Prairie Swine Centre

 Industry Partners

Prairie Swine Centre is an affiliate of the University of Saskatchewan

Prairie Swine Centre is grateful for the assistance of the George Morris Centre in developing the economics portion of Pork Insight.

Financial support for the Enterprise Model Project and Pork Insight has been provided by:

Author(s): Patience, J.P. and Lee Whittington
Publication Date: January 1, 2005
Reference: Centred on Swine Volume 12 Number 1
Country: Canada


What would an extra $5 to $10 per market hog mean to Alberta pork producers? It’s a huge amount of money that farmers can potentially capture by fine-tuning their feeding and operational management, says Dr. Patience. Although you cannot guarantee those exact extra earnings will be realized for every market animal shipped from every farm, it is the kind of money that gets left on the table far too often.

.“As an industry, there has been too much emphasis on improving productivity as a way to increase profitability. The goal should be to maximize net income and to do that, producers need to pay attention to both revenues and expenses.” Increased productivity is a means to an end, not an end unto itself. Patience says there likely isn’t one change that will generate an extra $5 per hog sold, but rather a series of adjustments that are worth $0.50, $1 or even $3 to $5 per hog that collectively add up to significant dollars.
Most critically, these changes are all possible on most farms. These are not expensive or technically difficult actions. Indeed, some farms are already acting on one or more of these items. He points to research that shows, for example, how a new approach to a feed analysis can help reduce feed costs ranging from $2 to $4 per head. “Even if you’re marketing 5,000 hogs a year, which isn’t necessarily a large operation by today’s standards, that’s anywhere from $10,000 to $20,000 in increased net income,”says Patience. “And that’s a huge amount of money that producers could have in their pockets.”

Different thinking
“Maximizing productivity won’t automatically maximize net income”. Producers need to look at their returns over feed costs, rather than just growth rate or feed conversion. They can use growth rate and feed conversion as tools to improve income, but the ultimate objective has to be to maximize return over feed costs.e 2, Issue2, Ap 2005

Forget bushel weight
Bushel weight is an unreliable indicator of feed grain quality, says Patience. The long-standing belief that the heavier the grain, the better the quality, just doesn’t pan out in the final feed analysis. The feed quality of the 48 pound and 52 pound barleys, for example in our research, is all over the map,” he says. The amount of DE ranges from about 2,700 kcal/kg up to nearly 3,200 kcal/kg. “This tells us there is no logic in paying a premium for 52 pound barley and there is no logic in accepting a discount for 45 pound barley.”
A five percent error in energy in one of the cereal grains in a diet can easily cost $2 to $3 per pig. Again, over 5,000 market hogs, that can be a return of as much as $15,000, for an assay that costs about $25.”

Profit from poor feed quality
One option is to grind grain finer, which makes it more digestible and the other is to add feed enzymes to improve feed digestibility. However, neither is a perfect solution. Specific enzymes are helpful in specific situations. Enzymes have dropped in price over the years, but they still represent an expense that must be managed properly.“ These options are there, but they should be discussed with your nutritionist to see if it makes sense for your operation,” says Patience.

Finding the energy
Does the highest energy ration make the most sense in the grower/finisher barn? Not necessarily. The high energy ration may not significantly increase average daily gain and might only marginally improve feed conversion, yet it can considerably increase feed costs. Research at the Prairie Swine Centre showed the only difference between a lower energy ration and a high energy ration was nearly $12 per head. Looking at a 5,000 head finisher operation, that’s a $60,000 saving in feed costs. The research compared five rations with DE ranging from 3.09 Mcal/kg to 3.57 Mcal/kg. The lowest energy ration cost was $37.76 per pig, while the highest energy ration cost was $49.52 per head (2004 prices). That’s a difference of $11.76 per head. “This research shows the low energy ration did as much for productivity as the highest energy ration and it was nearly $12 per head cheaper.” says Patience. “These numbers are specific to this research project, but producers should re-evaluate their own feeding costs to see how they stand. The Prairie Swine Centre is currently repeating this experiment on a commercial farm near Saskatoon. “

Consider Net Energy yardstick
Developing a feed ration based on Net Energy (NE) is another technique to fine-tune feeding costs. NE is a relatively new tool for measuring feed value in North America. Many producers are familiar with DE and Metabolizable Energy (ME), but NE is more precise. In Europe, NE is more common. “All three systems evaluate the quantity of energy available to the animal differently,” says Patience. “NE more accurately estimates the amount of energy available to the pig for maintenance and growth. Research shows potential to save a significant amount of money by switching from the digestible energy system to the NE system.” Using long-term or more traditional averages for feed ingredient prices, the Prairie Swine Centre research showed a “conservative” $2 increase in net income for each market hog sold, using the NE system.

Market in “the core”
While the actual amount will vary depending on the packer grid and market prices, one Prairie Swine Centre project showed in a $1.40/kg market, selling hogs that were even two kilograms below the core carcass weight range represented a minimum of $10 per head less compared to hogs marketed within the core. In this project, the core covered a carcass weight range from 85 to100 kg.
The Prairie Swine Centre research showed that on one farm, in a $1.40 kg market, light hogs marketed in 80 to 85 kg carcass range generated a loss of $10.21 per head. As carcass weights moved into the core range, the situation changed dramatically. Compared to pigs in the 85 to 90 kg weight range (minimum core weight), hogs in the 90 to 95 kg carcass range showed a positive return of $3.74 per head, while hogs in the 95 to 100 kg carcass range had a positive return of $6.36 per head. There was still a positive return of $2.17 per head in the 100 to 105 kg carcass range. Carcasses over 105 kg showed a loss. Since new grids are continually being introduced, and since results on individual farms will vary, the Prairie Swine Centre encourages producers to take the results from their own farms and from their packers, and make decisions on optimum marketweights. The interests of the packer must be addressed in this analysis, because they are the market – and producers must produce what they need.

Powerful profits
Even minor adjustments in barn temperature and ventilation rate can add another few, yet important dollars to the profit picture, says Patience. If the barn temperature and ventilation rate are set too high, for example, that can easily add $1 to $2 per hog in energy costs. Again, Prairie Swine Centre research showed an example of where the set-point temperature was two degrees too high, 17°C versus 15°C, and the minimum (winter) ventilation rate was 20 percent higher than needed. The power used to run this situation was compared to proper settings. Research showed a difference of $1.18 per head between the “optimum” settings and the incorrect settings.“Again, on its own it may not seem like a significant amount of money, but if you’re marketing even 2,500 hogs per year, that’s nearly a $3,000 savings,” says Patience.

The Bottom Line
Prairie Swine Centre research presents examples of where savings can be found, says Patience. Even in conservative terms, the work shows how a 2,500 head market hog operation can save $10,000, $20,000 and even as much as $25,000 per year from a series of minor management changes. Producers, however, need to pencil out these options for their own operations to determine the actual savings for their farms.

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