Dr. Bradley Wolter, Dr. Aaron Gaines, Ms. Julie Berling - Growth Of A Pig Production Business: Consumer Challenges, Strategy, and Opportunities

DOCUMENTISPROPRIETARYANDMAYNOTBEUSEDORDISTRIBUTEDWITHOUTEXPLICITAPPROVALOFTHEMASCHHOFFS.©2016THEMASCHHOFFS,LLC.
Cu
KEYNOTE: GROWTH OF A
PIG PRODUCTION BUSINESS
CONSUMER CHALLENGES, STRATEGY
AND OPPORTUNITIES
Dr. Bradley Wolter, President
September 19th, 2016

TODAY’S DISCUSSION
• My Approach & Presenters
• The Maschhoffs TODAY
• Our PATH to TODAY
– The Maschhoffs Story
– Agriculture’s Story
– Consumer Trends
• Our Path FORWARD: 2017
& Beyond
– Chicken’s ABF Journey
– Value Innovation POV
• Q&A/Discussion
Presented 09/19/16 2

OUR COMPANY TODAY
• 5th Generation Family-Owned
• HQ in Carlyle, IL
• Largest Network of Family-
Owned Pig Farms in North
America
– Approx. 750 production sites and 550
family farm partners
• About 5 Million Market Pigs to
4 Customers
• Decentralized Operations Span
9 States
– About 1,300 employees
– 218,000 sows
– 4 feed mills, 4 transportation washes

PART OF MULTI-PROTEIN BUSINESS
• Maschhoff Family
Foods is our holding
company
• Formed in 2013 with
the purchase of
GNP Company
• As part of a diversified
business we provide
healthy proteins that
enrich lives

BUSINESS OVERVIEW
Operations
 Business Units
• Largest family-owned hog
production network in North
America, 3rd largest overall
• Largest fully-integrated fresh
chicken producer in the upper
Midwest
 Total Business
• Approx. 3,000 Employees
• About 900 Family Farm
Partners
• 6 Feed Mills
• FY15 Net Sales of About $1.3 B
 69% Pork/31% Chicken
Highlights
1 Calculated using LTM sales information for GNP Company.

• Leading meat consumed
on the globe
• Global consumption driven by
sustained social economics
• Asia likely to import
significant amounts of pork
• U.S. remains leading potential
low-cost producer
• Evolving technology/industry
supply chain structure
• Commodity price volatility
remains
WHY HOG PRODUCTION EXCITES US
CHINA: Continued GROWTH Projected
SOURCE: Production, Supply and Distribution database and projections. March 2014.

OUR PATH TO TODAY

A BEGINNING LIKE MOST OTHERS…
2017
1851
-1990

BECAME PIG PRODUCTION SPECIALISTS…
20171851-1990
1991-
2003

RAPIDLY GREW IN PIG PRODUCTION…
1851-1990 2017
2004-
2014
HEARTLAND
PORK

…AS WE DIVERSIFIED
1851-1990 2017
2004-
2014
4 MAIN
Packers
& Processors

1851-1990 2017
R
DECENTRALIZED AND CUSTOMER FOCUS…
2015-
2016

THE COMPETITIVENESS CROSSROADS
1851-1990
2017
HEARTLAND
PORK

Mid-
1900s
FACE & PRODUCTIVITY OF AG
2017
One able to feed
Of U.S. pop in ag
One able to feed
Of U.S. pop in ag

Mid-
1900s
FOOD SYSTEM SCRUTINY
2017

CONSUMER DEMOGRAPHICS, TRENDS &
FOOD MOVEMENTS
2017
Mid-
1900s

THIS CREATES
HARD REALITIES FOR MEAT PROTEINS
Misinformation &
Distrust of Ag
& Empowered
Non-Meat
Movement
Consumers
Disconnected

OUR PATH FORWARD: 2017 & BEYOND

GROWING SUSTAINABLY
Decentralized production
system consists of five smaller,
largely independent,
geographically-based regions.
• Each region:
– Operates under guidance of
a General Manager (GM)
– Manages about 40,000 sows
– Is supported by dedicated
resources in the areas of
facility repair and
maintenance, pig movement,
herd health, and human
resources

