Swine Production Overview

1
Swine Production Overview

• John T. Waddell, DVM, MBA
• Special thanks to
• Locke A. Karriker, DVM, MS, Dipl. ACVPM
• Food Supply Veterinary Services
• Veterinary Diagnostic and Production Animal
  Medicine Department
• Iowa State University College of Veterinary
  Medicine

With significant contributions from Dr. Alex
Ramirez ISU VDPAM Dr. Ken Stalder ISU AN SCI Dr.
James Kliebenstein ISU AG ECON
2
Content

• Global overview Part 1
• Pigs produced, production trends, export / import
  trends
• US overview Part 1
• Animals produced, regional distribution, location
  of feed resources
• Iowa overview Part 2
• Production trends, value of pork production to
  economy
• Farm overview Part 2
• Farm facilities and organization
• Animal overview Part 3
• Life cycle of pork production
• Emerging Issues Part 4
• Environmental stewardship, ethanol and biodiesel,
  antibiotics

3
Global Overview
4
Efficient Agriculture Gives More People Richer
Lives

• Today
• If you want 10 million cooked breakfasts it
  requires 5,000 acres of crops to feed animals
• In the 1950s
• 10 million cooked breakfasts required more than
  15,000 acres.

Which would mean less land for all of us to enjoy
in other ways

5
Per Capita Consumption (2000)
PH (2002) NPPC Pork Facts
6
Per Capita Consumption (2000)
PH (2002) NPPC Pork Facts
7
Top 12 Pork Producing Countries - 2004
Percent Change from 1999 1. China 18.2
7. Vietnam 28.9 2. E.U.-25 - 0.3 8.
Japan - 0.5 3. U.S.A 6.3 9.
Philippines 20.8 4. Brazil 41.7 10.
Mexico 15.7 5. Canada 23.4 11. S.
Korea 15.8 6. Russia 15.8 12. Taiwan
8.9
World 11.6
Source USDA/FAS
8
Top 12 Pork Producing Countries - 2004
Percent Change from 1999 1. China 18.2
7. Vietnam 28.9 2. E.U.-25 - 0.3 8.
Japan - 0.5 3. U.S.A 6.3 9.
Philippines 20.8 4. Brazil 41.7 10.
Mexico 15.7 5. Canada 23.4 11. S.
Korea 15.8 6. Russia 15.8 12. Taiwan
8.9
DEMAND is growing and will continue to grow along
with the human population unless a zoonotic
health threat undermines consumer confidence
World 11.6
Source USDA/FAS
9
Top 10 Pork Exporting Countries - 2003
Percent Change from 1998 1. E.U. 11.2
6. Poland - 17.3 2. Canada 125.5 7.
Hungary - 17.4 3. U.S.A 39.6 8.
Australia 335.3 4. Brazil 474.3 9.
Mexico - 2.0 5. China 97.2 10. Czech
Rep 25.9
World 45.4
Source USDA/FAS
10
Top 10 Pork Exporting Countries - 2003
Percent Change from 1998 1. E.U. 11.2
6. Poland - 17.3 2. Canada 125.5 7.
Hungary - 17.4 3. U.S.A 39.6 8.
Australia 335.3 4. Brazil 474.3 9.
Mexico - 2.0 5. China 97.2 10. Czech
Rep 25.9
More exports means more regulations apply to meat
produced. Health programs must meet the most
stringent withdrawals for all potential markets.
World 45.4
Source USDA/FAS
11
2004 was the 13th consecutive record year for
U.S. exports
12
A closed border could be devastating. Example
recent re-instatement of Japanese ban on beef
employees fired, company banned from exporting
indefinitely
2004 was the 13th consecutive record year for
U.S. exports
13
United States Overview
14
Per Capita Pork Consumption
Source John Lawrence Chartbook
Courtesy Erik Guffy ISU Agriculture Economics
15
Barrow Gilt Sales

