Transcript Marketing Swine

Marketing Swine
Objectives
Describe three methods of marketing hogs
 List and describe the grades of market hogs
 List and describe grades of feeder pigs
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Making the right marketing decisions
can mean the difference between profit
and loss for the hog producer
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Producers must carefully study the
kinds of markets that are available
◦ Price offered, costs, reliability of the hog
buyer
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It is often hard to evaluate different
markets on the basis of price
◦ Many factors influence the price
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Supply of hogs and the demand for
hogs can vary from market to market
on any given day
◦ The costs can also vary
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The producer must calculate as closely
as possible the highest net return that
can be obtained for the hogs in each
available market
◦ Choose the market giving the highest net
return to the producer
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Producers of high-quality, meaty hogs will
generally get better returns by selling on a
grade and yield basis
◦ An increasing number of hogs are being sold on a
grade and yield basis
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Consumer demand for less fat in red meat has
put pressure on the swine industry to produce
leaner hogs
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Grade and yield marketing provides a price
mechanism to reward producers who raise
the kind of hogs that are in demand
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A problem with grade and yield
marketing
◦ The limited ability of packing plants to
evaluate hog carcasses on a large scale
 May have equipment in the future that can
grade them quickly
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Heavy hogs and cull breeding hogs usually
sell better at terminal markets or auctions
◦ Or they are sold by direct-marketing methods
Pork Promotion
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The Pork Promotion, Research and Consumer
Information Act of 1985
◦ Established a National Pork Board that collects
funds through an assessment of 45 cents per $100
value of pork sold in the United States
◦ Funds are used to promote the use of pork, develop
foreign markets, provide consumer information,
and conduct research and producer education
programs
Kinds of Markets
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Hogs may be sold through
◦ Direct marketing
◦ Terminal markets
◦ Auction markets
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Some hog producers participate in
group marketing
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Generally, the group markets the hogs
through one of the three methods just
listed
Direct Marketing
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Involves selling to packing plants, order buyers, or
country buying stations
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In this system, the producer deals directly with the
buyer
The producer must possess selling skills and a
knowledge of the markets to be successful in
obtaining the best price for the hogs
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Accounts for the majority of the hogs sold in the
United States
Animals are transported shorter distances
Shrinkage is less
Terminal Markets
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Hogs are cosigned to a commission firm
Commission firms can help the producer select
the best time to market hogs
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There are usually several buyers competing for
hogs on the terminal market
◦ This may produce a better price
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Prices may vary more widely on the terminal
market than in direct marketing
◦ This variation is affected by the number of hogs
coming on the market on any given day
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Less than 1% of the slaughter hogs sold in the
U.S. are marketed through terminal markets
Auction Markets
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In some areas, auctions markets are an important
method of selling hogs
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Some auction markets are developing new systems
to obtain more buyers for the hogs offered
◦ Telephone hookups and video auctions
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Most auction markets have hog sale days once or
twice a week
◦ Limits the producer in choosing the day on which to market
the hogs
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Transportation costs and shrinkage are less
Selling costs involved with terminal and auction
markets
Group Marketing
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Some producers use systems of group
marketing
◦ Have been established by some major
farm organizations
Hog marketing cooperatives also
exist in some areas
 Some of these groups negotiate
contracts with packers to supply hogs
 The basic purpose is to obtain higher
prices for hogs
 The bargaining power of the producer
may be increased by using a group
marketing method
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Pricing Methods
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Approximately 70% of the market hogs sold
in the U.S. are priced on the basis of carcass
merit
◦ Premium prices are paid for hogs with more lean
muscle and less fat
◦ Trend toward improved genetics in breeding that
results in the production of meatier hogs that meet
consumer demand for leaner meat
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Some hogs are still marketed on the basis of
the weight of the animal without regard for
