National Pork Board Update - 2016
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John Johnson, COO, National Pork Board, Pork Management Conference, June 14-17, in Clearwater, Florida.
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National Pork Board Update - 2016
- 1. National Pork Board Update John Johnson, Chief Operating Officer National Pork Board
- 2. Our Agenda • Meet our new CEO • State of the industry • Update on our goals to: – Build Consumer Trust – Drive Sustainable Production – Grow Consumer Demand
- 3. New CEO – Bill Even 3 • DuPont Pioneer: • Global Industry Relations Lead • Commercial Unit Lead for South Dakota, North Dakota and northwest Minnesota • Former South Dakota Secretary of Ag • B.S. in Ag Business from SDSU • Law degree from Drake University • Manages fifth-generation diversified crop and livestock operation, Humboldt, SD • Now lives in Adel, Iowa
- 4. Pork Production Per Year 4 Volume is up! 2015 was largest pork production year on record and 2016 looks even stronger!
- 5. Where is the Market Headed in 2016? • U.S. breeding herd continues to rebound • New Q1 2016 production was up 68 million pounds, or 1.1%, vs. 2015 • Q1 2016 prices are down 6.2% from last year at estimated $64.67/cwt live • 2015 pork production was up 8% • Issues for 2016: • U.S. consumer-level demand is down 3.2% YTD, but April was up 3% • Pork exports improved by 0.26% from 2015 • China has purchased more U.S. pork, but how big will future purchases be?
- 8. Lead Through Influence and Act as a Catalyst Our strategic plan fits our vibrant, dynamic industry Build Consumer Trust Drive Sustainable Production Grow Consumer Demand
- 9. Goal 1 – Build Consumer Trust Working collaboratively with food chain partners, the National Pork Board will enhance consumer trust in modern pork production by promoting producer adoption of on-farm management practices that reflect our ethical principles and by sharing our commitment to continuous improvement with consumers and key stakeholders.
- 10. • Using antibiotics responsibly • Preventing disease, rather than treating disease • Protecting the efficacy of antibiotics • Reducing the need to use medically important antibiotics National Pork Board Antibiotic Stewardship Policy
- 11. Our Focus: Research, Education, Communication Defined 5 strategic research priorities Pilot project and blue-ribbon taskforce Increased funding in 2016 PQA Plus revision focused on Good Production Practices New producer record-keeping tools Producer publications – newsletter, magazine, pork.org Be present at industry and influencer events Proactive media outreach – reporters and bylines On-farm continuous improvement shared through stories
- 12. Historical Industry Antibiotic Research • Since 2000, more than $6 million in Checkoff funds have been dedicated to antibiotic-related research • It is the No. 1 priority in 2016 • $750,000 in Checkoff funds have been dedicated to antibiotic-related research in 2016 alone
- 13. 2016 Research Priorities Address Societal Concern 1. Analysis and assessment of preventive uses of antibiotics at therapeutic doses in pork production to optimize swine health and public health. 2. Analysis and assessment of specific animal population antibiotic treatment vs. individual animal treatment in pork production to optimize swine health and public health. 3. Evaluation of on-farm challenges to antibiotic record keeping and identification of strategies to improve antibiotic record keeping practice for continuous improvement of responsible antibiotic use on the farm. 4. Characterization and assessment of the environmental fate of antibiotics, antibiotic metabolites, antibiotic resistant bacteria and antibiotic resistant genes on swine farms. 5. Exploration of strategies to protect herd health and minimize the need for antibiotics. 13
- 14. Message delivery throughout 2016 • Continue with regular Checkoff delivery methods – Checkoff Report (magazine, newsletter), pork.org • Additional antibiotic focus with new Pork Industry Guide to Responsible Antibiotic Use • Visit pork.org/antibiotics for more information 14
- 15. Remember “USCARE” Throughout 2016 • Six Steps to Take Now • Easy to Remember • Clear Call to Action