• percent of purchases
• 2002 2003 2004
• Negotiated hogs 14.7 13.3 11.0
• S/P Market formula 43.4 39.2 40.5
• Other market formula 9.3 7.6
  9.2
• Other purchase agreement 13.0 19.0
  18.0
• Packer sold 2.2 2.1 2.1
• Packer owned 17.4 18.8 19.2

Source USDA/AMS Prior Day Slaughter Reports
16
Barrow Gilt Sales

• percent of purchases
• 2002 2003 2004
• Negotiated hogs 14.7 13.3 11.0
• S/P Market formula 43.4 39.2 40.5
• Other market formula 9.3 7.6
  9.2
• Other purchase agreement 13.0 19.0
  18.0
• Packer sold 2.2 2.1 2.1
• Packer owned 17.4 18.8 19.2

More contract pricing means more producers know
how much they can spend and still make a profit
on the CURRENT inventory of animals
More packer ownership means more animals are on
rigid marketing timelines and are depended on as
raw materials for plant profitability
Source USDA/AMS Prior Day Slaughter Reports
17
Per Capita Consumption, Boneless weight
equivalent
18
U.S. inventory of growing pigs 60.4 million in
2002
U.S. inventory of breeding animals (boars, sows,
and gilts) 6.17 million in 2002
While significant interstate movement occurs,
most pigs are raised in areas with significant
breeding herd populations. Pig dense areas are
likely to have wide ranges of age and this
presents challenges to disease control.
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Soybeans common protein source for swine
Feed is the largest cost for growing pigs. Feed
costs are lower when pigs are raised near grain
production. Waste can be utilized for fertilizer.
Corn common primary carbohydrate source for
swine
21
Swine are used to add value to cropping
operations on diversified farms and represent a
significant percentage of the value of
agricultural products sold.
22
Breeding Herd by State
Courtesy Erik Guffy ISU Agriculture Economics
Source J. Lawrence Pork Industry Data
23
National Changes in the Breeding Herd (1992 -
1997)
Source Missouri Swine Audit
Courtesy Erik Guffy ISU Agriculture Economics
24
National Changes in the Breeding Herd (1997 -
2002)
Source Missouri Swine Audit
Courtesy Erik Guffy ISU Agriculture Economics
25
Consolidation (Source 1997 Successful Farming
Magazine)
26
Consolidation (Source 2006 Successful Farming
Magazine)
27
Average market weight (lbs.) from 1974 to 2004,
National Pork Board
28
Estimated Total Number of Operations Share of
U.S. Slaughter in 2003 by Size Category, U.S.
Pork Industry Structure Study, 2003

29
Share of Annual U.S. Hog Slaughter by Year and
Size Category, U.S. Pork Industry Structure
Study, 2003

30
Number of Large Firms Producing Hogs, U.S. Pork
Industry Structure Study, 2003

31
Percent of U.S. Slaughter Hogs Marketed by Large
Firms, U.S. Pork Industry Structure Study, 2003
32
Who Profits?
33
Pork Retail Price Shares
Year
Producers packers are paid less of each dollar
spent on pork at the retail level and are losing
market share
34
Farmers Share of Consumers Pork Dollar
35
Packers Share of Consumers Pork Dollar
36
Processing-Distribution-Retail Share of Consumers
Pork Dollar
37
Packers are moving closer to the consumer by
doing further processing including case-ready
meat and developing their own brand names. When
producers integrate with packers and retailers,
they reclaim part of the profit and market share
that has been lost.
38
Percent of U.S. Slaughter Hog Marketingsby Type
of Owner, U.S. Pork Industry Structure Study,
2003

