Your fast-track guide to reports in this issue:

• Crunch time in Canada
• Brazil examines its export effects
• US midwives go online
• Vietnam entering trade accord
• Integrators and processors
• New EU members assessed
• Mexico to achieve new production record
• Shows and seminars
• Updates on companies
• Data in brief
• Latest job opportunities
• Send us your news

Crunch time in Canada
Currency exchange rates and comparative costs have combined to force a major re-think for the pork sector in Canada. Instead of looking for growth every year on the basis of exports, now the industry is facing cutbacks and a stronger focus on developing the domestic market. The story is illustrated most clearly by the 2 largest Canadian processors, Maple Leaf and Olymel. Both have announced a fundamental re-structuring of their activities.

Olymel has spoken of its survival being threatened by serious problems affecting pork profitability in its home base of Québec, where it is reckoned to represent about 60% of the market. The co-operative called in former Québec government prime minister Lucien Bouchard to assist in talking to producers’ representatives about the measures that might restore long-term profits. Fresh pork rather than further-processed products is seen as the source of most difficulties, losing Olymel over C$100 million between 2003 and 2005. Previsions warn of a further C$55 million loss in the 2006 financial year.

The sharp rise of the Canadian dollar also has disrupted the exporting ambition of the country’s largest pork producer/processor, Maple Leaf Foods. Previously positioned to be a global exporter of fresh pork, the company now has announced that it intends to downsize its pig operations in Canada, citing changes in the global pork industry that have significantly impacted the profitability of its fresh meat business and have led to a C$100 million annualised loss of competitiveness in production and fresh-pork processing. Fresh pork is out and processed products are in, as Maple Leaf’s pig production, feed manufacturing and primary processing operations are re-sized to support a strategic focus on growing businesses in value-added fresh and further processed meat and meals.

Its directors estimate that it will incur restructuring charges of C$80-120 million over the next 3 years to complete the change. They say this reorganisation “will result in Maple Leaf reducing the number of hogs it produces or manages, while transitioning to 100% ownership of fewer barns”. Observers say this could mean reducing the present level of 7 million pigs slaughtered per year by almost 50% and a similar reduction in the 110 00 sows currently under its control on owned or contract sites. The company will also retain only the lowest-cost, most efficient facilities in primary processing and those feedmills necessary for the restructured pig producing operations. It has already dropped plans to construct a C$110 million primary pork processing facility in Saskatchewan and aims now to exit from an existing plant in the province by the end of 2009, as well as closing a slaughterhouse in Winnipeg and selling abattoirs in Alberta, Ontario and Nova Scotia. This will leave processing activities concentrated on its banner plant in Manitoba which is planned to convert to double-shift working for extra throughput.

Brazil examines its export effects
When over half of Brazil’s pork exports have been going to Russia, it was inevitable that a Russian embargo on taking meat from certain Brazilian states would impact on the national outlook for the pig sector. Last year’s confirmation of foot-and-mouth disease in Mato Grosso do Sul led initially to Russia banning all meat exports from Brazil as from February this year. By March it had caused a market crisis in which the pork-producing southern states saw their prices drop well below production costs. An upturn in June occurred for Rio Grande do Sul after Russia resumed purchases of meat from there, whereas the ban remained in place for neighbouring Santa Catarina which depressed its own price levels.

An inter-governmental group on meat and dairy products is due to deliberate possible future effects of a health-related ban on Brazilian meat exports when it meets in Rome in November under the auspices of United Nations food/agri agency FAO. Two possible scenarios will be described. One would be a total ban on exports from all parts of Brazil in the 2 years 2006-07 because of foot-and-mouth disease, pushing down domestic prices of pigmeat by more than 50% as all exports are disposed of in the domestic market. The other considers the alternative in which importing countries ban meat only from disease-stricken regions. In this case pork exports are projected to fall by almost 60%, reducing domestic prices by 26% in the first year so that producers respond by cutting output by 9.5% in the second year. Under the no-regionalisation scenario, by contrast, Brazil’s production in 2007 could have dropped by more than 20%.

