H1N1: Aftermath for the Ag Industry

As H1N1 media attention slowly dissipates, hog farmers are surveying the damage. At the time of this blog posting, 13,398 cases in 48 countries have been confirmed with 95 deaths. Repercussions of the outbreak have resulted in a blemished pork industry and have consequently impacted other agricultural commodities.

Despite the fact that humans cannot contract the H1N1 virus from eating pork, the media blitz has further damaged the already stressed pork industry. Since 2007, pork producers have struggled to earn profits. According to the USDA Agricultural Marketing Service, hog farmers have lost money 17 of the past 19 months; roughly 50 percent of the profits they have accumulated since January 1990. Producers were anxiously awaiting the onset of grilling season to fuel increased pork sales, but the virus outbreak terminated any such hope.

“The impact of the H1N1 flu has been quite severe on spot hog prices,” or the day-to-day cost of pigs, said National Pork Producers Council CEO, Neil Dierks, “Producers loses have nearly doubled.”

Dwindling domestic demands, coupled with bans on pork imports, have significantly affected the health and vivacity of the pork industry nationally and internationally.

According to the USDA Agricultural Marketing Service:
• The average American producer will lose $13.26 per head for the remainder of 2009, which is an average loss of $27.7 million per week for the U.S. swine industry.
• The U.S. pork industry is losing $8.4 million each day.
• Mexican pork sales have fallen 80 percent at a loss of $188 million.

H1N1 did not spare other agricultural markets. Russia banned all meat imports from producers in affected states and countries as animal-feed growers witnessed decreased market value as well.

"In the first trading session following the announcement of incidences of swine flu in Mexico and the United States, corn, soybean and wheat futures declined sharply," said Darrel Good, University of Illinois Extension marketing specialist. “Market participants reportedly are concerned that the threat of swine flu will reduce pork demand, stimulating further liquidation of hog numbers and resulting in reduced feed demand.”

Crop prices decreased immediately after the outbreak, but have since rebounded and, in some cases, even surpassed average levels as worries begin to wane. However, the same cannot be said for pork prices.

An industry that generates $34.5 billion of gross national product to the U.S. economy is in jeopardy. American and Mexican industry leaders are working on pork-consumption campaigns to boost sales. The Mexican Confederation of Pork Farmers and Mexico’s agriculture secretary hosted a “pork party” May 14, during which officials publicly promoted pork consumption by eating pork rinds and pork tacos.

Animal and crop farmers worldwide should view the pork fallout as testament to the significance of risk management in an unpredictable industry. The USDA’s Risk Management Agency provides an overview of crop and livestock insurance policies and programs to educate and guide producers.

Has your personal consumption of pork changed? Have you witnessed others bypassing pork products? Can the fate of the pork industry be reversed, or will H1N1 effects permanently tarnish market profitability?

Obama Nationalizes Organic Interest

President Obama expressed interest in the organic farming industry May 5 when he secured $50 million in United States Department of Agriculture (USDA) funds for organic food production.

Funding is available to farmers in all 50 states as administered by USDA’s Environmental Quality Incentives Program. To qualify, a producer must be in the process of transitioning to organic production or be certified with the National Organic Program (NOP), an organization that develops, implements, and administers national production, handling, and labeling standards for organic agricultural products.

Farmers must commit to furthering organic practices in conservation comprising crop rotation, cover crops, nutrient management, pest management, prescribed grazing and/or forage-harvest management to be eligible for funding. Financial allotment is $20,000 per producer. The application process ends May 29.

There is no doubt that organic farming is a huge growth industry, not only as a sector of agriculture, but also as a stand-alone business. The Obama’s have personally advocated organics by planting an organic garden on the White House’s South Lawn.

Multiple groups exist that champion the development and expansion of organic farming methods. The Organic Trade Association (OTA), a membership-based business association for the organic industry in North America, is one such group.

“OTA believes that this funding will further encourage farmers to use such practices and help increase the U.S. production of organic food to meet growing consumer demand,” said Christine Bushway, OTA executive director.

Other industry groups include the Organic Consumer’s Association, The New Farm, Acres USA, and the Northeast Organic Farming Association.

As proof of the farming segment’s increased growth, the USDA intends to create a division within the agency that is solely dedicated to organic agriculture.

Industry Stats (OTA)
• Organics have grown at a rate of nearly 20 percent per year for the past seven years
• Organic food sales grew in 2008 by 15.8 percent to reach $22.9 billion, accounting for 3.5 percent of all food-product sales in the U.S.
• Mass-market grocery stores represent the largest single distribution channel of organic products

Proponents of organic agriculture highlight that organic food products are healthier and less costly to both producers and the environment than food produced by conventional farming methods.

Organic opponents assert that organic products are more costly for food distributors and retailers and ultimately, restaurateurs and consumers. Some argue that organic farming is jeopardizing traditional agricultural in regards to agribusiness success and independent farmers utilizing technology.

Does organic farming warrant more or less federal money? Does it pose a threat to commercial farmers? What are the benefits and disadvantages of organic-agricultural methods?

May is National Beef Month

The National Cattlemen’s Beef Association (NCBA) celebrates beef all month long as beef farmers nationwide are gearing up for grilling season and an increased demand from consumers.

As backyard gourmets fire up their grills, the summer season witnesses a surge in retail beef sales. It’s prime time for outdoor cooking, especially with the observance of three major holidays – Memorial Day, Independence Day and Labor Day.

