Bible Pork Inc.
Bible Pork Inc., based in Louisville, IL, was The Maschhoffs' first sow farm contractor, starting out as a 500-sow, farrow-to-wean operation. In 1997, Bible Pork also built a 2,400-sow, farrow-to-wean facility. This former PIC user group had found a new partner.
Bible Pork became the major multiplication system for The Maschhoffs, based in Carlyle, IL, producing replacement gilts for the other sow farms in the system, utilizing two other sow sites constructed in 1999-2001 and 2006. The operation now boasts 60 employees and close to 13,000 sows.
Bible Pork produces more than 300,000, 21-day-old weaned pigs that are fed out in other Maschhoff contract finishing units, says owner Matt Bible.
Bible, 40, has been pleased with the contracting arrangement with The Maschhoffs because the business is family-oriented, not like a big corporation, but just like he runs his own family business.
For Matt, the beauty of that agreement is that it involves shared risk. The Maschhoffs supply pigs, feed, veterinary care and marketing, while his team, headed up by production manager Kevin Van Dyke, provides the buildings and equipment, labor force and manure application services.
He says that despite the economic downturn, there are no plans to cut sow numbers at Bible Pork.
With input costs as high as they are, however, manure will become increasingly important. Manure is applied using a dragline hose injection system on nearby cropland. Bible Pork continues to work with other area farmers so they can reduce input costs and gain the benefits that manure offers, just as Bible Pork's grain operation has.
Biosecurity is a high priority for a multiplication system. The farm sites around Louisville are isolated from other hog farms, and visitors are restricted. Units are shower in and shower out. Large signs are posted at the driveway entrances to prohibit visitors. There has been only one PRRS (porcine reproductive and respiratory syndrome) break since the sow contract business started, Matt says.
Bible Pork is owned by Matt and his wife, Jan, and Matt's parents, Jerry and Carolyn. Matt's brother, Monte Bible, has worked for the company for several years.
“The success of our company, Bible Pork, has been due to all of our employees and their hard work,” says Matt, who manages a finishing barn for The Maschhoffs, while Kevin oversees sow operations as he has for the last 16 years. Derek Iffert and his team manage the grain operations and handle all of the manure application. Curtis Frost handles the company's finances.
TriOak Foods
Tucked away in southeast Iowa at Oakville, scarcely five miles from the Illinois border, is the home of TriOak Foods, a company that dates back to the 1950s when it started as a produce, cream and egg business. Through the years it served as a major feed manufacturer and country elevator.
Then came the early 1980s, when quite a few customers were forced out of the livestock business. The company started a small pig contracting enterprise, buying feeder pigs for the customers to finish out. From the start, these customers were located in both Illinois and Iowa. Business grew on both sides of the border.
Today the business stands at 35,000 sows, producing over 22 pigs/sow/year across the entire system, reports Al Muhlenbruck, TriOak's marketing and public relations manager. Half of those sow operations are based in Illinois. TriOak has assisted customers in both states with construction of wean-to-finish facilities. The company provides those customers with 18- to 21-day-old weaned pigs to finish out in their 1,200- to 2,480-head barns.
“We currently prefer 2,480-head, wean-to-finish sites, which is about one week's production out of a 5,000-sow farm,” he explains.
The basic contract calls for the company to supply feed, veterinary care and marketing services, etc., while the contract growers provide the facilities, necessary land for capture of manure value and care for the pigs.
The company prides itself on operating a Pure Pork System. This system consists of contracting acres for the production of identity-preserved corn hybrids, to supply the mill and nutritionists with consistent, quality, locally grown corn.
TriOak ran an advertisement in the Burlington, IA, newspaper recently, that graphically explains its sustainable nutrient management process as a means to educate its neighbors, attract contract growers and explain that the goal of the system is to produce meat in a sustainable and environmentally friendly manner. “On a wean-to-finish barn, after you pay the application costs of that manure, you've got a little over $100/acre of value that stays here in the local community, and everybody benefits,” he adds.
The ultimate goal of the ads (there will be more) is to promote how pork is raised. Ads will educate area citizens on how TriOak contributes financially to local communities.
TriOak currently has about 150 contract growers, some dating back to the 1980s; some of these older relationships still have grow-finish barns, so these producers get feeder pigs.
“We have done whatever we can to continue the relationships with our customers,” Muhlenbruck says.
The company plans to continue its growth in the next five years, and be integrally involved in siting contract barns.
“We have encouraged people to move planned facilities because they were too close to sensitive areas, and there have been some sites where we've told people they shouldn't build,” he says.
Along with siting responsibility, TriOak started doing its own environmental audits of contract sites, he adds. “We have some of the best contractors in the world, but sometimes small things can be overlooked, so our goal is to assist our growers wherever possible to ensure environmental stewardship.”
