1991

1992

1993

1994

1995

1996

1997

1998

1999 20

020

0120

02

John Lawrence, Iowa State University

Confinement Farrow to Wean Budget

• 1200 sow unit • 21 pigs/sold/sow

– Farrowing building• 2500/sow 550,000

– Farrowing equip• 1250/sow 275,000

– Gestation building• 563/sow 630,000

– Gestation equip• 250/sow 280,000

– Site/office 90,000– Breeding stock 288,000

• 2.1 million• 1760/sow 34.18Breakeven

1.79utilities.48accounting1.75trucking5.13Breeding stock9.13building1.00vet6.94labor7.59feed

Costs/pig/sold

Litters Per Breeding Animal

1.52

1.34

1.46

1.621.67 1.68

1.64

1.75 1.73 1.74 1.77

1.00

1.25

1.50

1.75

2.00

1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000

PorkFacts 2000/2001; University of Missouri

U.S. Pigs per Litter (Mar-May)

7.27 7.177.31

7.747.94

8.328.48

8.67 8.75 8.80 8.86 8.89 8.81

6.00

7.00

8.00

9.00

1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001 2002

USDA/NASS, 2002

Confinement Swine Finishing Budget

• 1200 pig barn • 2.9 feed/gain • 1.71 adg• 60 to 265 pounds

– Finishing building• 164/pig 196,875

– equipment• 32/pig 37,500

– Site/office 18,750

• $253,200• 211/pig• $.41/lb breakeven 107.55Breakeven

.54utilities

.71accounting3.50trucking2.00interest9.35building1.80vet2.08labor36.10feed51.08Feeder pig

Hoop Barn Swine Finishing Budget

• 180 pig barn • 3.1 feed/gain • 1.68 adg• 60 to 265 pounds

– Finishing building• 55/pig 9,500

– equipment• 17/pig 3,000

– Site 4,000

• $16,500• $91/pig• $.42/lb breakeven 109.96Breakeven

1.00utilities3.25bedding3.50trucking1.81interest5.82building1.50vet2.70labor39.30feed51.08Feeder pig

#####Total expense54.86Feed total

45.82 Breakeven price54.86 Feed4.03Diet 6

44.00 Weaned pig cost10.08Diet 5

2,399 Gain:loss/year1.25 Transport11.38Diet 4

4.80 Net per pig1.50 Vet/med8.33Diet 3

1.00 Utilities8.91Diet 2

#####Total Income2.00 Ins/Tax3.82Diet 1

5.00 Labor4.63Phase 3

1.84 Pre-slaughter3.00 Principal1.98Phase 2

119.57 Market pigs4.00 Interest1.23Trans.

Income per head0.45SEW

500 Head sold/year

185.00 46% SBM

180 Pre-market weight5.50 Grain, $/cwt

6%$ 17.00 Pre-market price

3.10 G/F FE265 Slaughter wt50Transfer wt

1.80 Nursery FE94%$ 48.00 Market price10Wean wt, lb

How much do I gain or lose?

Live and Dressed Wt of Market Pigs

241 240 242 245250

257 254 257 257 259 262 265

172 175181

186 186 189 189 191 194 197

150

170

190

210

230

250

270

1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000 2001

USDA/NASS, 2002

DDGS in Swine Diets

• Characteristics

– DM 87-93– CP 23-29– Fat 3-12– Lysine .59-.89– Dig P .71– Ca .05– Fiber 8– ME 1283-1633

• Inclusion Rates• Start Max

– Nursery 5 25– Grow-finish 10 20– Gest sow 20 50– Lact sow 5 20– Boars 20 50

$129.87 $128.31 $126.74 $125.18 $123.61 $122.04 $120.48 $240.00

$129.38 $127.82 $126.25 $124.69 $123.12 $121.55 $119.99 $235.00

$128.89 $127.33 $125.76 $124.20 $122.63 $121.06 $119.50 $230.00

$128.40 $126.84 $125.27 $123.71 $122.14 $120.57 $119.01 $225.00

$127.91 $126.35 $124.78 $123.22 $121.65 $120.08 $118.52 $220.00 $/Ton

$127.42 $125.86 $124.29 $122.73 $121.16 $119.59 $118.03 $215.00

$126.93 $125.37 $123.80 $122.24 $120.67 $119.10 $117.54 $210.00 Price

$126.44 $124.88 $123.31 $121.75 $120.18 $118.61 $117.05 $205.00 SBM 46.5

$125.95 $124.39 $122.82 $121.26 $119.69 $118.12 $116.56 $200.00

$125.46 $123.90 $122.33 $120.77 $119.20 $117.63 $116.07 $195.00

$124.97 $123.41 $121.84 $120.28 $118.71 $117.14 $115.58 $190.00

$124.48 $122.92 $121.35 $119.79 $118.22 $116.65 $115.09 $185.00

$123.99 $122.43 $120.86 $119.30 $117.73 $116.16 $114.60 $180.00

$3.13 $3.08 $3.03 $2.98 $2.93 $2.88 $2.83 Corn Price, $/Bushel

$111.80 $110.00 $108.20 $106.40 $104.60 $102.80 $101.00 Corn Price, $/Ton

DDGS Value per TonUsing SBM 46.5 and Dical 21

Industry Issues

• Animal Care and welfare

• Antibiotic is in animal production

• Environmental stewardship

• Bio-security

Protecting air and water

• Animal feeding operations regulated by ND Dept of Health under permit to operate

• State and local zoning and setbacks• Site selection and engineering for facilities

and waste containment• Odor regulations• Manure management plans

Realizing the Resource -organic fertilizer and soil amendment

• Typical manure production/composition

• ton/gal N(lb) P(lb) $(.25)• Solid

– Sow 3.4 31 21 13– Feeder 1.1 17 9 6.5

• Pit– Sow 1850 32 28 15– Feeder 530 17 14 7.75

• Lagoon– Sow 3000 10 7 4.25– Feeder 950 5 3 2

Good and Good For You!

• Excellent Source of Protein and B Vitamins

• Pork Chop– 170 calories– 6.5 g total fat

World Pork Production• 765,000,000 pigs

• 181,000,000,000 lbs of pork produced– Most consumed meat in the world

• Over ½ of pork produced in China, US is 2nd

• Exports: Canada – 1st; U.S – 2nd; Denmark – 3rd

• Imports: Japan – 1st; US – 2nd

• Per capita consumption– Denmark = 168 lbs per person per year– US = 68 lbs per person per year (carcass wt basis)– Japan = 38 lbs per person per year.

Slaughter, Million head

1.52

1.34

1.46

1.621.67 1.68

1.64

1.75 1.73 1.74 1.77

1.00

1.25

1.50

1.75

2.00

1970 1975 1980 1985 1990 1995 1996 1997 1998 1999 2000

2001 = 98.0