Category: FSVS NEWS

Dr. Dermot Hayes, agricultural economist at Iowa State University, shared his outlook for US pork exports at the Four Star Veterinary Service Pork Industry Conference held in Fort Wayne, Indiana in mid-September.

“Southeast Asia is switching away from producing backyard pigs that scavenge or eat household and restaurant waste to one based on commercial feeding,” said Dr. Hayes. “What we are learning is that the old system isn’t viable any more in the era of African Swine Fever (ASF). This means that in a lot of the world countries will need to decide whether to import pork or to import feedgrains with which to produce pork domestically. The latter is far more expensive and will lead to malnourishment among the poor.”

Why focus on exports?

Going back to the fall of 2020, China came in unexpectedly and bought almost 7% of the US corn crop and that drove up domestic corn prices, he said. But it didn’t just drive up the price of corn for export, it also drove up the price of corn that stayed in the US for ethanol and for livestock feed.

“In a commodity market, it’s your last customer that sets the price,” he said. “In the pork business, because we’re a big exporter, it’s the export market that typically sets the price. Also, Americans are amazingly predictable in terms of how much pork we can eat at a set price, but the international markets are more volatile. So, if you’re looking for shocks in the market, you look internationally.”

Dr. Hayes said a lesson learned, especially in Southeast Asia, is that the US can export products there that are not in demand in the US. In so doing, this will reduce the breakeven cost of loins, tenderloins and bellies for the US consumer because the US can take the feet, head and intestines and sell them into a market where they’re worth $1 per pound or more. This increases the overall value of the carcass which reduces the breakeven price. While the US consumer is well-provided with pork, Dr. Hayes sees a growth opportunity for US pork exports.

US pork consumption has increased in line with population growth, but there’s been significant growth in US exports since 2000.

“Exports were almost zero in 2000, and now we’re exporting between 25% to 30% of our pork,” he said. “The question remains if that growth can continue and are there good fundamentals behind it?’”

In the graph above, the height of the bar represents the cost of producing a pound of pork. The US, Canada and Santa Catarina, Brazil are the low-cost producers. Mato Grosso, Brazil has foot-and-mouth disease, so they are not a player in the pork export market. Dr. Hayes said he’s been to Santa Catarina, and they don’t have a lot of room for pork expansion.

“In the graph, the red bar represents the feed cost, and China is spending more than $2 per pound for feed. The reason for that is they are at import parity, that is at the margin. Their soybean meal and corn prices are set by the import price because they are consistent importers.”

It can be very costly to move commodities across the ocean to other countries and then on a farm in-country to be fed to livestock. It can double the cost of production or more when you have to feed at import parity, he explained.

The expense of shipping pork

“If you’re moving frozen pork, it costs 15 cents a pound to go from Iowa right into Hanoi, Beijing, Shanghai or Tokyo. We’re not doubling the price of pork; we’re adding 15 cents plus margin to the cost of the product,” he explained. “It’s more efficient, from a transportation and logistics perspective to move the raw material rather than the finished product.”

The chart above shows the percent of imported pork consumed in a country. Dr. Hayes said it’s a measure of the opposite of self-sufficiency; it represents import sufficiency. For example, Honduras imports about 90% of the pork consumed.

“The US does have free trade agreements with the countries listed, and that’s the point. What had been happening in the past is these countries were restricting pork imports and allowing in feed grain imports. So, they were tilting the balance away from importing the final product back towards the raw material. If economics are allowed to work out, instead of buying soybean meal and corn from the US, those countries will buy pork from the US.”

He said the self-sufficiency argument doesn’t matter if you’re relying on a country for your feed or your final product. There’s no argument against trade because you’re already dependent on imported feed.

“Generally, over about a 10-year period, they go from buying no imported product to about 20% or 30% or 40% in the case of Japan and South Korea,” he said. “To think about why a country like El Salvador or Honduras would buy imported product, would you invest expensive capital in poor production facilities in countries that are so economically uncertain? You would need an enormous risk premium, and investors are not willing to do that. It’s just simply better to buy the imported product.”

The whole sector is shocked about the fact that they still have 20% or 30% of their domestic production that was relying on household and restaurant waste, and that’s not viable anymore, he explained. Thus, these trends will continue, not because we have new agreements, but due to the shock to the system because of ASF.

Cost to dispose of manure

“In Belgium, it takes at least $10/pig to get rid of the manure. In Holland, the government just further restricted how much manure can be applied; they’re going to have to dry it and move it out of the country,” he said. “In Upper Saxony, Germany, the value of land is huge because they need to control the land upon which to apply manure. It’s very expensive in Europe to dispose of manure.”

Dr. Hayes said he and his wife farm in Iowa, and they put in two manure easements.