39
Seasonality
40
Growth and weight gain slows in summer months as
heat impacts feed consumption
November pork production averaged 20 higher than
July
41
November hog prices averaged 20 lower than July
42
Iowa Overview
43
IOWA PORK PRODUCTION
Iowas Rank Value Rank Hogs (2005),
value 1,650 M 1st Farms with pigs
(2005) 8,900 1st All Hogs Pigs (2005)
16,500,000 hd 1st Pig Crop (2005) 16,043,000 hd
2nd(NC) Hog Slaughter (2005) 29,835,000 hd 1st
44
IOWA PRODUCTION VALUE (2000) 1000
Crops Corn 2,656,446 24.7 Soybeans 2,165,544 20
.1 Hay 104,602 1.0 Misc. Total
Crop 5,027,304 46.7 Livestock Hogs 3,071,277 28
.5 Cattle and Calves 1,839,973 17.1 Sheep
Lambs 24,693 0.2 Dairy Products 455,247 4.2 Chic
ken Eggs 241,099 2.2 Misc. Total
Livestock 5,747,134 53.3 Total 10,774,438 Govt
payments 2,302,094
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Percent Change in Breeding Farms, 1987-2002
Percent Change in Breeding Farms, 1987-2002
Courtesy of Mike Duffy
Courtesy Erik Guffy ISU Agriculture Economics
46
Percent Change in Breeding Numbers, 1987 - 2002
Courtesy of Mike Duffy
Courtesy Erik Guffy ISU Agriculture Economics
47
Pigs per Sow per Year
2002 - 14.7 1997 - 13.5 1978 - 10.2
Courtesy Erik Guffy ISU Agriculture Economics
Source IPPA Iowa Pork Newsroom
48
Iowa Marketings
Courtesy Erik Guffy ISU Agriculture Economics
Source USDA NASS Meat Animal Reports
49
Inshipments Breeding Herd
Courtesy Erik Guffy ISU Agriculture Economics
Source USDA NASS Meat Animal Reports
50
Pigs Imported into Iowa in 2005

• Canada 2,768,928
• Missouri 2,735,073
• Illinois 2,080,239
• North Carolina 1,931,280
• Minnesota 1,885,480
• Oklahoma 1,788,074
• Nebraska 1,335,855
• Colorado 1,122,594
• Other states combined 2,235,586
• Total 17,883,109
• Statistics courtesy of Iowa Department of
  Agriculture
• Land Stewardship

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Iowa Farrow to Finish Profits, 1994-2005
Source John Lawrence, Iowa State University
52
Profit per Head ISU Swine Business Record
53
Hog Packing Plants Buying Stations
Courtesy Erik Guffy ISU Agriculture Economics
Source John Lawrence
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Farm Level Overview
Impact on farm structure and size
55
The number of U.S. hog farms has declined each
year since 1980
In 2004 there were 60,830 farms that owned hogs
and 69,420 farms that raised hogs.
Source USDA-NASS
56
There are at least 10 farrow-to-wean farms that
have an inventory of gt12,500 sows in the U.S.
57
No. Pigs Marketed with 20 PPSY
58
Pigs Per Litter By Herd Size - 2004

• Herd Size Pigs/Litter
• 1-99 7.58
• 100-499 7.83
• 500-999 8.25
• 1000-1999 8.73
• 2000-4999 8.85
• 5000 up 9.05

Larger farms appear to have advantages in
efficiency
Source USDA Hogs Pigs Reports
59
Cost of Slaughter Hog ProductionIowa State
University Calculations, 1987-2005
Source John Lawrence, Iowa State University
60
System structure impacts cost of production

• Extensive LOWER capital investment, LOWER fixed
  costs, LOWER efficiency, HIGHER variable costs
• Intensive HIGHER captial investment, HIGHER
  fixed costs, HIGHER efficiency, LOWER variable
  costs

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Extensive production
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Intensive production
63
A typical, farrow to wean, confinement sow farm
with a 2400 sow inventory

• Facility construction cost 1.7 Million
• Animal Inventory cost 432,000.00
• Staff
• 9 Team members, 2 DTLs , 1 Farm manager.
• Annual Profit potential at budget
• 739,530.00

64
Housing Types
65
Breeding/Gestation Pens
66
Breeding/Gestation Pens
67
Breeding/Gestation Stalls
68
Breeding/Gestation Stalls
69
Evaporative Cooling System
Typically used to cool incoming air in
mechanically ventilated breeding and farrowing
facilities. Water is circulated over corrugated
fiber board and air is pulled through.
outside view
inside view
70
Environmental Controls
71
Breeding/Gestation Stalls
72
Farrowing
73
Farrowing
74
Farrowing
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Nursery Small Pens
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Nursery Large Pens
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Flooring Types
78
Finisher Small Pens
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Finisher Large Pens
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Wean-to-Finish Barns
81
Wean-to-Finish Barns
82
Hoop Buildings
83
Hoop Buildings
84
Hoop Buildings
85
Animal Level Overview
86
Why have farms gotten larger?

