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The Pipestone System: A producer-oriented production system keeps independent families excited about the future.

Article-The Pipestone System: A producer-oriented production system keeps independent families excited about the future.

Southwestern Minnesota is often recognized as a hotbed of innovation for the hog industry. The latest hog system to emerge from this unique area is no different.Called the Pipestone System, independent producers from the area have banded together in an unusual bond that keeps them competitive. Tying the producers together is the Pipestone Veterinary Clinic, Pipestone, MN.While the clinic oversees

Southwestern Minnesota is often recognized as a hotbed of innovation for the hog industry. The latest hog system to emerge from this unique area is no different.

Called the Pipestone System, independent producers from the area have banded together in an unusual bond that keeps them competitive. Tying the producers together is the Pipestone Veterinary Clinic, Pipestone, MN.

While the clinic oversees the system, it also remains independent from the producers and the system.

"The Pipestone System is not a company," says Gordon Spronk, veterinarian with the clinic. "It is not a co-op. None of the veterinarians with this clinic own the Pipestone System. To me, it is elegantly simple. This is a system of raising pigs that encompasses multipliers, sow barns and nursery-finishers."

The producers who are part of the Pipestone System choose their own destiny - and their own production schemes. They retain ownership of pigs and contract to deliver hogs to a packer. They capture premiums for consistent quality.

The Pipestone Veterinary Clinic serves as the communication center for the progressive group. The clinic manages the gilt multipliers and sow farms that form the foundation of the system.

The veterinarians also provide consulting services and offer a variety of options for producers to take advantage of on a fee-for-service basis. Services include coordinated group marketing, a genetically tailored nutrition program, recommended building specifications, just to name a few.

The Pipestone System got its start with help and guidance from veterinarians Gerald Kennedy and Spronk.

"In 1987-89 the Pipestone Veterinary Clinic was losing pork producer clients as producers left the pork industry," Spronk remembers. The veterinarians in the clinic decided they wanted to help clients strengthen their opportunity to stay in business.

"We decided to promote pigs in our area," Spronk says. "We didn't think what was happening in North Carolina was all that special. The original intent of the Pipestone System was to provide the opportunity for the competitive production of food in the Midwest."

Capturing a lean premium with the right genetic base was identified as a priority for the Pipestone System producers.

The system started with a 700-sow gilt multiplication unit called Hiawatha Gilts Ltd. This farm produced PIC's line of Camborough gilts. Producers bought shares according to the number of gilts they wanted to receive.

One share was worth $20,000. Each share entitled producers to 60 gilts/year.

"The original members of Hiawatha Gilts, Ltd. got a good return on the money they invested," Spronk says. "All of the Hiawatha members had inside, crated gestation and were sophisticated producers."

Producer demand led to the formation of a second gilt farm a year later, Calumet Gilts, Ltd., which produces PIC Camborough 22 gilts.

In late 1991, a group of the gilt farms' shareholders decided to change the way they were producing finishing pigs. Rather than spending money to update their facilities, they asked the clinic staff to put up a new sow farm to handle breeding, gestation and farrowing. Then, rather than sending gilts to shareholders, gilts would move directly to the new sow farm. Producers would take delivery of pigs weaned from the centralized sow farm. This was called the "Ten-Pound Pig Project."

"The objective was to provide large groups of single-source, high-health pigs for placement in farmers' nurseries and finishers," Spronk relates.

This concept remains the foundation of the Pipestone System.

The producer who owns the shares in the sow unit, owns the right to purchase a comparable share of the pigs when they are weaned. Each share provides a producer with 600 pigs every eight weeks.

Each 3,200-sow farm site produces 1,200 pigs/week. The sow site is considered a cost center. Producers receive pigs at "cost of production."

Pigs are weaned in groups, averaging 16-18 days old. "If we have a good farrowing rate, weaning age might go down to 14 days," Spronk says. Newly weaned pigs are shipped up to 200 miles for a one-day fill of the producer's nursery site.

Producers have an established schedule. They know about 2-3 weeks in advance when to expect their pigs. This helps plan marketings so nursery pigs can be moved up to finishing and nursery units can be pressure washed and ready for the next group. Individual farms are all-in, all-out (AIAO) by building. Many are AIAO by site.

Producers follow strict AIAO rules. If there are pigs left over in the nursery or the finishing floor, they are just plain "out," explains Spronk.

