Hog Market Research Articles

A genomewide association study of feed efficiency and feeding behaviors at two fattening stages in a White Duroc × Erhualian F population.

Feeding efficiency is a multifactorial and economically important trait in pigs. Genetic improvement of feeding efficiency will greatly benefit the pig industry. In the past decades, the hog market weight has increased worldwide. However, whether the genetic architecture of feeding efficiency is same or not at early and late fattening periods is unclear. To map genomic regions for feed efficiency and feeding behavior traits at early (n ≥ 384) and late (n ≥ 334) growth stages in pigs, we performed genomewide association studies for feed to gain ratio (FCR), residual feed intake (RFI), daily feed intake, daily visit times, daily feeding time (DFT), feed intake per second (FIPS), and feed intake per visit during 3 periods (2 stages and overall) in a White Duroc × Erhualian F2 intercross population. Six chromosomal regions showed significant association with these traits, of which 4 loci were reported for the first time. Our results confirmed the QTL of FCR around 34 Mb on SSC7 and RFI around 134 Mb on SSC12. Of note, 2 regions were associated with more than 1 trait. One was around 36 Mb on SSC7, and there were 47 and 67 SNP associated with FCR from 120 to 210 and from 120 to 240 d, respectively. The top SNP is located in a 2.88-Mb linkage disequilibrium (LD) block that harbors 44 genes. We propose the high mobility group AT-hook 1 gene as a plausible candidate gene in this region. The other was evidenced around 53 Mb on SSC12, which had multiple association signals for DFT and FIPS. The top SNP is located in a 211-kb LD block that harbors only 1 annotated gene, WSCD1, which encodes a protein with sulfotransferase activity and involves the glucose metabolism and, therefore, appears to be a plausible candidate gene. Except the region on SSC12 associated with DFT at both stages, the rest of the regions associated with the traits at only 1 stage, so the genetic architectures of the 2 stages are not same.

Impact of Mandatory Price Reporting on Hog Market Integration

This research examines whether mandatory price reporting (MPR) impacted price relationships among U.S. hog markets. Markets are cointegrated before and after MPR enactment, but not fully integrated in either period. Terminal markets adjust to shocks in the Iowa-Southern Minnesota market more quickly and Iowa-Southern Minnesota prices adjust to shocks in terminal markets more slowly following MPR enactment. Granger causality tests indicate a causal flow from terminal markets to Iowa-Southern Minnesota prices before MPR and a causal reversal after MPR enactment. These results likely reflect decreases in volume of negotiated sales, particularly in terminal markets, and greater reliance on mandatorily reported prices for market information.

Producer perceptions and attitudes toward hog marketing contracts

AbstractThe objective of this research is to use survey respondent perceptions and demographic data to assess factors affecting producer's attitudes towards hog marketing contracts. Six statements related to marketing contracts were presented to subjects to measure their attitudes toward the dominant method used by packers to procure hogs. The results suggest that the profitability of the producer, marketing method employed by the producer and the number of packers to whom the producer sold hogs significantly influences attitudes towards marketing contracts. These results suggest that low‐cost producers who market hogs via individual or group marketing contracts are more positive, or in some cases less negative, in their attitudes towards marketing contracts. Although prior nonparametric analyses provide some insight into factors influencing producers' views of marketing contracts, this analyses allows inference of statistical significance. [EconLit citations: D400, L100]. © 2010 Wiley Periodicals, Inc.

An option on the average European futures prices for an efficient hog producer risk management

The volatility of hog prices is high compared to most agricultural commodities. However, European hog producers do not benefit from any agricultural policy support. Through the continuous production process and induced selling activity on spot markets, producers benefit from a natural moving average product pricing. In addition, asymmetric price risk management is able to increase the expected utility of risk adverse hog producers. But, if there is a futures contract at the European Exchange (EUREX), there is no option market and as a consequence no derivative contracts on the European hog market. The article is presenting how financial intermediaries could offer an innovative derivative contract to complement the “ naturall ” steady price of the French hog producers.