• Demographics of the producers
• Economies of scale
• Usually start at 600 sows
• Start purchasing ingredients and transporting
  animals by the most economical methods (semi
  loads)
• Incorporation of new technologies
• Artificial Insemination
• All In, All Out Production
• Mechanization of Facilities
• Etc.

87
Example Sow Unit

• 4,800 Sow Unit
• 105,600 pigs/year (22 PSY)
• 2,030 pigs/week

88
Aerial View of 4,800 Sow Farm with onsite gilt
replacement/acclimation buildings
89
Aerial View of 4,800 Sow Farm with onsite gilt
replacement/acclimation buildings
Office Area
Waste water lagoon
90
Aerial View of 4800 Sow Farm with onsite gilt
replacement/acclimation buildings
2 Farrowing Barns 8 rooms X 48 crates each
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Aerial View of 4,800 Sow Farm with onsite gilt
replacement/acclimation buildings
1 Gestation Barn 1,120 crates
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Aerial View of 4,800 Sow Farm with onsite gilt
replacement/acclimation buildings
2 Breeding Barns 1,696 animals each
93
Aerial View of 4,800 Sow Farm with onsite gilt
replacement/acclimation buildings
6 Gilt Acclimation buildings 500 head each
94
Modern Swine Production

• Majority of swine produced in typical confinement
  facilities

95
Life Cycle of Pork Production Unit
Conception To Processing
Birth to Slaughter
Birth thru Nursery
Farrow 19 d
61 days
295 days
180 days
Nursery 42 d
Finishing 129 d
96
Four phases of modern pork production

• Breeding and Gestation

97
Breeding and Gestation

• Sows and gilts are housed in gestation stalls
• At weaning sows are moved from farrowing to
  gestation stalls
• Four days after weaning estrus detection begins
• Estrus detection done by exposing a boar to the
  sows
• Boar typically in the alley in front of the female

98
Breeding and Gestation

• Sows housed in crates for the duration of the
  gestation period
• Meet individual nutritional needs of the every
  sow
• Add body condition to sows that have become thin
  during lactation
• Reduced aggression between animals after weaning
  typically seen in a pen setting
• Access to fresh feed and ad lib water

99
Percent of Litters Sired by Artificial
Insemination1997, 2000, 2003 U.S. Pork Industry
Structure Study, 2003
100
Benefits From AI

• Allows use of better boars, thus better growth
  rate, feed conversion, etc. in pigs
• Enhances multiple matings
• Can reduce infection rate in sows
• Reduced number of boars needed, thus lower
  facility and feed costs

101
Farrowing Phase

• Sows housed in a farrowing crate
• Reduced crushing of piglets
• Creates optimum temperature environment for
  piglets
• Maintains optimum environment for the sow
  simultaneously.
• Wide spread use of the farrowing crate began in
  the 1970s
• Saw a big jump in the number of pigs that survive
  per litter.

102
Farrowing Phase

• Management occurring shortly after farrowing
• Iron shots
• Identification
• Castration of males
• Antibiotic treatment

103
Nursery Phase

• Numerous nursery styles
• Curtain sided buildings
• Completely enclosed
• Pen sizes vary
• 8-10 pigs per pen
• 20-25 per pen
• Even larger in large group systems

104
Nursery Phase

• Pigs weaned at an average of 19 days of age are
  removed from the sow and moved to a nursery
• Controlled environment
• Room temperatures 85-90 F at weaning
• Slowly lowered to 70-80 F by the time the pig
  is 8 wks of age
• Provide nutritionally dense diets to make the
  transition from mothers milk to dry feed
• Typically reared on totally slotted flooring
• Removes waste from immediate environment
• Reduced incidence of internal parasites
• Confinement pigs are typically cleaner than those
  reared outdoors
• Water usually provided through cup or nipple
  drinkers
• 2 per pen recommended

105
Grow - Finish

• Really two types
• Grow Finish
• Pig from nursery goes to grow finish facilities
  
• Approximately 50 lbs to market weight
• Wean-to-Finish
• Pigs weaned at approximately
• 19 days of age and moved
• directly to finishing facility
• Different facility requirements
• Heat
• Feeders
• Gating material
• Drinkers
• Etc.