“We are so lucky the last couple of years to have that inexpensive manure,” he said. “The slide (above) shows how much value there is in manure in the US – the value is $12 per pig right now, which gives us a $12/pig advantage compared to European countries who have a $10/pig disadvantage.”

Pork exports in 2022

Shifting from the long-term where Dr. Hayes believes the US has a lot of potential for growth, to the near term where he sees a lot of industry challenges.

“The punch line is that this year has been a terrible year for US exports,” he said “Notice all the red entries here. We were up in Mexico 23%, but we’re down 20% overall. In South and Central America, we’re about holding even, but we’re really losing out in places like Southeast Asia – the Philippines, Vietnam, Singapore and Australia.”

To put the 2022 data into perspective requires a look at 2020 and 2021 data of weekly export sales accumulated for over the calendar year.

“What has happened is we went from two extremely good years to a normal year, but we’re down 20%, because we had been up 20% for two years,” he explained. “Let me go through what happened in 2020. China had African swine fever and in 2018 and 2019, they culled a lot of pigs. In 2020, China really needed pork, so they came to the US and some months were we shipping 12% of everything we produced to China. It wasn’t all deboned; a lot of it was what’s called six-piece carcasses where we cut the carcass into six parts – we keep the middle parts here – then ship the end pieces over to China where they would do the deboning, partly because we were short on labor at the time. So, it was a phenomenal opportunity for us.”

The US has always faced a 25% duty in China that nobody else pays which is left over from the trade war, he said.

“A little later, China could be a little more price conscious; they weren’t in such panic to buy pork, and they went to Europe to buy pork to replace the more expensive pork they were buying from us,” he said. “European pork exports, especially Germany and Spain, really shot through the roof, but then we (the US) backfilled into the markets where they would have been. Our exports to places like Southeast Asia, Vietnam, the Philippines were really good. Since then, China has rebuilt its sow herd, and European pork is swamping the market to our detriment in the US.”

US pig market

On the domestic front, during the first six months of 2022, the US was not killing as many pigs as we had expected. There was a small reduction in the number of sows, but that should have been offset by an increase in sow productivity, he said. However, there were weeks in 2022 that slaughter was down 5% over 2021.

“Anecdotally, I’ve been told that it has to do with a very virulent version of PRRS,” he said. “We weren’t killing as many pigs as expected and if you don’t have the pork to export, you’re going to be down overall.”

Also, in 2021 and 2022, the domestic consumer has been willing to pay quite a bit more for pork, creating the strongest year for domestic demand that Dr. Hayes has ever seen. He speculated that it could have to do with the pandemic assistance checks (Economic Impact Payments) going out; people weren’t eating out; they built up their savings. Coming into 2022, the savings rate was the highest on record, he noted.

“There was just more money in the economy. I had always assumed that the demand for pork had maxed out, but it turns out that if you give people a lot more money, pork consumption does benefit,” he said. “So, the punchline on this year’s exports is that we didn’t produce as much pork as expected; we demanded more pork and were willing to pay a higher price in the domestic market; European countries had a surplus to export because China had rebuilt their herd; we pulled out of our price sensitive markets. It doesn’t mean that it’s all bad – price sensitive customers will buy our pork when we have a surplus at a cheap price. But if we have a scarcity of product in the market, they’ll back off and give the US consumer access to the pork.”

Dr. Hayes bottom line

The pork industry with grow and exports will continue for good fundamental reasons, he said.

“That’s good from a financial perspective but it exposes us to us getting African swine fever or Foot-and-Mouth Disease because we would really have to drop the value of our hogs to get consumers to buy 30% more pork,” he said. “If we get African swine fever, we will lose most of our export markets, and it’s something that every producer should be aware of.”

The US government has put in place a two programs called Livestock Gross Margin and Livestock Revenue Protection that work similarly to crop insurance.

“These are like out-of-the-money put options – you can buy them for 50% of fair value through your crop insurance agent,” he said. “I think they are hoping that farmers will use these as out-of-the-money options to protect against catastrophic risk. Because they’re subsidized, there’s been a lot of interest in them. I advise you to talk to your private insurance agent because if we get African swine fever or Foot-and-Mouth Disease, we are in a world of hurt.

Mycoplasma bovis tends to hit calves early on in life, especially those born on dairy farms, according to Dr. Bryant Chapman with Four Star Veterinary Service in Ohio, noting that beef-on-dairy calves can be at risk, especially if they were not provided adequate amounts of colostrum.

While mycoplasma can also cause mastitis and arthritis, the major concern with the pathogen is with the upper respiratory tract and pneumonia. Mycoplasma bovis can lead to irreversible lung damage, can increase morbidity in infected calves and, in some cases, increase mortality, Chapman said, pointing out that this costs producers not only in calf losses but also in lost growth potential and increased medication costs.

