Nate Brown: Profit Drivers – Day-to-Day Management

Posted on March 24, 2013 in


By Nate Brown, Vita Plus
Over the last several years, the information systems that pork producers use to manage data in their operations have improved tremendously. This improvement allows producers to take a deeper look at their operations and find additional opportunities for increased efficiency and profit.

During this breakout session at Swine Summit, we focused on three areas of using data to improve profits: internal benchmarking, costs of taking pigs to heavy market weights, and a brief look at an Optimum Market Weight Cheat Sheet.

Internal benchmarking
Data from three separate farms was evaluated to benchmark their grow-finish productions sites against the rolling four-year farm average for ADG, F/G, percent marketed and market load variation. Cost and revenue factors were assigned to each of these measures to rank the sites from best to worst within each farm.

This analysis showed a $9- $20-per-pig variance in cost of production between the best sites and the worst sites. This information can be used to make improvements within an operation by assessing why the best sites are performing well and why the worst sites are struggling. At the end of the day, the goal is for the entire operation to improve.

Cost of taking pigs to heavy market weights
The industry trend has been to take pigs to increasingly heavy market weights. In general, the industry is getting better at determining the feed cost implications of this management practice to better determine the optimum margin-over-feed-cost at various market weights. However, other potential costs are associated with taking pigs to heavier marketing weights. These include live hog mortality, transport mortality (DOAs), transport costs, and condemned and discounted pigs at the packer.

A case study looked at approximately 250,000 pigs that were shipped to one packer from one farm. transport costs, DOAs, and condemned and discounted pigs were tracked against market weight. In addition, mortality rates from this farm were analyzed to determine the rate of mortality during late finishing. A series of calculations based on this analysis showed that there was a cost of $2.36 per pig to take a pig from 250 pounds to 300 pounds due to the factors mentioned. This information, in addition to the margin-over-feed-cost information, can help producers make better decisions about which market weight is most profitable.

Optimum Market Weight Cheat Sheet
As mentioned previously, we are getting better at assessing what market weight is the most profitable to sell at for various packers. However, this target weight is a moving target based on changes in feed costs and the hog market. The Vita Plus swine team developed a table that includes hog market price on one axis and feed cost per ton another axis. By referencing the appropriate hog market price and feed cost per ton cells, the producer can use the table to quickly determine the optimum market weight for his operation at a certain packer.

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