106
Grow - Finish

• Typically
• 1000 head per barn
• 25 -28 pigs per pen
• My or may not be split sex feeding within or by
  barn
• All-in-All-out practiced
• Provided 7 square feet per pig
• Take advantage of differences in growth rate in
  pens to ensure adequate space
• Topping off of pens

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Nutrition
108
Nutrition - Water
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Water Usage
111
Water Usage
112
Water Usage
113
Water Usage
114
Nutrition - Feed

• Basic rations not complex
• Nutritional advances to allow us to feed a 10 day
  old pig
• Guidelines
• National Research Council (NRC)
• Bare minimums
• Kansas State
• Genetic Companies

115
Nutrition - Feed

• Basic rations
• Energy source Corn
• Protein source Soybean meal
• Lysine requirement
• Vitamins Minerals premix

116
Nutrition - Feed

• Sows
• Gestation ration
• 14 CP or so
• Lysine level 0.65
• Limit fed 4 to 5 lbs baseline
• Lactation ration
• 15 16 CP
• Lysine level 0.75
• Maximize feedintake

117
Nutrition - Feed
118
Nutrition - Feed

• Nursery (7 to 25 kg)
• More complex diets earlier
• Usually 2 to 4 different rations
• Higher lysine requirements 1.6 ? 1.2
• Start with a pelleted feed for 4 7 days
• No soybean meal
• Fish meal, oats, whey
• Early diets very but only feed a little

119
Nutrition - Feed
120
Nutrition - Feed

• Grow-Finish (25 kg to market)
• Basic rations
• Usually 4 to 6 different rations
• Protein and lysine requirements decrease with age
  (1.2 ? 0.8 Lysine)
• Usually all ground feed
• Feed wastage is critical

121
Nutrition - Feed
122
Feeder Adjustment
123
Modern facility summary

• Environment designed to be optimum
• Temperature
• Ventilation rates
• Dietary nutrients
• Maximize the opportunity for the pig to express
  its genetic potential for economically important
  performance traits
• Average daily gain
• Feed efficiency
• Carcass cutability
• Backfat
• Loin muscle area
• Percent lean
• Bottom line profitability

124
Emerging Issues
125
Ethanol
126
Benefits and Limitations of Using DDGS in Swine
Diets

• Dr. Jerry Shurson
• Department of Animal Science
• University of Minnesota

127
North American DDGS Production
Source Sean Broderick, Commodity Specialists
Company
128
U.S. DDGS Consumption

Estimate 2002
Estimate 2003
Estimate 2004
Estimate 2005
CSC 2006
CSC 2003
129
Estimated DDGS Usage in U.S. Swine Feeds
2001-2005 (Metric Tonnes)
130
Current Commercial Dietary DDGS Inclusion Rates
and Estimated Usage

• Grower-finisher diets 85-90
• 10-15 dietary inclusion rates
• Sow diets 5-10
• Gestation - up to 30 dietary inclusion
• Lactation - 5-10 of the diet
• Late nursery diets lt 5
• Added at 5-10 of the diet

131
Maximum Inclusion Rates of Golden High Quality
U.S DDGS in Swine Diets (Based Upon University
of Minnesota Performance Trials)

• Nursery pigs (gt 7 kg)
• Up to 25
• Grow-finish pigs
• Up to 20 (higher levels may reduce pork fat
  quality)
• Gestating sows
• Up to 50
• Lactating sows
• Up to 30