ENGAGED LEADERS & PEOPLE
LANA SCHNEIDER
Manager of
Administration
Regional General Managers (GMs)
DR. AARON
GAINES
VP, Technology &
Support Operations
JEFF DIESEN
CFO
MORGAN
DUGAN
Sr. Director,
Supply Chain
DR. BRADLEY WOLTER
President
PATRICIO VIDAL
Great Plains
Region
DR. SCOTT STEHLIK
Heartland Region
& Technical
Operations
SAM DEHAAS
Great South
Region
PAUL WETTSTEIN
Central Prairie
Region
JULIE BERLING
Sr. Director,
Strategic Insights &
Communications

LASER-FOCUSED ON HELPING OUR
CUSTOMERS SUCCEED

BUSINESS/INDUSTRY SYNERGIES
LeadershipDevelopment
Innovation
AnimalCare
InformationSystems
Customer
Focused
Customer Service
Excellence
Respect
Integrity
Safety
Innovation
Quality
Opportunities
for Synergy
and Growth
MIDWEST’S LEADING
CHICKEN PRODUCER
Be the 1st choice nationally for
fresh ideas in natural chicken.
LARGEST FAMILY-OWNED
PORK PRODUCER
IN NORTH AMERICA
To become the most cost-efficient,
anchor supplier of hogs to U.S. pork
packers and processors.

…AND VALUE-DRIVEN INNOVATION

CHICKEN’S PATH TO NAE (NOT ABF)
2004 2016
GNP Company’s Julie Berling, Sr. Director of Strategic
Communications & Insights and Bill Lanners, Sr. VP of Operations

2004 2016
EARLY INDICATORS…
2004
0% of
flocks NAE

2004 2016
LAUNCHED, THEN SHIFTED GEARS…
2005
-2006
10%
of MN flocks
NAE

2004 2016
DEFINING AN EMERGING CATEGORY…
30%
of MN flocks
NAE
“No antibiotics-ever”
means NONE, NEVER
2008

2004 2016
MARKET DEMAND GROWS…
2009
-2014
30-75%
of MN flocks
NAE; 20% in WI

2004 2016
FROM NICHE TO MAINSTREAM…
2015
100%
of flocks NAE
in MN; 20%
in WI

2004
100% NAE BY 2019,
THE MOVEMENT MARCHES ON
100%
of ALL flocks
NAE by 2019
2016

VALUE OF NAE OVER CONVENTIONAL
 Just BARE has grown double-digit YOY.
 Projected to be 28% of TOTAL branded sales in FY17.
28% of TOTAL
branded sales
in FY17
5% Organic
The CHALLENGE: Selling the whole bird at enough of
a premium to offset additional costs.

THESE ATTRIBUTES
COST ABOUT
+ More expensive feed
+ Slight decrease in bird performance
+ Increased sanitation requirements
+ Heightened biosecurity
+ Slightly less bird uniformity
+ More barn-level interventions
+ Reduced barn density
+ Lighting standard compliance
+ Stricter product segregation protocols
+ Annual auditing & licensing fees

TODAY TO 100% NAE
• Is it sustainable in the
long-term?
• What do we see being the
additional challenges?
• What pitfalls can we
expect on this journey?
HOW MUCH HARDER WILL IT BE TO MAKE
THE ECONOMICS WORK FOR HOGS?

A VALUE INNOVATION POV
Dr. Aaron Gaines, VP/Technical & Operations Support at The Maschhoffs

ANTIBIOTIC-FREE CASE STUDY
Pork Packers &
Processors

• Prevalence of endemic
and epidemic disease
challenges have increased
– Increased density of pigs in
key growing geographies
– Health destabilization
– New epidemic disease
outbreaks
– Commingled pig flows
• Industry reducing
antibiotics already
• Need to maintain high
standards of animal care
BUSINESS REALITIES

• Need to determine increased cost
of antibiotic-free (ABF) program
– 114% to 121% higher COP based on
Internal modeled estimates
– The major economic driver: the impact
on pre- and post-weaning mortality
rates
– Past tendency has been to
underestimate the “true” costs of these
programs after system implementation
• The Critical Question: How do we
optimize ABF so it is sustainable
longer-term?
– This is not something the veterinarian
and nutritionist are going to sort out by
themselves
OUR APPROACH & CRITICAL Q
Said that meat & poultry
raised without routine use
of antibiotics should be
available in their
supermarket.
SOURCE: https://www.nrdc.org/sites/default/files/antibiotic-free-meats-CS.pdf

DEMANDS A MULTI-FACETED APPROACH

ANTIBIOTIC STUDY OVERVIEW
• Trial carried out from Jun-Nov 2014
• Randomized complete block design
using 2 treatments*
– Treatment 1: Control
– Treatment 2: No antibiotics—from weaning to
harvest
• Used a total of 32 pens per treatment
with 30 pigs per pen
• All pigs vaccinated for PRRS 3 weeks
post-weaning, and tested positive for
SIV and M. Hyopneumoniae
* Note: All piglets were given Excede at processing. Antibiotics
were used therapeutically for all sows and piglets during lactation.