One of the most tell telltale signs of an early mycoplasma infection is a unilateral ear droop — when looking at a calf, one ear will be pointed forward and alert while the other is drooping — which is fairly unique to mycoplasma infection, Chapman said.

Mycoplasma can present differently depending on type of cattle operation, he said — dairy calves tend to come down with it earlier in life than in beef calves that spend their first few months on pasture with their mother. Beef calves can develop mycoplasma when they’re weaned and put into more of a drylot housing scenario.

Generally, mycoplasma is a slower-moving pathogen, where a producer will be treating a couple of calves every week for multiple weeks, Chapman said. With other bacteria, a whole group of calves will get sick all at once. Once calves are around 400-600 lbs., they tend to grow out of it and have some immunity against mycoplasma, if they did not have much lung damage, he added.

Facility management

Mycoplasma likes to thrive in damp, humid environments, Chapman said. He said barns should be kept clean and dry with good ventilation to reduce the risk of Mycoplasma bovis infection.

Mycoplasma cells do not have a cellular wall, so it doesn’t live very long in the environment, he said, but studies have shown that Mycoplasma bovis can live within biofilms created by other bacteria or debris for months or potentially years. Without proper sanitation and disinfection, mycoplasma can move from one group to the next by residing within a barn if it is not cleaned out properly between groups.

Proper ventilation management is important, especially during winter when calves may be confined in barns. Producers want to keep their animals warm but humidity can then develop and allow mycoplasma to proliferate.

Treatment and control

As mycoplasma has no cellular wall, so only certain types of antibiotics will be effective against it, Chapman said. Antibiotics that target the cell wall, such as the beta-lactams, will not be effective, but other products such as the macrolides can be a good choice, he said, as long as they are used judiciously.

Long-acting macrolides can work well, Chapman said, because they remain in a calf for a longer period of time, which is important with the slow-acting nature of mycoplasma. Macrolides have also been shown to target the lungs where mycoplasma can cause damage.

Unfortunately for the control of Mycoplasma bovis, there really isn’t a “great vaccine, whether it would be autogenous or commercial for cattle,” Chapman said. There are companies that are trying to develop a vaccine, but so far attempts have been “pretty futile” in terms of true protection against mycoplasma.

Prevention is the best way to control mycoplasma flare-ups, which means targeting the environment, Chapman said. Producers should pay attention to keeping the calves’ environment dry, use appropriate bedding, and make sure the stocking density and ventilation rates are appropriate for their facilities. On dairy farms, there is the extra milking equipment handling and sanitation.

Organic farms

Organic producers really have to focus on environment to reduce the risk of mycoplasma infections, Chapman said, as they do not have the ability to treat calves with antibiotics.

He suggested organic producers look at practices that would boost calves’ immune system, such as making sure they have enough electrolytes in their water or adequate mineral nutrition, so that they have a strengthened immune system to fight off mycoplasma. He suggested trying essential oil and botanical products that have become available, but with the caveat that those products do not have clinical trials to support their efficacy.

Organic facilities really need to focus on what they can do before an outbreak because one a mycoplasma infection starts, there’s not much that can really dampen it, he said. “It’s through the setting up of the correct environment and potentially vaccination” — although the history of vaccines and this bug has not been the most successful — that organic producers need to focus on, including facility and equipment cleanliness, calf environment, and housing and ventilation, Chapman said.

Even for conventional farms, facility and environmental management are the first, key steps to reducing mycoplasma risk. Just treating calves with antibiotics “isn’t going to solve your problem” with mycoplasma, he said, because the problem will continue to flare up. Maintaining a clean, dry, draft-free environment also helps prevent other respiratory diseases beyond mycoplasma.

Mycoplasma bovis is a “challenging and frustrating bacteria” that most groups of calves are going to be exposed to, so producers need to stay on top of their facility and environmental management programs to reduce the risk of the disease and minimize its effect on growing calves.

Swine producers may be facing an emerging respiratory condition without really knowing about it.

According to Dr. Michael Pierdon with Four-Star Veterinary Services in Pennsylvania, hemorrhagic tracheitis syndrome (HTS) is a clinical respiratory condition that has been identified in pigs that presents with a characteristic gross lesion on necropsy of hemorrhage in the trachea (windpipe) that becomes obstructive. The lesion causes severe coughing and, due to the restricted airway, high mortality.

The pigs develop a hemorrhage underneath the mucosa of the trachea, which creates a “blood blister, for lack of a better term,” that restricts the airway and causes issues with breathing, and ultimately, causes death, he said.

HTS primarily affects growing pigs, with the most dramatic outbreaks occurring in heavier finishing pigs, maybe 125-lbs plus, in Pierdon’s experience. He said he has diagnosed it in younger pigs, including in the nursery, although the severity of the gross lesion is less impressive in younger animals and the mortality doesn’t tend to be as high.

