Staying Focused in Uncertain Times
By Drew Ryder, Feedlogic Corp.
How many sows should I cull? Do I depopulate? Do I ship lighter pigs? Do I dare go ahead with a planned expansion? Whenever the industry goes into a loss cycle – as it is in now – the inevitable hand-wringing begins. In integrator board rooms, farm offices, and around the farmhouse kitchen table – everyone is faced with difficult decisions.
It would be a lot easier if pork production wasn’t a forward-looking business, where you must anticipate market conditions many months before you make a decision to invest in inputs or infrastructure. Today, it’s even worse because the decision making has been confounded with new uncertainties surrounding feed costs and the future of Canadian pig production.
At a number of recent industry trade shows in South Dakota, Minnesota, and Iowa, the air was abuzz with these uncertainties. Everyone was trying to guess how much the flow of Canadian pigs south will be affected by Country of Origin Labeling coming in September and wondering what will happen to feed prices if the 2008 crop is bad.
This is all new territory, so historical data is not that helpful. In fact, the independent producer with 300 sows has about as much chance at guessing outcomes as the integrator with 100,000 sows and a whole department focused on hedging future positions.
Here’s what we do know: Packer capacity is not easily adjusted down. If the supply of pigs drops significantly later this year because of excessive culling of sows occurring now, pig prices in the U.S. may rise a lot more than the futures markets are currently indicating.
Whether pig prices will rise faster than feed prices is another question. While you ponder that scenario, do what you can now to reduce your feed bill per pound of pig produced.
Areas where you are probably already leaving dollars on the table and will get worse as feed prices rise:
- Poorly adjusted feeders. Keep them as tight as you can without limiting feed intake. This takes discipline and training.
- Shipping heavy pigs. The higher the corn price, the less attractive it is to ship higher weights. Know what it costs for every pound of gain at each stage of growth – then pick an average shipping weight which nets the best return or lower loss and stick to it as much as possible. Today, a 240-pound pig may be a better option than a 270-pound pig.
- Incorrect diets. How sure are you that pigs are getting fed the right diet for their stage of growth? Check feed budgets and make sure they match your pigs’ actual intake. If they are way off, you could be feeding more expensive early diets to later stage pigs.
- Poor diet formulation. If you haven’t made changes to formulations for a long time, have a reputable nutritionist look at your production situation and make recommendations for more cost-effective formulations.
A final piece of advice: Devote more time to measurement. It’s difficult to improve if you aren’t sure that your benchmark data (typically close-out records) is accurate. The most successful producers of the future will have the most accurate data pertaining to their own production systems and will have a way to act on it. Contact us if you want to know how to do this.
Drew Ryder is president and founder of Feedlogic Corporation. Feedback: dryder@feedlogic.com; 320-222-3000
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