Management in a Low-Margin Market

Producers and their consultants aren't making abrupt changes in their operations, but continue to focus on fine-tuning production methods. Bob Baarsch, president of Next Generation Pork, Inc., LeRoy, MN, says a practice that has saved him money is electronically importing feed invoices directly into accounting and grow-finish management software. Your feedmill should provide this cost-free, he says.

Producers and their consultants aren't making abrupt changes in their operations, but continue to focus on fine-tuning production methods.

Bob Baarsch, president of Next Generation Pork, Inc., LeRoy, MN, says a practice that has saved him money is electronically importing feed invoices directly into accounting and grow-finish management software.

“Your feedmill should provide this cost-free,” he says. “The downside is you will want to be invoiced every week so you can keep your system more up to date. The feedmill will get paid quicker as incentive, but the interest cost is low now. This alone saved our 100,000-hog/year company over one-half person in the office. You can easily justify purchasing software in the 10¢/hog/year range and come out better all the way around.”

Baarsch has been doing more re-rationing in the last six months than in the previous two years. Bakery by-products, meat and bone meal, wheat midds and distiller's dried grains are popular choices in his least-cost formulations. “And with high ingredient prices, we have to be looking at Paylean (Elanco Animal Health). We're putting it in to head off selling weights that historically go down in the summer,” he says. Phytase is cost-effective in the premix and deserves a look.

Producers who use contract growers may want to renegotiate those agreements, he continues. “Many growers have done better than projected. They've refinanced at lower rates and many have paid off loans faster than expected,” he says. “Some growers may want to consider renting barns or taking a small rate reduction to lower costs to the integrator.”

The big-hitter for Baarsch, however, is his auto-sort system. “We can only reduce costs so much, and then have to improve revenue,” he says. Last month, barns with the (Farmweld) FAST auto-sort system earned $5/pig more. About 40% of Next Generation barns will be equipped with auto-sort systems by the end of the year.

Soybean Substitution

Kansas State University (KSU) nutritionist Mike Tokach says a frequent question producers are asking is what to substitute for soybean meal (SBM). He suggests lysine levels up to 6 lb. instead of the normal 3 lb. in grower rations and 4.5 lb. in late-finisher diets.

“Use appropriate amounts of methionine and threonine to maintain ratios,” adds Tokach. The ratio in early stages is about 65% threonine to lysine and 60% methionine to lysine; levels are figured on a true digestible amino acid basis. Six pounds of synthetic lysine replaces about 160 lb. of 46.5-47% protein SBM and can save from 70¢ to $1/pig in grow-finish diets.

“Synthetic lysine won't price in for some producers. Ingredient prices really vary depending on location and the producer's purchasing arrangement,” Tokach says. “Soybean meal price is as high as I've ever seen. There are worries that we will simply run out. In the past, if alternatives were close to breakeven, I tended to use SBM. Today I tend to use synthetics to conserve SBM.”

Most farms need to work on feeder adjustment. Particle size is still an issue. “If producers don't monitor it, it's almost always too high,” notes Tokach. The correct range is 600-700 microns for grow-finish diets. For $10, KSU will analyze a grain sample.

“Make sure anything that doesn't cost much money to fix is being done correctly,” he adds.

Particle Size, Particle Size

It's a constant battle to get even the big farms to get particle size right, states Dale Hendrickson, an Indiana-based veterinarian who consults for systems that market 10 million hogs. “I recommend sending in a sample of ground corn every month. Keeping particle size at 700 microns is one of the biggest cost-savers for a hog operation. Hammers and screens wear out and they aren't checked. Every month, I had guys bring me the old screen and hammers. They had to lay them on my desk. That's the only way I knew it was being done.”

The Farmland, IN, swine practitioner says there's no magic in cutting costs, just required diligence. Vaccination and drug usage, for example, should be reviewed every six months. Too many producers implement a program and neglect to take anything out once a problem is corrected.