carcass merit
◦ This method of pricing is rapidly declining
Use of contracts with producers
◦ More than 60% of hogs marketed are now sold under some
form of contracting
Market Classes and Grades
The use (slaughter or feeder), sex, and
grade of swine determines their
classification
 Slaughter swine
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◦ Those that are killed and sold as meat
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Feeder swine
◦ Those that are sold to be fed to higher
weights before slaughter
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The quality of the hogs and pigs is reflected in the
grade standards established by the USDA
Grades of slaughter barrows and gilts are based on
carcass quality and the yield of the four lean cuts
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Ham
Loin
Picnic shoulder
Boston butt
The quality is referred to as acceptable or
unacceptable
◦ Acceptable
 Have bellies that are at least slightly thick overall and not less
than 0.6 inches thick at any point
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Other quality factors
◦ Amount and distribution of external finish
◦ Firmness of fat and muscle
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Five official USDA grade for
slaughtered barrows and gilts are
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U.S. No. 1
U.S. No. 2
U.S. No. 3
U.S. No. 4
U.S. Utility
Boars and stags are not graded
Feeder Pig Grades
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Classified in the same grades as slaughter
hogs, with the addition of one lower grade
◦ U.S. Cull is the lowest grade of feeder pig
Feeder pig grades are used to indicate the
expected grade of the pig when it reaches
slaughter weight
 Unthrifty pigs
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◦ either U.S. Utility or U.S. Cull grades
◦ These pigs have failed to grow and gain properly
◦ Poor care of disease can cause a pig to be
unthrifty
Factors used to decide at what
weight to market hogs
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Type of Hog
◦ Meaty hogs can be fed to heavier weights without a
large increase in feed costs
◦ The quality of the hog, as measured by the ratio of
lean to fat, is not decreased appreciable with this
type of hog
◦ Can have a decrease in percent of lean cuts
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Hog-Feed Ratio
◦ As feed costs increase, the additional returns above
feed costs decrease as hogs are fed to heavier
weights
◦ As the price of hogs increases, the returns above
feed costs increases
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Amount of discount for heavier hogs
◦ Packers typically discount the price of hogs
below 220-230 pounds and above 250-260
pounds
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Time of year
◦ The price of slaughter hogs changes seasonally
based on the supply of pork and consumer
demand for pork
 Generally lowest in November and December
◦ The supply of hogs coming to market is less
variable than it used to be
Shrinkage of Hogs
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Shrinkage
◦ Loss of weight as they are shipped to market
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The distance to market
◦ A shrinkage of about 2% can be expected, regardless of how
close to market the hogs are located
◦ As distance hauled and time on the road increase, the
amount of shrinkage increases
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Rough handling
◦ increases the amount of shrinkage
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Temperatures below 20 F or above 60 F
Avoiding Shrinkage
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Careful handling of hogs while sorting
and loading reduces losses from
shrinkage
◦ It also reduces death losses and the
number of damaged carcasses that arrive
at market
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Keeping the hogs warm in winter and
cool in summer while hauling them
◦ The wise hog producer reduces stress as
much as possible when moving hogs
Activity
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Worksheet
Quiz
1. It is often hard to evaluate different markets on the basis of price. True
or False
2. Direct marketing accounts for the majority of hogs sold in the United
States. True or False
3. U.S. Cull is the lowest grade of feeder pigs. True or False
4. Shrinkage decreases as hogs are moved greater distances to market.
True or False
5. The U.S. Utility feeder pigs show unthriftiness because of disease or poor
care. True or False
6. What percent of market hogs sold in the U.S. are priced on the basis of
carcass meat merit?
7. Most auction markets have hog sale days ______.
8. The traditionally recommended weight for selling slaughter hogs has
been ______.
9. A ______ is an older female hog that has farrowed or is showing signs
of pregnancy.
10. List three methods that may be used to sell hogs.
Quiz- Key
1. It is often hard to evaluate different markets on the basis of price. ANS: T
2. Direct marketing accounts for the majority of hogs sold in the United States.
ANS: T
3. U.S. Cull is the lowest grade of feeder pigs. ANS: T
4. Shrinkage decreases as hogs are moved greater distances to market. ANS: F
5. The U.S. Utility feeder pigs show unthriftiness because of disease or poor care.
ANS: T
6. What percent of market hogs sold in the U.S. are priced on the basis of carcass
meat merit? 70%
7. Most auction markets have hog sale days _once or twice a week_____.
8. The traditionally recommended weight for selling slaughter hogs has been
__200–220 pounds____.
9. A _sow_____ is an older female hog that has farrowed or is showing signs of
pregnancy.
10. List three methods that may be used to sell hogs.
ANS: Direct marketing, terminal marketing, auction marketing