Partners Resurrect Bankrupt Operation

A sprawling Nebraska hog enterprise thrives in the first 18 months of business with new owners, new ideas and a new attitude. Scott Burroughs readily admits that when he was hired in August 2003 as a consultant to help prepare Furnas County Farms to be sold, he wasn't really sure what to expect. The farms had a reputation of being outdated and worn out. Burroughs, a former staffer with the National

A sprawling Nebraska hog enterprise thrives in the first 18 months of business with new owners, new ideas and a new attitude.

Scott Burroughs readily admits that when he was hired in August 2003 as a consultant to help prepare Furnas County Farms to be sold, he wasn't really sure what to expect. The farms had a reputation of being outdated and worn out.

Burroughs, a former staffer with the National Pork Board, and Danbred North America, the Seward, NE-based genetics firm, admits he once felt the reputation was probably warranted.

But upon closer observation, he concluded the system was indeed outdated and inefficient, but was not worn out by any means. There was a solid production team in place that just needed focus and the tools to do their jobs.

In August 2004, Nebraska Pork Partners (NPP) purchased the 52,000-sow, farrow-to-finish system started by Chuck Sand in the late '70s. The name symbolizes a new team approach, that, coupled with a resurgence of the hog market, led to a very successful first 18 months in operation, adds Burroughs.

Furnas County Farms Purchase

NPP acquired the offices in Columbus, NE, and the buildings and livestock assets of Furnas County Farms. Sand Systems served as the management company managing the assets of the operation.

The system includes 21 Nebraska farrowing sites ranging in size from 1,000 to 4,500 sows, 14 nursery sites ranging in size from 5,000 to 13,500 head, and 21 finishing sites ranging in size from 4,000 to 32,000 head. NPP also has 60,000 finishing spaces in Iowa on 11 farms.

The two main production pods are located near Columbus, NE, and Arapahoe, NE, in the southwest part of the state.

Focus on the Basics

From the outset, the company mantra has been to focus on the basics and take immediate steps to improve production efficiency, while forging solid lines of communication and respect for the operation's 400 employees.

Burroughs declares: “We are here to produce a high quantity of good-quality pigs in a teamwork environment, and we are going to focus on the basics of production. If we get production right, the company will be successful.”

Major production changes included:

  • Established a new management hierarchy designed to empower NPP production staff and employees. The senior production team consists of two breeding farm directors, three nursery-finish directors, a director of veterinary services, a director of human resources and the chief operating officer (Burroughs).

    Reporting to them is a team of production supervisors responsible for four to six farms. They perform weekly farm inspections to keep units on track. The production supervisors rate sites on everything from buildings, pigs and feed and water to employee morale.

    Each farm also employs a farm manager who must submit weekly reports to their production supervisor, detailing production throughout, including pig deaths and pigs treated.

    This new management hierarchy didn't catch on with everyone right away, says Burroughs. A third of the employees immediately bought into the new approach, a third were skeptical and a third were undecided. All were offered jobs in the new company, and eventually 97% were rehired.

    NPP's hierarchy is more formal than before, but also more open to all employees for input. “We have really encouraged a ‘bottom-up’ form of communication instead of a ‘top-down’ mentality,” stresses Burroughs. “Our view is the people who know these farms the best are those who work in them everyday.”

    When problems surface at the farms, a task force typically made up of farm managers and production supervisors is formed to address the issue, and then a policy decision is implemented system-wide, he continues.

    Production supervisor Jeff Wright likes the new arrangement because it provides more structure. There are weekly production meetings with staffs from all farms, monthly production supervisor meetings, and quarterly meetings of all management teams company-wide to provide more opportunity for input and feedback. The latter goes beyond production issues to focus on people management and resolving conflicts.

  • Improved employee training and compensation. When employees are hired, they receive an employee manual and a biosecurity sheet of farm movement protocols. Burroughs states NPP has increased salaries to be more competitive in the industry, put in place a 401K matching funds program, and installed an incentive program based on production improvements. “As the company does well, the team members also do well,” he notes.

    Wright was impressed by the new approach to teamwork. “There have been positive changes in employee morale, and they feel like they have ownership in the system that they never had before,” he says. “It was also nice that NPP offered everybody their jobs back and provided improved employee benefit packages.”

    Todd Flinn, farm manager at Ridgetop Farms, a 32,000-head finisher at Albion, NE, benefits from NPP's production incentive program by selling a large majority of hogs in the packer's red box (271-300 lb.) and finishing out a large percentage of feeder pigs received.