Nonlinear adjustments in deviations from the law of one price for wholesale hog prices

AbstractThis article applies the Band‐Threshold Autoregression (Band‐TAR) model to investigate whether the law of one price (LOOP) holds in Taiwanese wholesale hog markets during the period from May 1987 through December 2003. We find evidence of a nonlinear mean reversion in deviations from the LOOP for relative hog prices. Our empirical study confirms the presence of thresholds and provides strong evidence in support of the view that the regional hog markets have been tightly integrated in Taiwan and that the wholesale hog market in Taiwan is an efficient market economy. Furthermore, the estimated half‐lives from the nonlinear generalized impulse response analysis are as short as four months.

Regional Impacts of a U.S. Hog Slaughter Plant Closing: The Thorn Apple Valley Case

As the 1998 U.S. hog market collapse unfolded, Thorn Apple Valley ceased hog slaughter operations at its Detroit, Michigan plant. We examine the impacts on Michigan live hog prices relative to Eastern Corn Belt hog prices. Results indicate that Michigan producers' relative price advantage diminished after the closure as procurement competition changed. As the impacts of the 1998 hog market collapse were absorbed, Michigan producers' relative price advantage became consistently negative. Examination of Michigan's market hog production distribution indicates postclosure shifts away from production in areas geographically near to Thorn Apple Valley and growth in counties geographically closer to alternative packers.

Ledger provision in hog marketing contracts

Price‐dependent loan agreements at low interest rates have sometimes been included in North American hog sector long‐term marketing contracts. We show that a general form of this stipulation can be viewed as a hybrid between a forward rate agreement and a bundle of commodity spot options. In some cases, the provision amounts to a commodity swap. These observations provide an approach to valuing the provision. Historical data are used to estimate expected payouts to the producer under the contract feature.

This Little Piggy Went to Market; This Little Piggy Stayed Home

Live U.S. hog market prices were unstable in the 1990s and crashed in the fall/winter of 1998 99. I situate the 1998 99 crash in the context of ongoing long‐term integration of a U.S. pork filiere and, using ethnographic data collected from Illinois contract hog producers, describe the role of market and production contracting in the unstable livehog markets of the 1990s. Production and market contracting in the 1990s linked large animal producers and large packers through new nonmarket channels. As a result, unstable markets and then the 1998 99 crash affected smaller, spot‐market‐selling hog producers more severely than it did larger producers. My analysis speaks to the structure of power in agricultural markets where contracts are used and warns against economistic understandings of markets that do not consider how different actors are related to commodity markets.

Developing Economic Indexes for the Quebec Hog/Pork Industry

The Quebec hog/pork industry has grown significantly over the last 25 years. Explanations of this growth in the literature have centered on government policies, expansion of profitable market opportunities, and reforms in marketing institutions. A coincident index model that trends with total hog slaughters in Quebec is estimated using a dynamic factor model. It implicitly defines a variable that measures the overall state of economic activity in the Quebec hog/pork industry. The results show that reforms in hog marketing institutions are strongly correlated with the economic expansion of the industry. A leading economic index also forecasts the growth of the coincident index using leading variables. The overall statistical performance of the leading coincident index is disappointing, but the growth in American inventories of frozen pork meat is shown to have useful predictive value.