In fact, investors are lining up to put money into pork projects in Brazil even though animal health issues still dominate the country’s meat export prospects. About 40% of all pork production in Brazil is located in the country’s 3 most southerly states, notes a recent report, but an increase for the Brazilian Midwest is predicted after signs that both national and foreign groups are investing in the state of Mato Grosso and surrounding areas. These investments benefit from long-term federal credit lines as well as from state development programmes, according to observers in the foreign agriculture service of the US department of agriculture. They add that an increase in centre-west production will offset a small decrease occurring in the southern part of the country where producers are reported to be balancing supply and demand to help their profit margins.

Also noted is that about 45% of Brazil’s pork production is concentrated among 10 large processors. Sadia is named as the largest with an 11% market share, followed by Perdigão with 8%, Aurora with 7% and Seara with 5%. These operators rate differently on export volumes, however. Seara alone accounts for 25% of all pork exports from Brazil.

Early forecasts are for Brazil to post a 2% reduction in pork output for 2006, but to follow this with an 8% increase in 2007 as renewed exports power a recovery. A higher domestic demand also looks likely for next year. Producer and processor organisations have been mounting a promotion campaign for fresh pork through supermarkets in the south of the country. As the USDA’s report remarked, producer groups in Brazil want to encourage a year-round uptake of their product rather than the current seasonal pattern of fresh pork consumption in which the peak coincides with the June-August winter months. For example, the demand for pork products rockets in the urbanised areas of São Paulo state when the temperature drops. The October/November period should normally be favourable as processing plants and supermarkets stock up on pork to meet an extra Christmas demand, although prices in parts of the south were slow to react at first this year — perhaps due to unseasonably hot weather.

According to USDA, Brazil’s pork organisations are also trying to close a gap between the regions in terms of pigmeat consumption. Current per-person annual pork uptake of 18kg in the south and 15kg in the south-east contrasts with 11kg for the centre-west and just 6kg for the north-east.

Plasma makes European comeback
European feed ingredient suppliers say that the usage of plasma protein for piglet starter diets in Europe continues to show a healthy recovery after the lifting of the European Union ban on the material that was imposed at the start of 2000 among measures following general concerns over BSE risks in animal feeding practices. The EU ban of using plasma for pigs was removed in September 2005, specifically in relation to porcine blood products used in non-ruminant feeds. Supplies of the material came under pressure from a fast-rising demand to apply it in petfoods, but a change of rules means that bovine plasma can now be imported from the USA for petfood applications. This has released supplies of European porcine plasma for feeding to pigs. Industry estimates suggest that the recovery in product usage in western Europe is already back to about 40% of pre-2000 levels and there are forecasts that almost 100% looks probable by 2008.

US midwives go online
A university-backed initiative started in the American Midwest offers an Internet opportunity for farrowing attendants to share information and connect with peers over a large geographical area. The farrowing care interest group sponsored by Iowa State University’s extension service, Iowa Pork Industry Center and the Iowa Pork Producers Association allows producers and employees to receive information on CD-ROMs and participate in 3 telephone-based discussions designed to address questions about the educational materials provided and specific farm issues.

They use a computer with a CD player to see and hear the home study materials and access teleconferences by a regular telephone line or by a separate high-speed Internet connection. Those with such a connection have the option to ask questions, talk to speakers and view presentation slides online during the phone conference.

Vietnam entering trade accord
There will be implications for the international trade in pigmeat when Vietnam finalises its membership of the World Trade Organisation (WTO), according to the National Pork Producers Council in the USA. It quotes Iowa State University economist Dermot Hayes as calculating that Vietnam’s accession will increase US pork variety meat exports to Vietnam to US$16.5 million by 2012 from US$3 million in 2004 and will raise live hog prices by US$0.52, or 4.4% of producer profits. NPPC has urged the US Congress to approve Permanent Normal Trade Relations status for Vietnam.

In May, the USA and Vietnam finalised an agreement on market access, which paved the way for Vietnam’s entry into the WTO. The agreement sets tariff rates on pork variety meats down from 20% to 8% in 4 years from the time of implementation. Tariffs on most other pork products will be reduced by 50% in 5 years.

Integrators and processors
American swine management company The Maschhoffs Inc has announced an agreement with Iowa-based co-op Farmers Cooperative on a partnership of their feed divisions to achieve more efficient milling and transportation operation. The Maschhoffs will lease a co-op feedmill in Iowa and become responsible for its daily operations, which include making feeds for established FC accounts. The co-operative will provide delivery of all feed made in the partnership. The companies have also come to an agreement on additional feed volumes that will be made through other FC milling assets. The Maschhoffs Inc works with nearly 150 farm families in Iowa. Nationwide, it manages one of the country’s largest pork production networks, producing more than 2 million pigs per year.