    Out of the last turn of 28,000 head sold, only 256 head were trimmed for bruises, etc. at the packing plant, adds Flinn. He attributes that success to extreme patience and handling of hogs. As he sells more quality hogs, the “lost opportunity” category developed by NPP for pig deaths and quality losses declines, and Flinn and his farm staff are rewarded accordingly.

    Ridgetop is enrolled in Farmland's Process Verified Program, producing quality hogs for Japan.

  • Embarked on a health improvement program that continues the PRRS stabilization program started by Furnas County Farms. Biosecurity has become more stringent. Logistics have been streamlined to make sure trailers are sequenced properly, with proper downtime and hygiene applied. Sanitation will be enhanced with the completion of three truck washes and drying bays in 2006.

    Sandy Urban, boar stud manager at Spalding, NE, was impressed with NPP's responsiveness in upgrading equipment at the stud.

    The company went the “extra mile” to stock the lab with new equipment to totally automate testing and extend semen collections for artificial insemination, she says. Batch control and traceback are also automated, enhancing accuracy and accountability. The increased attention to detail and technology upgrades have increased farrowing rates over 10%.

    NPP's two, well-isolated gilt multipliers in western Nebraska are negative for PRRS and Mycoplasmal pneumonia. The rest of the production system is PRRS stable.

  • Adjusted pig flow. NPP is built in reverse from the ideal, with large finishing and small sow farms, says Burroughs. Its three-site production system is comprised of sow units, nurseries and finishers. Weaned pigs are commingled by breeding farm health status into common nurseries. Those nurseries then populate the large finishers, he explains. NPP has moved away from continuous-flow to all-in, all-out production where possible, and to what Burroughs calls “age segregation blocks” in the largest finishers.

    “We are not able to depopulate these large finishers 100% between groups, so we are basically bringing in a large block of pigs of about the same age and segregating them in a part of the barn,” he explains. The largest finishers are filled in less than four weeks, vs. 20 weeks with continuous-flow production, he says.

  • Increased weaning age. Weaning age used to be about 16 days. NPP has increased weaning age to about 21 days by cutting the sow herd to 42,000 (10,000-sow reduction), says Burroughs. The herd is stocked with PIC breeding stock, and Danbred genetics are being added to the mix.

    Despite this large reduction in sow numbers, total weaned pig production has stayed the same.

    “The increased efficiency is due to many factors, but primarily a production team that focuses on the basics of production every day,” stresses Burroughs. “We have culled poor-producing sows, but the real difference is that our production teams are handling many details daily that were missed before.” Reducing sow numbers while producing the same number of weaned pigs has helped cut production costs.

    Larry Himmelberg, who previously worked for Danbred North America, is director of nutrition for NPP and provides management advice to farms during regular production visits. He suggests NPP has made “slow but steady progress” in improving production performance. Since NPP took over, farrowing rate has improved by over 10%; born alive/litter has increased by 1.6 pigs/litter; nursery death loss has declined by 50%; and pigs/sow/year has climbed about 15%.

  • Renovated and replaced building components. The hog buildings of the Furnas County Farms' operation were built in two stages, from the late '70s to the early '80s, and the last units went up in the late '90s, says Himmelberg. Breeding, farrowing and nursery units are shallow-pit, pull-plug gutters, and the majority of the Nebraska finishers are open-flush gutters, with effluent irrigated on nearby cropland.

    The newer structures required little repair, but the older barns called for a major changeover in farrowing crates and floors, says Harold Ksiazek, director of purchasing. Automatic drop feeding, along with catching up on repairs, has provided a better environment for team members and the animals.

    Dicam environmental control and monitoring systems with remote access have been installed to track feed, water and ventilation settings, says Ksiazek.

    The new teamwork approach extends to building renovation, says Ksiazek. Everyone is working together to continue fine-tuning facility changes.

  • Updated recordkeeping and re-porting systems. New computer software systems were installed at the two feedmills in Spalding and Arapahoe to get a handle on the feed budgeting process, points out Himmelberg.

    “We had to figure out which feed was going where, and make sure the right feed got in the right bins,” he says. “Before, feed budgets were managed at the farm using paper records. Now, budgets are established and followed for each bin from inside the mill. We track feed in every single bin in our system through a unique identification number that gives the bin history, and shows the feed that should be fed now and in the future.

    “This new computerized batching system networks all feedmills with the main office in Columbus, so production is all tied together now, and every batch of feed is tracked from start to finish,” says Himmelberg. The accounting software also interfaces with the feedmill software to improve efficiency and accuracy of data management.

