Better Pork - October 2005
BEHIND THE LINES
by ROBERT IRWINOur pork producers are among the most productive and competitive on the planet (their position as exporters points to that), but the competition has been heating up. The stronger Canadian dollar makes it hard for pork to be "cheaper" in world markets.
Will keeping out "food additives" by not using tools that keep costs down make our pork more desirable? Who pays for that? Or is it just another cost of doing business that producers must shoulder?
In this issue's cover story by Don Stoneman, beginning on page 8, we look at what's happening with some other commodities as consumers, processors or food service companies demand more. There are no easy answers here. If there's an added value to giving the end user what is wanted, it's not always apparent.
Maple Leaf, our biggest pork processor, is telling us that good old Canadian commodity pork is facing a makeover to differentiate it from meat produced in competing countries. But it's not clear who is going to pay for the pork industry's equivalent of a new wardrobe makeup, hairstyling and membership at the gym. This is one of the largely processor-driven questions that the industry faces in the coming months and years.
And as Canadian pork producers struggle with this question, Jim Dalrymple explains on page 32 ("Public support for pork research needed more than ever") that even relatively small competitors like Australia are boosting their spending for pork research to enhance their pork export opportunities. In fact, $20 million for a new research centre is a big commitment for a country like Australia that only produces about 5.5 million pigs annually.
The largest spending on individual Ontario farms has always been for feed. And corn remains our key energy ingredient. On page 36, however, nutritionist Janice Murphy reports on research that suggests wheat screenings could be a good energy source for grower-finisher pigs -- good information to file away the next time corn prices soar.BP
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Who will pay the price for making Ontario pork 'different'?
Producers want to know how they will be compensated for the extra costs when a powerful processor talks about creating marketing advantages with 'points of differentiation'by DON STONEMAN
The meat and bone meal issue has cooled off, at least for now, and Ontario producers are still feeding it to hogs if they wish after a protracted battle with processors who saw its exclusion as a marketing advantage overseas. Now Paylean, the newly approved feed additive that boosts lean pork production, may be the hotpoint in relations between Ontario pork producers and packers.Michael McCain, president and chief executive officer of Maple Leaf Foods Ltd., Ontario's (and Canada's) largest pork processor, alluded to concerns about Paylean's use at a Signature Pork awards dinner in St. Marys in mid-summer.
McCain continues to promote "points of differentiation" that separate Canadian pork in export markets from our competitors to the south, especially as the value of the two countries' currencies draws closer to par. Canada's discounted currency had provided pork producers with a comfortable profit cushion for years, he argues, and that advantage has gone and won't come back. Maple Leaf's 2003 annual report estimates that the change in the exchange rate that year cost producers $16 a pig.
Meat and bone meal has been one of the points of differentiation that Maple Leaf has stressed. Taking the protein source out of rations increases feeding costs. Some producers feel that keeping Paylean out would also put them at a cost disadvantage.
McCain pointed out that that one of the points of differentiation in overseas markets might be that Canadian producers currently don't use Paylean, a growth-boosting feed additive used in the United States for the last six years and only recently approved in Canada. Consumers in the developed world, McCain argues, are turning away from "food additives." Maple Leaf's position on this question is still being evaluated, as is that of Quality Meat Packers in Toronto, the province's second largest pork packer.
Paylean's maker, Elanco Animal Health Products of Canada plans to launch the product in Ontario this fall. Colin Hatch, Elanco's Guelph-based marketing associate, says Paylean offers users a $2-a-pig advantage after product and higher feed costs (dietary crude protein must be increased to make the product work) when it is used for the last 28 days of a finishing ration.
McCain says the issue will be taken up with Maple Leaf's overseas customers. In early September, Jeanette Jones, Maple Leaf Foods director of communications, said evaluations were still underway. "At this point, Signature Hog contracts do not allow the use of Paylean," Jones told Better Pork. "We are undergoing testing to learn as much as we can. We need to know more on the commercial impact of Paylean before we can take a definitive position. I'm sure you can appreciate it is a very complex issue."
'Fair consideration' for producers
Ontario Pork's chairman Larry Skinner would not comment to Better Pork directly on what Michael McCain had to say in St. Marys. However, he asserts that if Canadian pork is going to be "differentiated" and there is extra value in it for processors, then companies like Maple Leaf must be prepared to pass on "fair consideration" to producers.Skinner expressed concern about product differentiation programs in general. "We have to think long and hard before we enter into differentiation strategies to determine if the cost might be prohibitive."