According to Pierdon, mortality rates are in the 1%–2% range. With a sudden acute outbreak of respiratory disease in mid- to late-finishing, with 1%–2% mortality over the course of a week, the losses can be substantial.

HTS is not new, he added, noting that the Swine Health Information Center held a webinar on it in 2020, but it hasn’t gotten a lot of attention because the trachea is not a tissue that is often examined or collected during a routine field necropsy.

The causative agent(s) are also yet to be determined, Pierdon said. “With respiratory conditions, people think lungs. What really put me on the trail of this is finding respiratory outbreaks with severe coughing and high mortality and sudden onset in mycoplasma-negative flows that we would oral-fluid test and find negative for PRRS and influenza.” he said.

While there are really severe lesions inside the trachea, the lungs often do not have significant lesions, he said.

HTS could easily look like influenza, and even that kind of mortality would be typical in an influenza outbreak in late-finishing pigs, Pierdon said, but it’s really telling when there are respiratory outbreaks that test negative for influenza, but those pigs still have those signs.

Clinical management

According to Pierdon, HTS outbreaks should be treated symptomatically with anti-inflammatories and sometime expectorants. He said antibiotic treatments are not particularly helpful given that there hasn’t been a consistent bacterial diagnosis associated with the condition and the affected animals tend to be heavy, market-ready hogs.

He added that it seems to be highly contagious within a barn with symptoms developing over a short period of time (24–72 hours), with the duration of clinical signs lasting 7 to 10 days.

With its rapid onset and lack of definitive cause, Pierdon said it is hard to get in front of the outbreak so it needs to run its course while supportive therapy is provided to clinically manage the pigs through the outbreak.

Critical actions

Pierdon’s goal is to raise awareness of this syndrome or clinical condition as a way of encouraging people to actually open the trachea and look for it. If a barn of pigs experienced an outbreak and oral-fluid samples tested positive for influenza, the assumption would be that it was an influenza case. Pierdon’s hypothesis is that it can’t just be him in Pennsylvania that is finding this problem and he wants other people to know to look at tracheas so those samples can be sent to the diagnostic labs. From there, the diagnosticians and epidemiologists can have more opportunity to try to figure out the actual cause of HTS. If it can be demonstrated that HTS is more common than believed, research funding may become available to further study and understand the problem better.

Pierdon said the lesions are most commonly found inside the trachea between the larynx and the thoracic inlet – in a market hog, about 4 in. behind the larynx. The lesions are most apparent when the trachea is cut in cross-section, he added.

He encouraged swine producers with pigs exhibiting acute and sudden outbreaks of coughing associated with mortality to have pigs necropsied, including an examination of the trachea. Producers can do this themselves or have a veterinarian investigate, but the point is to open the tracheas.

Veterinarians finding HTS lesions should include fresh and fixed pieces of trachea in their diagnostic tissue submissions to the diagnostic lab of their choice for gross diagnosis and histopathology.

By encouraging samples being submitted to diagnostic labs, Pierdon hopes a critical mass of confirmed cases will demonstrate the scope of the problem and make funding available to better understand HTS.

Dr. Jason Woodworth, swine nutritionist at Kansas State University spoke at the Four Star Veterinary Service Pork Industry Conference held in Fort Wayne, Indiana in mid-September about recent nutrition research as well as frequently asked questions.

Gilt development focused on her offspring

“A lot of times we’re focusing on gilt development in relation to her longevity in the herd, as opposed to the impact of gilt development on her future offspring,” said Dr. Woodworth. “We conducted a review looking at factors that influence offspring performance and profitability based on gilt development. This summary table describes the factors to consider when selecting gilts and include birthweight, litter of origin, colostrum intake, etc. The focus is on how to properly develop those gilts to increase the performance and survivability of her offspring.”

Essential fatty acid (EFA) balance

Dr. Woodworth said some of his research is focused on linoleic acid (LA) and alpha linoleic acid (ALA). These types of special fatty acids are found in higher concentrations in vegetable sources and contain much higher amounts of EFAs than other animal-derived fat sources like choice white grease. Research conducted at North Carolina State University studied EFA supplementation to sows and found that when sows go through a typical lactation, their EFA balance decreases. Thus, the amount of EFAs she consumes is less than what she puts out through the milk.

“Net over net, we have a reduction in EFA with some diet formulations currently used. The NCSU data suggested about 125 grams per day of linoleic acid and about 10 grams of alpha linolenic acid per day is the target to maximize performance,” he said. “That’s also in line with a study out of Australia in 2018 that observed reduced piglet mortalities when sows consumed about 120 grams of linoleic acid per day. And a large study we conducted at KSU showed increased piglet weaning weights when EFA were supplemented at increased levels.”

