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Delmarva Farmer Columnists

 

How much are pigs worth? (Aug. 19, 2014)

Pig Tales

By Dr. Rich Barczewski, Associate Professor, Delaware State University

“How much are pigs worth?”
You might think that it is a very simple question with a very simple answer but unfortunately, the swine industry has changed so much over the years that the answer can be quite complicated.
If you are a feeder pig producer, the price you would expect to get for your animals would be the current market price for feeder pigs, based on their weight and grade. However, in many cases, feeder pig producers are currently working under contract and receiving prices that are essentially pre-set by contracts that are arranged prior to the sows even being bred.
If you are a market hog producer, the price is the current market price based on the animals’ weight and grade. But here again, some producers have pre-arranged contracts that set the price ahead of time.
There are still a few hold-out producers who produce hogs on the open market and sell them through some of the larger auction markets.
In those cases, the price is determined by various market factors of supply and demand.
Local processors impact these prices based on the supply and quality of hogs that are entering the market and their specific need for product.
Many of the larger packers work on contracts where prices are pre determined, taking some of the risk out of production.
Producers who have contracts generally are obligated to deliver a set number of animals to the packing plant on a regular (usually weekly) basis.
For doing that, they are guaranteed a set price and a place for the animals they produce.
Incentives may be in place so that the producers get more money if the quality of the animals they deliver is better than the average.
I have been amazed to watch some of the evolution that has occurred in the swine industry over my lifetime.
When I was a kid, my father always had hogs.
He often claimed that hogs were his first love and he really enjoyed finishing out a pen of market hogs on an annual basis.
As kids, my brothers and sisters and I even had a pet pig named “Sampson” who we used to take out of the pen and walk around the farm with us.
You need to understand that we all knew what Sampson was destined for.
You see, my father was also a sausage maker and when Sampson reached 220 pounds (the ideal market weight back then) he became Polish Sausage!
Think about that fact for a minute. Back in the late 1960s, the ideal market weight was 220 pounds. Hogs were commonly marketed between 200 pounds and about 230.
Currently, most market hogs are much larger with some tipping the scales at 280 pounds or even more.
Why? Basically, it costs as much to process a 300-pound hog as it does a 200-pound hog so from an efficiency standpoint, the packing plant generates more product by processing larger animals.
That brings me to another factor to consider in the value of pigs: What are the pigs being bred for?
I know this may sound strange to individuals who are unaware, but there are actually two segments of the industry, the commercial industry that produces pork for human consumption and the show ring that produces pigs that are intended to be shown at various fairs and exhibitions.
Show hogs are genetically different than commercial hogs.
They are bred to be leaner and more heavily muscled.
While we all know that most show animals will end up in the food chain, the value of those animals is highly inflated because individuals who show are willing to spend large sums of money to acquire their animals.
In many cases, prices paid for show hog feeder pigs will exceed the value of a full grown commercial market hog.
People who know me know that I have always had a problem with this but I’ve decided to give up the fight.
If individuals are willing to spend large sums of money for a show pig, they do so at their own risk and they know what they are getting into up front.
So when you consider all the factors involved in determining value on a pig, it is apparent the answer to that question can be more complicated than you think.

What babies can teach us (Aug. 19, 2014)

Keeping the Farm

By Robin Talley, District Director, Delaware Farm Service Agency

On a plane ride home from Nebraska a couple of weeks ago, I heard the most remarkable story. A coworker and I were chatting about work and family and balancing both.  Her son, now in his early twenties, is a teacher and football coach.
When he was three years old, she was running late for work one day and told him to be ready to hop out of the car at day care.  When the car slowed in front of the day care, he opened the door and jumped out!
I could only imagine her panic. She didn’t know whether to stop or pull forward because she didn’t know where he was. Thankfully, he was not seriously hurt — just had a little “road rash.” The lesson of that day will last a lifetime: Sometimes you just need to slow down and consider your priorities.
I know this is a terrible time of year to suggest slowing down. But, when important decisions have to be made, we need to assemble our resources and think it through. Just like a baby, we can take it in steps.
For instance, the 2014 Farm Bill allows farm owners to make a one-time decision to reallocate base acres and update yields.  This decision will impact the farm through 2018.
Farm Service Agency is in the process of mailing all farm owners and operators a letter. The letter includes a summary of the crop acreage reported on the farm for the 2008-2012 period.
It’s important for you to review this summary for accuracy. Let us know if any of the data is incorrect or missing.  This verification process is the first step before owners and operators can make a decision whether to reallocate base acres or retain their current base acres.
Data may be missing because a crop report was not filed.  If so, you can request a late-filed acreage report. 
If data is incomplete due to reconstitution of the farm, your local FSA office will research and update the acreage.
We have 60 days to get the acreage history right before we can move on the next step — base reallocation.
The decision to maintain the farm’s 2013 base acres or to reallocate them is important because it impacts potential payments in the Agriculture Risk Coverage and Price Loss Coverage programs.
For example, PLC payments are issued when the effective price of the crop is less than the reference price for that commodity.  The effective price is determined using a 12-month market year average price.  The reference price was set in the farm bill law.  Payments are calculated using the base acres, not the planted acres of the crop. 
The wheat reference price is $5.50/bu.  If the 2014 market year average price turns out to be $5.00 per bushel, a 50-cent payment will be earned.. The total payment will be calculated using the base acres, not the 2014 wheat acreage planted.  
The purpose of the ARC and PLC programs is to manage price and revenue risk.  To make the best choice for your farming operation, you’ll need to understand the differences between these programs. 
As we head into fall, FSA and Extension will be holding meetings to educate farmers about their options and demonstrate the decision tools which will soon be available.  The final step will be for farm owners to choose ARC or PLC.  This election will be effective for the duration of the farm bill. 
My one-year old niece spent the week with us recently.  Two tentative steps at the beginning of the week quickly turned into a dozen by the end.  Rollout of ARC and PLC are about the same.  Much has been happening behind the scenes to assemble the data and tools and we’ll be running in no time.
Be sure to subscribe to GovDelivery so you’ll have the latest news on farm bill implementation.  Subscribe online at http://www.fsa.usda.gov/subscribe or contact your local office for assistance.