130 THE AMERICAN SOCIETY OF ANIMAL PRODUCTION

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1 130 THE AMERICAN SOCIETY OF ANIMAL PRODUCTION In conclusion, we may describe the present stage in the development of the carcass method of handling hogs in Canada as being one of steady expansion. The advantages weighed against the disadvantages, whether real or suggested, balance strongly in its favor. In so far as accurately appraising the market value of a hog, there is no com: parison with live grading. As to the possible field for extension work in making use of special qualities or of tracing out disease and weaknesses in order to eradicate and eliminate them, the machinery for identification is already provided. The standards employed are specially adaptable in connection with other swine improvement policies in both production and marketing and are thus being made to conform to the commercial requirements of the industry. DISCUSSION OF SELLING HOGS BASED ON DRESSING PERCENTAGE AND CARCASS GRADE W. O. FRASER United States Department of Agriculture Mr. Pearsall's discussion of the sale of hogs on the basis of carcass yield and grade, as such transactions are conducted in Canada, has been most interesting. Those of us who are interested in effectuating improvements in swine production and methods of marketing are intensely in, terested in the development of methods that will provide for the buying and selling of hogs on the basis of their actual value to the buyer. We believe this principle is fundamental to a constructive program for improvement in the production and marketing of swine. We are, therefore, entirely in sympathy with the objective that the system of marketing hogs on the basis of carcass yield and grade, as now practiced in Canada, was designed to accomplish. Such a system of selling hogs has the very decided advantages of, (1) providing for paying each farmer for the exact amount and grade of pork he produces which after all is the objective of the feeder in raising hogs, (2) it makes possible the positive identification of hogs that are soft and oily and the purchase of such hogs on the basis of their correct relative value, (3) it makes it possible to trace the origin of bruises and correct their source, and (4) it provides for determining the origin of diseased hogs and for correcting the cause that may have been responsible for the diseased condition.

2 THE AMERICAN SOCIETY OF ANIMAL PRODUCTION 131 In considering ways and means of attaining the objective that has been reached in Canada by selling hogs on the basis of yield and carcass grade, or of effectuating changes in marketing that will proceed as far in that direction as is considered practical, there are, however, some considerations peculiar to the hog and pork trade of this country that should, I think, be given careful consideration. In considering the merits of selling hogs on the basis of carcass yield and grade some thought should be given to the complexities of the demand for hog products in this country by consumers who because of custom, relative purchasing power, and for other reasons, prefer and demand a wide variety of pork products. For example, New England prefers relatively heavy hams and thick heavy bacon; cuts that are produced from relatively heavy well-finished hogs. Baltimore, on the other hand, prefers pork carcasses that contain a relatively high percentage of lean meat, and cuts that are produced from light hogs that do not possess a high degree of finish. Other cities and areas have their respective preferences, which in combination with the relative supplies of hogs of the different weights and grades, establish the relative prices for hogs by weight, class and grade. As a result of these sectional preferences for hogs of different weights and degree of finish or grade and of the wide range in the weight and grade of the hogs marketed from year to year and from season to season due to available feed supplies, the existing hog-corn price ratio, and other factors, the relationship between the prices paid for hogs of different respective weights and grades is constantly undergoing change. For example, when heavy well-finished hogs are relatively scarce in relation to the demand, such hogs may command top prices. On the other hand, if feed supplies are plentiful and the supply of heavy wellfinished hogs is in excess of the demand, while the supply of light hogs that are somewhat lacking in finish is below trade requirements, light hogs of good grade and at times even medium grade may command a higher price per pound than choice heavy hogs. This complexity in our supply and demand situation merely means that we do not have an established standard hog that is consistently preferred in our trade. This situation is in sharp contrast to that existing in Canada where the export demand requires a specific type, weight and grade of hog, and nearly 50 per cent of the production is exported. If we had the opportunity to remove from the domestic hog trade, say 40 per cent or perhaps even 20 per cent, of the carcasses produced from hogs that weigh 180 to 220 pounds and that are of a specific degree of finish when

