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June 6, 2016

5 Min Read
Variation a huge profit robber in finishing pigs

We are continually amazed at the variation we see in swine production. The Swine Management Services Sow Farm Benchmarking shows a range of 18 to 34 pigs weaned per mated female per year. Our SMS Financial Benchmarking says each additional pig weaned per mated female lowers the break-even $1.50 for all pigs or $20+ variation per pig.

The variation is just as large in the growing pig. The biggest problem in analyzing closeouts has been how to sort out the bad data and how to evaluate one closeout versus another? To address this issue, SMS created the SMS Production Index combining death loss and DOAs, culls and lights, average daily gain, and adjusted feed conversion into one number. These four numbers are the ones the person in the barn managing the pigs influences every day.

With the SMS Production Index we can also look at trends over time and monitor changes. Another part of the SMS Closeout Benchmarking is the SMS Model we have created to recalculate all the closeouts to a standard market cost per pound and a standard feed cost per pound, this allows us to compare closeout over multiple years.

There are three SMS Benchmarking databases, Nursery, Finisher and Wean-to-Finish. In this column we are going to look just at finisher closeouts.

Table 1 shows the numbers that make up the SMS Production Index and the “opportunity dollars per pig that the SMS Model calculates. The opportunity dollars use the top 25% of the closeouts as the base numbers and calculate a dollar value for each closeout compared to the top 25% using the SMS Model.

There are a total of 5,492 finisher closeouts in that data set which represents 6,726,655 pigs, however 736 (13.4%) of the closeouts are filtered out for being outliers for either average weight in, average weight out, death loss, average daily gain, feed conversion and inventory variation. The average opportunity dollars when compared the top 25% closeouts is $11.24 per pig or $75 million. That $11.24 is made up of $1.58 per pig for death loss and DOA percent, $0.70 per pig for culls and light weight percent, $1.04 per pigs for ADG, $1.69 per pigs for gain max equals 3 pounds, and $6.23 per pigs for adjusted feed conversion (50 to 275 pounds).

To show the breakout of the four components of the SMS Production Index and the large variation you need to view Charts 1-4. Chart 1 (unfiltered closeouts) is death loss with a range from 0% to 27.7%. Closeouts with death loss less than 0% and over 15% are filtered out.

Chart 2 (unfiltered closeouts) culls and lights are a very large profit robber and we are amazed at the number of producers who do not keep these numbers separate from the market sales. Chart 2 shows the variation from 0% to 47.4%.

We all know that average daily gain is key driver to profitability, however it usually not the gain of the top half of the pigs that is the problem but it is the gain of the bottom 25% that is the true profit robber. Increasing the ADG of the bottom 25% by 5%, only increases ADG by 0.018 pounds, but increases average weight sold by 3 pounds. Increasing the ADG of the bottom 25% by 10% increases only increases total ADG by 0.036 pound, but increases average weight sold by 6 pounds. Chart 3 (unfiltered closeouts) finisher average daily gain shows the variation from 0.04 to 3.66 pound per day. The filters would remove closeout at less than 1.4 and over 2.5 ADG.

Chart 4 (unfiltered closeouts) is actual feed conversion from 50 to 275 pounds. The variation is from 0.04 to 7.57. In the SMS data closeouts with feed conversion less than 2.3 and over 3.5 are filtered out. In Table 1, SMS-all average for adjusted feed conversion is 2.73 after filtering out questionable closeouts.

Are you looking at each individual closeout after they are completed? Does anyone check for accuracy? If you think there are some numbers that are out of line what is done about it?

As the SMS Benchmarking databases grow we will continue to refine the models and share some of the data through our columns. Where are your closeouts at? As shown in the SMS database in Table 1 the top 25% have death loss and DOA percent at 2.3%; culls and light weight at 0.8%, average daily gain at 1.95 and adjusted feed conversion at 2.50. How much money are you leaving on the table per pig if your closeouts are just average?

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 90-100%, the 70-90%, the 50-70%, the 30-50% and the 0-30% 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 different SMS Benchmarking databases for all production areas we now have more detailed information to share with the swine industry. If your farm would like to be part of the SMS Benchmarking databases, or if you have suggestions on production areas to write columns about, please e-mail or call us. We enjoy being a part of the National Hog Farmer Weekly Preview team. Previous Production Preview columns can be found at 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, contact us at [email protected] or [email protected].

Please join us at the World Pork Expo, Outdoor Exhibit Area Booth SV1607 located southeast of the Varied Industries Building.

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