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Perspectives of coronavirus and the pork industry

June 8, 2020
By KRISS NELSON - Farm News editor (editor@farm-news.com) , Farm News

By KRISS NELSON

editor@farm-news.com

To help shed some perspective on the effects coronavirus has had on the pork industry, Dr. Bradley Wolter, chief executive officer and president of The Maschhoffs, LLC presented his viewpoints in a webinar hosted by the University of Illinois recently.

The Maschhoffs are in the top of the pork production industry in the United States with an operation that spans seven states.

Headquartered in Carlyle, Illinois, The Maschhoffs are made up of 600 farms operated by a little over 400 families. This puts the company in a situation to produce about four million pigs annually.

"At the core of everything we do operationally, it's about the people," he said. "In order to do that, in addition to the family farmers that are part of what we do, we own and operate the sow side of our business and it takes about 1,100 employees to operate just short of the 200,000 sows today."

The Maschhoffs, Wolter said focus exclusively on pork production with a complete farrow to finish operation. They also have some of their own genetic lines with some outside sales of those animals.

Their customer portfolio includes Smithfield, Hormel and JBS.

"We are very proud to call ourselves partners with those folks," he said.

Wolter said the company also has their own private label -Maschhoffs Family Farms.

"We harvest about 10% of our production that we brand and it keeps us focused on the farm to table experience," he said. "We are very proud and passionate about what we do and we recognize, at the end of the day, there is a consumer at the end of the process. It really is at the core of how we think about business."

A potential supply issue

As an adding insult to injury scenario, Wolter said prior to the COVID-19 pandemic, the global pork industry has been seeing a lot of growth. The United States has followed suit with that growth with five new packing plants being built recently due to that rapid expansion of the industry.

"Coming in to this year, the USDA hogs and pigs report indicated upwards of a 7% increase of total hogs," said Wolter. "In the U.S. the growth of the industry was predicated on the assumption there will be export demand. Based on historical consumption in the U.S., we are needing to export about a third of our production."

While African swine fever remains a very significant risk to our industry in the United States, Wolter said it is also an opportunity for us at the moment, given the demand for pork in China.

Coronavirus

Coronavirus, Wolter said, obviously is the factor most impacting the pork industry with what already was experiencing a large supply.

The U.S. pork industry, he said was tight prior to COVID, with uncertainty being the theme.

"As we grew this sow herd, we grew packing plants, we expanded the industry and one of the challenges along the way of those packing plants is to find the labor resources to put the human capital in place to run those plants to capacity," he said. "So, this increase in total hog volume, we haven't really solved the riddle yet on how to harvest the pigs and there is a lot of angst and concern as we got into the fourth quarter here in 2020. Would we be able to harvest all the pigs that we are anticipating to produce? This is before COVID had set its head on us."

Wolter said as the pandemic began to spread and the company was assembling their taskforce he knew it would be challenging to the large food systems, but wasn't sure on what degree.

"I certainly wasn't savvy enough to recognize that we would see the entire industry really get challenged," he said. "I envisioned we never would need to manage the growth of our animals. I envisioned it would go down for a short period of time and come back up. We have had less than 50% of plant capacity and of course, once you lose that capacity, you don't get it back quickly."

The taskforce at Maschhoffs, Wolter said first and foremost were concerned with protecting their teammates.

"We have to think about the potential to lose teammates and the potential, frankly, for an entire team at a farm. Or even within a pod a group of farms in a given geography," he said. "We have had contingency plans in all of those cases we quickly built and we have been fortunate in this process we haven't had to enact in any great extent."

Nutritional strategies

Controlling the growth of animals has also been a main focus for the company with the pandemic.

"When you lose the opportunity to harvest those pigs, they are growing. They are not sitting on a shelf and they don't volunteer to stop," he said. "We've been selecting these animals for lean growth rate throughout the entire 25 years that I have been a part of the program. We think about how we improve the rate of growth and capture the animal's genetic potential through our animal care programs every day."

It is difficult to reverse that process.

"We have implemented diet and management strategies to control the growth and we have to monitor that very closely," he said.

Space management

Wolter said with the growing industry, there is already an issue of space availability. Fortunately, The Maschhoffs, he said do not anticipate any space issues - for now.

"We've chosen not to grow in recent times while the industry was growing rapidly," he said. "We've chosen to manage and continue to improve our efficiencies in the absence of strong growth. We have been, and will continue to be in a strong space position and we have not run out of space at this particular point and time."

However, they have begun to prepare for a potential euthanasia event.

"Will the plants meet the needs of the industry? What do we do with the animals we can't get harvested? This has been an incredibly emotional and tough situation on our team," he said.

Financial concerns

Wolter said they are concerned as financial hardships set in, there won't be a demand for their products. Also, there is a supply chain issue by not having the labor in place in the packing plants to run to full harvest capacities.

On the backside of that is the fabrication.

"We are literally sending out a lot of primal cuts - heavy bone-in primal cuts and what does the average consumer do with that? I am concerned in the absence of that knowledge we see consumption go down," he said. "And then again, what does the new normal look like as it relates to consumer demand as a result of some of these factors?"

Harvest capacity

The challenge is in the inside of the packing plants.

"The COVID event is what is happening inside the plants," he said. "The absence of testing and the ability to manage the spread, of course, our customers did an outstanding job in our minds of stepping in and doing what they could as it unfolded, but at the end of the day, we lost capacity and today there is a three million pig backlog."

Optimism

Wolter feels there could be some lessons to be learned for the future.

"We are moving forward with optimism," he said. "I see this as an opportunity for us to position the business for better resilience. We've learned a lot from this. We have tested systems we hoped to never have to test."

Wolter said The Maschhoffs will continue to evaluate risk.

"We have uncovered a new risk and it forces us to take a look at the biology - to understand about the pigs and how we might exploit that to help create a more reliable supply chain," he said.

 
 

 

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