Factors That Affect Hog Profitability -- Details, Details, Details

Livestock Update, May 1998

Cindy Wood, Animal and Poultry Sciences, Virginia Tech

With hog prices today, little things may count most in weathering the down side of the cycle. Feed is by far the largest part of costs, just as market hogs are the major source of income. Following are some suggestions for improving these factors to maximize the return on hogs.

FEED COSTS

Consider selling finished animals at lighter weights. The last few pounds tend to be the most expensive because most of the extra weight is fat. Three items to consider in making the decision: sort loss trigger levels (see section on sort loss below); price of feed; and feed efficiency of your animals after 200 lb. Some genetic lines remain efficient longer than others.

Monitor quality control and waste of feed. Attention to small details can make a big difference here: ingredient quality; properly stored feedstuffs; verification of delivery (weigh or count); calibrated mixing equipment; check that purchased feed matches specifications. In addition, many feed companies offer technical assistance. Consider taking advantage of it.

Feed efficiency factors. All of the following factors (based on a list compiled by Gary Allee, U. of MO.) can impact the pounds of feed it takes to get pigs to market. They are offered as thinking points. The Pork Industry Handbook contains lots of good information on feed efficiency. Each county Extension office in Virginia should have an up-to-date copy of this important reference. The "Feed Purchasing Manual" available from NPPC may also be useful.

1. Feed wastage
2. Feed particle size
3. Number of pigs per pen
4. Health status
   1. pigs from multiple sources
   2. All in, all out vs. continuous flow
   3. mortality and morbidity
5. Market weight
6. Temperature
7. Energy density of the feed
8. Feed additives
9. Genetics
10. Improper formulation/mixing

WHAT ABOUT SORT LOSS?

Avoid sort loss by selling a potential discounted hog on a different day or to a packer with a wider weight range.

Reduce sort loss by careful sorting and weighing of each hog, but realize costs may outweigh the benefits. Evaluate the size of the discount, additional time and equipment (scale) needed to sort hogs more closely and the efficient use of facilities. Will better sorting mean selling more often? Can all-in, all-out procedures still be used?

Maximize return per pig space. Selling lighter-weight hogs allows you to push more hogs through the same facility, increasing the revenue per space. Even with a large sort discount, selling underweight hogs might produce more return to your facility. This usually entails continuous production and assumes that pigs are available to replace those sold. If there are no hogs that need pen space, then feeding to the preferred weight would likely be more profitable unless hog prices fall drastically in the short term.

FAT FREE LEAN INDEX

Developed so that a standard of comparison is possible, the Fat Free Lean Index (FFLI) is useful for benchmarking your hogs against others. Some packers will provide the FFLI on the kill sheet. Otherwise, it can be calculated using a formula provided by NPPC. For any individual producer, however, the premiums and discounts detailed on the kill sheet provide the most direct feedback on how well those hogs meet packer demand.

If your hogs' FFLI is:		Then your hogs are among the:
Less than 42.5%		Fattest 25%
42.5 - 45%		Below-average 25%
45.0%		Equal to the national
average
45.0 - 47.5%		Above-average 25%
More than 47.5		Leanest 25%

INTERNET RESOURCES

There are many sources of information about hog production on the internet. Here are two good starting points. Happy surfing!

http://www.nppc.org/

http://www.nasda-hq.org/nasda/nasda/Foundation/foundation_main.htm

Visit Virginia Cooperative Extension