Top Ten Ways to Stay Profitable in Tough Times

By Dr. Chad Hastad and Matt Steidinger, Swine Nutrition Services, Inc.

The last year of swine production has seen some wide variation, not only in ingredient cost, but also market prices, and herd health status.  While remaining profitable during these continuing changing times can be stressful, it is important to make decisions based on knowledge, not emotion. Here are 10 areas to focus on to stay profitable:

1. Feeder Management. This is the easiest way to impact lower cost of production with no additional cost. Properly adjusted feeders can improve feed conversion, thus reducing feed cost. 
2. Particle Size, Particle Size, Particle Size. Making sure particle size is around 700 microns will help optimize feed conversion with little investment cost. A quick rule of thumb - for every 100 microns over 700, it will cost $0.50/pig in reduced feed conversion.
3. Understand Energy Needs. With the rise in corn price, energy in the diet is now more expensive then protein. Understand your need for fat if you are limited for time and if you are making your ideal market weights.
4. Hitting Ideal Market Weight. Make sure you are selling pigs to each packer that generate the most revenue. Remember that minimizing sort loss and maximizing revenue are typically two different strategies (more on this below).
5. Know What You Pay For. Understand what things in the diet bring value. Don’t spend $5 for something that will return $2.
6. Consider Alternative Ingredients Carefully. Look for opportunity ingredients but make sure they price in as well as other characteristics such as affects on feed handling, carcass traits, or overall performance.
7. Review Additive Use. We all use additives in our diets from time to time during a production challenge.  However, often we forget to come back and evaluate if that additive is still warranted.
8. Follow a Feed Budget. This will help match the nutrient requirements of your pigs with the diets that you use.
9. Keep Records. As they say “you can’t manage what you can’t measure.” It is important to keep current & accurate records that can guide you while making decisions about your operation.
10. Consider Growth Promotants. With the current high feed cost, you may be able to capture more value, increase performance, or reduce diet cost. While several are available on the market, make sure you work with your nutritionist or veterinarian to understand which is best for you.

More on Market Weights

With increasing feed costs, swine producers need to think about their market weights. Economic terms say the most profitable weight at which to sell pigs is when the additional cost of adding one more pound is equal to the revenue from adding that pound or when marginal cost equals marginal revenue. Remember that this change affects ALL of the pounds, not just the last one added. Thus, this is not very practical approach for swine production. Because the rate of gain during swine production changes, market price and feed prices fluctuate it is difficult to suggest a single weight that fits all producers.    

The simplest approach is once hogs are in the approximate marketing weight range, individual producers should evaluate their own cost of lowering/increasing market weights at different feed prices to determine the incremental value. However the best method is to collect a large amount of closeout information and work with someone who can help model carcass revenue and feed cost to find your ideal market weight for each packer.

Dr. Chad Hastad and Matt Steidinger consult with approximately 78 clients, representing over 142,000 sows.  Swine Nutrition Services Inc. was formed in 2003 and provides consultation involving  feeding protocols, developing feed budgets / programs, providing least-cost ration formulation, as well as the evaluation of other ingredients that may be available on a farm-specific basis. Chad can be reached at chastad@frontiernet.net or (507) 236-4217, and Matt can be reached at mattsteidinger@mid-west.coop or (815) 848-3526.

Profitable Pork is published by Feedlogic Corporation. The information contained herein is not a substitution for professional services of any kind. The editor of this newsletter claims no responsibility for the use or misuse of the information.

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