Better Pork - October 2001
DENMARK -- where organic pork costs 100 per cent more
Farmers fear that the added costs imposed by new regulations will lose them valuable customers abroadby NORMAN DUNN
European Union regulations for minimum organic livestock production standards make organic pork double the price of that produced conventionally, according to the Danish National Committee for Pig Production (NCPP).Because of a booming export market for organically-raised pork, most of which only goes to Britain so far, the Danes now have an estimated 0.4 per cent of national production, or some 90,000 hogs per year, raised on bio-farms. Denmark had its own minimum standards, but these have now been superseded by the EU regulations introduced in August of last year.
The Danish rules included the following:
* A minimum 0.5m2 laying area per 100 kg hog in the pen, and minimum 0.5 m2 outside space with total area per hog not less than 1.3 m2;
* Up to 20 per cent of conventional (non-organic) feed in rations (based on percentage of dry matter of agricultural origin ingredients);
* Soybean meal may be used so long it is not from GMO crops;
* After 2005, feed must come from 100 per cent organic sources.NCPP trials indicate that these rules meant it was possible for the average Danish bio-farmer to break even in organic pork production at around the equivalent of $2.82/kg a kilo dressed weight. As of last August, non-organic hog producers in Denmark needed at least $1.71 a kilo to break even.
But the new rules now being forced on Danish producers stipulate more space per hog and also ban the use of soybean meal from beans that have had oil extracted by chemical means, which up until last year applied to almost 100 per cent of the meal used in Danish hog feeds. The result is that break-even point for Danish bio hog producers is now equivalent to around $3.35/kg carcaseweight -- or more than 97 per cent above that in conventional hog production.
The most serious problem caused by the new rules is the ban on conventionally produced soybean meal. "This has presented us with the highest proportion of cost increases because there is no readily available substitute with the same feed value," explains Henrik Beakstroem Lauritsen, an ecological pork production specialist with Danske Slageterier (DS), the Danish pig industry representation organisation.
Cold-pressed soybean meal still has too much oil (3-4 per cent) in it and means that it can negatively affect carcase grading. "We're using protein peas, which grow quite well in Denmark, and rapeseed meal as substitute protein sources," adds Lauritsen. "Linseed meal is a promising substitute. But present varieties mature too late for harvest in Danish autumns, although new types with earlier harvesting are being tested this season. But so far these alternatives cost much more than the previous soybean standard."
The extra space required represents an increase of 77 per cent on current organic housing in Denmark with a 100-kg hog getting a minimum 1.3 m2 space inside and 1.0 m2 outdoors.
The NCPP warns that this not only means extra housing costs for Danish organic pig farmers, but also more labour charges for cleaning the bigger pens. Even more bitter for the industry is that the NCPP and DS last year completed a new design for organic hog feeding buildings based on the previous national rules of 1.3 m2 per feeder. First models of the open-sides sheds are already with organic farmers. This natural-ventilation unit has straw-bedded laying areas for groups of 20-30 with solid-floor outside runs which can be fitted with delta scrapers for automatic cleaning once or twice a week.
The Danes fear that the extra costs of the new regulations will add so much to the price of the bio-pork that valuable customers abroad may be lost. All export marketing is currently carried out by Freeland Food, a subsidiary of leading Danish slaughterhouse concern Danish Crown, and this spring Freeland was paying $3.20-3.40/kg carcaseweight for organically produced hogs. Conventional hogs prices at the same time were $2.14-2.32/kg.
According to market experts, this means that the organic pork producers were no more than breaking even, although they were receiving up to 50 per cent higher prices than their conventionally-producing neighbours. BP
* Exchange rate $1 Cdn = DKK 6.80
HOLLAND: multi-storey farming on the drawing board
New words are appearing daily in Dutch farm vocabulary as political pressure continues to reduce the size of the livestock sector and its claimed polluting effects. Not the kind of words you might imagine, but instead ones such as "agrocluster," "high-rise farm factory," "industrial ecology" and "agroproduction park."A sector of the Dutch nation's planners is aiming for more concentration of agricultural output, and the pressure groups involved want a countryside with reduced manure smells, ammonia emissions and nitrate-polluted ground water. One result blueprinted by architects looking into possible alternatives to traditional farm-based intensive livestock output is the "agrocluster" - a multi-storey concentration of livestock and cropping enterprises on industrial land near large centres of population.
Initial drawings have already been produced for such a concept in one of the world's largest harbour complexes: Rotterdam. Dr. Jan de Wilt, who heads the development project, foresees a six-storey complex 1000 metres long and 400 wide. Fish farming will take place in the cellars. A slaughterhouse and meat preparation plant will take-up the ground floor. The next few floors will accommodate some 300,000 swine (breeding herds and feeders with balconies to give sows the chance of some outside air), 250,000 laying hens and around a million broilers. The top storey is planned for mushroom growing and the penthouse is to accommodate glasshouses for intensive vegetable production.
Dr. de Witt stresses the multi-storey formula is not yet settled. The so-called agroclusters of the future could just as well feature a group of buildings with less height - a so-called agro-production park - but still concentrated in industrial development land and highly integrated, he adds.
Integration would include slaughterhouse offal used as fish feed, exhaust air from the poultry and swine floors being channelled into the vegetable glasshouses giving CO2) atmosphere enrichment for crop yield boosts of up to 10 per cent. Biogas from the manure produced would heat the building. Left-overs from the vegetable production would be processed to comprise part of the swine rations.