ANTIBIOTIC STUDY RESULTS
ITEM CONTROL NO ANTIBIOTICS P-VALUE
Number of pens 32 32 -
Number of pigs 960 960 -
Body weight, lb
Start 14.1 14.1 >0.1
End 281.3 283 >0.1
Within-pen CV, %
Start 19.3 19.6 >0.1
End 9.8 10.2 >0.1
Average daily gain, lb
Live 1.75a 1.68b <0.05
Carcass 1.28a 1.22c <0.05
Average daily feed intake, lb 4.16a 4.09b <0.05
Gain: feed, lb:lb
Live 0.421a 0.412b <0.05
Carcass 0.307a 0.299b <0.05
Morbidity and mortality, % 6.5b 14.1a <0.05
a,bMeans with difference superscripts are different (P<0.05).

• Develop feeding programs
that reduce changeover
costs at the feed mill (i.e. #
of diets in phase feeding
program)
• Identification of feed
additives and/or ingredients
that improve pig health
• Leverage antibiotic
alternatives to offset pig
growth and feed conversion
impact of ABF
EXAMPLE 1: NUTRITION

• Identification of source flow(s)
best suited for ABF
• Increased diagnostic testing to
manage disease risk for given
source flow(s)
• Implementation of more
advanced biosecurity programs
or technologies (i.e. filtration) to
manage epidemic disease risk
• Reduce and/or eliminate disease
pressure associated with
endemic disease by leveraging
new or existing health product
technologies
EXAMPLE 2: HEALTH

• Need to understand what
genetic lines are better
suited for ABF
• Within genetic line need
to understand what
individual sire(s) may be
better suited for ABF
EXAMPLE 3: GENETICS

SIRE LINE DIFFERENCES IN
WTM MORTALITY
• Raw values from sire line 9, expressed as deviation from the mean line value
• Range in mortality across sire lines = 2.95%
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
A B C D E F G
WTMMORTALITY,DEVIATIONFROMMEAN(%)
SIRE LINE

WITHIN-LINE SIRE DIFFERENCES IN TOTAL
PROGENY MORTALITY, %
• Raw values from sires currently evaluated in the CTH, expressed as deviation from the mean line value
• Range in total combined mortality (pre-wean + post-wean) across sire lines = 24.69%
-15%
-10%
-5%
0%
5%
10%
15%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48
Pre-Wean Mortality Post-Wean Mortality Total Mortality

• Need to understand housing
requirements for ABF (i.e. stocking
density)
– Mortality and morbidity rate tends to
increase at floor spaces below 6.0 ft2
– Is this response different for ABF?
• Redefine barn design specifications to
facilitate animal care practices associated
with ABF program
• Defining a flow strategy to reduce fill time
by right-sizing our BTW and WTM assets
for ABF
• Potential segregation of Parity 1 offspring
due to higher mortality rates
EXAMPLE 4: HOUSING

Dr. Bradley Wolter
PRESIDENT
E: BRADLEY.WOLTER@PIGSRUS.NET

Dr. Bradley Wolter, Dr. Aaron Gaines, Ms. Julie Berling - Growth Of A Pig Production Business: Consumer Challenges, Strategy, and Opportunities

Recommandé

Recommandé

Contenu connexe

En vedette

En vedette (19)

Similaire à Dr. Bradley Wolter, Dr. Aaron Gaines, Ms. Julie Berling - Growth Of A Pig Production Business: Consumer Challenges, Strategy, and Opportunities

Similaire à Dr. Bradley Wolter, Dr. Aaron Gaines, Ms. Julie Berling - Growth Of A Pig Production Business: Consumer Challenges, Strategy, and Opportunities (20)

Plus de John Blue

Plus de John Blue (20)

Dernier

Dernier (20)

Dr. Bradley Wolter, Dr. Aaron Gaines, Ms. Julie Berling - Growth Of A Pig Production Business: Consumer Challenges, Strategy, and Opportunities