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Poised To Compete

Bob Dykhuis is proof that an independent pork producer can grow and thrive in the fast-changing hog industry. He's also proof that expansion is possible, even in environmentally sensitive areas.The Holland, MI, producer started in pork production 20 years ago with a new, 100-sow farm he and his father built. A few years later, he went on his own and gradually expanded to 2,400 sows. He is now expanding

Bob Dykhuis is proof that an independent pork producer can grow and thrive in the fast-changing hog industry. He's also proof that expansion is possible, even in environmentally sensitive areas.

The Holland, MI, producer started in pork production 20 years ago with a new, 100-sow farm he and his father built. A few years later, he went on his own and gradually expanded to 2,400 sows. He is now expanding his to 5,550 sows.

Dykhuis accomplished this growth in Michigan, a state known for its strict environmental lobbies. His ability to mesh hogs with the community was shown last summer when he notified neighbors of his plans to change and expand a 3,000-head finishing site into a 2,750-sow unit. No opposition was voiced from the neighbors.

Today, Dykhuis could safely be classified as a mover and shaker in the hog industry. His can-do attitude allows him to look ahead and take advantage of new technologies and opportunities. Technologies like phase feeding and artificial insemination (AI) have increased his production efficiencies. Separate-site production and contract finishing have fueled his expansion. Now his herd size allows other efficiencies like producing enough weaned pigs a week to go all-in, all-out on finishing buildings. This alone saves him $2,100/finishing unit/year.

Combined, these factors have added up to a hog operation poised to continue growth well into the next century.

"You do business for different reasons," Dykhuis says. "I really feel called to do this business just like my brother who is a Christian Reformed pastor felt called. I think hog production is fun. It is a dynamic industry where we can provide interesting jobs. And I think it is more exciting than ever."

A Growth Path Growth has always been a key to Dykhuis' hog operation and will continue to be important. In 1978, he had just completed two years in college when he and his father set up the 100-sow farm. To earn extra money, Dykhuis built bins for a local equipment dealer.

He learned he loved working with hogs. Throughout the early and mid-1980s, he honed his hog production skills, sold his share of the original hog farm to his father and then built his own hog operation. Dykhuis sold feeder pigs.

By 1987, he had developed a 700-sow unit and sizeable crop acreage. In 1988, he created a closed nucleus herd to produce Pig Improvement Company (PIC) stock for his operation. Finishing units were built for the offspring.

In 1990, his father retired and sold Dykhuis back the original hog operation. Dykhuis continued to sell feeder pigs, but tried some contract finishing.

Two years later, he built finishing units for 3,000 head. The buildings were all tunnel ventilated. "We couldn't believe how nice that went," he recalls. "We kept records on feed batches. The hogs were leaner and feed conversion was better."

Feed conversions ran between 3.0-3.2 lb. for pigs in lot-type facilities with bedding. When the pigs were moved into the new facilities, conversion rates improved to 2.6-2.8 lb. Recently, Dykhuis says the conversion rate on 6,000 market hogs averaged 2.58 lb.

With the feed conversions in new facilities clearly better than in older facilities, Dykhuis started offering contracts for finishing in new buildings with tunnel ventilation. This decision allowed him to expand his sow herd without adding finishing buildings.

In 1995, Dykhuis converted his main farm operation from 700 sows to 2,400 sows, farrow-to-wean. One site of finishing buildings was converted to an off-site nursery. Another new, off-site nursery was built. In addition, he still maintains the closed nucleus herd of 200 sows for producing PIC breeding stock.

In the meantime, other facilities Dykhuis owned on other farms were changed and switched over the past few years, according to the farm's changing needs. A gilt development farm became gestation. The original hog farm was remodeled into a gilt development farm. An on-farm boar stud was added.

Now Dykhuis is switching a 3,000-head finishing site into a 2,750-sow farrow-to-wean complex. The pigs will be contract finished. Dykhuis hopes to line up new wean-to-finish units for contracting.

When completed, this new sow herd along with Dykhuis' other sows will produce 2,200 weaned pigs/week. After sorting out the bottom pigs, Dykhuis will have enough to fill two 1,000-head finishing units.

The ability to fill a finishing unit in one week instead of two saves Dykhuis $2,100 a unit per year. A contract finishing units costs him $100 a day. With three turns a year per building, he figures that reducing the fill time from six weeks to three will save $2,100 a unit.

Filling two finishing units/week will allow him to fill one with barrows and the other with gilts. Barrows grow one week faster than gilts. So this reduces Dykhuis production costs even more.

He plans to produce 1,100 pigs/1,000-head unit. He hopes to sort the small pigs off and move to a more traditional nursery and finishing unit, under contract. His goal is to do everything possible "to make those finishers hum like crazy," he adds.

Contract Finishing Pluses Dykhuis' growth is closely tied to contract finishing. "With this new sow unit, we won't have a finishing hog in any of our buildings," he says. "We will be all contract finishing."

Right now, he works with seven contract growers in the Michigan area, paying monthly on a per pig space basis. He fields a lot of calls from other people interested in contract growing.

"Contract finishing is a win-win thing because we need those off-site units for all-in, all-out production," he explains. "And community-wise, contract finishing is good. It gives guys a chance to get involved in an operation.

"It's not our goal to own it all," he adds. "Our challenge is to keep enough money in the chain so that the contractors get paid well."

Without the need to invest in finishing facilities, Dykhuis also has the ability to grow his herd larger, faster. This in turn, increases his efficiencies.