One priority of those audits is to ensure that every dollar of yield is obtained out of the manure produced. TriOak field specialists will analyze pits to determine the actual nutrient profile and ensure proper field application.
Pit levels are monitored and recorded to ensure they don't get too full in the fall when contractors are spending a lot of time on the combine.
“Together, the company and its contractors must manage all areas of environmental stewardship. While contractors are responsible for preparing their own manure management plans, application and general stewardship, TriOak provides assistance through its specialists as needed.
“Manure is the purest hedge that the pig farmer has against rising energy costs if managed and applied correctly,” Muhlenbruck says. The company has a certified crop advisor on staff to help growers reduce input costs, maximize yields and efficiencies, and utilize best management practices.
“On the production side, it has never been more important to know and deliver what your customers and consumers desire. Today, total buy in and implementation of the Pork Quality Assurance-Plus program is essential. TriOak stands solidly with the industry and has adapted production practices and educational programs that not only help assure the consumer that the product is raised correctly, but it's also safe. Improvements in animal well-being equate to improvements in efficiency,” he says.
For top health, pig flow at all contract barns is all-in, all-out, and cleaned, washed and disinfected before another group of pigs is fed out.
Biosecurity is an imperfect science. For instance, many systems require 72 hours away from pigs before visiting a sow farm. Extra precautions are taken at TriOak for the worker who stops at a convenience store near a packing plant, which truckers are known to frequent, on his way to work at one of the sow farms. “Our system audits and process evaluation is constantly on the lookout for the ‘unexpected or overlooked’ details that may reduce risk,” Muhlenbruck explains.
As the system grows, milling capacity must be increased. TriOak is considering expansion of its milling capacity. Plans are to build a second mill either in west central Illinois or near Burlington, IA. The main criteria for its location include quality of roads, infrastructure, availability of feedstuffs and personnel. While both Illinois and Iowa have road issues in general, the state of Illinois does have some serious road problems to work through in the future. Many secondary roads are in dire need of modernization (many are only 20 ft. wide), and the manner of funding down at the township level is in need of evaluation and change, he explains.
As the sow herd expands in Illinois and Iowa, plans are to build new sow barns with wider stalls that can be converted to pens as needed.
But Muhlenbruck says he has serious concerns that the U.S. pork industry can manage sows in pens and improve animal well-being strictly due to group housing. Pen size alone is not a guarantee of sow well-being.
The Maschhoffs
This 110,000-sow system based in Carlyle, IL, has several hundred production partners, many of whom are located throughout Illinois.
Bradley Wolter, chief operating officer, says no mandate has been issued to lower production costs, but there has been a reemphasis on best management practices throughout the production company from operations in Illinois to Iowa, Missouri and Oklahoma.
Wolter cautions against the wisdom of cutting too many corners. “I think we need to be careful from a pig production perspective, because it's tempting to say, ‘let's cut back on ventilation, let's reduce the amount of feed;’ and I think at the end of the day, we just need to remember that this is a biological organism and it functions in a systematic way.
“For instance, we can certainly cut environmental temperature, but the pig is going to have to make up for that in the form of heat production, and then we are going to be putting more $5 corn through these animals to keep them warm.”
He says a better strategy is to beef up execution and look to new technology that may help improve efficiency.
Julie Maschhoff, head of the communications department and public relations division at The Maschhoffs, finds it ironic that as high corn prices have hurt production operations, they have also highlighted the value of manure as fertilizer.
It is only through the use of confinement hog barns, maligned by activists and some consumers, that the pork industry has been able to efficiently capture the value of manure, she says.
Opponents also fail to recognize the worth to the community from The Maschhoffs' operations, which, based on an Iowa State University study, provide $1.5 billion in economic impact throughout the Midwest and combine the buying power of its 540 employees and allied businesses. More than 2,500 people depend directly on The Maschhoffs network, including its production partners, and the various businesses that contract for various services, Julie says.
A series of “Did You Know” posters are plastered around the offices of The Maschhoffs, reflecting the trickle down effect: the six-to-one return of the hog production business to Midwest consumers.
To provide some protection from hog market fluctuations, CEO Ken Maschhoff says in 2004 the 150-year-old family business started diversifying outside agriculture in early 2008. A flashlight startup company, First Light USA, was developed. The Maschhoffs also became the largest shareholders in 110-year-old Potter Electric of St. Louis.
Ken says quite frankly these changes are in response to the increasing fragility of the pork complex, including wide swings in the corn prices which, if sustained, could turn the United States into a corn-importing nation and destroy future pork exports.
He says expansion in the hog business, now on hold for the company, has become more difficult in Illinois of late. “We have not grown as fast in Illinois in the last three years as we have in Iowa; we have constructed a lot more new buildings in Iowa.”
