January 5, 2015

5 Min Read
Hogs tell all; are you listening?

There are three old sayings in the swine industry, “Hogs are Beautiful,” “Pigs are the Mortgage Lifter” and “Hogs Tell All”. We estimate that $50 million to $100 million is spent on keeping hog records each year. If Hogs Tell All, are you listening to what they are saying?

We have finished developing the Swine Management Services (SMS) Closeout Benchmarking program. We currently have over 10,000 closeouts and 16.4+ million hogs in the database. SMS Closeout Benchmarking will be broke out by nursery, finisher, wean-to-finish and wean-to-finish double-stock barns. We are set up to run a quick check on the closeouts from different record keeping programs before we import them and about 6% are never imported for reasons such as inaccurate inventory/sales and feed usage out of the norm.

After the data is imported we also filter closeouts for data outside of norms for inventory control, death loss, weight in, weight out, average daily gain and feed conversion. This will eliminate another 10% to 12% of the closeouts from being included in the averages. That means that 16% to 18% of the closeouts we get are not used in the database averages. If you are not reviewing your own closeouts and correcting bad closeout data, how accurate is the information you are generating for your own use?

At SMS we have spent several years trying to come up with a way to easily analyze and compare closeouts and have come up with the SMS Production Index. The index uses Death Loss and DOAs, Culls and Lights, Average Daily Gain and Adjusted Feed Conversion to come up with the SMS Production Index number. Another part of the SMS Benchmarking Program is the SMS Modeling where we can calculate the Opportunity Dollars lost or gained compared to the Top 25% of all the closeouts. This standardizes the market and commodity prices and gives us the ability to compare closeouts over multiple years.

In Table 1 there are 4,576 finishing closeouts representing 6.5 million pigs after filtering out bad closeouts from the years from 2010 to 2014. They are broke out into the zero to 25%, 25% to 50%, 50% to 75%, 75% to 100% and All and ranked by the SMS Production Index.

Looking at the Opportunity Dollars per Pig in Table 1, the average closeout loses $6.68 per pig as compared to the Top 25%. That comes to $43,650,620 lost on the 6.5+ million pigs. Chart 1 shows the huge variation in dollars per pig over the four years. The loss comes from:

  • 1.2% more death loss equals $0.99

  • 0.8% more culls and lights equals $0.48

  • 0.07 lower average daily gain equals $0.56

  • 5.0 pounds less average gain equals $3.00, gain is capped at a maximum of 5.0 pounds per pig

  • 0.08 worse adjusted feed conversion equals $1.65

Average by grouping

  • 0-25%         $0.00

  • 25-50%       -$4.26

  • 50-75%       -$7.06

  • 75-100%     -$11.88

  • All              -$6.68

Percent of closeouts

  • <= -$20           5.2%

  • <= -$10           23.8%

  • <= $0               40.4%

  • <= +$10          28.1%

  • > +$10             2.4%

In Charts 2-5 the data is broken out showing the large variation by closeout over four years with individual charts for SMS Death Loss and DOAs, SMS Culls and Lights, SMS AGS and SMS Adjusted Feed Conversion.

Death Loss, Chart 2 shows the variation on from zero to 15.0%. SMS filter is zero to 15%; outside this range they are not included in the averages.

Average by grouping

  • 0-25%         2.0%

  • 25-50%       2.7%

  • 50-75%       3.3%

  • 75-100%     4.7%

  • All              3.2%

Percent of closeouts

  • <=1%              3.6%

  • <=2%              20.4%

  • <=3%              28.6%

  • <=4%              22.7%

  • >4%                24.7%

Culls and Lights, Chart 3 shows the variation from zero to 42.1%, many farms are not separating out culls and lights. There is no SMS filter. This is a huge profit robber and you need to know how many there are.

Average by grouping

  • 0-25%         0.6%

  • 25-50%       0.9%

  • 50-75%       1.3%

  • 75-100%     2.6%

  • All              1.4%

Percent of closeouts

  • <=0.5%           34.7%

  • <=1.0%           22.0%

  • <=1.5%           14.6%

  • <=2.0%           8.6%

  • >2.0%             20.0%

Average Daily Gain, Chart 4 shows the variation form 1.32 to 2.82. SMS filter is 1.30 to 3.00.

Average by grouping

  • 0-25%         1.86

  • 25-50%       1.81

  • 50-75%       1.77

  • 75-100%     1.73

  • All              1.79

Percent of closeouts

  • <=1.6               8.7%

  • <=1.7               15.2%

  • <=1.8               22.9%

  • <=1.9               22.6%

  • >1.9                26.7%

Adjusted Feed Conversion, Chart 5 shows the variation from 2.01 to 3.95. SMS filter is 2.00-4.00.

Average by grouping

  • 0-25%         2.62

  • 25-50%       2.63

  • 50-75%       2.71

  • 75-100%     2.82

  • All              2.70

Percent of closeouts

  • <=2.25             2.6%

  • <=2.50             28.5%

  • <=2.75             30.0%

  • <=3.00             23.8%

  • >3.00               15.1%

The question asked at the beginning, “If Hogs Tell All”, are you listening?” can probably be answered by “not well enough.” The $43 million lost on these 6.5 million hogs tells us we need to spend more time analyzing and comparing closeouts to make changes to the management and reduce the variation. The 16% to 18% bad closeouts means we need to spend more time on making sure the money we spend on creating the closeouts is not wasted.

When the producer is making $25-plus per pig, they are not too concerned on even doing closeouts and making sure they are accurate. But as market price drops and expenses increase, your banker needs to know what it is costing you to produce a pig and if you are making a profit. The days of lower profits will come back, and will you be ready and have a plan in place to reduce costs and improve profits?

SMS Production Index

Table 2 provides the 52-week rolling averages for 11 production numbers represented in the SMS Production Index. The numbers are separated by 90% to 100%, the 70% to 90%, the 50% to 70%, the 30% to 50% and the zero to 30% groups. We also included the 13-week, 26-week and 12-quarter averages. These numbers represent what we feel are the key production numbers to look at to evaluate the farm’s performance.

At SMS, our mission statement is to provide “Information solutions for the swine industry”. We feel with the creation of the new Farm Benchmarking database we now have more detailed information to share with the swine industry. If your farm would like to be part of the Farm Benchmarking database, or if you have suggestions on production areas to write columns about, please email or call us. We enjoy being a part of the National Hog Farmer “Weekly Preview” team.

Previous Production Preview columns can be found at www.NationalHogFarmer.com.

If you have questions or comments about these columns, or if you have a specific performance measurement that you would like us to write about, please contact [email protected] or [email protected].

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