"That's the industry we're in," he adds. "We almost have to cooperate or get just so large. I think that in the future, you will need to have one week's worth of pigs in one finisher to be efficient."

The downside to offering finishing contracts is the financial risk in times of a low market. "Every month, we need to pay those finishers," he says. "That means when prices get below our cash flow breakeven, we either have to have cash reserves or we have to have operational borrowing capacity, or a packer deal. " Now that Dykhuis believes he is reaching a size for good efficiencies, he sees market access as the next roadblock. He wonders what must be done to assure access. At his current size of 2,400 sows, he holds an agreement with a packer to market the hogs. In the future, it may well take many more animals to tie in with one packer.

He describes this growth process of finding more roadblocks like climbing a ladder. Each time a certain goal is achieved, he climbs a little higher and sees more ahead. Fortunately, the climbing comes easier now, he adds.

Employee Focus Growth will continue to be primary in the Dykhuis operation. "We need to stay dynamic, we need to keep expanding," he says.

He also feels he must keep growing to keep good employees. "For a person going into the hog industry, to move up, they need to go into an organization that is expanding or big enough so there's more opportunity above."

Growing to his current size, Dykhuis has had to learn how to manage employees and depend on them. He has 19 full-time employees.

He has a three-point strategy to keep employees. "First, we have to be the best hog farm in Michigan so it is a place where people want to work," he says. "Second, we take care of our employees' physical needs." Employees receive a range of benefits including medical, disability and life insurance plus paid vacations. Some positions include a company vehicle. Employees work alternating holidays and weekends.

Third, Dykhuis says he must give the employees good tools to work with, including a good building and environment.

Employees are pulled into the decision-making process, too. Weekly meetings between all the managers handle concerns and problems.

Dykhuis' location also helps keep employees, he says. People like to live there, just a couple hours from several major cities, yet close to many recreational areas like skiing and fishing.

"Michigan is a great place to live," he says. "So it's important to have a sow unit set up so it gets along with neighbors."

Michigan was one of the first states to clamp down on large hog units for environmental reasons. So Dykhuis is very careful to follow environmental rules. He also is careful to locate his units in hidden areas away from close neighbors.

"We've always tried to maintain a clean operation," he says. "We've always knifed in our manure. We try to put buildings back in the trees. And we try to maintain a good rapport with people."

Big Milestones Since Dykhuis began raising hogs in the late 1970s, the hog industry has vastly changed. In retrospect, he can see which of the changes made the biggest impact on his bottom line.

1. Genetics - "PIC gave us a sow that would come in heat in a gestation stall," Dykhuis recalls. "That sow and the gestation stall were so key in the early '80s. They gave us the ability to set up production and organize sows by weeks, which made things like vaccination so much easier." It also helped producers keep farrowing, nursery and finishing units full.

Lean genetics represented the next wave of technology to sweep the hog industry. Carcass quality improved and led to more consumer demand.

2. Feed Regimens - Split-sex feeding and phase feeding created big strides in feed conversion, according to Dykhuis. They feed five nursery rations and seven phases in finishing.

They also stock all barrows in one building and gilts in another, in both nursery and finishing. 3. Record keeping Programs - Today's computer records have become indispensable management and information tools, Dykhuis admits. They use PigCHAMP in their operation and for tracking feed use in contract finishers. He finds the system very user friendly.

"We live by the computer and the ability to manage these large databases," he says. "We're starting to do a lot of analysis on the sow herd now."

4. Pig Separation - Dykhuis says the use of all-in, all-out (AIAO) technology, which moved to off-site finishing, three-site production and contract finishing have produced great leaps in production efficiencies.

"We've eliminated the evidence of mycoplasma pneumonia with AIAO," he says. "Back in the early 1990s when we started AIAO nurseries, we saw more consistent growth and less treatment."

Dykhuis says AIAO along with separate-site production also shut down the spread of pseudorabies. "The ability to place pigs in off-site facilities and have them all take off and grow is a big improvement," he explains.

5. Improved Environment - "We use tunnel-ventilated buildings and I think they are fantastic," Dykhuis states. "Ventilation is constantly improving. It is something that puts dollars in our pockets through consistent performance."

6. AI - "I think we produced 20 lb. more pig on the same amount of feed in the same amount of time when we went to AI," Dykhuis claims. Their average daily gains jumped from 1.80-1.85 lb. to 1.98-2.0 lb. with AI. AI reduced genetic lag so they were able to reproduce the more efficient animals faster.

"In addition, AI has made the life of a breeding herd manager palatable," he says. "AI has made it a job where you don't get stepped on, and it's all positive contact with the animal. You can work in teams. That's been good."

The Future Dykhuis already looks to a bright future in the hog industry. He talks excitedly about feed rations that will make manure a non-issue, environmentally. He believes animal biotechnology will continue to make great genetic strides.

But immediately ahead, the drop in hog prices means efficient production, cost control and quality will be very important. "It won't be the least-cost producer to survive, but the producer with the most net," he states. "Unless you happen to be both least cost and most net."

One thing is for sure, Dykhuis intends to be among the survivors.

"I think the window for a guy like me is tied to the community," he says. Because of his community ties, he is able to successfully operate a hog farm near a community.

"I don't have to go to places like Oklahoma," he explains. "So that gives me cheaper grain. And I have a long-term, sustainable manure plan that gives us a niche in the Midwest."