What is in this article?:
A select group of were asked to share their thoughts about the major challenges and opportunities the U.S. pork industry will face in the next 10-20 years. These industry leaders were asked to focus on their area of expertise (i.e. swine health, genetics, meat quality, etc.), and also to offer their big picture view of the pork industry in 2015-25. Over 50 individuals shared their insight and foresight.
A select group of “visionaries” were asked to share their thoughts about the major challenges and opportunities the U.S. pork industry will face in the next 10-20 years.
These industry leaders were asked to focus on their area of expertise (i.e. swine health, genetics, meat quality, etc.), and also to offer their “big picture” view of the pork industry in 2015-25.
Over 50 individuals shared their insight and foresight. After reading their thoughtful comments, we think you'll agree that the future of the pork industry is bright, and as always, very challenging.
Ken Maschhoff, The Maschhoffs Inc., Carlyle, Ill.
“Envisioning the science of commercial pork production in the next 10-15 years, I feel there will be dramatic changes, driven by technology.
“Early adaptors will enjoy success, but not to the degree of the creators and drivers of those technologies. A few mid-adapters will survive, but technology will not wait for latecomers.
“Production units will be extremely environmentally friendly. There will be limited or no odor issues. ‘Quality-of-life’ laws will force science to develop designs and methods that deal with these concerns.
“Facilities will be customized to address the welfare of animals, because:
The public will demand it; and
We will possess a better understanding of how the environment and animals interact. In an attempt to optimize this, science will help us create the most efficient facilities and technologies.
“In 2020, the most sought-after college graduates will be those with engineering or creative design degrees.
“On the biology side, one big change will be feed conversions of under 2:1 at 300-lb. finished weights, with conversions of 1.5:1 in some cases, due to a combination of genetic and nutritional breakthroughs.
“Feedstuffs will be derived from plant varieties and inputs specifically engineered for an exact animal genotype. Constant DNA typing and mapping will be needed along with crop monitoring (feedstuffs) in order to facilitate the most precise nutritional programs.
“All feed inputs will be contracted with every acre involved in a multi-year nutritional management plan that will dovetail with the CNMP (Comprehensive Nutrient Management Plan) for the same acres. All ingredient supplies will be paid on exact nutrient specifications delivered, vs. today's price per bushel or per ton.
“On the meat quality side, animals will be harvested on-site or on-farm. Mobile CO2 chambers, rendering trucks and refrigerated transport will reduce or eliminate animal welfare and meat quality issues associated with current live animal transport.
“New requirements for animal identification and animal welfare auditing will be simplified by an on-site harvest system. Whole carcasses will be transported in specially equipped trucks to designated, value-added processing plants. These will be the top 80% of today's most efficient plants. These companies can expand their processing areas, as their kill sections will be effectively outsourced.
“The added expense of transporting chilled carcasses will be offset because only 75% of the actual freight will exist. Waste or other by-products may need to be transported directly for rendering.”
Robert Baarsch, LeRoy, Minn.
“All predictions about the future must be framed with underlying assumptions.
“Consolidation, triggered and shaped by technology adoption, will continue as rapidly, or more rapidly, into the next 10 years.
“Pork production companies will grow primarily by acquisition. This growth will trigger difficult challenges in assimilating production systems such as barn and ventilation design, as well as employee culture. Variation will continue to drive these growing companies crazy.
“Process control will centralize and be staffed with the most intelligent and experienced stockmen available. These offices will house the technological equivalent of a cockpit in a modern fighter jet, monitoring all the critical factors affecting hog growth.
“The data will be consolidated and filtered using software beyond what we now know as statistical process control (SPC). It will be more similar to artificial intelligence, able to predict disease outbreaks or detect ventilation problems instantly.
“All feed tanks will be equipped with scales, and the pigs' growth and feed efficiency will be monitored constantly by weight-predicting equipment.
“The system will determine the optimal temperature for the type of pig, health status and building design. It will also optimize temperature and nutrition-based energy costs and make cost-based decisions between heating the building or feeding more energy to the pigs.
“Our number one challenge will be satisfying consumers who will continue to be more sophisticated in their concern for how we raise our animals, treat our employees and take care of the environment.
“Fewer of our prospective employees will have agriculture backgrounds and education. We will need rigorous training programs that include basics that we take for granted today.
“These well-trained employees, coupled with our electronically connected stockmen, will be a very effective team. Our e-stockmen will have remote video surveillance, which will allow disabled employees to make significant contributions. Ultimately, the animals will be better served because they will have several sets of eyes and ears overseeing their care.”