- 16. Building Trust – Responsible Antibiotic Use • Tangible research priorities • Producer, consumer (and media) education • Food chain and influencer outreach Our No. 1 priority is to shape the dialogue through demonstrating antibiotic stewardship. 16
- 17. Our Primary Audiences 17 Food-Engaged Opinion Elites • About 1 in 5 Americans • Pay attention to food issues • Politically informed and active • Express their opinions “Creative Cooks” • The marketing audience • Live in about 1 in 3 households • Enjoy being creative in the kitchen • Regularly cook pork Consumer audiences Food Policy Influencers/ Thought Leaders • Policy professionals in legislatures, regulatory agencies, think tanks, etc. Nutrition Professionals • Registered dietitians • Communicate to others on diet and nutrition issues Professional audiences Food Chain Partners (Packers, Processors, Retail)
- 18. Listening to the Research Data: Best Messengers -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Doctors and nurses Veterinarians U.S. Dept. of Agriculture U.S. FDA The Humane Society Registered dietitians 4-H/FFA Organic Consumers Assn Well-known chefs PETA Family-Owned Pig Farms Restaurants…such as Chipotle, Panera National Pork Board Food columnists Food bloggers Restaurants...such as McD's, Taco Bell How much do you trust each…to provide honest information about the use of antibiotics in pork production? Do not trust A great deal A moderate amount Only a little (% among all consumers)
- 19. Listening to the Research Data: Key Learnings • Vets and government voices are most trusted. • Checkoff messages do not eliminate concerns, but they do increase acceptance. • There is confusion about the relationship between antibiotics in food production and human health. • The motivating concern for influencers is safe food, with some focused on resistance.
- 20. Blue Ribbon Panel on Antibiotics Panel members convened Feb. 1-2 in Dallas • Mike Apley, D.V.M. and Ph.D., food animal production medicine, Kansas State University • Bonnie Buntain, D.V.M., veterinary medical and surgical program, University of Arizona • Mike Chaddock, D.V.M., associate dean, College of Veterinary Medicine, Michigan State University • Chris Cochran, senior manager, food sustainability, Walmart • Justin Ransom, senior director, quality systems U.S., McDonald’s • Steve Solomon, M.D., public health consultant, past director of the Centers for Disease Control and Prevention’s office of antimicrobial resistance • Elizabeth Stewart, marketing/corporate social responsibility, Subway 20
- 21. D.C. Policy Event with Atlantic Media Thought leader dinner held March 15 in Atlantic’s Watergate office • Hosted 26 key influencers and media for engaging discussion • Thought leaders represented human health, animal health, pharma, food production/retail, livestock, public health, health advocacy and media Antibiotic resistance and policy forum held March 16 at Newseum • Convened 125+ key influencers and media for policy forum on antibiotic resistance and responsible on-farm use of antibiotics • Atlantic Media ensured journalistic credibility to the dialogue: • Keynote address on the challenges of antibiotic resistance • Panel 1 – Antibiotics and the Food Supply: Explored the issue of antibiotic resistance from farm to table • Panel 2 – Antibiotics and Health: An examination of the health elements of antibiotic resistance in humans with leading health experts, practitioners and thought leaders
- 22. Upcoming: National Press Foundation Event Media Familiarization Tour • 4-day educational event for 20-40 journalists selected through application process • July 24-27 in St. Louis • Series of 15 sessions from issue experts, as well as 1-2 local field trips • NPB-sponsored panel session on antibiotics stewardship efforts within food production – Rationale: Engage and inform media on responsible use of antibiotics, position NPB as a leader and resource;
- 23. Building Trust – 5 On-Farm Blogger Tours July – September we will engage influential food bloggers to share our stories. • Bloggers increasingly get questions on how food is raised. • We give them a rewarding, exclusive experience.