The post-weaning diarrhea challenge

Post weaning diarrhea is an industry challenge in the US. There are three sets of factors that need to be considered.

“From a nutrition standpoint, when we think about post weaning diarrhea, we tend to jump to crude protein pretty quickly,” he said. “We know that when we increase crude protein, a lot of nursery diets will have increased levels of undigested protein going into the hind gut which is helping feed the bacteria there and generating the scours that we’re seeing. The challenge with our mentality of chasing maximum performance, especially in an early weaned pig, is that we also tend to feed excess amounts of crude protein.”

Dr. Woodworth said a change of mindset is needed in our approach to formulate the nursery diet. He recommends a diet with lower crude protein and an amino acid fortified nursery diet spread out over phase one and phase two combination.  He suggests minimizing the inclusion of conventional soybean meal and specialty protein sources while taking advantage of some of the synthetic amino acids.

“The benefit is that it does reduce the incidence of scours, and it also reduces diet cost,” he said. “We need to be thinking about a different target when we approach our performance KPIs for the nursery. Reducing crude protein and nutrient intake may result in lower performance of the pigs, but hopefully it will be associated with less scours which has benefits we see later.”

Another approach to reduce post weaning diarrhea is ABC-4 which stands for acid binding capacity four. ABC-4 isn’t a new concept, but it’s receiving more attention in the US as the industry learns more about the weaning process.

“ABC-4 is important is because a newly weaned pig doesn’t have the capacity to produce enough acid to be able to maximize digestibility of nutrients,” he said. “In the past, we just put acids in the diet. The challenge is that we know some ingredients act as buffers. While we may be pushing some acids in the diet and if we have high levels of limestone, for example, we’re binding them up and those acids aren’t having much of a benefit. So, we started looking at ways to formulate diets to lower the acid binding capacity.”

Dr. Woodworth said nutritionists and producers may be reducing digestibility of some nutrients because the acid isn’t available to break down some feedstuffs. The current push is to figure out how to formulate diets that have low acid binding capacity. Studies are underway looking at ABC-4 and zinc oxide and its impact on average daily gain and removals and mortality.

To summarize, Dr. Woodworth recommends the following to minimize post weaning diarrhea:

• Reduce excess nutrients like crude protein and feed the right diet to the right pig at the right time
• Improve digestibility using ABC-4 and enzymes
• Stimulate gut development with fiber
• Adjust KPIs to ensure you are aiming at the right target

“The biggest thing is focusing on a whole team approach, especially from a post weaning diet standpoint,” he said. “We can’t do it alone; it takes the whole group. If you’re walking barns with only your nutritionist or only your veterinarian you’ve got a lost opportunity – get the whole team in there together.”

Do grow-finish feed additives make economic sense?

Starting in 2020, the US industry has seen a dramatic increase in fat costs. The rule of thumb of a nutritionist is that a 4:1 ratio of fat to corn price typically allows fat to be used as an energy source. When the ratio is below 4:1, it makes sense to add in some fat, but when it’s higher than 4:1, it doesn’t make sense economically.

“Right now, prices are about 7:1 to 8:1, and so a lot of fat should not be in a diet. However, it may still be there,” he said. “That’s one of the challenges faced by a nutrition supplier. You are often vetted based on your ability to have the best performance. Unfortunately, oftentimes the best performance isn’t necessarily associated with best profitability.”

Dr. Woodworth said the prices agriculture is seeing are not going to change anytime soon, and it’s partly due to the renewable oils push.

“It sounds like the aviation industry is also going to have a big push and initiative to use more renewable oils,” he explained. “What this has driven is, by 2025, to have around 25% more soy crush capacity in the US. Unfortunately for us, the oil will be priced out of our market, but there could be opportunities for lower priced soybean meal as a result of those new crush plants coming online.”

Recent trials assessed the value of added fat (up to 3%) on finishing pigs and showed no change in average daily gain, while 3% fat offered the best feed efficiency. However, the income over feed cost was lowest at the highest inclusion of fat. Dr. Woodworth reminded producers to be mindful of the economics of that decision and measure based on profitability, as opposed to basing it on performance alone.

Consider your feed biosecurity

Prior to the PEDV outbreak about eight years ago, the industry didn’t think much about feed biosecurity.

“We didn’t think about feed being a vector of virus transmission,” he said. “Since then, we’ve learned that viruses like PEDV and even ASFV and bacteria like Salmonella and E. coli can hitch a ride on feed and infect farms. We need to start figuring out how to transfer our sow farm biosecurity mentality to our feed mills and our feed supply chain, because we’re bringing in some of these pathogens through our feed.”