Assumptions no mycotoxins formulate on
a digestible amino acid and available phosphorus
basis
132
Benefits and Limitations of Feeding DDGS Diets to
Swine
Benefits
Limitations

• Energy value corn
• High available P
• Reduce diet P supplementation
• May reduce manure P excretion
• Partially replaces some corn, soybean meal, and
  dicalcium phosphate and reduces diet cost
• Commonly fed at 10 of diet
• Higher levels can be used if amino acids are
  supplemented
• Only golden DDGS should be used
• High amino acid digestibility
• Appears to reduce gut health problems due to
  ileitis
• May increase litter size weaned when fed at high
  levels to sows
• Increases pig weight gain when fed to sows during
  lactation

• Low protein (lysine) quality
• add other supplements high in lysine and
  tryptophan
• Variability in nutrient content and digestibility
  among sources
• Manure N excretion increases
• Belly firmness and pork fat quality may be
  reduced when gt 20 in the diet
• Fine particle size causes flowability problems in
  bins and feeders
• Difficult to pellet and maintain throughput of
  pellet mills
• Mycotoxin free grain should be used to produce
  ethanol and DDGS
• Short-term feed intake may be reduced when
  feeding high DDGS diets to sows

133
DDGS Varies in Nutrient Content and
Digestibility, Color, and Particle Size Among
U.S. Sources
134
U of M DDGS Web Sitewww.ddgs.umn.edu
A DDGS web site featuring nutrient profiles
and photos of DDGS samples research
summaries - swine, poultry, dairy, beef -
DDGS quality presentations given links to
other DDGS related web sites international
audiences
135
U.S. Ethanol Biorefinery Locations
136
Biodiesel
137
Making Biodiesel

• 100 gallons of veg. oil or animal fats
• 10 gallons of methanol
• 100 gallons of bio-diesel
• 10 gallons of glycerol

138
The chemical reaction to make biodiesel
Potassium or Sodium Hydroxide
Methanol or Ethanol
139
The biodiesel production process Source National
Biodiesel Board
140
Biodiesel Production Plants, 2006 Source US
Biodiesel Board
141
Planned New or Expanding Biodiesel Production
Plants, 2006 Source US Biodiesel Board
142
U. S. Biodiesel Production
143
U.S. Soy-diesel Production

• Currently 65 plants in U.S.
• Production capacity 365 million gallons
• Output 2005 75 million gallons
• Small plants (lt 10 mg batch process) using waste
  fats and oils
• Output has been going to soap and shampoo rather
  than biodiesel

144
U.S. Soy-diesel Production

• 58 plants expanding or under construction
• projected capacity 713 mil. gal.
• Many of the new plants - 30 mil. gal.
• (Requires the oil from 400,000 A. soybeans.)
• Continuous processing using multiple feedstocks
  of vegetable oil

145
Environmental Concerns
146
Public concerns

• Center around three main areas
• Soil
• Accumulation of minerals in the soil
• Runoff of minerals from land where nutrients were
  applied
• Water
• Surface
• Ground water
• Air
• Nuisance
• Health

147
Challenges

• Producers must meet the demands
• Many technologies are available to address these
  concerns.
• Expensive in a time of declining margins

148
Pig Densities

• Livestock production is becoming concentrated in
  many geographical parts of the world.
• Pork production is no exception

149
Pig Densities in Selected Countries(Adapted from
Saskatchewan Agriculture Food and Rural
Revitalization, Statistics Canada.)
150
Pig Densities in Selected Countries(Adapted from
Saskatchewan Agriculture Food and Rural
Revitalization, Statistics Canada.)
151
Resources for current updates

• Iowa Pork Industry Center
• http//www.ipic.iastate.edu/about.html
• Daily Livestock Report
• The DLR is published daily by Steve Meyer and Len
  Steiner, and distributed courtesy of the Chicago
  Mercantile Exchange. You can subscribe by going
  towww.dailylivestockreport.com/subscribe.asp.
• National Daily Hog and Pork Summary from the USDA
• http//www.ams.usda.gov/LSMNpubs/PDF_Daily/DHPS.pd
  f

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