3 132 THE AMERICAN SOCIETY OF ANIMAL PRODUCTION marketed, then hogs of that weight and grade could be depended upon continuously to be in preference, thus immeasurably simplifying our standardization problem. It would seem, however, that it might be rather confusing if we were to establish rigid requirements for a grade of hogs and sell on that basis, when under conditions that are somewhat unusual with respect to supply and demand, hogs of either heavier weights and more finish or lighter weights and less finish, might command prices higher than those paid for the standard grade in our markets. This situation would, I believe, be quite confusing to producers inasmuch as they could not be assured that a hog that very closely approached the ideal with respect to weight and grade would necessarily command the top price. This problem is very closely related to the inconsistency that frequently exists between the actual cut-out value of hog carcasses and their weight and grade. In general, light, low grade hog carcasses yield a higher percentage of the relatively lean and high price cuts than do hogs that are heavier and of higher grade. In sections where a relatively large percentage of pork is sold fresh, these lower grade cuts frequently command prices that are as high if not even higher than those realized from the higher grades. Such a situation might result in hog carcasses of the good grade ha-ring a higher cut-out value than choice grade carcasses of similar weight, because of their higher yield of relatively lean cuts such as hams and loins, and their relatively lower yield of lard, in comparison with the choice grade. Consequently when as a result of unusual supply and demand conditions such a situation exists, good grade hog carcasses may command a higher price per pound than choice grade hog carcasses and even medium grade carcasses a higher price per pound than either good or choice. This does not mean, however, that cuts from the lower grade hog carcass will necessarily always bring a higher price per pound than those produced from the higher grades. The "grade of the cut relates fairly directly to the grade of the carcass and cuts produced from lower grade hog carcasses are not of sufficiently high quality always to command top prices. Nor does this mean that on a live grade basis good grade hogs should sell for a higher price per pound than choice hogs or medium grade hogs for a higher price per pound than good and choice hogs, even though the carcasses produced from the good grade hogs do grade good and sometimes bring a higher price per pound than the choice carcasses that are produced from choice hogs, and the medium grade carcasses that are produced from medium grade hogs a higher price per pound than either good or. the choice grades.

4 THE AMERICAN SOCIETY OF ANIMAL PRODUCTION 133 The fact that on a live basis choice hogs sell for a higher price per pound than good grade hogs and good grade hogs for a higher price than medium grade hogs is due to the relative yield of the three grades. Other factors being equal, choice grade hogs yield a sufficiently higher percentage of carcass to live weight than good grade hogs and good grade hogs a sufficiently higher percentage of carcass to live weight than medium grade hogs to more than offset the price differential in favor of the lower grade carcasses. The prices paid for live hogs should, therefore, and under normal conditions do, relate directly to grade even though the carcasses produced from the same hogs that represent the choice, good and medium grades may relate inversely to grade. This situation would be very confusing to producers, if in offering their hogs for sale alive, the choice hog would sell for a higher price than the good, and the good a higher price than the medium, whereas if the hogs were slaughtered, and yields were not therefore a factor, the value of the carcass would relate directly to the cut-out value and might result in good grade carcasses selling for a higher price per pound than those that graded good or even choice. Such a situation is difficult to explain. It would be very difficult for hog producers correctly to evaluate in determining whether to sell their hogs on a live or carcass weight and grade basis. There are additional factors that should, I think, be carefully considered in connection with the sale of hogs on this basis. In a method of selling and distributing live hogs that is as complicated as ours, wherein hogs are assembled at country loading points either by dealers or shipping associations from which they are shipped directly to packing plants, or concentration yards, or to terminal markets where they may be reshipped to distant points for slaughter, it would seem to be necessary to work out a rather complicated method for making proper returns to producers. When we consider further that a load of hogs shipped to terminal markets may be sold to a number of different buyers because of the animal's suitability with respect to weight, class and grade for a particular purpose, the problem becomes further complicated. In such cases it would be necessary for someone or some agency to keep a record and make returns to the respective owners. Some further difficulty might arise in estimating yields in view of the various methods by which hogs may be handled. It would be difficult for farmers, for example, correctly to estimate yield if hogs were to be held over a day or two before slaughter or shipped to some distant point for slaughter, a consideration over which it would be very difficult for them

5 134 THE AMERICAN SOCIETY OF ANIMAL PRODUCTION to maintain control if the hogs were once sold, although such action would materially influence the yield. It would seem to me that such a system of selling would be much more readily adaptable to selling hogs direct to packers rather than at terminal markets. Although we have no preference for one type of marketing as compared with another we do consider it desirable that producers be provided a maximum of flexibility in determining where and by what method their hogs should be sold. In closing may I say again that we are intensely interested in the adoption of such revisions in our methods of buying and selling hogs as are necessary to enable each producer to sell his hogs for their correct relative value. It is, however, our opinion that very material progress can be made toward that end without proceeding so far at this time as to resort to selling hogs on the basis of carcass yield and grade. Our experience indicates that hogs can be graded fairly accurately alive and that competent buyers can buy hogs alive at prices that will at least fairly accurately represent their correct relative value. As I have previously stated we are entirely in sympathy with the attainment of the objective that has been reached in Canada by means of selling hogs on the basis of carcass yield and grade. The further discussion of this topic should I think be directed toward just how far it is practical to go and what measure it is practical and feasible to adopt in our hog trade to accomplish that end.