Paylean is neither a hormone nor an antibiotic, according to Elanco's Hatch. It's a beta agonist, which attaches to receptors in muscle cells, turns them on or off and signals the muscle to increase its size.
Even the leanest swine genetics can benefit from the use of a Paylean feeding program, Hatch says. "We think pigs that have the ability to lay down lean will respond better to Paylean," Hatch says. A minimum of 27 grams of total lysine per pig per day is necessary when they are on the Paylean feeding regimen. The feeding period averages 28 days but can be as long as 41 days for tail-enders in a feeder barn.
Hatch has an immediate answer to counter any of McCain's objections about Paylean. When McCain cautions that Paylean is banned in food-additive-sensitive Europe and not approved for use in the equally sensitive (and, for Canadian pork producers, much larger) Japanese market, Hatch replies that Japan has accepted pork from pigs fed Paylean since the product was approved in the United States in 1999. As recently as last fall, an expert food safety group in Japan reviewed Paylean again and approved its safety for Japanese consumers, Hatch says.
As far as Europe is concerned, Hatch says, Paylean is one of many scientifically tested products that isn't used there and the Canadian Food Inspection Agency has set up protocols to assure the Europeans that the relatively small amount of pork that is shipped there is from pigs that haven't been fed Paylean.
With regard to cautions on the Paylean label, "all lean pigs today need to be handled with a lower level of stress," Hatch says. There is no direct link between the use of Paylean and fatigued pig syndrome, he says.
Chicken producer not happy
So just how good are differentiation strategies for producers? In other commodities, there are no clear answers. It depends upon the processor.A couple of years ago, Clinton-area chicken producer John Maaskant began growing chicken for Maple Leaf's Prime Naturally program, which requires that the grower use a specific Shur-Gain ration made without meat and bone meal. When he compared returns to another barn that was on a standard feeding program, he wasn't happy. He felt that the "bonus" he was paid to cover an average extra $40 a tonne for feed wasn't making up the difference. "They are trying to create a brand and differentiated product that has attraction and charge more for it," Maaskant says. "I figured I was subsidizing them."
Because the allocation system used at that time, guaranteed processors a supply of birds, it was difficult for a producer to move to another processor. It took Maaskant another year and a half to find another processor that would take his birds. That processor also had a specific feeding program.
There was a waiting list to raise chickens for Sun Valley Foods, owned by Cargill and a food service supplier to McDonald's. The chickens have to be raised without the use of specific drugs that are deemed, when used at sub-clinical levels, to be "growth promotants." Under the Sun Valley feeding program, all drug use has to be documented, Maaskant says, and a veterinarian of the producer's choice "signs off" on the documentation. The producer gets feed from the supplier of his choice. "It's not a complicated program," Maaskant says.
And there is a bonus, of sorts, that is tied to weight at slaughter, not to production practices. Ontario chicken producers are paid on the basis of average weight categories, with three cents per kilogram more being paid for birds in the 2.8 kilogram category than for birds weighing 2.2 kilos. Raising heavier birds is more difficult and expensive because there is "more risk time and mortality" in the barn, Maaskant says.
Sun Valley buys most of its chickens in an "in-between" weight category that used to be discounted, but pays the heavier bird price for them. "Some processors would say it's a bonus," Maaskant says. "I say they need to (pay it). If you grow to a heavier bird there has to be something more there."
The program wasn't linked to any particular feeding plan and Maaskant liked that aspect. But being tied to a company for both processing and feed made him uncomfortable.
"It gets to be pretty unpleasant. It's almost like you become a contract farmer. All we could do was complain. We couldn't negotiate." Generally farmers don't mind helping processors get what they want, Maaskant says. However they do want to be competitive as they are doing that. "I talked to them straight up. I've already had my input into their system."