Reports in Belarus say the Belneftekhim corporation plans to establish a new agricultural company in the Logoisk region. According to news agency Belta, its activities will include the construction of a pig unit with capacity for 2500 animals. Meanwhile Belarus president Alexander Lukashenko is reported by Interfax to say that the country is ready to employ Danish experience and technologies in a project to build a state-of-the-art pig unit for the production of high-quality pork. President Lukashenko apparently made the comment when receiving a group of Danish investors in Minsk. The investors were reported to have offered to establish an enterprise in the Minsk region with up to 66 000 pigs. Designed by Danish Crown advisers, it would be intended to produce 5600 tons of pork per year.

Premium Iowa Pork in USA has received a US$300 000 department of agriculture grant under a programme offering support for producer projects involving value-added farm products. Currently expanding its processing plant capacity from 700 to 1200 pigs per day, the family-owned company processes pork for niche marketing at wholesale and retail levels.

Latest announcements from Russian integrated meat processor Cherkizovo have described unveiling a state-of-the-art pork production complex at Tambov and achieving a 39% increase to US$3.7 million for net income in the first 6 months of 2006. Turnover was up 9% to US$283.4 million and gross profit showed a 21% rise to US$62.9 million.

Mikelani pig farm in Latvia is named by Baltic Business News as the source of the first Latvian pigs exported to Russia and also the first live exports sent anywhere since the 1930’s, when Latvia shipped pigs to Denmark and other parts of Europe. It had secured a contract to supply 3000 live slaughter pigs to a Russian meat processing company in Pskov, at prices reportedly 6% above Latvia’s current market.

Sandor Csanyi, head of Hungary’s OTP bank and the country’s highest-profile investor in pork companies, has been reported by the Nepszabadsag newspaper in Budapest to have travelled to the Volga region of Russia recently to discuss a proposed pig project with officials there. The report mentioned a potential investment of HUF10 billion (US$46.3 million) in an enterprise to accommodate 54 000 pigs.

Norway’s government has overturned a competition authority move to block the merger between Norwegian meat processors Gilde and Prior. These will now form a new company called Nortura, while retaining their own names as brands. Due to be ready by the middle of November, the new company will have a total of 7000 employees in 41 municipalities across Norway.

Agribusiness group Charoen Pokphand of Thailand is expanding into Russia by creating a Russian subsidiary with farming, feed and pork processing interests. This is being started as a wholly-owned offshoot of CPF Europe and will be known as Charoen Pokphand Foods (Overseas) LLC, with registered capital of RUB220 million (Russian roubles)—about US$8.2 million. Adirek Sripratak, president of Charoen Pokphand Foods (CPF), said the company had conducted a study of the Russian market that had identified firm prospects for expansion. A particular growth area involved the supply of pig feeds because of the country’s increasing demand for pork. Charoen Pokphand Foods (Overseas) would be the group’s own pig feed manufacturer in Russia and would start operations in the last part of 2006.

Mexico to achieve production record
A national meeting of Mexican pig producers has declared that Mexico expects to produce 1.3 million tons of pigmeat this year and therefore set a new record for annual output. It is seen locally as a consequence of the positive results from the national campaign to combat classic swine fever and a sustained growth in the sector in 2006. Sources in Mexico indicate that some 40 000 tons of pork will be exported to Japan, opening a potentially large market for coming years.

Shows and seminars
Feed-to-meat exhibition VIV China in Beijing reported receiving 20 423 visitors for its September 2006 edition. Pre-event registrations came from 73 countries and over 13 000 people attended on the opening day, said Gerard Leeuwenburgh, business unit manager at Netherlands-based event organiser VNU Exhibitions. International visitors comprised 23% of the 3-day total attendance, up from 11% at the previous show. Over 70 countries were represented. Approximately 26% of the visitors came from the pig sector. Some 285 local exhibitors were among the 426 companies participating on trade stands. The 143 foreign exhibitors were from 25 countries. Dates of 26th-28th September have been set for VIV China in 2008, again at China International Exhibition Centre in Beijing.

