Today's swine industry looks vastly different than it did 40 years ago when Daryl Olsen graduated from veterinary school. As part of Kansas State University's 2022 Swine Profitability Conference, Olsen recently reflected on his career and shared key factors that influence growth and success in the swine industry.
While there are many ways to be successful, here are Olsen's top 15 strategies to consider for growth and success. Allow these to challenge you to think about what can be done better or what's next for your operation and/or the industry.
#15: Ownership structure
Work with a legal expert to understand and design a structure that works best for your operation. If you join a group, understand your risk and responsibilities. More than anything, be cautious and limit yourself to the percentage of your personal guarantees.
#14: Luck ... just a little
Sometimes you just need a little luck. Luck plays a big part in what happens in our lives, whether it's meeting a spouse or getting into vet school. However, being in the right place with the right attitude makes all the difference and can help bring a little luck your way. The key is that when you realize you got lucky, don't over-analyze it. Act on it and move forward.
#13: Risk management
When used correctly, risk management is a valuable tool, but it's not the only factor in profitability. It can certainly help you avoid the valleys, but it can also eliminate the peaks. Be cautious as to how you use it in your operation. Even the best risk manager doesn't succeed unless they know how to raise healthy pigs. Work with an expert to understand the role risk management can play in your operation.
#12: Geographic location
Understanding the best location for your operation is a balancing act. Between input costs, markets and employees, there are some places that are better situated than others. When it comes to biosecurity, be very careful where and how you're expanding. Some operations assume they are secure, and they probably were ... yesterday.
There are great genetic companies in the industry. Partner with the one that can service your needs and take time to learn how to manage your specific genetics. Every genetic line has its pros and cons. Capitalize on the advantages of your genetics, and work through the deficiencies.
Data tells us that any facility can be profitable, but I've seen many situations that cause producers a lot of pain because they're paying too much for an old facility. In addition to principal and interest payments, they now have large repair payments. New is oftentimes the most economical, long-term decision. Build the best and regularly reinvest in it to prevent repair costs from spiraling out of control.
#9: Nutritional program
When it comes to nutrition, work with the best. Find an expert who is focused on your operation and everyday costs and develop a trusting relationship. Feed is the largest input cost so be sure to understand its impact on your bottom line. Work with your trusted expert to create a tailored nutritional program that best fits your operation.
Understand that, as a leader in your organization, you set the tone for those you lead, in good times and bad. Outlooks are good now, but through challenging times like COVID and low prices employees look to you to reassure them about their future. Be confident and have a plan that will weather the storm. As a leader, expect much, but give more.
#7: Strategic plan
Every business needs a strategic plan. Consider: Where are you going? What are you good at? What's your niche? Don't worry so much about owning or being involved in every portion of supply chain or what others are doing. Your operation has its own advantages. Build your strategic plan by embracing your strengths and focusing on what you do best.
Concentrate on your key inputs: grain, energy (especially important lately), and keep an eye on trends and world events that can affect pricing. Initial costs are a factor; however, the actual realized costs are what impact the bottom line. Many producers often try to save on costs that make up a relatively small percentage of total costs. Instead, concentrate on higher input costs that have a larger impact.
#5: Capital, or rather, lack of capital
Capital is often the number one cause of failure, but not because people run out of money. They run out of enough money, so they quit making their own decisions, and let others step in and make decisions for them. Bad financial decisions reflect throughout the entire operation, so start with the capital upfront to prevent forced, bad decisions.
When it comes to labor, I think we're reaching a near crisis across the United States today, and not just in the swine industry. There simply aren't enough employees. Millions of people have left the workforce, and we can't count on them to come back. We must identify a way to attract and retain legitimate employees or continue to produce more with less.
#3: Facilities … again
Which brings us back to facilities. As labor continues to be a major challenge, what can we do to make our facilities more efficient? Is it conceivable to have one employee per 600-800 sows? We must drive innovation and design the most long-lasting, employee-efficient facilities possible, especially as Prop 12 gains more traction and staffing continues to be an issue.
#2: Market accessibility
If you don't have a place to sell your pigs, you are in trouble. COVID showed us what not having a home for pigs can do to the market. Regardless of the type of operation, you must have a long-term market strategy of where you're going to sell your pigs. Invest time into building strong relationships to ensure you have a reliable pathway to the market.
#1: A big, fat, healthy, weaned pig
Ask yourself: Can I consistently raise a healthy, weaned pig? Healthy pigs drive everything we do. All other challenges are manageable when the foundation of your operation is consistent, healthy pigs.
Source: AMVC Management Services, which is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.