Low‐Price Low‐Capacity Traps and Government Intervention in the Québec Hog Market

This paper investigates the marketing of a primary commodity produced by competitive producers that sell to a single downstream processor. There is a significant lag between production and marketing decisions made by producers. If a credible price commitment cannot be made before producers make their output decision, it is a dominant strategy for the processor to buy producers' output at the world price adjusted for transportation costs. Producers fully anticipate this partial holdup ex ante and adjust production accordingly. When the processor's capacity is binding ex post, the equilibrium is described as a low‐price, low‐capacity trap. Under a specific condition, the processor finds it advantageous to credibly commit to a price increment before producers make their output decision. The ensuing equilibrium is Pareto‐superior to the no‐commitment equilibrium. We argue that the Québec hog/pork industry has experienced such a situation in the past few years. Government intervention is justified even if the processor has committed to a price increment. The modeling of strategic interactions between the government and the processor reveals that their price increments are strategic substitutes. However, given that the processor's (government's) payoff is increasing with the government's (processor's) price increment, the first‐mover advantage entails committing early to a low‐price increment to force one's rival to offer a high‐price increment.Cet article analyse la mise en marché d'un produit primaire vendu par des producteurs preneurs de prix à un seul et unique transformateur. Les décisions de production et de mise en marché sont séparées dans le temps. Si le transformateur ne peut pas s'engager à payer un certain prix avant que les producteurs prennent leur décision de production, alors la stratégie dominante du transformateur est d'offrir aux producteurs le prix mondial diminué par les coûts de transport. Les producteurs anticipant ce hold‐up partiel et réduisent leur production en conséquence. Lorsque le transformateur est confrontéà une contrainte de capacité ex post, les producteurs et le transformateur sont piégés dans un équilibre de « petit prix et petit volume ». Si une condition est respectée, il peut être avantageux pour le transformateur d'offrir un supplément aux producteurs avant leur décision de production. L'équilibre qui s'en suit constitue alors une amélioration au sens de Pareto. Nous soumettons que l'industrie porcine québécoise a vécu pareille expérience durant les dernières années. L'intervention du gouvernement demeure justifiée même si le transformateur s'est commis à payer un supplément. En fait, les interventions du transformateur et du gouvernement sont des substituts stratégiques. Puisque le gain du transformateur (gouvernement) croit avec le supplément offert par le gouvernement (transformateur), il y a un avantage àêtre le premier à se commettre à payer un faible supplément, tant pour le transformateur que pour le gouvernement, pour ainsi forcer l'autre partie à offrir un supplément plus généreux.

Swine production.

The US swine industry is large and growing. The quantity of pork desired by consumers of US pork is growing at the rate of 1.5%/y. New production systems and new technology have enabled production per sow to grow at a rate of 4% annually in recent years. Consequently, the number of sows in the United States is declining. Because productivity growth is outpacing demand growth, the deflated price of hogs and pork is declining. Hog production and prices continue to exhibit strong seasonal and cyclic patterns. Pork production is usually lowest in the summer and highest in the fall. Production and prices tend to follow 4-year patterns. The US swine industry continues to evolve toward fewer and larger producers who rely on contracts for both hog production and marketing. In 2000, over half of the hogs marketed were from approximately 156 firms marketing more than 50,000 head annually. These producers finished 60% of their production in contract facilities. Over 90% of their marketings were under contract or were owned by a packer. These producers expressed a high level of satisfaction with hog production. Both they and their contract growers were satisfied with production contracts. These large producers were satisfied with their marketing contracts and planned to continue them in the future. The hog industry has changed a great deal in the last decade. There is little reason to believe this rapid rate of change will not continue. This swine industry is highly competitive and profit driven. Profit margins are too small to allow producers the luxury of ignoring new technology and innovative production systems. Consequently, hog production will continue its rapid evolution from traditional agriculture to typical industry.

Using extreme value theory to estimate value‐at‐risk

This study examines problems that may occur when conventional Value‐at‐Risk (VaR) estimators are used to quantify market risks in an agricultural context. For example, standard VaR methods, such as the variance‐covariance method or historical simulation, can fail when the return distribution is fat tailed. This problem is aggravated when long‐term VaR forecasts are desired. Extreme Value Theory (EVT) is proposed to overcome these problems. The application of EVT is illustrated by an example from the German hog market. Multi‐period VaR forecasts derived by EVT are found to deviate considerably from standard forecasts. We conclude that EVT is a useful complement to traditional VaR methods.