Seventy percent of grill owners barbecue on Fourth of July. Memorial Day is the second most-popular grilling day at 62 percent, while Labor Day is third at 55 percent (NCBA).

With the economy in recession, beef prices have been significantly reduced, with some cuts experiencing a 3-to-12 percent cost decrease, according to the Beef Checkoff, a producer-funded marketing and research program designed to increase domestic and international demand for beef.

With beef costs on the decline, coupled with the emerging grill season, beef producers and industry partners are ardently promoting their products with aggressive advertising, trade-show appearances, grocer promotions and partnerships.

BeefUSA is a Web site dedicated to furthering the success of the beef industry with links to health and farming information for consumers, producers, retailers, restaurateurs and industry partners.

Industry Beef Bites (Source: NCBA unless otherwise noted)

• Christopher Columbus brought cattle to America during his second visit in 1943.
• The U.S. beef industry is worth an estimated $175 billion with cattlemen conducting business in all 50 states and operating 800,000 individual farms and ranches.
• A smaller cowherd and fewer cattle in feedlots have provided generally smaller beef supplies in 2009 (Chris Hurt, Purdue Extension agricultural economist).
• 2009 retail beef prices have averaged $4.33 per pound compared to 2008’s $4.16 per pound price but are still greater than foodservice beef sales (Hurt).
• Fifty percent of beef sales come from foodservice (Hurt).
  

Health-conscious consumers tend to stray away from beef and opt for chicken and seafood fare instead. Many Americans link beef with cardiovascular health issues, but eating beef in moderation is healthy. The NCBA works to promote the health benefits of beef at BeefNutrition.org. The USDA has classified 29 cuts of beef as “lean,” including round, sirloin and flank, though the most popular cut of beef consumed in the U.S. is ground beef.

Nutrition Beef Bites (Source: NCBA)

• A serving qualifies as "lean" if it has less than 10 grams of total fat, 4.5 grams or less of saturated fat and less than 95 milligrams of cholesterol per 3.5-ounce serving.
• A 3-ounce serving of lean beef provides 51 percent of the daily value for protein total.
• A 3-ounce serving of lean beef contributes less than 10 percent of daily calories to a 2,000-calorie diet.
• Beef provides 10 essential nutrients, including iron, phosphorous and selenium and is the No. 1 food source for including zinc, protein and vitamin B.
• Beef is a source of creatine, an acid that helps in supplying energy to the nerve cells and muscle.

As temperatures rise, have you thought about what you’ll be grilling this season? For recipe ideas, visit BeefItsWhatsforDinner.com.

How does beef stack up compared to other protein options in terms of taste, cost and availability? Do you think health facts about beef contribute to beef sales? What can the beef industry and beef-industry partners do to increase sales?

Pork Paranoia

As I am writing this, more than 140 Americans have been diagnosed with swine influenza. As international and national cases continue to escalate, uninformed consumers are misguidedly shunning pork and pork products.

Hog farmers are on the defense, refuting allegations that the outbreak is caused from eating infected pork. According to The U.S. Centers for Disease Control and Prevention (CDC), no evidence indicates that swine influenza can be transmitted through food consumption – a crucial message for the pork industry to deliver.

“Swine flu is a misnomer,” said C. Larry Pope, the CEO of Smithfield Foods, the leading processor and marketer of pork and processed meats in the U.S. “They need to be concerned about influenza, but not eating pork.”

Many health organizations also take issue with the term “swine flu” because of its scientific inaccuracy. Instead, the CDC refers to the illness by its scientific name, H1N1 flu. The virus that is circulating includes genetic components of human, avian and swine origin.

Swine flu – a common respiratory disease in pigs during winter months – mirrors the human flu strain. It is so common, in fact, that 30 to 50 percent of the U.S. swineherd have been affected with some form of the virus. Multiple varieties of the strain exist.

The current outbreak, however, is not the result of consuming or interacting with contaminated pork.

"This is not a food-borne illness virus,” said U.S. Agriculture Secretary Tom Vilsack, “It is not correct to refer to it as swine flu because really that's not what this is about."

Regardless of its origins, hog farmers are feeling the effects of the outbreak. Farmers producing corn and soybeans as animal feed are also threatened by economic loss from decreased demand. Hog prices are plummeting as countries are banning U.S. pork imports, and grocery chains and restaurants are decreasing their pork orders to counteract an implicit, misapprehension for the other white meat. The pork and animal-feed industries are experiencing what the beef industry endured with “Mad Cow Disease.”

Part of the problem is people lack the necessary perspective and panic trumps logic. Every year, thousands of Americans die from the common flu, but the 24-hour news cycle chooses to focus its attention on H1N1 instead, most likely because of the novelty of its recent advent. There is no arguing the news merit of people becoming sick, but the public’s response could potentially create a panic that could do more harm than good.

Despite overwhelming evidence of the safe consumption of pork, the $15 billion American pork industry is in jeopardy. As summer approaches, a usual high-time for pork because of the grilling season, the National Pork Producer’s Council, National Pork Board, American Meat Institute and others are working to clarify the fallacies associated with the outbreak and promote the continued consumption of pork.

Do you think the spread of H1N1 is being blown out of proportion? Is there a danger of a media-induced panic? What should hog farmers do to re-establish trust with pork consumers? How can separate farm industries work together to improve market demand for their products? Should sister industries (chicken and beef) rally for the best interests of the pork industry?