Navigating the Storm: Part one – Marketing strategies and closeout analysis

Posted on October 17, 2018 in Swine Performance
By the Vita Plus swine team
A note about “Navigating the Storm”
Challenging hog markets can present producers with difficult management decisions to maintain or maximize the profitability of their operation.  When making decisions in challenging markets, it is important to consider all the factors that go into determining profitability.  Producers should optimize their nutrition, management, and marketing strategies to fit the current market and their unique operation.

The Vita Plus swine nutrition team understands the challenges you are facing, and we are dedicated to helping you be successful, regardless of market conditions.  This publication is intended to help you identify some of the areas where the Vita Plus team can help you improve your operation’s profitability.  This series will address a wide range of management strategies to consider across multiple areas, including nutritional interventions, management and marketing strategies, and closeout economic analyses.

In part one, we address management around the time of marketing and how we analyze closeout information to improve profitability. 

Internal benchmarking
Vita Plus has developed analytical tools to help you benchmark your various sites, barns, genetic lines, feed mills, etc.  Graph 1 shows an example analysis across sites for a wean-to-finish (WF) production system.  By placing an economic value on average daily gain (ADG), feed-to-gain (F:G) and marketing percentage, we can rank the sites based on economic performance compared to the system average in terms of cost per pig.  This analysis allows you to identify which sites are doing well and which sites need improvement.

As Graph 1 illustrates, it is common to have differences of up to $15 per pig between sites when running this analysis for WF or grow-finish (GF) sites within a system.  In average to good markets, this represents your potential profit.  In poor markets, it is simply unaffordable.

Optimum market weight
Vita Plus has developed models to examine customer-specific market scenarios and determine the optimal weight to maximize income over feed cost (IOFC).  We use a producer’s carcass data, feed costs and packer grids to predict an optimum market weight specific to their system.

As Graph 2 shows, a 10-pound change in market weight can result in a profit loss of up to $4 per pig in the IOFC.

Along with the market weight analysis, Vita Plus analyzes the variation of market weight, referred to as the coefficient of variation (CV), to determine its impact on the IOFC.  We account for producer-specific production situations and market scenarios to determine the impact of the market weight CV in their system.

In the modeled scenario in Graph 3, a 1-percent improvement in CV would result in a 70-cent per head advantage in IOFC.  Through our marketing efficiency analysis, areas of opportunity can be identified and solutions and tools can be developed to help you meet your marketing goals.

Contact your Vita Plus consultant for more information on any topic discussed in this series.  Navigating the Storm: Part two will look at sow and pre-weaned pig management as well as barn temperature to improve profitability.

Category: Business management
Markets and economics
Swine Performance