Jim Long President – CEO Genesus Inc.
July 22, 2013 ________________________________________
National Pork Industry Conference ReportLast week we participated at the National Pork Industry Conference (NPIC) held at the Kalahari Resort in Wisconsin Dells, Wisconsin. Our report:
- NPIC was well attended and well organized by Larry Graham, Glenn Shields, and their team. It was professional in all aspects.
- Over 600 attendees, a broad section of producers and industry people.
- In one of the breakout sessions we got to present our views on Global Swine Markets and the Genesus Genetic Research and Development Program.
- Mark Greenwood, Senior Vice President of AgStar (Farm Credit lender) gave some financial numbers from their lending database for swine operations.
- 2013 numbers through March 31, 2013
- Working capital excludes sows in working capital numbers
- AgStar’s financial participants breakeven in 2013 $64.44 lb. – 2012 $61.76
Cost of New Sow Unit
- 1,800 – $2,000 a sow unit – wean to finish
- Need at least $500/sow cash or 35% – 40% down payment
- Additional $450 /sow to get weaned pig out the door.
- 2,500 sow farrow to wean total cost to get up and running = $2,350 per sow = $5.875 million.
- $2.35 million or 40% cash to get financing or collateral enhancement.
- Used sow units value are about $800 – $900 per sow space.
- AgStar prefers farrow to finish model. Conversion costs from stalls to G-pens between $200 – $300 per sow space.
- Existing nurseries value $80 per space
- New nurseries $180 – $200 per space
- Finish and wean to finish building new $260 – $300 per space (this includes site, well, etc…)
- Contract growers need 20% – 30% down.
- Operating Lines – AgStar
- Asset value on inventory $100 – $105 per head
- Sows valued at $225 and 70% advance rate = $160 a head max
- Higher pig values and feed costs are leading to more cash use to invest in inventory.
SummaryMark Greenwood gave synopsis how AgStar is a major swine lender looks at lending and the industry. Good benchmark’s for us all to consider.
SpeakerOne of the speaker’s at NPIC was Dr. Peter Kristensen, Director Genus PIC Europe. Dr. Kristensen spoke on Europe’s adjustment from Gestation Stalls. What he said was amazing. He basically said it’s all over for us his words several times “the train has left the station.” “You’re four years too late.” “You don’t have enough money.” His presentation was an advocacy for the North American Swine industry to capitulate and appease to the Animal Welfare lobby and convert from gestation stalls, maybe farrowing crates, castration, etc. It made me feel ill. Here was a PIC director (of course from Europe) the world’s largest genetic company advocating an appeasement for our industry. He spoke as if all European farmers supported his view. But we wonder does he own a farm? Does he own pigs? What has it cost him to say it is inevitable? His talk certainly was thought provoking and in itself created borderline hostile reactions from the producers who have their money invested in our industry. The European model is making their producers uncompetitive in cost of production and it was said at NPIC that Europe’s export market will become next to non – existent due to the many new regulations. That’s a model we want? Don’t think so! The difference could be mind set. In North America many of our forebears left Europe. We left for a better life and freedom. Freedom to choose. We don’t like top down edicts. We aren’t afraid to compete but we don’t like elites whether in Europe or Park Avenue Animal Rights Activists telling us what to do. Our nature is to fight for what we believe in. We are not appeasers; we drive Pick Ups not Renaults. We eat ribs not crepes, we play football not tennis. We are different, we are wired that way. Europe is Europe. America is America. We don’t like experts from Europe telling us what to do. Question: “How do you think you are doing with Greece? Keep your advice.
Winston Churchill – Prime Minister Great Britain on Appeasement:
“There is no greater mistake to suppose that platitudes smooth words, and timid policy offer a path to safety.” “An appeaser is one who feeds the crocodile and hope he eats him last.” “Victory will never be found by taking the path of least resistance.” “I never worry about action, but only about inaction.”
Categorised in: Pork Commentary
This post was written by Genesus