Quality and contractual choice: a transaction cost approach to the polish hog market

This paper analyses the marketing arrangements between Polish hog producers and buyers at a time when high‐quality markets are emerging. Interrelationships between four key factors are investigated: governance structures, prices, grading and investment in quality production. A sample of 200 Polish hog producers is analysed. A multinomial logit analysis indicates that producers' choice between large processors as opposed to traders and local slaughterhouses can be predicted by type of contract, grading and quality. A cluster analysis reveals four distinct groups of farmers according to investment in specific assets, ability to safeguard assets, degree of coordination with buyers, use of grading and written contracts, and extent of bargaining power

Supply chain relationships in the Polish pork sector

New institutional economics suggests that the development of institutions and the existence of transaction costs are important determinants of the speed and success of the transition from command to market systems. Investigates the development of hog marketing channels in Poland during transition using data from a survey of Polish hog farmers. Given the fragmented structure of hog production and processing and the upheaval of transition, different transition paths can be identified. The supply chain relationships, such as contracting, that encourage improved quality and stimulate further investment are likely to exhibit long‐run transaction cost advantages.

Institutions and price transmission in the Vietnamese hog market

This article addresses the issue of whether different market institutions are accompanied by different degrees of efficiency and symmetry of price transmission between the producer and retail levels. It analyzes hog market institutions as they differ between the North and the South regions of Vietnam. The paper uses a price asymmetry model including an error correction term to reconcile potential cointegration relations with symmetry. The analysis shows that the market is efficient in conveying accurate information, provided public support institutions are in place.

Canadian Hog Marketing Boards from Inception to Decline

This paper is dedicated to Mr. Harry‐Jae Elder first Chairman of the Board, Saskatchewan Hog Marketing Commission whose vision was that building a marketing system which allowed independent farmers to gain long term economic power, would enable them to survive

Design, pricing, and returns of short-term hog marketing window contracts

Design, pricing, and returns of short-term hog marketing window contracts

An evaluation of supply chain performance in the Canadian pork sector

Examines the hog marketing system in Canada and the development of single‐desk hog marketing agencies, acting as central selling agencies, which have made an important contribution in enhancing the pork supply chain. Reports the results of a 1995 survey, soliciting opinions from representatives of meat packers, provincial marketing agencies and producers across Canada, from which a framework was developed to evaluate the efficiency of five main areas: production and distribution; equitable distribution of rewards; growth in pork processing; investment opportunities; and degree of competition. Emphasizes the vulnerability of the Canadian pork sector to increased competition from producers in other countries, and stresses the need for Canada to develop an effective supply chain in order to maximize its potential in this sector.

Monthly variation in hog carcass traits (1996)

Little research has been conducted regarding the impact that time of year when hogs are marketed has on various carcass traits. This study examined monthly variation in a variety of hog carcass traits based upon 1995 slaughter summaries provided by a midwestern hog marketing network. Results indicate that carcass traits did indeed vary throughout the 1995 calendar year. However, given that these monthly variations were observed only during one year, it remains to be seen whether they indicate a seasonal relationship that hog producers can expect to see year after year or specific factors operative only in 1995. Additional years of data will be collected to extend this study and validate the results.; Swine Day, Manhattan, KS, November 21, 1996

The impact of provincial marketing boards on price relations and pricing dynamics in the North American slaughter hog market

Canadian Provincial hog marketing boards act as sales agents for hog producers. The hypothesis that the introduction of marketing boards in Alberta. Manitoba and Saskatchewan between 1969 and 1972 created seller side market power is tested and supported:their hog prices rose to levels comparable to Ontario where a marketing board had been in place. Organized sellers can also influence pricing dynamics because of the linked spatial oligopsonistic nature of the hog packing industry. Cointegration tests and variance decompositions indicate that establishing boards in the surplus producing western provinces made them relatively less isolated from pricing innovations in deficit producing eastern Canada.