    Both mills produce complete grind and mix rations, and can manufacture 50 different rations.

    Spalding feedmill manager Dave Thome says a template set up by Himmelberg enables the computer to pull up an order and instantly blend the number of batches required for a group of pigs as they make their way into the nursery and through finishing.

    Computerized mixing is very accurate. Should there be a health challenge, for instance, antibiotics can be added or changed in the feed as necessary, says Thome.

    Danette Stone works at the Columbus office on the Pigchamp recordkeeping system for NPP. She says two new databases are being added to provide much more in-depth record analysis. One system will tie all production records together, while the second will calculate group closeouts, she says.

    Pigchamp records are being managed more closely to reduce costs. One area of focus is using less medication by strategically treating the sick pigs in a group. Since pigs are being weaned older, pig performance is enhanced, and subsequent sow productivity has improved, she says.

  • Updated environmental re-cords. Three-ring binders carry details for every farm such as environmental conditions, maps and permits on over 45,000 acres receiving nutrients from NPP facilities annually. “It was perceived that there were a lot of environmental violations in the past, but that wasn't true,” states Burroughs.

    Burroughs believes that his great production team, who continually strive to be the very best, will shoulder NPP's continued success.

Nebraska Pork Production Lags

State fights to regain lost production and keep pigs at home.

While talk grows of increasing pork production in states like Indiana and even North Dakota, Nebraska, on the other hand, is trying to gain back some of what it has lost.

In the last decade, Nebraska has seen a marked decline in its total inventory and producer numbers.

“In 1994, Nebraska had an inventory of 4.7 million animals, and the current inventory is 2.85 million,” (see Figure 1) reports Rod Johnson, executive director of the Nebraska Pork Producers Association (NPPA). “Along the way, we went from 12,000 producers to about 2,500 producers.”

Nebraska ranked sixth nationally in hog production for 2005. It moved up a notch from the previous year, not because production increased, but because Missouri slipped a notch to seventh place.

Most grievous to folks like Johnson is that Nebraska has an abundant supply of the resources needed for pork production — feedgrains, water, open spaces, a packing and processing industry (markets) and a perceived desire for economic development.

But the fact is, many of the hogs produced in Nebraska are finished out elsewhere, says Johnson.

Truckloads of early-weaned pigs and feeder pigs can be seen leaving the state daily, he says. Iowa and Minnesota are the primary destinations. Mike Brumm, Extension swine specialist at the University of Nebraska, estimates about 1-½ million pigs are shipped out of the state each year.

Johnson says for packers to keep their plants viable in Nebraska, they must import 30-40% of their kill to make up the shortfall.

Ironically, the pig deficit also means that packers must bid an average of $2/cwt. higher to keep pigs slaughtered and processed in the state, he notes.

Local Control Issue

Why has this situation happened?

“When Nebraska has lost market share to the states around us, it indicates an issue here locally,” Johnson explains. “Nebraska is very strongly committed to a system of local control, where local counties have established planning and zoning.”

In some areas, pork producers have faced significant local opposition to hog units, possibly due to a lack of understanding of the industry and the economic benefits it can bring to an area.

“The real frustration for many producers is they have met all the planning and zoning requirements, and are still rejected by the county commissioners, due to the ‘public outcry,’” says Johnson.

Producer Action Plan

In response, the NPPA has created a program called the Nebraska Model (, an effort to promote the industry as an opportunity for the next generation to get involved in production agriculture, and to promote the benefits of the industry to the public, spells out Johnson.

Also, several producers have been trained in the National Pork Board's Operation Main Street program. Several producers have spoken to civic groups around the state about the value of pork production. The checkoff-funded program was launched in 2004 to help producers upgrade their image at the local level.

Agricultural groups in Nebraska have also joined forces to promote the livestock industry in numerous ways, including the development of the Livestock Friendly County Program, administered through the Nebraska Department of Agriculture.

Currently, only Morrill County (far western Nebraska, cattle country) has obtained the designation, but 8-10 counties are looking into becoming involved in the program, says Johnson.

At this point, the program is only a promotional effort. “We are hopeful that by becoming Livestock Friendly, it will promote a change of attitude within the general population of the county,” he adds.

Nebraska counties want to attract small businesses and cottage industries to invest in their towns. What community leaders need to understand is that pork production represents rural development, and the first value-added phase to corn and soybean production, stresses Johnson.