Marketing SwineMarketing Swine

ObjectivesObjectivesDescribe three methods of marketing

hogsList and describe the grades of market

hogsList and describe grades of feeder pigs

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

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

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

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 quicklyHeavy hogs and cull breeding hogs usually sell

better at terminal markets or auctions◦ Or they are sold by direct-marketing methods

Pork PromotionPork PromotionThe 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 MarketsKinds of MarketsHogs 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

Direct MarketingDirect 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

Terminal MarketsTerminal MarketsHogs are cosigned to a commission firmCommission 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 dayLess than 1% of the slaughter hogs sold in

the U.S. are marketed through terminal markets

Auction MarketsAuction 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

Group MarketingGroup MarketingSome producers use systems of

group marketing◦ Have been established by some

major farm organizationsHog marketing cooperatives

also exist in some areasSome 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

Pricing MethodsPricing MethodsApproximately 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

Market Classes and Market Classes and GradesGradesThe use (slaughter or feeder),

sex, and grade of swine determines their classification

Slaughter swine◦Those that are killed and sold as

meatFeeder swine◦Those that are sold to be fed to

higher weights before slaughter

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

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

Feeder Pig GradesFeeder Pig GradesClassified 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

Factors used to decide at Factors used to decide at what weight to market hogswhat 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

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

Shrinkage of HogsShrinkage of HogsShrinkage

◦ 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

Avoiding ShrinkageAvoiding ShrinkageCareful 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

ActivityActivityWorksheet

QuizQuiz1. 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- KeyQuiz- Key1. 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