- 24. Growing Our Enterprise Risk Management Launch of PorkCrisis Text Alerts… …and ready for top industry concerns • Antibiotics • FADs, Existing/Emerging Disease • Animal Welfare • Pork Safety • Producer Economic Viability
- 25. Accomplishments: Moving the Needle March 2015: FEOE Consumers (FEOE – Food Engaged Opinion Elites)
- 26. November 2015: FEOE Consumers (FEOE – Food Engaged Opinion Elites) Accomplishments: Moving the Needle
- 27. Goal 2 – Drive Sustainable Production The National Pork Board will invest in research and producer education programs that enhance the productivity and sustainability of pork production and deliver benefits to producers, consumers and the community.
- 28. PEDV Success PEDV data from 995 sow farms, representing the largest systems in the U.S. 2.54 million sows!
- 29. New Production Capacity Underway • Three new plants online in 2017/18 • Two remodeled plants online yet this year…? • Meets the boom in contract finishing and ongoing operation expansion • Seeing strong growth in alternative production We are a $23 billion industry!
- 30. Common Industry Audit • Goal: Develop a workable, credible and affordable on-farm verification system • Objectives –Reliable way to assure on-farm animal well-being and food safety. –Eliminate audit duplication, minimize an administrative burden. –Develop consistent standards. –Creates industry accepted process that assures protection of herd health.
- 31. Scope of Work Swine Disease Matrix project Swine health data – analysis & monitoring for trends Global swine health and issues identification Improve the biosecurity ability of the US swine herd New Swine Health Information Center Executive Director – Dr. Paul Sundberg Board comprised of NPB, NPPC, AASV and at-large representatives
- 32. Working in concert with food chain partners, the National Pork Board will grow domestic and international consumer demand by focusing on pork’s improved nutrition, quality and sustainability. Goal 3 – Grow Consumer Demand
- 33. 33
- 34. Trajectory of Domestic Growth 2013 = 5.5% 2014 = 7.5% 2015 = 3.0% 2016 = -3.2% (Year to Date)
- 36. What Does 1% Gain Mean for Producers? • In 2014, pork’s share of meat expenditure was 26.1% • 1% share gain for pork expenditures = $2.35 billion increase retail sales OR $23.69 additional domestic retail value to every pig 36 Beef 50.3% Chicken 23.6% Pork 26.1% Meat Expenditure Share
- 37. 2016 Goal: A Focus on Pork Quality • Reduce the percentage of pork chops scoring below “3” • Voluntary commitment from the industry • Seek consistent eating experience and repeat purchases 1 3 42
- 38. 2015 Exports Struggled, But Finished Strong • 2015 was challenging. – West Coast ports slowdown, market access. – Strong U.S. dollar and global competition. • 2015 exports snapshot vs. 2014: – Pork / Pork VM Volume = 4.70B lbs. 2% – Pork / Pork VM Value = $5.58B lbs. 16% – Exports for only muscle cuts 3% – 24% of all pork/VM shipped abroad – Export value/head = $48.31 23%
- 39. Trade Challenges • West coast port slowdown = Need to rebuild trust • Currency • Russian closure • Steep competition • Tariff and SPS barriers Brazil Canada Chile China European Union Mexico South Africa United States All others Share of Global Exports
- 40. An Improving 2016 Pork Exports Outlook • USDA projects 2016 pork exports will rise 5.2% • EMI’s 2016 production forecast is up 2.2% vs. 2015 • 2016 changes will not be spread evenly throughout the year • Q4 will see ~2.6% higher slaughter; What’s our capacity? • Q4 production will be ~4% higher – plenty of pork to sell • Need aggressive U.S. and international marketing 40
- 41. Our Priorities Are In Motion • LEAD the conversation on antibiotics. • DEFINE new quality standards for pork that return value to pig farmers. • EXPAND the domestic consumer base and spending on pork. • ELEVATE demand for U.S. pork in international markets. • REFINE our ability to monitor and respond to foreign disease threats. • CONTINUE to improve animal handling practices. • RECRUIT the next generation to our industry.