Higher housing costs for McDonald's
McDonald's Canada hasn't put its policy on chicken production practices on its Web site. However, its higher supplier standard of animal welfare for egg production is front and centre. On its Web site, it stresses that the eggs it serves are produced by hens housed in cages at a rate of 72 square inches per bird. That's more room for each hen than is called for in the Code of Practice. And that would mean that there are fewer hens in a barn and higher housing costs. If farmers get more for eggs shipped to McDonald's, no one is willing to publish prices. Any additional payment to producers "would be an agreement between the grading station and the supplier of McDonald's," says Harry Pelissero, general manager of the Ontario Egg Producers. He directed Better Pork to speak to the Canadian Poultry and Egg Processors' Council in Ottawa whose president, Robin Horel, passed the question back to the producer organization. Horel said that even if he knew, he couldn't comment on it. "It's a matter of commercial confidentiality" that would not be shared between his members, who are graders and compete against each other.He speculates that higher costs associated with larger cages and fewer hens in a barn "might just be the cost of doing business" with a customer which has the buying power and the volume of McDonalds' Canada.
Skinner hopes that the benefits for Ontario pork producers will be clearer if processors want to differentiate their products. "We want to work with them. They have to recognize that they have to work with us."
And the producers' payment advantage has to be long-term. It's no good if the benefit goes away in six months, Skinner told Better Pork. BP
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Antibiotics and hormones a concern in Ontario
When the Ontario Farm Animal Council (OFAC) asks consumers about food issues, antibiotics and hormones comes up as equal levels of concern in pork, says Crystal Mackay, OFAC's executive director, even though there are no hormones approved for use in pigs in North America.Hormones are always the most contentious issue when OFAC does a food writer tour, Mackay says. The issue comes up in regard to teenage girls developing breasts earlier than they used to because of hormones in beef.
The most common thing she get asked about is the use of human antibiotics for livestock. Consumers have a skewed idea of the scale of antibiotic use. They think that "tons of it" are dumped in the feed, Mackay says. BP
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Move to brand Ontario red meats gets underway
While the packers are concentrating on "differentiating" our pork production in export markets, producers are preparing to fund differentiation programs here in Ontario.Sheep and beef and pork producer groups are looking at branding Ontario red meats simply by telling consumers that they are produced here. Consumers like to know that they are buying from local farmers, says Keith Robbins, director of communications and consumer marketing for Ontario Pork. They are familiar with the very successful Foodland Ontario campaign, but there is nothing comparable in place for red meat producers. Frankly, says Robbins, shoppers have no way of knowing if the pork chop in front of them in the meat case came from an Ontario farm.
The budget had not been approved as of this writing, but with contributions from all of the commodity groups and other funding partners, it could reach $1-$1.3 million annually for three years to get the branding established.
Ontario Pork already has a head start on this. "We learned a lot from our Farm to Fork experience," Robbins says. Farm to Fork targeted pig farmers' rural neighbours. This program will target urbanites as well.
"I don't think it will be an onerous task to brand these products," Robbins says. In a trial with retailers, there were some early successes. "The other option is doing nothing," Robbins says. And that has certainly already been tried already.BP
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back Don't neglect your boardroom negotiating skills
A boardroom decision can cost a producer more than a decision about feed or ventilation in the barn. Yet too many producers concentrate on their farming rather than their leadership skills
by RICHARD SMELSKI
Many urgent decisions affecting our daily business are now being made at boardroom tables rather than on the farm. Producers often focus on management and on-farm skill sets, but shy away from boardroom meetings and leadership skills. Yet a boardroom decision can cost a producer more than a decision about feed or ventilation in the barn.One may feel removed and ineffective in these boardroom decisions, but the worst battle to lose is one where you lose by default. From a producer's standpoint, leadership skills are needed just as great as farm management skills.
The Ontario Swine Industry has been blessed with many great leaders - M. Davies, W Stein, M. Selves, H. Beattie, G. Hill, J. Degroot, K. Murray, J. Lichti, C. Schlegel, B. Robinson, R. Coghlin, K. McEwen, G. Procter, E. Dolmage, F. Kains, G. Bowman, and many more.
However, as operations are consolidated and put more emphasis on shareholder value, there is less industry leadership and more self-serving missions. Yet the big battles are at the boardroom and not on the farm, making leadership even more important.
