This document summarizes the challenges facing the US pig industry according to Kyle Coble of JBS Live Pork. The three main challenges are labor shortages, disease pressure including African Swine Fever, and increasing demands for environmental sustainability. Regarding labor, unemployment is low while wages are increasing. To address this, JBS uses strategies like developing hourly employees, partnering with training programs, and exploring automation. Disease prevention relies on initiatives like the Swine Health Improvement Plan. Carbon neutral goals will impact the industry, requiring approaches like evaluating life cycle assessments of inputs. Overall the industry must embrace changes and continue innovating to succeed.

1. 1
USA Pig Industry
Perspectives: Challenges
and Solutions
Kyle Coble, Ph.D.– September 16th, 2022
FeedWorks Conference – Sunshine Coast, AUS

2. Learnings this week…
2

3. Agenda
3
• JBS Live Pork Background
• Current Industry Conditions
• The “Big 3” Challenges
• Opportunities for Success in those areas
• Concluding Thoughts

4. JBS Live Pork Background
4
• Business Unit within JBS Pork and JBS Foods
• JBS Foods is the largest global protein provider
• #2, globally, in pork production
• Pork production in the USA, BRA, UK, and AUS
• JBS Live Pork consist of ~170,000 sows
• Market 3.8 million market pigs annually
• Production areas cover the midwestern section of the United States from TX
to IN

5. Scope and Size of JBS Live Pork
5
8th Largest

6. Scope and Size of JBS Live Pork
6
Year JBS Live Pork U.S. (Dec 31) China
World Sow
Inventory
2018 167,500 (2.6%) 6,326,000 37,000,000 68,000,000
2019 167,000 (2.6%) 6,471,000 31,000,000 67,700,000
2020 169,000 (2.7%) 6,176,000 38,500,000 60,400,000
2021 170,000 (2.8%) 6,180,000 39,000,000 66,100,000

7. U.S. Breeding Herd Trends
7
Source: www.nass.usda.gov

8. 8
Quarterly Hogs and Pigs Inventory – June 2022
Source: www.nass.usda.gov
7% Reduction
since Q1 2020

9. Domestic Disease Pressure
9
Source: SHIC – Swine Disease Reporting System 9.6.2022

10. Domestic Disease Pressure
10
Source: SHIC – Swine Disease Reporting System 9.6.2022

11. Market Hog Returns
11

12. Feed Cost Trends
12
$-
$20
$40
$60
$80
$100
$120
$140
1/1/2002
10/1/2002
7/1/2003
4/1/2004
1/1/2005
10/1/2005
7/1/2006
4/1/2007
1/1/2008
10/1/2008
7/1/2009
4/1/2010
1/1/2011
10/1/2011
7/1/2012
4/1/2013
1/1/2014
10/1/2014
7/1/2015
4/1/2016
1/1/2017
10/1/2017
7/1/2018
4/1/2019
1/1/2020
10/1/2020
7/1/2021
4/1/2022
Estimated WTF Feed Cost, $/pig

13. Challenges in the Industry
13
• Labor
• Disease and Sow Mortality
• Environmental Sustainability

14. Labor…
14

15. Current U.S. Unemployment Rate
15
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
1/1/2020
2/1/2020
3/1/2020
4/1/2020
5/1/2020
6/1/2020
7/1/2020
8/1/2020
9/1/2020
10/1/2020
11/1/2020
12/1/2020
1/1/2021
2/1/2021
3/1/2021
4/1/2021
5/1/2021
6/1/2021
7/1/2021
8/1/2021
9/1/2021
10/1/2021
11/1/2021
12/1/2021
1/1/2022
2/1/2022
3/1/2022
4/1/2022
5/1/2022
6/1/2022
7/1/2022
8/1/2022
Percentage,
%
Source: National Bureau of Labor Statistics