Also, Ken says that Illinois is not viewed as a pro-business state, with a number of corporations migrating to neighboring states, compounded by a number of negative taxes being proposed in the last few years. In 2004, the governor proposed a 6.5% sales tax to be placed on all industrial inputs including seed, feed, chemicals and fertilizer that would have been “catastrophic for agriculture.” It was proposed again in 2007 but beaten back with vigorous effort.
Ken adds: “But the really big proposal was a gross receipts tax that was based on how much you sell, not on your income or how much you sell at a profit.
“So, for instance, we at The Maschhoffs would have been paying a large amount of sales tax in 2008 because gross sales may have been through the roof, maybe our highest ever because pork prices will probably go up as input costs go up, but we will have a year that will probably be in the red,” he explains.
Considering the problems of both permitting and the politics of Chicago, Ken says, “While we want to continue to explore all potential production partners/sites in Illinois, we expect a greater percentage of any future hog growth will probably take place outside the state of Illinois.”
Phil Borgic
The economic climate in Illinois and other states worries Phil Borgic, too, who owns a 3,000-sow, breed-to-wean operation near Nokomis, IL.
He's had eight contracted customers who have been buying 14 lb., 21-day-old weaned pigs to finish out on their farms. They include some who have sow herds of their own and want to finish more pigs, and others who've gotten out of sows to finish out pigs exclusively.
Borgic prides himself on delivering healthy pigs to his producer-customers every eight weeks. Now that business model may need to be changed.
“It is possible that we may need to get back into finishing because of the economic situation,” he says. “Everybody is struggling with finishing, and for financial reasons, we may need to start finishing again.
“People are quitting pork production. So far we have only lost one customer out of eight, but who knows what the next phone call might be,” says the 52-year-old producer.
Back in 1998-99, when single-digit hog prices forced thousands of hog producers out of business, Borgic switched his operation from farrow to finish to breed to wean, and was able to survive the market crash.
This time, the uncertainty is just as great. He's heard stories about sow farms losing all their weaned pig contracts and buyers bargaining for lower-priced pigs.
So far that hasn't happened to him, but he's been calling around to find out what finishing spaces might be available and what packer might buy his pigs.
Borgic says he's also working on a different way to price his pigs, at a time when both he and the finisher are losing money. His breakeven is now $38 and the contract calls for selling weaned pigs for $36.60. After the weaners are finished with high-priced feed, they are being sold at a significant loss. His weaned pig prices are based on six-month futures for October, which guarantee him a loss, too.
While one of the ways out may be for him to return to finishing the pigs, he admits he doesn't relish the switch, because he's never enjoyed the marketing end of the business.
On a positive note, Borgic comments his current staff is the best he has ever had — and sow performance is the best he has ever seen. Production figures bear that out, averaging 25-26 pigs/sow/year. Farrowing rate the last 10 weeks (as of mid-April) has averaged 91%, total born is 12.65 pigs/litter and weaning average is a solid 10-plus pigs/litter.
Because sow performance has been excellent, staff has culled 150 head, bringing sow inventory down to 2,850. “I need to produce 1,300 weaned pigs a week, and with our sow herd at 3,000, we were actually producing 1,350-1,375 pigs a week, so this reduction will cut that back.”
Borgic points out that there are reasons pork producers are reluctant to cull sows. Those 150 culled sows were in good condition and still only brought $95/head. His normal culls are only returning $75/head.
Harder culling of older sows has brought rewards, however. Culling the PIC herd first for structural soundness and second for performance issues has reduced average sow death loss to 7%. Lowering average herd parity and boosting replacement rate to about 60% have also enabled the farm to reduce pounds of feed/day fed to sows.
Borgic is part-owner in a gilt replacement business that reduces his cost of bringing in new breeding females.
Sow feed intake has been reduced by about 10% where females had adequate backfat. Gestating sows now average about 5.25 lb. of feed/day and lactating sows about 13.5 lb. of feed/day.
Feeders have been cranked down tight and any feed spillage is scooped up and returned to the feeders.
Borgic, president of the Illinois Pork Producers Association, says his biggest concern right now is the low price of wholesale pork. Packer margins are not that healthy, retail pork prices are the best bargain in the meat case, and the country appears headed toward a recession, worrying him that higher pork prices may lag and hog prices may remain stagnant.
The southern Illinois producer doesn't expect help from the state government. “Probably one of the biggest problems right now in Illinois is our dysfunctional government, accumulating nearly a billion-dollar deficit this year alone,” he points out.
When the state budget was passed recently, funding for the University of Illinois Extension and Soil Conservation Service were both axed by the governor, while at the same time he approved by executive order funding of a state health care program that wasn't passed by the state legislature.
State government shouldn't shortchange agriculture, which is vital to the state's future, Borgic believes.
The state is still a good place to raise hogs, too. Density is not an issue between Peoria to the north and Carlyle to the south. “Montgomery County, where I live, provides a good selling point for future growth: it's easy to find an isolated place from other farms,” he says.
