Trends Mean Changes to Oklahoma Pork Industry, Roy Lee Lindsey SaysMon, 25 Nov 2013 15:49:08 CST
The pork industry in Oklahoma is benefitting from a number of trends currently changing the marketplace. One of those is the recenlty-opened public comment period on an EPA proposal to reduce the number of gallons of ethanol required to be blended into the nation’s fuel supply is now open. Predictably, the ethanol industry is against the roll back in the Renewable Fuel Standard and cattle producers are pleased with the proposal. Roy Lee Lindsey of the Oklahoma Pork Council spoke recently with Radio Oklahoma Network’s Ron Hays and says Oklahoma pork producers will benefit if the standard is indeed rolled back. (You can listen to the full interview by clicking on the LISTEN BAR at the bottom of this story.)
“One is we believe it is going to have an impact on what we pay for grain. We’ve said from day one that we don’t mind competing to buy grain, but we want to compete on an even playing field. And when you have a mandate that says you must produce so much corn ethanol, you’re not competing on an even field to buy grain. So that’s always been our big hesitation, our big objection to what the RFS has been.”
Lindsey says he’s seen some economists’ numbers which say that the reduction in ethanol production would lead to a ten-cent-per-bushel drop in the price of corn. He said that would result in about three million dollars per year in savings to Oklahoma pork producers.
Lindsey also says that, perhaps more important than the money, is the EPA’s admission that the RFS adversely affects commodity markets.
“It’s the first time EPA has really admitted that this arbitrary number standard that was created in the RFS doesn’t work. And we’ve suggested that to them over the last several years-more than once in the last five years when we’ve had a shorter corn crop where we had a drought like we did last year in the corn belt, and this RFS really tightened up supplies. So, at least now, EPA is acknowledging, ‘Hey, we’ve got to do something different.’”
Lindsey says this fall’s bumper corn crop that has led to a drop in prices by close to two dollars a bushel is also very helpful to pork producers.
“Finally, after several years of struggling to make profits, we have the opportunity to put some money back into the bank to build up some equity again.”
He says that farmers typically store up equity in the good years to be applied during lean times. After the last three years of drought, many farmers have drawn down their stored equity to dangerously low levels and the opportunity to replenish the equity is very welcome. Lindsey said that producers will be adding to the sow herd, but in a measured way with an eye to what the weather will bring to the next couple of corn crops.
A trend that Lindsey has seen developing across Oklahoma is the conversion of hog farms from finishing facilities to sow farms. He said it’s a simple equation which allows producers in the state to reap more profits. Farmers can ship about 2,500 baby pigs in a semi load to where there is cheap feed or pay to ship in about 100 pigs-worth of corn in the same semi.
“At the end of the day, the simple economics say it’s much more efficient to ship pigs where there’s corn than to bring corn to the pigs.”
He says Oklahoma is also a very favorable state for sow production because of its relative isolation from the PEDv virus so far.
“That makes us an ideal place to raise sows and produce baby pigs for the rest of the country.”
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