Optimistic Outlook Despite PEDv
Since last spring, PEDv has wiped out an estimated 5 million pigs in 27 states. Despite the devastation of the disease, the hog industry outlook is still optimistic for four reasons: A cure is in sight, there is the potential for record-high industry revenue, warm weather slows the virus, and demand is steady.
A cure is in sight
Porcine epidemic diarrhea virus (PEDv) is a swine virus that is fatal to almost 100% of infected piglets less than 2 weeks old. Luckily, PEDv isn’t an airborne threat, but that doesn’t mean it can’t spread easily. A small amount of manure can infect an entire facility.
The only vaccine available for PEDv comes from Harrisvaccines in Ames, Iowa. To date, the company has shipped 1.4 million doses of vaccine to producers. The company released the first generation of the vaccine in August, following the first recorded PEDv outbreak in April. The second generation, called iPED+, came out in January 2014. The vaccine is given to sows close to farrowing, which passes the antibodies on to the piglets.
Harrisvaccines was the first to the market with a solution because of technology that allows the company to speed up the vaccine process. The traditional vaccine approach is to grow the virus in the lab and then modify it, which takes more time with difficult viruses like PEDv. Instead of the traditional method of vaccine manufacturing, Harrisvaccines uses a technology originally developed for the U.S. military’s anti-terrorism efforts, which uses a gene-sequence from the virus to make a vaccine. In about six weeks, the company can take a gene sequence from the virus, in this case the spike gene, synthesize it, and change it to fight the virus. This is what they did to create the first generation.
“We were confident that the first-generation vaccine produced antibodies that would have some effect on the virus,” says Joel Harris, Harrisvaccines. The initial results from this vaccine showed that it was effective in preventing the virus in some but not all instances, so Harrisvaccines continued to refine the treatment.
The second-generation vaccine achieves more consistent levels of antibodies. “Initial reports are positive,” says Harris. “This is a safe and effective tool when it’s used correctly.” Harrisvaccines is working on acquiring a USDA license to make the vaccine more readily available. At this time, producers can get the vaccine with a prescription from their veterinarian.
Harrisvaccines will continue to work on the vaccine as the virus adapts. “There isn’t just one PED virus,” explains Harris. “There are variant strains that are 5% different than the initial virus.” It will take continued research to see if the current generation will protect against the new strains.
Besides the vaccine, producers should focus on prevention efforts and biosecurity. “No vaccine is 100% effective,” adds Harris. “Following the other prevention measures is very important.”
Companies like Boehringer Ingelheim Vetmedica, Inc. (BIVI) and the Pork Checkoff have also pledged research dollars to find ways to manage the virus.
Record-high industry revenue
Lean hog futures for spring and summer contracts are at record-high levels. However, Chris Hurt, a Purdue Extension ag economist, says it’s possible the markets have overacted.
While PEDv can be devastating to individual swine herds, Hurt says it remains to be seen whether slaughter supplies will fall enough to warrant the $10 to $14 per-hundredweight surge in spring and summer futures prices over the past two weeks.
"So far this year the number of animals coming to market has been very close to the numbers indicated in the U.S. Department of Agriculture's December Hogs and Pigs report," he wrote in a weekly outlook report. "When adjusted for the number of slaughter days compared to last year, the slaughter count so far is down 0.5%. However, market weights have been higher by about 2.5%, thus causing total pork production to be up by about 2%."
According to Hurt, the futures market suggests that lean hog prices could average about $112 per hundredweight for the period of March through August. This compares with an average of $88 per hundredweight for the same time period last year.
If fear of low slaughter supply is the cause of the price jump, Hurt said it means traders expect hog slaughter supplies could be down by as much as 7% to 10%. However, the USDA’s December inventory indicated that slaughter supplies for the second quarter would only be down 0.5%. Third-quarter supplies will come primarily from winter farrowings, which is where the most uncertainty comes into play.
"Winter farrowing intentions were up 1.3%, but since PEDv kills baby pigs and is most prevalent in cold months, the number of pigs weaned per litter could be down sharply," adds Hurt. "This is where no one knows for sure." The USDA will provide an updated inventory report on March 28, which will provide information on the number of pigs that survived the winter.
If lean hog slaughter supplies end up dropping by only 3% to 4%, instead of the larger losses markets are expecting, futures prices could come down.
The bigger question, Hurt said, is how PEDv will affect the financial well-being of the pork industry as a whole this year. "The initial answer might be somewhat surprising," he adds. "PEDv will likely increase economic returns for the U.S. industry."
The outcome for individual hog producers won't necessarily mirror that of the overall industry. Producers with herds severely affected by PEDv could end up with net financial losses, Hurt said. High hog prices could offset pig losses for producers with an average number of piglet deaths. "PEDv could actually be a financial windfall for producers who are able to avoid the disease," explains Hurt. "At the farm level, current futures markets are suggesting a live price for 2014 at a record high of $76 per hundredweight compared with $64 last year. This will provide record-high industry revenues and the highest profit per head since 2005."
For farmers who are in need of financial assistance, Senators Kay Hagan and Debbie Stabenow have urged Secretary of Agriculture Tom Vilsack to approve disaster assistance for small pork producers affected by the virus. The senators are asking the USDA to use the livestock disaster program. At this time, the assistance hasn’t been approved.
More good news
The start of spring is good news for PEDv. The virus survives better in the cold so warmer weather should help slow down the virus and reduce animal losses.
In addition, PEDv poses no threat to human health or food safety. And according to Hurt, even in short supply situations, consumers are slow to reduce their pork use.