Research has taught us that prevention is the key. It starts with ingredient sourcing and ensuring you’re sourcing from good, trusted suppliers who will do a good job with manufacturing, storage and delivery. He said partner studies with a group in Vietnam assessing ASF transmission showed much of it came down to people in trucks.

“We continue to see with all of our research that getting ASF or other viruses on boots or into truck cabs is really what’s causing some of the transmission issues,” he said. “If we can keep truck drivers in trucks, that’s a big step in the right direction.”

Kansas State University has conducted African swine fever (ASF) research related to feed biosecurity and a summary of the research to-date has shown:

• While ASF and PEDV are not similar from a virus structure standpoint, they share similar characteristics and behavior within a feed mill
• Once you bring ASF into a feed mill, it can spread throughout and may be nearly impossible to remove
• Dust is an excellent carrier of the virus
• Contamination of feed and surfaces can be detected after multiple batches of feed pass through the equipment
• Especially with high traffic areas, it’s people who are carrying it throughout the system
• Mitigants and/or holding feed at different temperatures work to minimize or eliminate the virus

Kansas State University has many swine resources available on their website, including updated Swine Nutrition Guides for producers.

National Pork Board also has resources available to assist producers with biosecurity and foreign animal disease preparedness.

Dr. Dermot Hayes, agricultural economist at Iowa State University, shared original ongoing research on the Chinese agricultural market at the Four Star Veterinary Service Pork Industry Conference held in Fort Wayne, Indiana in mid-September.

“The Chinese grain markets are of particular interest in the crop area – how much land they have available,” said Dr. Hayes. “This is a slide showing the value of Chinese imports of wheat, corn, pork, beef, rice, soybeans, poultry, etc. Producers of every one of these products in the US dislikes the China market because the Chinese come and then they go. They come in and buy ethanol and DDGs and then they put duties on that, and then they buy sorghum and then they place a duty on that.”

To any individual commodity market in the US, China has been an unreliable market. However, Dr. Hayes said the chart (below) illustrates that when added together, China’s commodity imports are a reliable growth market. The US just doesn’t know which product they are going to buy.

China was buying pork in 2020, but by the end of 2020 and all 2021, they bought more corn and less pork. He said sometimes they buy products they can substitute like corn and ethanol, using one to make the other. When they do this, it gets political and involves duties. Dr. Hayes bottom line: the import value trend line is going up, and we are seeing about $100 billion in Chinese imports of land intensive products.

“China is driving world commodity prices, even though exporters all over the world really do not like that market,” he said.

Chinese corn imports saw a significant surge in 2020-2021 crop year to about 30 million metric tons. The USDA export estimate for this 2022-2023 crop year shows China is closer to 20 million tons.

“China can only buy corn from the US or Ukraine; they’re not yet set up to buy it from Brazil or Argentina,” he said. “The surprising jump in imports explains why our [US] market started to improve in the fall of 2020.”

Recently, China has been consistent with soybean imports at 100 million metric tons.

“Iowa produces about 10 million acres of soybeans or 12 million metric tons,” said Dr. Hayes. “For one country to buy more soybeans than what the Midwest can produce is quite amazing. Soybeans are the most land intensive crop. This is an economic concept that you can divide goods into land intensive or capital intensive or labor intensive. Almost all the cost of producing soybeans is the acre of land that they are grown on because the seed and fertilizer costs are low relative to other products. What China has done is given up on being self-sufficient in soybeans, they only grow a small amount of domestic soybeans for tofu; all of their soybeans for animal feed are imported.”

Using Google maps, Dr. Hayes shared the images above of the city of Shanghai, China. On the left is Shanghai 20 years ago in 1997 and it’s about 20 miles across. On the right is Shanghai in 2017 and it’s now about 100 miles by 100 miles.

“Shanghai, like the other big cities in China, is located on the land that is the best; that’s how the cities got to be big,” he explained. “If you are out in the desert in China, you couldn’t survive. So, the prosperous cities in China are the ones sitting on good land. The proposition I’m going to set up is how can China claim to have a constant number of crop acres and yet continue to see that kind of growth in their urban areas. It’s not just happening in Shanghai; it’s occurring in Beijing and Tianjin and others. The question is how they are accommodating this rapid growth and urbanization without losing farmland?”

China’s land use policy

“In 2007, an economist in the US wrote a book titled Who Will Feed China, and the answer was – the whole world is going to have to feed China,” said Dr. Hayes. “That scared the Chinese leaders and they said, ‘we’re not going to allow that to happen. We’re going to limit how much crop land we allow for conversion.’ That was in theory, but I’ve been going back frequently and I see more and more land that has been converted.”

According to Dr. Hayes, Chinese leaders, in a typical top-down approach, told the provincial governments that they shouldn’t convert any more land to development.