A switch in timing has been announced for the next Expoaviga in Barcelona, Spain. After announcing that the 16th Expoaviga in October 2006 had registered 45 000 visitors, including 15% from outside Spain, the organisers at Fira de Barcelona added that the show will return in the spring of 2008. The move from autumn to spring was called a better fit in the fairs calendar and to meet the requirements of exhibitors and visitors. The event in 2006 was the first held at the new Gran Via 2 showground outside Barcelona, with 250 direct exhibitors on stands covering some 60 000m2.

Updates on companies
Spain-based feed palatability specialist Lucta has opened a pig research facility about 80 kilometres north of its Barcelona headquarters. The experimental unit will study feeding behaviour, preference differences and voluntary ad lib feed and water intake patterns in group-housed pigs after weaning. It can house up to 500 weaners and operates with 4 independent rooms containing 12 pens of 10 pigs each per room.

Euribrid in the Netherlands has appointed Marc Broadbent as manager of marketing and communications for the breeding group and for its pig/poultry genetics companies Hypor, Hybro, Hybrid and Plumex. He takes on the new responsibilities concurrently with his existing role as marketing and communications manager for Hypor. His challenge will be to integrate and unify the marketing activities of the member companies while developing a strong brand recognition for Euribrid as a multi-species breeding company, said managing director Roald van Noort.

BASF in Germany has combined its animal nutrition and human nutrition interests into a single business unit in its Fine Chemicals division, saying that this re-focus reflected the change to a more competitive marketplace in which prices for many products had fallen significantly. The associated synergies would also cut costs besides allowing a more flexible response to market requirements. BASF’s animal nutrition station in Offenbach, Germany, will cease operations in the second quarter of 2007.

Dr Ellen de Brabander has been appointed to be a member of the executive committee of Intervet, Akzo Nobel’s animal healthcare business based in the Netherlands, and its vice president of research & development. Former R&D chief Klaus Olbers is taking a consulting role at another Akzo Nobel company, human vaccines developer Nobilon. Dr de Brabander was previously vice president of corporate technology at DSM.

A global licensing and collaboration agreement for the use of the boar semen sexing technology has been signed by Dansk Svineproduktion of Denmark and Norsvin of Norway with Ovasort Ltd, a private company started by the veterinary school of the University of Bristol in the UK. Currently undertaking a research and development programme at Cardiff University in Wales, Ovasort aims to commercialise a method for producing male-enriched or female-enriched pig semen through high-volume sperm separation. Dansk Svineproduktion becomes the worldwide licensee for the use of the technology in pigs.

CME Group Inc is to be the new combined identity of the US holding companies for the Chicago Mercantile Exchange and the Chicago Board of Trade (CBOT). Announcing a definitive agreement to merge the 2 organisations, the companies said it would give global access to a wide array of benchmark exchange-traded derivatives based on agricultural commodities and other products. Cost savings and benefits are expected from consolidating trading floor operations into a single facility at CBOT and unifying information technology operations. Chicago Mercantile Exchange offers futures and options primarily in interest rates, equities, foreign exchange, commodities, energy and alternative investments. CBOT provides financial, equity and commodity futures and options.

Alpharma, Bayer, Boehringer Ingelheim, CEVA, Elanco, Intervet, Merial, Novartis, Pfizer, Phibro and Virbac have been named as members of the Asian Animal Health Association located in Thailand to represent the industry across Asia. It was recently accepted as a member of the International Federation of Animal Health and will formally take a position on the IFAH Board in 2007.

CORRECTION: Please note with our apologies that incorrect details for animal nutrition company Exquim in Spain were listed in the latest Pig International annual buyer’s guide directory issue. The correct entry reads: EXQUIM S.A., Av. Diagonal, 549 5ª planta, Edifici L'Illa, 08029 Barcelona, Spain. Telephone +34 93 504 4400. Fax: +34 93 589 4502. E-mail: exquim@ferrergrupo.com. Website: www.exquim.com.

Jeremy Skuse has been appointed to the newly-created position of executive officer of the Animal Welfare Science Centre started jointly in Australia by the University of Melbourne, Monash University and the Department of Primary Industries. The position is based at Melbourne University’s Parkville Campus.

Aco Funki of Denmark has relocated its French branch office to Brest in Brittany from the northern Paris area, to gain greater proximity to the main areas of pig production in France for its equipment sales. Jean-Jacques Lamoighe is named manager of the branch office.