Scott Burroughs, Nebraska Pork Partners, Columbus, Neb.
“To project where U.S. commercial pork production will be 20 years from now, let's look back at the last two decades.
“The U.S. pork industry has transitioned from a ‘way of life’ to a ‘business’. Thinner profit margins and higher capital requirements have put an emphasis on economies of scale. Farms have been built or acquired by business entities, while single-farm owner/operators have moved into contract relations or exited pork production.
“The next 20 years will see further changes and refinements, but the end result will still be 105-110 million pigs marketed per year. Environmental restrictions, animal welfare legislation and global pork production will hold a lid on the U.S. industry.
“For those who can adapt to the changing environment and drive efficiencies to the bottom line, returns will be very good.
“Business and manufacturing practices have been infused into the U.S. pork industry. Although a business mentality and many manufacturing methods have been beneficial, pork production is not a manufacturing process — it's a biological one!
“Two key areas of focus for the next 20 years are pig production and business model/company culture.
“Let's tackle pig production first.
“Raising pigs for food began over 9,000 years ago and the biological fundamentals have not dramatically changed. Environmentally controlled conditions, artificial insemination, nutrition and genetic selection have all advanced. But, the basics have not changed. They must be done seven days a week, all year long, year in year out. There is no black box for production of pigs.
“Now, let's look at the business model/company culture issues.
“Incorporating a business approach into the U.S. pork industry has had a positive influence and added a much-needed dimension for long-term competitiveness. However, success in the next 20 years will not come from a manufacturing or technology business model, but rather a ‘biological business model.’ Very few of today's top 50 production entities have adopted this model.
“Let's examine the three models and why virtually all entities will need to adopt the biological business model.
“The ‘manufacturing business model’ strives for low variation and high output in a least-cost environment. Yes, these traits are vital to the biological model, but one key difference exists — a switch turns it on and off. When employees go home, the process stops. When output needs to be increased, more shifts are added or the process is sped up.
“The ‘technology business model’ develops the latest technology, then mass-produces it. Leadership in a technology business is in tune with day-to-day processes and has a strong vision for the future. This model incorporates everything from the manufacturing model, including the on/off switch.
“The ‘biological business model’ incorporates both manufacturing and technology attributes, while acknowledging that our industry is driven by a 24-hours-a-day, seven-days-a-week, 365-days-a-year process. Pig production is the overriding focus.
“In a biological model, everyone at the farm and in the boardroom must be equally connected, striving for the same goals with equal intensity, every day. Communication, discipline, interaction and empowerment must be more than buzzwords. Very few entities have successfully implemented this model.
“How does integration fit into this model?
“Integration is a real component of the U.S. pork industry, and it covers many sins from the production side. The ‘integrated model’ is much better than either the manufacturing or technology model. However, it will not compete solely with the biological model.
“The ultimate success story will come from an ‘integrated biological model,’ which will likely be accomplished in the next two decades.
“Non-integrated entities adopting the biological model will be successful for the next 20 years, but the integrated biological model will be at the top. The board and senior management team that can accomplish this ultimate model will be something to mimic.
“There is a bright future for those who are focused on producing pigs in an environmentally sound, welfare-conscious and people-oriented business. Contract production will continue for growers who adapt their focus to producing pigs.
“The days of raising pigs to sell buildings, add value to a veterinary service, sell more tons of feed or sell management services are numbered.”
Bob Brauer, Oakford, Ill.
“For the first time in 29 years, Oasis Hog Farms does not own pigs. We made the decision to get out of the business in December 2003. Many in our community were surprised and asked why.
“Our short answer is, we doubled the size of our operation the year prices dropped 80%. Good timing, huh? Our projections showed that we could survive the lowest hog prices we had seen in the last two decades ($28). The projections did not show the effect of $8 hogs or chronic PRRS! We just never recovered.
“The good news is that our timing to liquidate could not have been better. We sold the last pigs at the home place in December 2004, and we have contracts to sell it and the three farms we built in 1998.
“It has been a very difficult period, but there is life after pig farming. Rich (Brauer) is now an Illinois House Representative; our sister, Jane Feagans, is a seed company office manager. I am an investment representative for Edward Jones.
“I loved the work and I loved the people. I will miss both.
“There are still pigs to raise, and it seems to me there will be three segments of the industry:
“The contractor who owns the pigs, takes the risks, provides the technology and services to the growers;
“The growers who provide capital and labor in return for less risk and a better night's sleep; and
“The traditional, independent producers who will have to form alliances to keep their costs low and attempt to extract a reasonable price out of the market.