“What’s different in China is that nobody owns the land itself. The local governments have been making most of their money from converting the land – taking it from peasants and selling it to developers,” he said.  “About 60% of the [provincial] revenue comes from those transactions. So, you can see the central problem. The boss is saying no more conversion of land; but the provincial governments make legitimate revenue from selling communally owned crop land for development.”

For example, consider if every county in Iowa had to report their crop acres to the Iowa state government, and then the state reported those acres into the federal government. The counties aren’t working under any incentive program, so they are reporting accurately that they’re losing land. The state doesn’t want to report their losses to the central government, so about half stopped giving public access to county level data.

“However, the other half continued to publish their losses, which was a mistake, because now we’ve got a look at what they were collecting from the prefecture (like county governments in the US) and what they’re reporting to the Chinese central government. That was an example of what was happening to the land in China before it became political,” he said. “They were losing about 1.5 million hectares (3.7 million acres) a year. Around 2007, it became political, and the government told the provinces they cannot go below a redline set at 120 million hectares, so everyone reported that they were at the redline and not converting any land, which is impossible given what has been reported and what we can see.”

The graph above is from research conducted by Xiaorui Qu, a Ph.D. student who works with Dr. Hayes. The solid line shows China’s claimed crop land. The dotted line above shows where Chinese land now stands based on Xiaorui’s research. China is still losing about 1.5 million hectares a year and they are well below where they say they are. The research estimates China is losing a land base the size of Iowa every decade.

“What does it all mean? It explains the chart showing that China is starting to import a lot of land intensive products,” he noted. “If you ask them, they will say, ‘We are importing corn for a couple of years to rebuild our stocks.’ But the question is, how did their stocks get so depleted in the first place? I think the answer is that if they want to grow wheat and rice to be self-sufficient, then they’ve already given up on soybeans, and I think they are slowly giving up on corn due to the lack of land.”

Dr. Hayes bottom line

“I think US pork exports will resume strong at the end of 2022 and into next year, because of the culling that’s happening in China and Europe,” he said. “I think China will be at import parity for pork going forward, meaning production costs will be at least twice as high and with a 12% import duty, that industry is not protected. I expect to see considerable turmoil in China with considerable imports of pork muscle meat from Europe and pork variety meats from the US. Whether we like China as a customer or not, we’ve got them.”

Dr. Bret Marsh, Indiana State Veterinarian, spoke about the threat of a foreign animal disease (FAD) outbreak in the United States at the Four Star Veterinary Service Pork Industry Conference held in Fort Wayne, Indiana in mid-September.

“This is about preparation as it relates to foreign animal disease, and the challenges we could be faced with in this state and across the country along with identifying some of the challenges that are going on around the globe,” said Dr. Marsh.

In the map above, red indicates where African swine fever (ASF) exists around the globe; green is ASF-free.

“This is where it’s reported. My guess is it probably exists places that are not reported in red on this map. But as you can see, we have large portions of the globe that are green. We are fortunate here in North America to be in the green, but this virus has been on the move. And it’s presented some very unique challenges globally,” said Dr. Marsh.

ASF was first diagnosed in the continent of Africa in the 1930s. When it spread, a few countries like Spain and Portugal had success in eradicating the virus in the 1960s. However, virus spread has taken off in recent years, especially when China announced a diagnosis in August 2018. The Chinese outbreak and rapid spread across their provinces put North America on a higher level of awareness. The 2021 diagnosis of ASF in the Dominican Republic and Haiti suddenly put the virus much closer to the US border.

“This challenge exists not only for us here but anywhere on the continent and in South America,” he said. “This virus is a tough one. It’s a virus built to survive in the environment for long periods of time.”

ASF virus remains active in Dominican Republic and Haiti.

“Unfortunately, based on the last reports I’ve heard, the virus may be there for a while because of the economic challenges on the island and political unrest. In Haiti, for example, it’s one thing to get your diagnostic samples, but there’s no gas or fuel to deliver them to a diagnostic laboratory. The basic things we take for granted here are unique and insurmountable challenges there,” he said.

Classical swine fever remains a threat

Classical swine fever, historically called hog cholera, is a virus that the US has experienced. It was eradicated in the US in 1978. However, the island of Hispaniola not only has ASF, but it has had classical swine fever since 1997.

Classical swine fever currently is found in Central and South America, Europe and Asia and parts of Africa. North America, Australia and New Zealand are currently free of the disease. In the 1990’s large classical swine fever outbreaks occurred in The Netherlands, Germany, Belgium and Italy.

“This virus is alive and well and exists in large areas across the globe, and you just need to be aware that it exists not far from our shores as well,” he said.

Foreign animal disease preparedness

The question goes beyond how to prepare for a FAD on your farm. How does the US industry — and North America — prepare because the US swine industry is inextricably bound to the Canadian and Mexican pig industries?  Dr. Marsh said this became increasingly apparent in his recent experience with avian influenza outbreaks.