This leadership at the boardroom table is crucial as Ontario becomes more dependent on export markets, consolidated businesses and increased government bureaucracy. Can you imagine someone negotiating your energy credits for you in Queens Park or Ottawa or Geneva, where often it is not what makes sense but what can be traded. "Do you think some negotiator might suggest decreasing the sow herd in Canada in return for less border protection? Few negotiators see the whole picture -- their job is to deal with a narrow segment of the business. And rarely does the negotiation take place on a level playing field. Just recall the U.S. countervail which arbitrarily placed punishing duties on Canadian pork. There is no conspiracy to weaken the industry, but there is certainly a thrust by the "big few" to increase market share that often involves negotiating at boardroom tables in your absence. There are management advantages in aligning production -- reduced sales costs, predictable deliveries and traceable inputs at transparent costs. But the more disciplined (better managed) the operation, the less creativity, flexibility and compassion for the participants.
Yet James C. Collins and Jerry I. Porras in their book "Built to Last: Successful Habits of Visionary Companies," reviewed hundreds of organizations and determined that one of the key things differentiating companies that last a long time are that they have more noble goals than just maximizing return to the shareholder. In other words, not only do these organizations produce a profit to survive, but also they had more noble aims of supporting society.
Leadership is not based on size or financial well-being. It is based on good information, consensus and the public good. As the swine industry consolidates, be sure to pick your partners carefully.
There is a cost to being involved at the boardroom table. It might be that you have to purchase shares or it may involve membership. The farm community is unique because leadership has traditionally been a natural characteristic. Many outside our industry are frustrated by the fact that farmers prefer to trust the leadership skills of their fellow farmers, but this rural leadership is still a great rural asset. BP
Richard Smelski is general manager of Ontario Swine Improvement Inc. and a former Ontario government swine specialist.
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back Measuring nitrate concentrations below the crop root zone after manure spreading
Experiments found that, where manure is applied at agronomic rates, large quantities of nutrients usually do not lurk below the root zone or beyondby BONNIE BALL-COELHO
Are there nutrients lurking below your root zone? In a series of experiments between 2001 and 2005 conducted by Agriculture and Agri-Food Canada, on different soil we measured nutrient concentrations down the soil profile. Following fall application of liquid swine manure on loams in Oxford County we measured soil nitrate (N) levels in the soil.On Oct.10, 2001, we applied 3,920 imperial gallons of manure per acre, containing 178 pounds total N per acre. By the following spring, soil nitrates had moved to 0.4 metres deep.We found that early corn growth was better with manure applied in the spring than in the fall, indicating, that N was lost over winter from fall-applied manure. Since nitrates did not accumulate below the root zone, which is effectively about one metre deep in the case of corn, N was more likely lost to the atmosphere (denitrification) than to leaching out of the reach of corn roots.
After we applied 3,920 gal/ac containing 150 kilograms of N per hectare on Nov. 5, 2002, to silt loam, soil nitrates had moved to 0.9 metres deep by the following spring. The nitrate amount was about 60 kilograms of N per hectare. Some of this nitrate (about 30 kilograms per hectare), was recovered by the Pre-Sidedress Nitrate Test (PSNT), so was still i the top 0.3 metres by June. Crop growth, yield and the PSNT all indicated that much of the N was available to the 2003 corn crop.
Even though nitrate from fall manure had moved further down the profile over the 2002/03 winter than in the 2001/02 winter, more N was available to the crop in spring 2003 than in spring 2002. Greater N loss by denitrification during the milder 2001/02 winter than during the colder, snow-covered 2002/03 winter likely led to the reduced N availability.
In both experiments, there was no difference in nitrate concentration to 1.2 metres deep between fertilized, spring- or fall-manured plots in the falls of 2002 and 2003.
We also measured soil nitrates following pre-plant injection of liquid swine manure on silt loams in Oxford County. After we applied 5,000 gallons per acre containing 110 pounds N per hectare pre-plant, on May 20, 2004, nitrates had only moved to .6 metres deep by July. with 145 mm of rain, not below the root zone And after we injected 4,500 gallons per acre containing 295 pounds of N per acre on April 22, 2005, nitrate had not moved into subsoil layers with 57 millimetres of rain by May 5.
Following repeated pre-plant injection of liquid swine manure on silt loam in Perth County, the cumulative effects of different rates on profile nitrates became apparent after three years. Nitrates increased with injection of 8,300 gallons per acre containing 496 kilograms of total N per hectare in 2000, plus 6,660 gallons per acre in 2001 and 2002 containing 322 and 464 kilograms of N per hectare. About 27 pounds of nitrate -N per acre accumulated between 0.4 and 0.9 metres deep. This nitrate was still within reach of corn roots and so was potentially available to subsequent crops.