- 42. This message funded by America’s Pork Producers 42 Inspiration Starts Here
Editor's Notes
- I have a brief agenda in my 20 or so minutes before you today. I quickly want to cover: -- the state of the industry --our staff is motivated – passionate even – about how best to deliver value to you: the American pork producer --the strategic plan is in full implementation as we know that by building trust, driving sustainable production we will eventually build consumer demand --finally, we are an industry fueled by passion: In food production, outreach to our audiences and a commitment to food safety, employee safety and animal welfare.
- Revised language: 6/13/16: Q1 production was up 68 million pounds, 1.1% from Q1-2015. Q1 prices of producer-sold hogs were 6.2% lower than on year ago, $64.67/cwt carcass I would remove the “silver lining” point and make it: Issues for 2016: U.S. consumer-level demand is down 3.2% YTD but April was up 3%. Pork exports have improved but by only 0.26% from 2015 China has purchased more U.S. pork but how big will future purchases be? We know that U.S. breeding herds have rebounded since PEDV and many farmers invested in their operations in 2015. That led to explosive production that is continuing into 2016. New Q1 slaughter rate estimates released by the USDA in February show an increase of 66 million pounds of pork coming to market. That dropped hog prices 4.6% in the first quarter, on year over year basis – down to $46 to $49 per hundred weight. That’s trending with 2015, where pork production closed out the year up 8 percent. That’s a far cry from 2014 when PEDV removed 9 million pigs from production. Increased production means declining market value – so the break even price for hog production is something we all must keep our eye on. With pig farmers producing not only more hogs, but heavier hogs – we can expect a continued glut of pork on that market. While this is good news for consumers as it means lower prices, it is a challenge. As an industry we need to leverage growing consumer demand and improved outlooks for exports.
- New data set – ISU revised in 2015. Note that higher costs for Q3-16 thru 2017 are not a done deal yet – weather scare that may or may not come true. These costs are based on 6/13 futures.
- New data set – ISU revised in 2015. Note that higher costs for Q3-16 thru 2017 are not a done deal yet – weather scare that may or may not come true. These costs are based on 6/13 futures.
- The NPB is a unique industry organization and we demonstrate leadership through our influence and ability to unite pork producers with key stakeholders and act as a catalyst of change. That’s the focus of our strategic plan. This plan – introduced in January 2015 – has three distinct goals. --build consumer trust --drive sustainable production --grow consumer demand We feel that goals 1 and 2, if successful, will meet the demands of goal 3.
- What do we mean by Build Consumer Trust? It means…[read slide].
- Here’s a snapshot of our three priorities within our antibiotics stewardship plan. --Research comes to life through the 5 defined priority areas. We will invest $750,000 in 2016 in ABX research and are currently seeking and reviewing proposals. Also, we have created an objective, blue ribbon task force to advise the NPB on next steps. These panel members are academics, veterinarians and retail and food service professionals. --Education is defining our good production practices, providing record keeping tools to producers and using our NPB resources to share information. --Communications take place through direct contact with influencers, proactive media outreach including deskside visits in national media offices. Putting the farmer in the center of the story through media interviews and social media engagement.
- Read slide.
- This details how we will roll out the program to producers.
- What we found is the top 4 messengers for sharing information about health issues and ABX use in hog production are doctors, nurses and vets. Followed very closely by government officials. The National Pork Board falls relatively low in the profile as we are clearly invested in pork production and are viewed as biased.