“Our business with my brother and sister was great for 22 years. The problem is, we were in it for 29 years.
“We were very lucky because our 401(k) at the farm did provide some off-farm investments. As my finance professor says, ‘If you are going to put all of your eggs in one basket, watch that basket very carefully.’”
Linden Olson, Worthington, Minn.
“One of the major challenges facing the global pork industry will revolve around the increasing globalization of world economies, including food production and processing.
“Multi-national food companies will look closer at where the lowest-cost raw product that meets their standards can be procured and processed, whether that product is 100 or 10,000 miles away.
“This will allow market segmentation to provide pork to consumers who demand, and will pay for, pork and pork products that are produced and certified under their requirements, which will include environmental standards, production practices, food safety, health and nutrition ideals and social concerns.
“For the U.S. pork industry, one major challenge will be transitioning from being the lowest-cost pork producer to something yet to be determined. The opportunity will be to transition to a goal that captures what the global consumer will be demanding.
“This will require producers and processors to first agree, then work together to put the new goal into practice. The integrated processors will have an advantage in moving quickly in a new direction.
“A second challenge will be working in the legislative arena to ensure that laws, rules and regulations are enacted to give the pork industry a fair chance to compete in the global marketplace without emotionally charged, special interest restrictions.”
Bill Prestage, Prestage Farms Inc., Clinton, N.C.
“As I try to view the next 10 to 20 years for our pork industry, I see many current trends continuing.
“I think there will be even greater emphasis by packers and consumers on meat quality, safety and consistency. This means we will have to produce hogs with the sizes and carcass traits that packers demand.
“We will have to be more efficient. Consumers should not have to pay for our inefficiencies and, in the long term, they will not.
“Within the live production segment of our industry, we will continue to see some mergers and acquisitions. There will be more acquisitions of live production assets by packers. However, I also believe there will always be a place for producers of any size, if they have a competitive cost structure.”
Jim Ledger, Washington, Iowa
“In the next 10 to 20 years, I envision uniformity (of pork products) will be achieved through cloning and gene altering.
“A new approach to disease management will be achieved through genetics. The livestock industry needs to use a different method of gene altering than the crop industry. We must convince consumers that altering genes is more conducive to food safety than using chemicals and drugs to control diseases and pests.
“There could be four categories of commercial producers in the future — ultra-large, large, medium and small. I will focus my thoughts on the medium and small producers and their survival against tough competition.
“The following points may not have a lot of impact on an individual basis, but combined into total practice, you will be a survivor:
Establish good relations with your banker and veterinarian. They will require you to keep good financial and health records.
Seek advice from someone who has been successful in business.
Use a genetic package that produces good numbers and a product that is in demand, domestically and globally.
Strive for efficiency, no matter how small. A small amount of wasted time or material doesn't seem like much, but over a year or a business lifetime, it could be the price of owning your own business.
Get as much information as possible on innovations. Adopt new concepts only if they have promise to improve your bottom line.
Good, caring production practices are still the key to producing a nutritious protein source.
Work to assure consumers that you are providing a wholesome, safe product.
Relax. Don't get so involved in business that you forget to enjoy your family, relatives and friends.
The Keppy Family, Davenport, Iowa
Three generations of the Keppys offered their thoughts about the future of the pork industry.
Patriarch Roy Keppy: “Myrtle and I were fortunate to have farmed when we did. I was able to raise good crossbred pigs because of great purebred breeders. Together, we made great progress in producing consumer-acceptable, lean pork.
“I am concerned that the industry has gone too far on the lean concept. I'm very aware of the eating quality problems that should not be happening. The aging population is part of the fastest-growing consumer group. Tender, flavorful pork is very important to them. Someone needs to step to the plate to solve eating-quality problems before we lose market share.”
Next generation, Glen Keppy, son of Roy and Myrtle: “The organizations that helped provide an opportunity for profit — and even the right to farm — have been changing since the start of modern pork production in 1950 until today.
“The industry will change, so the needs of an organization will change also. Producers of all kinds need to provide the leadership to keep the pork industry in front of the issues and proactive as we face detractors and global competition. Don't take things for granted.”
Third Generation Chad Keppy, son of Glen and Carol Keppy: “We, the producers, need to adopt and embrace change to keep pork a competitive protein source. For producers in a situation similar to mine, I believe one way to accomplish this is to utilize niche markets. It is a smaller, more specialized market trying to give consumers exactly what they want. We will continue to work together to produce pigs in the U.S. and add value to the pork we produce.”