Please read the articles associated with the following websites:
Cooperative Coordination in the Hog-Pork System: Examples from Europe and the
US 
Click Here - then click on Contract Production & Marketing
Reading Assignments on Purdue Pork Page
Indiana Animal Agriculture: A look to 2020
Trends and Future Developments in the Hog/Pork Sector
Ractopamine, Response, Economics, and Issues Powerpoint slide show
Alternatives to Conventional
Antimicrobials in Swine Diets
Trends in US Pork Industry Employment
Antibiotic Use
Biotechnology
Finishing Site
Production Model
Key Requirements (sow farm)
Business Model Requirements
Pork Industry - How to Participate
Table 9
Returns for Producing Hogs, 1994, Medium Size*
| Results | Independents | Contractors | All |
|---|---|---|---|
| Profits | 42.8% | 40.6% | 42.6% |
| Break-even | 27.3% | 21.0% | 27.0% |
| Losses | 29.9% | 38.4% | 30.4% |
Table 1
Estimated 1995 plant capacity of the largest pork slaughter
firms.
| Rank | Company | Daily Capacity (1,000 head) | Capacity Share % |
|---|---|---|---|
| 1 | IBP, Inc. | 70.9 | 17 |
| 2 | Smithfield Foods Corp. | 43.3 | 11 |
| 3 | Monfort (ConAgra, Inc.) | 38.5 | 9 |
| 4 | Hormel Foods Corp. | 37.0 | 9 |
| 5 | John Morrell & Co. (Chiquita) | 30.5 | 7 |
| 6 | Excel Corp. (Cargill Inc.) | 25.9 | 6 |
| 7 | Farmland Foods, Inc. | 22.8 | 6 |
| 8 | Thorn Apple Valley | 18.1 | 4 |
| 9 | Indiana Packers | 13.0 | 3 |
| 10 | Tyson Foods, Inc. | 12.0 | 3 |
| Totals | 312.0 | 75 |
:
Table 6
Percent of Medium Size Producers Networking*
| Type of participant | Independents | Contractors | All |
|---|---|---|---|
| Hog producer | 7.9% | 28.8% | 9.2% |
| Feed dealer-manufacturer | 1.8% | 9.5% | 2.2% |
| Packer | 1.2% | 5.4% | 1.5% |
| Veterinarian | 1.2% | 3.7% | 1.3% |
| Grain Producer | 0.8% | 1.4% | 0.8% |
Table 7
Percent of Medium Size Producers Networking by Activity*
| Networking activity | Independents | Contractors | All |
|---|---|---|---|
| Joint marketing | 4.3% | 11.6% | 4.8% |
| Joint purchasing | 3.0% | 9.2% | 3.4% |
| Seedstock multiplier | 1.0% | 7.4% | 1.4% |
| Shares data | 1.5% | 5.5% | 1.7% |
| Splits production | 1.0% | 4.1% | 1.2% |
Performance Parameters
The net result is to produce more lbs. pork/sow/year efficiently!!
Today's Producer measure Success in terms of:
Economic Return
Productivity + Efficiency = $
Swine Production has moved from a way of life to a main stream business.
Business Changes
Contract Feeding
Less supporting firms
Management Information Systems
Increased Vertical Integration - Coordination
Work Policies in Writing
Feedback
Incentives
simple ie.
breeding
nursery
growing finishing
Employee Expectations
Animal Welfare
Animal production with minimal pain, stress, suffering, and enhancing their
well-being.
Animal Rights
Concept that animals have rights that are equivalent to, or supersede those of
humans. They should not be subjected to any harmful intervention by humans. In
extreme ends, eliminates the use of animals for food, fiber, biomedical
research, recreation, education, and companionship.
Items of Concern
Gestation Crates
Farrowing Crates
Castration
Tail docking
Early weaning < 4 weeks
Perforated flooring
Hormones that induce heat
Square footage
Reactive Mode
Victim Mode
Entrepreneurial Mode
Planning Mode
1.) Improved Breeding Herd Performance. Pigs per litter have increased nearly one pig per litter in the 1990's, which is a significant increase over the trend line.
2.) Fewer and Larger Farms. The number of U.S. farms with hogs has declined every year since 1980, says Plain. The number of farms with 500 or more hogs seems to have held steady with farms raising one to 99 hogs a year dropping from more then 500,000 farms in 1980 to around 50,000 in 2000.
3.) Specialization. More producers are focusing on farrowing or finishing only, with fewer producers operating full farrow-to-finish systems or raising their own feed.
4.) Fewer and Larger Packing Plants. The percentage of hogs slaughtered in plants that process more then 1.5 million hogs annually has risen from 21.1 percent in 1981 to 87.3 percent in 1999.
5.) Geographic Production Shift. Production has shifted from the Midwest to Southeastern states like North Carolina, as well as more sparsely populated states like Oklahoma, Texas, and Colorado. That shift also has promoted the aforementioned specialization as the Midwest now serves as the feeding floor for farrowing sites in North Carolina and elsewhere.
6.) Production/Packing Integration. Some companies such as Smithfield Food, Premium Standard Farms and Seaboard Farms raise hogs and process pork. That was nearly an unheard of prospect a decade ago. Today, more and more individuals and producer groups also are looking at replicating that formula in some manner.