16. Unemployment Rate by State
16

17. Hog Farm Employment at Lowest Since 2012
17
$-
$200
$400
$600
$800
$1,000
$1,200
26,000
27,000
28,000
29,000
30,000
31,000
32,000
33,000
34,000
Weekly
Wages,
$/employee
Employee
Number
Employees Wages/Wk
6% Increase in Wages

18. 18

19. Multidisciplinary Approach
19
• Seasonal and Migrant Labor Force Access
• Tapping into unconventional labor forces
e.g. partnering with work-release programs
• Communicating Pros and Cons of Advanced Degrees to Inbound Workforce
• Hiring hourly employees with their future growth in mind
e.g. “I never got to be anything more than a mill operator”
• Creating a culture of purpose and belonging
• Onboarding employees with a high degree of care and support

20. Mike Rowe Works Foundation
20

21. Internally Developing Candidates
21
• Online training developed in house with
Kansas State University
• Students must be with the company 3 months
and in good standings
• Bonus eligibility for hourly staff
• Curriculum intended to develop learning
process and content
• Culture
• “Home grown” talent

22. Non-Traditional Approaches
22
• Automation
Power washing
Truck Driving (feed?)
Enhanced Barn Environmental Monitors
• Big data
Analyzing employee work hours x work
outcomes
Ability to designate where your labor
should be allocated for optimization
Predicting outcomes vs dealing with
them

23. Challenges in the Industry
23
• Labor
• Disease and Sow Mortality
• Environmental Sustainability

24. African Swine Fever Proximity to U.S.
24

25. Swine Health Improvement Plan
25
• Modeled after the National Poultry
Improvement Plan (1930’s)
• Industry, State, and Federal
• Playbook for technical standards
that focus on disease prevention
and containment practices
• Involves areas from trucking to feed
safety
Source: https://usswinehealthimprovementplan.com/

26. Sow Mortality
26
Source: National Hog Farmer Article, 2022

27. Sow Death by Reason
27
Source: National Hog Farmer Article, 2022

28. Industry and Academic Approach
28
• Economically, the industry cannot sustain this poor level of female retention
• Starts with gilt management and taking it back to the basics
• OCD has been observed at high rates in herds
• Nutritional therapies to keep “genetics” in check – slow growing gilts
• Animal housing versus welfare obligations
• Better understanding of the biological modifiers for bone development
Lack of sow data on Ca, P numbers x retention
Are we relying too much on phytase?
• Do we need to retro fit barns and look at controlled feeding practices?

29. Variation in Gilt Breeding Weight
29
Source: PIC Technical Update, 2022

30. Challenges in the Industry
30
• Labor
• Disease and Sow Mortality
• Environmental Sustainability

31. We have a great history here…but it is a new era
31
Source: Pork CheckOff

32. Recent pledges by industry to be carbon neutral
32
• Carbon Neutral by 2040, 2050, etc
• Animal production has segments that
will be impacted
• Grain production and transportation
• Life Cycle Assessment (LCA) Values
Unknown on most ingredients
• Does formulation priorities change?
1. Nutrient Specifications
2. Cost
3. LCA
Source: www.visualcaptialist.com

33. What is an LCA?
33
A Life Cycle Assessment
(LCA) is defined as the
systematic analysis of the
potential environmental
impacts of products or
services during their
entire life cycle.
Source: https://stich.culturalheritage.org/life-cycle-assessment-explained/

34. Industry Leading Efforts
34

35. Additional Needs
35
• Reporting LCA, just like growth performance, in published results
e.g. ADG, ADFI, FCR, LCA
• 2012 NRC may be the last NRC to have book value nutrient loadings
• The next NRC must have BOTH nutrient loadings and LCA values for each
ingredient
• Standardized approach for how to calculate LCA’s
• Graduate students must be a vital part as they are the early adopters

36. Concluding Thoughts
36
• The last 2 years has been a
turbulent time for the entire
world
• Pork Producers and other
protein providers are resilient
and innovative
• The roaring 20’s are
here…captivate on the
innovative momentum of other
industries
• Change is here. Don’t resist it –
embrace it.

37. 37
Thank you – Questions?