Opportunity in Alternatives

Illinois producer Bret Burgener says he is just “looking for opportunities.” One of those opportunities is in field peas. The Moweaqua, IL, farmer figures the peas will be a good replacement for SBM, so he planted 80 acres this year. He thinks there could be a substantial savings with peas at $3.50/bu. vs. soybeans at $10. They can also be double-cropped with soybeans.

Burgener, who farrows 650 sows, is also a member of the Meadowbrook Farms Cooperative, a 200-plus producer group that owns a packing plant in Rantoul, IL. Joining the cooperative meant shaving market weights to 260 lb. to meet Meadowbrook's primal cuts requirements. Burgener, like other members, is banking on more income from value-added product. The plant kills about 3,000 hogs daily.

Accurate Feed Budgeting

With seven phases in the grow-finish ration, Bert Huftalin needs tight control of his feed budgets. An invaluable aid is software from a Minnesota company called Alliance Control. Their Simplicity software interfaces with Huftalin's WeighTronics grinder. The program is set at a certain number of pounds of feed/pig. After they enter the number of pigs in each group, the computer figures the total. Once that amount is ground, the software asks if the user is ready to go on to the next group.

The Malta, IL, producer has a (Farmweld) FAST auto-sort system in one barn to confirm that phases are advanced at the right weight. He plans to shop for more of the automatic scales at World Pork Expo in June.

Least-cost rationing for the 800-sow, farrow-to-finish operation is getting more emphasis. Huftalin is using alternative products like distiller's dried grains, wheat midds and higher levels of synthetic lysine.

Check Your Refrigerator

Iowa State University veterinarian John Carr believes producers who want to save money in a hurry should focus on feed waste. Feeder adjustment is difficult, but the task should be the number one goal on a daily basis, he says. If you can't run feeders with a tight adjustment without them plugging, think seriously about putting in different feeders.

In the health area, Carr warns that many refrigerators are not working at the right temperature. “Far too many are careless about refrigerator management. When they're frozen, vaccines don't work.”

He offers these refrigeration tips:

  • Refrigerators should have a maximum/minimum thermometer inside.

  • Temperature should be 36-47° F. (2-8° C.). If it fails to maintain this temperature, change the settings and check the insulation and door closure policy. If the refrigerator persistently fails to maintain the temperature, replace it.

  • Icebox refrigerator/freezers, commonly used on farms have several temperature zones. At the back of the refrigerator, cold air from the freezer compartment falls. Vaccines placed against the back can freeze and become inactivated. To prevent this, place a small, flat piece of polystyrene against the back of the inside of the refrigerator.

Emphasis on Small Details

“We're concentrating on the small details,” says Art Lehmann, Strawn, IL. The current president of the Illinois Pork Producer's Association and his family own and manage farrow-to-finish operations on four farms totaling 4,000 sows. Some things they're doing are:

  • Locking in almost 100% of corn and SBM needs.

  • Hedging hogs to lock in favorable prices.

  • Watching market weights. “We're trying to stay close to the top of the packer matrix without going over. We're not cutting back on weight, just monitoring more carefully by doing a better job of sorting and speeding marketing up a bit.”

  • Reviewing medication protocol. Growth promotants have been removed from feed. “We're trying to get by with nothing, and when there's a need, use therapeutic levels.”

  • Using by-products like meat, bone meal and bakery waste and being more aggressive about least-cost rationing. “Another issue this year — try to stretch out bean meal.”

  • Reducing preweaning mortality by using assisted farrowing, split suckling and warming boxes.

  • Concentrating on sow productivity and working harder on sow conditioning and retention.

  • Paying attention to sow and gilt backfat. Ultrasound a sample of gilts and sows to help train worker's eyes for condition. Backfat is monitored in 10% of females at breeding, halfway through gestation and at farrowing. “We don't want them too thin, and we're finding backfat is critical.”

  • Ensuring gilts are at least 300 lb., over 210 days of age and on their third heat cycle before breeding. “We've seen impressive results from research showing an older, bigger gilt has a higher born-alive number, and we're beginning to see the results of our efforts with gilt development. Born alive has improved by nearly one pig/litter in the gilts. It may be the most important thing we're doing.”