7.) Packing/Processing Integration. Nearly all packing companies - certainly all major pork packers - have moved towards producing further-processed pork products. This is another trend that will only continue to grow as boneless, prepackaged meat products dominate the market.
8.) Contracting Growth. Between 1997 and 2000, US pork production contracts rose 5% for farrowing and 4% for finishing systems. Marketing contracts have gained even more prominence, with 83% of US hogs marketed in 2000 covered by some sort of contractual arrangement, according to Plain.
9.) Globalization. Global pork export trade increased steadily throughout 1999-02, though Europe's foot-and-mouth disease outbreak this year slowed the trend somewhat.
10.) NIMBY Attitudes. The US public has become more apprehensive about pork production and packing/processing plants. The general public tends to adopt the "not-in-my-backyard" attitude at the first hint of either type of business moving into an area. In recent years this has certainly slowed production expansion and more recently it's affected packing plants. The NIMBY issue will continue to be a factor in the foreseeable future.
There are at least five key areas of influence or "drivers of change"
These include:
Industrialization of Animal Industries
Industrialized food systems are those which are holistic in production-processing-marketing, organized to deliver specific-attribute consumer products by development of economically optimized delivery systems or through differentiation by science or branding.
There will be a number of ways in which these food systems are organized and owned
Firms, that were originally independent operations, will form alliances. Input industries, producers, processors, distributors, and even retailers will be combined to form the system.
Farmer-owned cooperatives will develop food systems. These will be an extension of current cooperative programs in a host of areas such as input supplies, genetics, research, transportation, processing, and retailing.
For example, a cooperative with a strong feed base may form alliances with a cooperative in the processing business. In addition, a cooperative with production units may form an alliance with an independent processor.
By the year 2010, most of these systems will be formed. The era from 2010 to 2020 will be a period where systems compete against each other for market share.
Impacts of Industrialization on Farm Size and Structure
The dairy and pork industries are in the midst of a dramatic movement to the industrial model, with the current transition largely to be completed by 2010.
Industrialization of production means the movement to large scale production units, that use standardized technology/management and are linked to the processor by either formal or informal arrangements.
Size and standardization will be important characteristics in lowering production costs and in producing more uniform animals that fit processor specifications and meet consumers' needs for specific product attributes, as well as food safety concerns.
Consumer Demand
Consumers want safe, nutritious, consistent quality animal products at moderate prices that are presented in a variety of convenient formats.
The future success of each of the species will depend upon consumer desires.
Consumer-Food Safety
Producers' responsibilities will fall into two categories:
Producers' primary role in food safety will focus on improved management techniques to reduce the amount of antibiotics used and minimization of drug residues in meat.
Technology: Nutrition, Buildings, Meat Quality
Technology will continue to evolve in ways which can lower costs, increase product quality, and help meet environmental and social concerns of the communities where production occurs, as well as meet consumer desires.
Building and equipment will continue to move toward larger scale to fit the industrialized model. There will be a continued movement toward standardization of building design within a production system.
Inside the buildings, expect enhancement of monitoring systems to help detect gases, temperature, humidity, and disease organisms that could adversely impact the economic performance of animals.
Improvement in meat quality will be an additional area of heightened technologic advancement. First, will be an increased understanding of the consumer preferences, including such items as color, taste, texture, packaging, and portion size.
Technology: Management Systems
As information systems expand to collect data on a wider scope of economically important factors, similar advancements will occur in management systems to increase control. Management systems that can process increased amounts of data and use this to make faster and more accurate decisions will be the norm. Movement toward site-specific management will become more common.
Technology: Genetics
Access to technology will be determined in tow ways. One is public acceptance of animal products that are the result of biotechnology.
In the genetic arena, application ranges from:
It appears that enhanced meat quality will be of greatest significance as we enter the new century, followed by a period of increased emphasis on disease resistance.
Environmental and Social Constraints: Livestock Waste Issues
There are real and perceived environmental problems that must be dealt with by the livestock industry in the coming decades.
Diet manipulation will likely hold the key to finding solutions to several of the air and water quality questions now facing livestock producers.
Universities and regulatory agencies have generally supported policies that encourage the recycling of animal nutrients to the land inorder to minimize energy use and potential environmental damage caused by production of commercial fertilizers. However, waste treatment may become more popular.
Treatment systems:
The technology to provide site-specific regulations is currently available and will be widely accepted by 2020.
Globalization of Animal Industries
The final major driver of animal industries is expected to be involved with the movement toward a global economy.
Reductions in trade barriers will enable animal products to move into foreign markets that have been restricted in the past.
Adding to the total consumption will be a continued income growth for much of the world. Income growth will likely be led by Asian countries where real income has been growing at a rate of 7.7% annually over the past decade.
The U.S. has a strong feed, grain, and protein supply base to be low cost producers of most animal products.
We have an extremely efficient processing and distribution system, with the ability to supply large volumes of relatively consistent product into world markets.
We have integrity in contracts, enforceable by the laws of the land, and finally a food safety and sanitation system that is broadly accepted.
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