Where lower rates of 5,000 gallons per acre containing 300 kilograms of N per hectare in 2000 plus 3,330 gallons per acre in 2001 and 2002 containing 230 and 160 kilograms of N per hectare were injected, subsoil nitrate concentrations were less than two ppm to 1.2 metres deep. The injection rate for 95 per cent of maximum corn yield averaged 3,650 gallons per acre over four years of experiments sidedressed with swine manure containing 0.4 to 0.6 per cent N. Neither ammonium nor phosphate migrated to subsoil at any rate of sidedressed manure after three years.
Following repeated pre-plant injection of liquid swine manure on loamy sand plots in Norfolk County for three years, we measured nutrient concentrations in soil solutions collected 1.5 metres below ground. During the extremely wet summer of 2000, nitrates moved below the root zone where 5,000 or 7,000 gallons per acre of manure containing up to 220 kilograms had been applied. With 227 millimetres of rain in June, approximately 35 kilograms per hectare of nitrate-N leached from the manure, as opposed to 12 kilograms per hectare from fertilizer.
More nitrate leaching occurs after pre-plant injection of manure than following sidedress injection of fertilizer N, partly because N in earlier-applied manure had more time to convert to nitrate form than N in fertilizer applied later when heavy rains had come. In sandy soil, once ammonium contained in manure or fertilizer has converted to nitrate, it is easily carried below the root zone with rain. In other years, little nitrate moved below the corn root zone from manure pre-plant injected at rates ranging 3,500 to 5,500 gallons per acre, containing 140 to 150 kilograms total N per hectare. Ammonium was not found in solutions collected 1.5 metres deep and phosphate concentrations were the same, regardless of the nutrient source (manure or fertilizer).
The rapid movement of nitrate through coarse-textured soil demonstrates why liquid manure should not be applied in the fall on these soils unless a cover crop is present to absorb the converted N. Cereal rye overseeded into standing corn in August reduced nitrates in soil solutions 1.5 metres deep equally well in the fall and subsequent spring, whether manure or fertilizer was the N source.
Sandy soil represents the worst-case scenario for nitrate movement to groundwater after manure application. However, nitrate movement is not indicative of manure movement, because unlike ammonium and phosphate, nitrate is a conversion product. We did not find any evidence of actual manure movement to deeper soil layers in sand after pre-plant injection under natural rainfall.
To confirm if there is any risk of manure itself moving to deeper layers, we applied liquid swine manure at high rates (6,660 and 9,975 gallons per acre) on saturated loamy sand. Then the field was irrigated with 80 millimetres of water. An additional 10 millimetres of rain fell overnight. From a trench the next day, soil was cored sideways underneath the injection band. The specialized sampling equipment we used was constructed to eliminate possible contamination of samples with manure from the upper layers.
Ammonium and phosphate were not detected below 0.3 metres deep. Therefore, despite rapid transfer of converted N (nitrate) with rains on sandy soil, manure constituents such as NH4 and P do not readily move below the root zone. This is unlike some more heavily textured soils, where manure can bypass soil and move to deeper layers via cracks or bio-pores created by soil animals such as dew worms.
In summary, where manure is applied at agronomic rates, large quantities of nutrients usually do not lurk below the root zone or beyond. In sandy soil, once manure N converts to nitrate, it moves below the root zone if heavy rains occur in-season. More commonly, any residual N not taken up by the crop leaches beyond the root zone over the winter. Therefore, matching application time and rate to crop demand for N is a good way to minimize risk. In loams, nitrates move down more slowly. When manure is applied in the fall or at rates exceeding crop requirements, nitrates migrate downward, but for the most part remain within the root zone (less than one metre deep) for one season or longer.
However, less N may be available to subsequent crops when manure is applied in the fall, due to variable gaseous N losses by denitrification over winter. Phosphate and ammonium contained in manure are not profile-mobile over the short term in either sand or loam. BP
Bonnie Ball Coelho is a researcher, Southern Crop Protection & Food Research Centre, Agriculture and Agri-Food Canada, in London.
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