Marketing Swine

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Marketing Swine
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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
• 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
• Supply of hogs and the demand for hogs can vary
  from market to market on any given day
• The costs can also vary
• 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
• Consumer demand for less fat in red meat has put
  pressure on the swine industry to produce leaner
  hogs
• 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
• Heavy hogs and cull breeding hogs usually sell
  better at terminal markets or auctions
• Or they are sold by direct-marketing methods

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Pork Promotion

• 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

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Kinds of Markets

• Hogs may be sold through
• Direct marketing
• Terminal markets
• Auction markets
• Some hog producers participate in group marketing
• Generally, the group markets the hogs through one
  of the three methods just listed

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Direct Marketing

• Involves selling to packing plants, order buyers,
  or country buying stations
• 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
• Accounts for the majority of the hogs sold in the
  United States
• Animals are transported shorter distances
• Shrinkage is less

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Terminal Markets

• Hogs are cosigned to a commission firm
• Commission firms can help the producer select the
  best time to market hogs
• There are usually several buyers competing for
  hogs on the terminal market
• This may produce a better price
• 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
• Less than 1 of the slaughter hogs sold in the
  U.S. are marketed through terminal markets

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Auction Markets

• In some areas, auctions markets are an important
  method of selling hogs
• Some auction markets are developing new systems
  to obtain more buyers for the hogs offered
• Telephone hookups and video auctions
• 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
• Transportation costs and shrinkage are less
• Selling costs involved with terminal and auction
  markets

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Group Marketing

• 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

• 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
• 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

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Market Classes and Grades

• The use (slaughter or feeder), sex, and grade of
  swine determines their classification
• Slaughter swine
• Those that are killed and sold as meat
• 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
• 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
• 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
• 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

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Feeder Pig Grades

• 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
• 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

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Factors used to decide at what weight to market
hogs

• 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
• 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
• 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

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Shrinkage of Hogs

• Shrinkage
• Loss of weight as they are shipped to market
• 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
• Rough handling
• increases the amount of shrinkage
• Temperatures below 20 F or above 60 F

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Avoiding Shrinkage

• 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
• 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

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Activity

• Worksheet

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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.

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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 __200220
  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