Devolving Food Production to the
Lowest Common Denominator
A Pork Industry Perspective on Consumer Expectations for Animal Well-Being
Chris Novak, CEO
National Pork Board
Overview
• The Danger of Dihydrogen Monoxidation
• Pink Slime, Agent Orange Corn, & the Green
Devolution
• “Stalling” on a Slippery Slope
• Preparing for the Next Wave
• Hanging Together or Hanging Separately
The Danger of Dihydrogen
Monoxidation
Key Findings of USFRA Consumer Research
• While nearly all Americans agree that food production is
important to the success of the country, they are split over
whether it is going in the right or wrong direction
• Consumers think about food production constantly, yet know
very little about how food is brought to the dinner table
• Overwhelmingly, farmers and ranchers share the same values
as consumers on issues related to environmental stewardship
and animal care
• Though they think about food regularly, the researchers found
that “consumers have become disconnected from their food.”
Consumer Concerns About Agriculture
1-10 scale:
1 = extremely UNCOMFORTABLE with it
10 = extremely COMFORTABLE with it
H2O
Supplementing naturally occurring animal
hormones
Using dihydrogen monoxidization on crops
and farm animals
Using pesticides on crops
Administering animal antibiotics
Using genetically modified (GMOs) or
biotech seeds
Using fertilizers on crops
Most
Uncomf.
(1-3)
Influencers
Uncomf.
(1-3)
“I’m not
aware of
this
method”
55%
72%
2%
52%
53%
14%
49%
48%
59%
61%
1%
1%
43%
51%
2%
26%
31%
-
Pink Slime, Agent Orange Corn, & The
Green Devolution
A New Generation of Activist
A New Generation of Attacks
•
•
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•
•
Demonstrations
Social Media
Corporate Outreach & Brand Attacks
Lawsuits
State & Local Ballot Initiatives
Federal Legislative Initiatives
The Real Agenda
• “For modern animal agriculture, the less the
consumer knows, the better.”
– Dr. Michael Greger (HSUS)
• “Slaughterhouses are a kind of Auschwitz.”
– Dr. Holly Cheever (HSUS)
• “Meat consumption shouldn’t be normal.”
– Gene Baur (Farm Sanctuary)
• “We need the poultry industry not to exist.”
– Wenonah Hauter (Food and Water Watch)
• “Agribusiness… they’re the radicals!”
– U.S. Congressman Jim Moran (D-VA)
• “Let’s hear about veganism as an
alternative. Taking on meat should be the
real war.”
– Dr. James McWilliams (The Atlantic)
Boiling the Frog
• Reduce Supply
• Increase Cost
• Decrease Demand
Fewer British Hogs & Hog Producers
The Price to British Consumers
Sources: BPEX, OECD
Sow Housing: Estimating Industry-Wide Costs
• Depends on Age of Facilities
– No information – assume uniform distribution.
– 25 year useful life, 1/25 of the barns are
replaced each year.
– Interpretation: If retrofit within 5 years, 20%
of the industry will transition normally at end
of life of facilities, 80% will be transitioning
early, representing a capital opportunity loss.
Costs = Capital + Permanent + Transition
Aggregate Cost -- Capital Costs + Permanent Costs + 24-month Transition
Percent Percent
Decrease Increase in
in Industry Mkt Hog
NPVd
Cost
2400 Sow Three
Cycle NPVa
1200 Sow Three
Cycle NPVa
Total Industry
Cost
Retrofit Barns to Drop Feed
$ 2,884,210,417
$ 1,637,154,971
$ 4,521,365,389
-100%
25.0%
Build New Drop Feed
$ 3,303,100,998
$ 1,826,565,552
$ 5,129,666,550
-113%
28.3%
Build New ESF Feed
$ 2,603,144,889
$ 1,403,147,158
$ 4,006,292,047
-88%
22.1%
Retrofit Barns to Free-Stall
$ 3,900,986,414
$ 2,199,416,921
$ 6,100,403,335
-135%
33.7%
Build New Free-Stall
$ 3,668,433,543
$ 2,028,588,996
$ 5,697,022,539
-126%
31.5%
Industry Level Total Impact
• Best Case = Loss of $1.239 billion
– Retrofit barns to Drop Feed, Small Pens – No
productivity hits or added costs.
• Worst Case = $6.100 billion loss
– Retrofit to Free Access Stalls
– Added permanent costs – Labor
– 2-year transition with -10% productivity hit
“Stalling” on a Slippery Slope
The Castration Scenario
• Voluntary 2018 ban in Europe on piglet castration
• Use of anesthesia or/and analgesia as of 2012
• Prominent US animal welfare specialist advocating
vaccination as alternative
• Economic incentive for integrated companies to use
alternative approach
• Activist videos & petition campaign beginning in US
The Realities
• No topical analgesics approved by FDA in US
• Unsubstantiated reports of increased piglet mortality
in countries anesthetizing piglets prior to castration
• US consumer & food chain acceptance of vaccination
alternative is questionable given existing consumer
market research
• Semen sexing and other technologies not available in
the near-term
• Non-castrate boars have significant economic &
sustainability impact on food chain
The Implication
• 110 million market hogs X 50%= 55 million boars
• Current market weight 280 pounds
• 15.4 billion pounds live weight
• Move to non-castrates requires marketing @180 lbs
• 55 million boars X 180 pounds=9.9 billion pounds
• Result: 18 % reduction in total pork supplies or a need to
produce 23 million more animals
Preparing for the Next Wave
Pork Forum Resolution—Sow Housing
• Fund additional research that optimizes sow housing system
types and enables producers to make informed sow housing
decisions to continually improve their farms
• Provide pork producers with the information and education
they need to implement responsible sow housing on their
farms
• Ensure that customers understand the animal welfare,
environmental and producer sustainability consequences of
their marketing decisions.
22
Vulnerabilities:
From a Food Companies Perspective?
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Castration
Ractopamine
Euthanasia
Antibiotics
Feedback
Culls
Injected Product
Action Plan: Understanding Food Company Needs
IDENTIFY biggest potential issues
• Start broad
• Focus where activists are
• Look far ahead
CONSUMER RESEARCH framing + language
to successfully address these issues
DELIVER results to customers for use in
communication plans and talking points
Research & Education
• Key Research Focus
– Housing system optimization
– Determine ideal criteria for creating groups of sows
• Key Education Focus
– Update the 2002 Sow Housing Conversion Calculator
– Develop educational materials for caretakers for managing animals in
group housing.
– Develop lender fact sheets that outline reasonable conversion costs
and production outcomes.
• Key Customer Focus
– Sustainability & Economic Analysis on key vulnerabilities
25
Hanging Together or Hanging
Separately
Our Food Company Requests
• Work with those of us who support your business mission and
goals—not activists who are hostile to your shareholder and
consumer interests
• Reflect your commitment to improving animal welfare
through investments in research and engagement with the
industry & academic experts who understand the science
• Be open to listening to producers—beyond your immediate
suppliers—who will be effected by your decisions
• Do your due diligence—evaluate the economic, scientific,
consumer, and environmental consequences of your welfare
decisions
• Understand the long-term agenda
Questions?
Chris Novak, CEO
National Pork Board
CNovak@Pork.org
Ph: 515-223-2600
This message funded by America’s Pork Checkoff Program.