- Here’s what we found in our overall messages to these audiences The voices of vets and the government are more trusted than the voice of NPB. The more we use the voices of individual farmers rather than NPB or other trade associations, the better. Likewise, animal and human health care professionals also score high for credibility Our messages do little to reduce concerns, but they do significantly increase acceptance. Implication: Our goal should not be convincing people not to have concerns, and building credibility requires acknowledging concerns There is significant confusion about the relationship between antibiotics in food production and human health. ABX are not differentiated from other “additives,” leading to a central question: what happens when we eat ABX? The primary motivating concern for both cooks and elites is safe food, but elites are more focused on antibiotic resistance as a problem to be addressed Within our target segments, the critical subgroup is “Moms”
- And in 2016, through our proactive outreach and social media initiatives, we brought food bloggers on to the farm. This event was held late in September in order to have them create content in time for October’s National Pork month. [details on slide]
- Another facet of Building Trust is how we respond to a crisis situation. In fact, this is part of why we established building an Enterprise Risk Management System as one of our objectives. Two specific steps taken this past year toward fulfilling that objective was developing a new tool which -- like insurance -- we hope we will never have to use. In the event of a pork industry crisis or emergency, we need to reach you immediately, with information you will need on your farm. Here is how it works— in the event a major disease outbreak is confirmed in the U.S., you can receive a text with a short message letting you know what has happened and telling you were to get additional information. Our goal is NOT to use this service other than when there is a major pork industry crisis or emergency. We encourage all producers to sign up simply by text PorkCrisis (all one word) to 97296 and reply with a “Y” for yes. If you have questions on this, just see Cindy Cunningham. Additionally, we have defined the top issues facing the pork industry and are developing communications and response plans to be read. The top 5 issues include, of course, antibiotic stewardship, but also preparing for F-A-Ds, and educating consumers on the proactive steps we take around animal welfare, food safety and helping our producers meet changing market demands.
- Goal 2 is to Drive Sustainable Production [read slide content]
- One of the bright spots of 2015 was simply the fact that our industry has had minimal recurrence of PEDV. In the most recent industry study among nearly 1,000 farms and the largest production systems, we have seen only a small recurrence of PEDV in the early part of 2016 This is good news and underscores why we have seen such an increase in pork production.
- As producers recover their herds and profit from the high values in 2014, they have reinvested into their operations. Much of this growth is producer financed and two new processing plants will come online in 2017 to manage the pork generated by these farms. We are also seeing growth in contract finishing, which allows many young producers to get introduced to pig farming. And we have seen strong growth in smaller, alternative production nationwide.
- Another element of building consumer trust is assuring there are safeguards and processes in place on the farm. That’s why we implemented in 2014 the Common Swine Industry Audit. [Read detail on slide.]
- The scope of work for SHIC includes: Creating a swine disease matrix to understand priorities and their interconnectedness Swine health data collection, analysis and monitoring Defining improvements to biosecurity practices And defining and identifying threats on a global basis SHIC is being led by a familiar face – Dr. Paul Sundberg, the former head of Science and Technology at the National Pork Board.
- Finally, I want to discuss growing consumer demand. This is goal three, which is focused on…[read slide]
- Here’s a look a the growth in consumer expenditures since 2009. Expenditure/demand growth in 2013 was 5.5%, in 2014 was 7.5% and, last year, it was 3%. It’s a great story which defied the naysayers who said domestic growth was not possible. Demand has grown considerably since 2009 -- yet there are some signs for concern as growth is slowing compared to 2013 and 2014. (ENTER)
- 3 – species RPCE was down, yr/yr/again in April - Reversion to the mean but sill on uptrend
- Part of our strategic plan is a specific focus on improving pork quality. You will be hearing more from the Checkoff on that in the year ahead as we take on research efforts focused on improving consumer recognition of what “quality” looks like through a focus on color. In the strategic plan, our objective is to reduce the percentage of pork chops scoring below a “3” on the color scale. Here are examples of the color scale, with a “1” pork on the far left, ranging from a “4” pork second to the end, on the right. The final cut is noted as a “3.”
- Updated 61316
- USDA is now forecasting 5.2% growth for U.S pork exports (USDA WASDE report, June 10, 2016) EMI is forecasting: 2016 U.S. pork production to be +2.2% from 2015. Q4 production will be up 4% Q4 slaughter will be up 2.6% The line about aggressive marketing is more true than ever.
- In closing, our 2016 priorities are well in motion and we are very excited and optimistic about the year ahead. [click through the bullets to define our top 2016 priorities and read or comment on each.]