“It’s surprising the number of products right here in Indiana that go into the international market,” he explained. “You find that out because in a disease situation, you put an area around that infected site called the control zone. To move products in and out of that area, you have to have a permit. For example, one of the turkey companies here in Indiana ships 50 semitruck loads a week of turkey products to Mexico. It stopped [when avian influenza was diagnosed in Indiana] — just like that— those trucks were stopped at the border. We had to go through a negotiation on a timetable to continue to move that product. We’re just talking in a 10-kilometer area, that’s 6.2 miles. That’s all it took, and Mexico said no.”

If there’s a FAD suspected in your area, a 3-kilometer circle will be drawn around the site of the infected animal and that becomes the infected zone. Then a buffer zone will be established another 2 kilometers out from the original infected zone. The area as a whole is called the control area.  The control area will have restrictions on movement.

“If you’re outside of that zone, we hope that other states and other countries consider those as free areas and you can continue to move your product,” he said. “Otherwise, if you’re in that control area, there will be a permitting process for moving products in and out of the area,” he said. “If you’re on the infected side, we’re going to be trying to contain the virus until we can eradicate the disease. But it really depends on where you wind up. Basically, your preparedness plan should prepare for either of those eventualities:  If your site is infected and you’re in the control zone, or if you’re outside that area.”

There are many activities going on in the US swine industry to help producers and processors prepare for a foreign animal disease. Key programs Dr. Marsh discussed and encouraged producers to participate in:

Premise ID. Having a state premise ID is critical for rapid identification of farms in the control zone. This is important to be able to contain the virus as quickly as possible.

Secure Pork Supply Plan

• Voluntary initiative that provides practical continuity of business plan in the event of a FAD disease outbreak
• Focuses on three areas
  • Traceability and movement management
  • Enhanced biosecurity
  • FAD training and response

AgView

• Free, opt-in technology solution from the National Pork Board that helps producers of all sizes and types provide disease status updates and pig movement data to state animal health officials
• Designed to provide business continuity for US pig farmers by making disease traceback and pig movement data available to the USDA and state animal health officials on Day One of a foreign animal disease (FAD)

US SHIP (Swine Health Improvement Plan)

• Designed to identify disease-free areas with monitored- and certified-status herds across the country
• ASF-CSF Monitored certification aims to mitigate risks of disease introduction and provide a practical means for demonstrating evidence of freedom of disease (outside of FAD control areas) in support of ongoing interstate commerce and a pathway towards the resumption of international trade
• Applicable across the full spectrum of US pork industry participants from the small show pig farmer to the large commercial producers and slaughter facilities
• Modelled after the National Poultry Improvement Plan (NPIP) H5/H7 Avian Influenza Monitored certification held by greater than 99% of US commercial poultry operations

Certified swine sampler collector

• New program for the swine industry
• When an outbreak occurs, there aren’t enough veterinarians to test all the pigs, especially on an ongoing basis
• This program recognizes the work of an accredited veterinarian to train individuals at the farm level to collect the appropriate samples and submit those samples to the appropriate laboratory
• States maintain a repository on who’s been approved and certified

 Important things to know if there’s an ASF outbreak

FAD PReP/Red Book for ASF. This is a manual for high-consequence disease response in the US. The USDA maintains the content, and states execute. If there’s an outbreak in your state or region, download a copy and reference it.

Stop movement. Unique to an ASF outbreak, USDA will issue a National Movement Standstill of at least 72 hours after a detection in domestic or feral pigs. This is intended to allow states to gather initial critical information for a unified approach to an ASF response while inhibiting further virus transmission. Consider how this will impact your operation when creating your FAD plan.

 Feral swine. Any ASF diagnosis in the US will shut down US export markets. The infected animal could be a feral pig or domestic pig. Eradicating ASF in the feral pig population creates a unique challenge given the number of feral pigs found across the US. 

US territories.  In 2021, the US submitted a self declaration of the establishment of a protection zone for US territories in the Caribbean. This essentially sequesters Puerto Rico and the Virgin Islands from the 48 contiguous states in case of an ASF outbreak in either territory. Thus, if an ASF-positive pig is found in these US territories, it would allow US pork trade to continue with trading partners around the world.

ASF vaccine. An ASF vaccine hasn’t been approved yet, but Dr. Marsh said he is encouraged by some of the vaccine candidates that are being considered.

Dr. Marsh said a lot of work needs to take place now, while the US industry is negative, to ensure your operation is prepared and ready to respond if/when there’s an FAD outbreak. The US industry’s ability to quickly contain the virus during an outbreak will be crucial. Dr. Marsh encourages producers to consider their operations and work with their veterinary team to build an FAD preparedness plan, using all the tools at their disposal.