Training centre PTC+ in the Netherlands has welcomed a Dutch parliament decision that assures the continuation of its practical training courses in both animal and plant sectors of agriculture for the next 4 years. The national agriculture ministry will provide the required financing and PTC+ will assume responsibility for the continuing development of these sectors. Its courses held at 5 locations cover pig production and animal nutrition as well as poultry and cattle areas.

Gary Fitzner PhD has joined yeast culture products company Diamond V Mills in the USA as a swine technical services scientist, providing US/Canada support and expanding the company’s research in pig nutrition.

New product registrations in South Africa have been reported by Belgian veterinary medicines company VMD. Through its subsidiary VMD Vet South Africa, it has registered Doxyveto-50S Plus water soluble powder containing doxycycline hyclate with citric acid and a formulation named Myogaster-E that is administered through injection to deliver vitamin E and selenium.

Gérard Deman, formerly managing director of Adisseo Group, has been appointed CEO of its parent company Drakkar Holdings following the resignation of Patrick Verschelde. He also becomes chairman-CEO of Adisseo Group, which notes it is the world’s third largest producer of nutritional additives for animal feed. Adisseo has been a subsidiary of Chinese group Bluestar International since the start of 2006.

Dow AgroSciences reports that its Concert plant-cell produced vaccine production system has been a finalist in the first annual Animal Pharm innovation awards held in the UK. The system utilises plant cells to produce vaccines in a manufacturing process that is totally free of animal components. In January this year the company received the first regulatory approval for a plant-made vaccine, from the USDA Center for Veterinary Biologics in the USA.

Development of the world's first fermentation-based method for the commercial production of amino acid l-tyrosine to use in human and animal nutrition has been reported by Kyowa Hakko of Japan, which plans to start full-scale production in 2007. Previously, the main methods for producing l-tyrosine have involved animal protein, such as hair or feathers. Plant-based processes using soybeans also existed, but struggled to produce large amounts at an economical price.

Data in brief
European Union’s average pig reference price fell by almost 12% between a peak of €1.65/kg at the end of August 2006 and €1.45/kg in the middle of October, on European Commission figures. Noting the prices, MLC in the UK said the seasonal decline had been faster this year than in 2005, when the average fell by 7%, because the hotter summer this year brought a higher peak price before the return to more normal levels around September.

Slovenia’s statistics office reported that 33 884 pigs weighing 2665 tons were slaughtered nationally in August, up 1.8% on number and 0.5% on weight from the same month in 2005.

Australia in October saw the highest pig prices for 2 years, on APL data. One driving factor was an increase in the volume and value of Australian pigmeat exports to Singapore. During August 2006, the average value of exports to Singapore was A$3.70 FOB, the highest per kg value to this market since January 2003. August 2006 Australian exports of pigmeat to Singapore reached 2344 tons, up 44% from August 2005. According to the Australian Bureau of Statistics (ABS), 5.373 million pigs were slaughtered for meat in Australia during the 12 months to August 2006. But the only states to record higher slaughter numbers were Victoria, with a 13% increase, and South Australia with 5% more. The ending national average slaughter weight was 73kg.

China’s Hunan province has been registering a pig:feed price ratio of 5.26:1 in recent weeks, according to correspondent Julie Yin. A ratio of 4-4.5:1 is generally reckoned to be needed to break even. At an exchange rate of US$1 = RMB7.8, local maize was selling at RMB1200/metric ton and soybean meat at RMB2100/ton.

US in September had 62.7 million pigs, said USDA, an increase of 1% year-on-year. The breeding herd nationally had expanded slightly to almost 6.1 million sows, gilts and boars.

Armenia’s national statistics committee has given a figure of 137 508 pigs for the national on-farm inventory in January this year, compared with 89 082 at the start of 2005 and 85 393 in January 2004. Armenia imported 1558 tons of pork in the first half of this year, imports for the whole of 2005 having totalled 2709 tons.

Norway produced 59 357 tons of pork in the first half of this year, Statistics Norway reports. Norwegian production in the same period last year had been with 54 524 tons, down from 55 802 tons in the first half of 2004.

Zimbabwe’s pig production has been growing this year at a rate of about 20% after years of decreases, says Harare newspaper The Herald. This growth has occurred despite a shortage of feed materials that has existed since a severe drought 4 years ago.

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