Sow herd culling and mortality rates have been creeping higher in recent years. Prioritizing these profit-robbers offers good payback opportunities.
The development of multi-site production systems has the sow herd segregated from the nursery and finishing facilities of many hog operations. The capital requirements for new pork operations have contributed to this type of segmentation, too.
As the sizes of pork operations have grown larger, portions of the farrow-to-finish production chain are contracted off to other producers. In doing so, some level of profit must be built into the contracts if each participant is to remain viable. This spreading of profits means the management of each phase gets only a portion of the total margin attributed to each market hog produced.
For example, it is important that a breed-to-wean operation that is selling weanling pigs on a contractual basis keep a close watch on costs and production parameters. These operations are particularly sensitive to costs related to the sow herd, particularly sow fallout rates and the resultant need for replacements.
Several of the major recordkeeping entities have reported that breeding herd death loss has been increasing the past several years and now averages approximately 7%. It appears sows are exiting the herd earlier than ever.
The 1999 PigCHAMP summary report shows the average parity of culled sows in the U.S. was 3.1. Combined culling rate (44.6%) and death loss (6.9%), plus a few gilts that fail to conceive or possible sow herd expansion during the period, pushes the PigCHAMP average replacement rate to 56.9% in 1999. This rate reflects likely factors in a higher rate.
PigCHAMP also reported that the best 10% of herds have an average replacement rate of 30% (culling 25.5% and 2.7% death loss) reinforcing that replacement rates can be improved.
The culling, death and replacement rates can play a pivotal role in the profitability of a breed-to-wean operation in several ways. Many sows never reach their most productive parities (third through fifth). Additionally, the introduction of breeding animals from an outside source carries a certain disease risk. More replacements equals more risk.
The optimum tenure of a sow in a breed-to-wean operation is a complex question to answer.
One approach is to look at a replacement gilt as a capital budgeting item similar to the purchase of equipment or land. Such an approach takes into consideration the number of parities a gilt will be in the herd. In other words, consider the initial cost of the gilt, followed by periods of expenses and income, spread over her productive parities.
A spreadsheet has been developed at the University of Tennessee that helps determine how long a sow must remain in the breeding herd of a farrow-to-finish or a breed-to-wean operation before she is paid for. The analyses are based on discounted cash flows, which calculate net present value (NPV).
For this article, average reported values were used for most of the items listed in Table 1.
The results of the NPV analysis, using average values, are demonstrated in Table 2 and 3. These tables illustrate inputs that can have the largest impact on the parity in which a sow reaches a positive NPV or has paid for herself.
If you follow the rows corresponding to 10.1 pigs born alive (Table 2) and $32 price received/weaner pig (Table 3), you will notice that a positive NPV is not reached until the fourth parity, given the assumptions used in this analysis.
However, holding all other assumptions equal, you will notice that a 0.25 improvement in pigs born alive or $2 improvement in price received lowers the point at which a positive NPV is reached to parity 3. The improvements needed to lower the parity in which a positive NPV is reached under this scenario include a 2.5% improvement in number born alive (NBA) and a 5.8% change in price received for the weaners.
These relatively small changes could be accomplished easily by sharpening management skills or negotiating a slightly higher price. Incentives such as heavier pig weights or fewer defects could be bargaining points.
Many pork producers realize increased sow longevity can result in reduced direct costs associated with gilt isolation and acclimation. Long-term improvements in sow longevity also can cut facilities costs by reducing the space required for isolation/ acclimation and for housing replacement gilts. So, annual depreciation, interest and repair expenses would be lowered.
The space "reclaimed" through increased sow longevity can then be redirected to other productive uses, such as sow gestation and breeding pens. The cost reduction or redirected facility use can reduce up-front cost and hence improve cash flow. This may be particularly important in a startup.
But, when examining the impact of lowering facility costs over the life of a building and the total number of replacements housed during this period, the cost savings on a per-sow basis is nominal and has little effect on the parity at which a positive NPV is reached.
Labor requirements are reduced as the productive lives of sows increase. Less time is spent obtaining, developing and breeding replacement gilts.
However, the cost savings on a per-replacement basis are relatively small and have little impact on the parity in which a positive NPV is reached.
The disease risk associated with bringing in replacement gilts is more difficult to quantify. This risk likely has different production and economic values depending on the diseases and the impact on the breeding herd, nursery and grow-finish animals.
Scientists estimate that an outbreak of porcine reproductive and respiratory syndrome (PRRS ) could reduce profits by more than $200/inventoried sow through poorer farrowing rates, fewer pigs born alive and increased preweaning mortality. And, this does not include the negative effects PRRS has on nursery and grow-finish pigs.
Improving longevity can help a producer reduce such a risk. However, these risks and the costs associated with them are complicated to model simply because the probability of introducing a disease through replacements is difficult to determine.
It is a common belief that older sows have fewer substandard pigs (weighing less than 8 lb.) at weaning. Therefore, older sows would increase the number of pigs sold at full value.
The National Pork Producers Council’s Maternal Line National Genetic Evaluation Program shows that the percentage of substandard pigs does vary by parity and genetic line, converse to what many commonly believe. This should reinforce that continuous, accurate monitoring of birth and weaning weights is important when making management decisions.