Dr. de Wilt explains that one of the concept's biggest environmental advantages would be the huge decrease in transport, for 40 per cent of all transport in Holland is connected with the food chain. "Production will take place closer to the major consumer market - meat and vegetables for a million people."
Veterinarians who have looked at the plans admit that disease and hygiene could be much better controlled in an agrocluster with swine on a farrow-to-finish system and most feed processed within the complex. Environment protection lobbies are also cautiously welcoming the concept on the grounds that concentrated production in an industrial area - and the Rotterdam multi-storey would be in a position to produce about three per cent of Dutch hog output - means much better control of by-products and residues compared with the same production on maybe 700 farms scattered across the countryside.
Holland certainly doesn't want to lose the family farm image completely. "Small-scale, country-based activities will still exist alongside large-scale complexes in urban industrial locations," says Dr. de Witt.
In the meantime, the idea has been welcomed by the country's agriculture ministry, which feels that such innovative developments are essential if the Netherlands is to maintain its position as a leader in world food production. Resistance to the multi-storey idea is to be expected, commented Minister of Agriculture Brinkhorst. One of the main values of the report that featured the agrocomplex idea is the present discussion amongst everyone involved." It has got the Dutch thinking about the future of farm production, he feels.
One thing is certain: such revolutionary ideas - even the not-so-extreme alternatives - will have to be carefully sold to the general public. Another tower project - in Babel - failed to succeed through lack of communication! BP
SPAIN: a place in the sun for Dutch hogs
The 10 C difference in average temperatures between north and south means that northern Europeans flock to Spain's 300-day sunshine climate whenever holidays start. Now, Dutch hog producers are buying farms in the south, building hog feeding units and sending their piglets on the same route.The reason? Building costs and environmental restrictions are less in Spain for hog production, cutting investment requirements in buildings by about 25 per cent compared with the Netherlands. Wage costs are substantially less and the price of farmland is only one third of the cost in northern Europe. Feed prices are slightly higher, but there are tax advantages and on the bottom line Spain is currently proving to be around 16 per cent cheaper than northern Europe for pig feeders.
Last year, some 200,000 piglets were shipped south to take advantage of this situation. The Dutch farmers at home have internet-video contact with their Spanish feeding enterprises and a management organization supplies them with weekly fax or e-mail reports on all physical and financial aspects of the production.
The journey south for the piglets is 1600 km and takes 21 hours non-stop by truck. Feeding to 100 kg liveweight takes an average 145 days and delivery contracts are made with slaughterhouses and processors down in Spain. BP
© copyright 2001 AgMedia Co-operative Inc..
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When it comes to price discovery, value is in the eye of the beholder
Farmers need to communicate the true values in their production process if they are to realize the intrinsic worth of their productsby RICHARD SMELSKI
Price discovery means selling something, such as pigs, and then trying to determine the relative value in the market place. Unfortunately, the effort put into price discovery can take more energy than the selling process. Price discovery has little value if it is not associated with the intrinsic value of the product sold.For example, what are the other elements affecting the sale, such as credit terms, housing requirements, labor adherences, environmental obligations, humane handling observations, input guarantees or something as simple as times and delivery? Selling requires that these intrinsic values be communicated to the buyer and if need be, further up the food chain.
Most farmers, like many others, do not like the word "selling" and would rather be buyers. They dislike expounding on the different and the unique virtues in their product. However, every purchase requires a buyer and seller, so production without selling is meaningless. And if you do not communicate your values in the sale, than the buyer has no desire to pay for the true values in the production scheme. Information needs to be attached to the products such as quality controls, environmental restrictions, labour efficiency and capital utilization that were involved.
The idea that pigs of equal quality deserve an equal price is a myth. There are no pigs of equal value. Pigs at the Royal Show bring several times the price of pigs sold through regular channels, proving that different values are attached to the situation and not simply the commodity. It is easy to categorize pigs according to some data, in order to channel them into a commodity product. The data may not be even related to the end use. The total value is not in the commodity, but in the production chain. Put another way, the demand for pork is different if the consumer is in a romantic evening setting than if he or she is eating in a car or casually checking the nutrient content on the label. Selling means giving customers what they want at the time.
Become familiar with the word "outsourcing". Outsourcing means supplying input into a mainstream production channel, under specified terms (contract). Car companies realized that they could obtain their car parts better and cheaper by outsourcing than by producing them themselves. Outsourcing can also be profitable -- for example, the potato supplier to McDonald's actually gets a better return then McDonald's itself.
Now price discovery takes on a new meaning because the chain becomes dependent on each of its partners to fulfil the consumer's demands. Outsourcing requires you to mature into an interdependent supplier versus an independent supplier. However, outsourcing has a high information requirement because different outsource suppliers have to match the quality controls. The more information (selling) you provide, the better your opportunity to become an outsource supplier to the high value chains. Or you can do what we did in the old days -- leave the cream can at the side of the road and hope enough money is left behind when the cream cans were picked up. If you're short, next time you can leave two cream cans.
The perception exists that production costs should dictate market price. Do you care how much a Malaysian makes peeling rubber off a rubber tree plant when you purchase tires? Do you think that a consumer cares any more about the farrowing rate than you do about crossbreeding programs for rubber trees?
Like your tires, the consumer wants a safe, convenient, timely and fulfilling product. The price will be relative to the information that can be provided; and Ontario has a tremendous opportunity to tell more of its pork story. BP
Richard Smelski is hog technical services manager for Agribrands Purina and a former Ontario government swine specialist.
© copyright 2001 AgMedia Co-operative Inc..
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