Producers are not obligated to any feed company under the Pipestone System. The Pipestone Veterinary Clinic has an alliance with Kansas State University to provide nutrition guidelines. KSU swine nutritionists Steve Dritz and Mike Tokach balance diets and provide nutrition recommendations for the group. Producers pay a separate charge for this service.

Producers utilize their preference of nursery and finishing buildings. The clinic suggests 3 sq. ft./pig in the nurseries, with 25 pigs/pen in 600-head rooms. The building specifications, outlined by the veterinary clinic staff, include computer-controlled power ventilation, stainless steel feeders and plastic flooring.

Finishing barn plans are available for both 600- and 1,200-head barns. Finishing barns have totally slotted floors and the ability to split-sex and phase feed.

Due to rapid expansion, construction has been an area of concern, Spronk relates. A construction arm of the system, International Swine Builders, has been formed to add efficiency.

Most of the pigs are marketed on a Swift contract through Global Ventures, an entity set up by the clinic. Dave Logan, CEO of Global Ventures, joined the Pipestone System in 1993. Global Ventures provides field research, nutritional and marketing services for the Pipestone System.

Both Spronk and the producers repeatedly stress that participants are free to utilize facets of the program they wish to utilize. Most follow the clinic's recommended building plans and work with the clinic in developing feeding programs and marketing arrangements.

One point is non-negotiable, however. Each producer in the Pipestone System is obligated to keep performance records on all pigs. These extensive records are filed at the veterinary clinic for analysis. The data is compiled to help the producers improve and to give the clinic the option to make changes that would improve the finished pork product.

A valuable feature of the Pipestone System provides total traceback capability, conception to market.

A group identification number is assigned to pigs at weaning. This is a unique code that will stay with each group of pigs for the rest of their lives. The code has12 digits, which includes the birth week, the source of the semen, which sow herd pigs came from, what week the pigs were born, where the pigs were placed in the barn and the owner's identity. Pigs stay in the same groups all the way to market.

The Pipestone Veterinary Clinic, on behalf of the Pipestone System, is in constant contact with the packer to make sure the system is producing a consistent quality product. If changes need to be made, immediate genetic adjustment is possible starting at the boar stud.

As the Pipestone System grew, so did the demand for fresh boar semen. Kennedy, Spronk and partner Jay Bobb, DVM, founded a boar stud, Pipestone Artificial Breeders (PAB) in 1993.

The boar stud started with 100 boars, under the management of Nancy Stoltenberg, and has since grown to more than 600 boars in three separate studs. A new 500-head boar stud is now being stocked in Audubon, IA. Not only does PAB provide semen for the sow herds in the Pipestone System, but it also offers boar semen on a commercial sales basis to producers across the U.S.

According to Spronk, both gilt multiplier farms, (Hiawatha and Calumet) have expanded to 1,600 sows each and changed to two-site production.

As of early 1997, the Pipestone System has grown to 25,000 sows. These sows are still owned by independent farmers through purchased shares, and housed in sow farms managed by the clinic.

The clinic subscribes to the Agrimetrics record system. This system allows producers to compare their performance to pork industry giants.

Other Alliances Strategic partnerships have been formed with Big Gain Inc., in central Minnesota, Kerber Milling in north central Iowa, and Orange City Veterinary Clinic in northwest Iowa.

Financing for the system has been arranged through local banks and Farm Credit Services. "When we were seeking financial options for producers, First National Bank and Trust of Pipestone President, Mike Morgan really made things happen," Kennedy says.

Farmer shareholders in the Pipestone System purchased shares in Ellison Meats in 1995. This portion-control meat business is located in Pipestone, MN, and processes both beef and pork, with much of the pork coming from the Pipestone System pigs. This facility gives the system some flexibility in niche marketing.

Spronk says although the veterinarians figured out how the Pipestone System should work, in order to succeed, producers have to be willing to take the risk and do it. Kennedy says, it actually is a"people system."

Kennedy heaps a great deal of credit on the initial shareholders, and clinic partners Spronk and Bobb. "Pipestone System employees such as Willie Langholz, environmental assurance director, as well as production manager Barb Becker, actually dedicate their lives to making the system work," Kennedy explains.

"The clinic's goal was to help our clients. If you really ask why this is happening here, it's because these guys aren't just talking about it anymore, they are doing it," Spronk says. - L