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Swine Operations must Maximize Efficiency through 2020 and into 2021

Kent Bang
Educational Opportunities: 
Home > Education & Events > November 2020 > Swine Operations must Maximize Efficiency through 2020 and into 2021

The pork industry has been through significant challenges in 2020. This will be a year many would like to get behind them, with a chance to look toward a brighter future. At the same time, we will likely continue to face challenges as we always have. Those challenges relate to supply, revenue, cost of production, competitiveness, regulatory issues and more. In 2021, two key challenges will come into play as you think about farm financial improvement.

Production efficiencies have always been a critical metric to success. Understanding those metrics on your swine operation and how you compare to the industry is critical. That’s because management determines what is most important and gives direction on how to drive improvement at the farm level, given the resources available. Ranking the importance of key metrics is somewhat subjective, but my list in order of impact would be:
  • Percentage of weaned pigs sold as “full value” pigs
  • Wean to finish feed efficiency, (feed/lb. gain, Kcal/lb. gain, $/lb. gain)
  • Grower space utilization (grower cost/head, % utilization)
  • Pigs weaned per week (based on facility nameplate design)
  • Pigs weaned per sow (PW/S/Y or PW/MF/Y)
Based on your management key metrics, what three to five directions can you provide to farm managers and department heads to measure and improve production outcomes?

Cost of Production
Driving production cost lower has to be a goal in any commodity business. It clearly has a big impact on success in this industry. Surprisingly, today pork producers have costs that range from $62 to $76 per carcass cwt. I think that captures the vast majority of this industry and the range continues to astound me. Cost of feed explains some of it. Across the country, corn basis can vary by $1.00 per bushel, and meal by $30 per ton. Those commodity prices alone could account for nearly half of that variation in cost of production. Reducing breakeven costs lower starts with selling more pounds. The goal is efficient use of resources and the cost of those resources. I have ranked what I believe are the big three related to impacting cost of production below, based on farrow to finish costs. These three account for 75-80% of production costs:
  • Feed cost ($/lb. sold)
  • Facility cost
  • Labor cost
Comparative cost of production is harder to come by. Understanding how my farm compares to budget on a regular basis and how I compare to the industry is also imperative. Lee Schulz at Iowa State University has a good as a month-to-month comparison, with the understanding that it is a “model”, and compared to our internal review of client financials, would represent the top 20% of the industry. Cost of production in 2019 in the I.S.U. model averaged $64.99 per carcass cwt. Average cost of production in our data would indicate median cost of production is $7.00 to $8.00 per head greater ($3-4 per carcass cwt).
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