Survival Tactics In A Down Market

1 Buy Feed Ingredients Now Corn and soybean meal are at unusually low prices right now. In fact, these products only get this low 10% of the time, according to Ron Plain, ag economist at the University of Missouri. So lock in, buy ahead and store your feed now."Prices aren't likely to get much lower," he adds. "And something like the weather could change things and prices will get a lot higher."Jerry

1 Buy Feed Ingredients Now Corn and soybean meal are at unusually low prices right now. In fact, these products only get this low 10% of the time, according to Ron Plain, ag economist at the University of Missouri. So lock in, buy ahead and store your feed now.

"Prices aren't likely to get much lower," he adds. "And something like the weather could change things and prices will get a lot higher."

Jerry Shurson, University of Minnesota nutritionist, adds that shopping around for the best prices will pay, too. He suggests spending time studying the markets for the most expensive nutrients in the diet: energy, protein and phosphorus.

"If you can cover those three nutrients you have come a long way toward minimizing your diet cost," he explains.

2 Don't Overfeed While feed is cheap, it still represents two-thirds of production costs. Plain says producers should still work hard to cut feed costs.

One suggestion is to pull hogs off feed 10-12 hours before trucking them to the slaughter plant. Plain says this will save a little feed without hogs suffering any loss.

In addition, resist the urge to feed the hogs to heavier weights. This time of year, hogs put on weight faster. Plain says producers can easily end up with hogs weighing 280-290 lb. Then they may face discounts and miserable feed conversion. "As cheap as hogs are, there is no need to feed them too long," he says.

Feed costs can also be cut by fine-tuning diets. "The mindset for many producers is that low hog prices mean it's time to get serious about fine-tuning feed programs," reports Shurson. "The reality is, producers should always be fine-tuning feeding programs, regardless of hog prices."

Focus on the grow-finish phase first where the most feed tonnage is used. Shurson suggests working with independent nutritionists to customize diets specific to production conditions. Separate-sex feeding, multiple-phase feeding, feed budgeting, and changing diets at the right time, also help minimize overfeeding.

Make sure all non-nutritive additives, such as growth promotants, are paying their way. "If there are no performance or health benefits, those additives do nothing more than raise diet cost," Shurson says.

Adjust feeders regularly, at least three times/week. "You should be doing everything you can to minimize feed wastage," Shurson adds.

3 Check Production Figures For Trouble A check of your hog operation's production records could uncover problems robbing you of profits. Tom Baas of Iowa State University offers a quick list of production figures you can check your own figures against.

To be profitable, Baas says you must be above average in most of these production areas. A single weakness or strength seldom determines profitability.

These benchmark numbers are suggested figures only. If yours are considerably different, dig into why and work to improve your profitability. Here are some suggested benchmarks:

2.2+ litters farrowed/breeding female/year for handmating or confinement systems is a fair target, according to Baas. Penmating systems should look for 2.0 litters/breeding female/year.

20+ weaned pigs/breeding female/year should be the goal for most herds.

80% farrowing rate on an annual basis is a good target. Baas notes this rate will vary throughout the year.

190 days to market is a realistic goal for the average of all pigs, Baas says.

Whole herd feed efficiency should be averaging 3.3 while the grow-finish in confinement should be 3.2 or less and nursery 2.0 or less.

Feed disappearance in the grow-finish units should run 4.75 lb./head/day.

4 Tighten UP Marketing Watch market weights. "It's easy to get into the habit of trying to hold hogs until the market price looks better," reports Palmer Holden, Iowa State University swine specialist. "But if your pigs are gaining 2 lb. or more/day, in 10 days they are going to be 20 lb. heavier and they may gettoo heavy and too fat." Heavyweight pigs often mean poor feed efficiency.

Plus , hogs with too much backfat and too heavy will be docked in price by the packer, Holden adds.

Weigh your hogs and group them accordingly to reduce sort loss, advocates Plain. "It takes extra time and effort, something you should do all the time. But in these times of low prices, you really need to do it."

Plain also suggests shopping around for the best market price. "It may be quick and easy to take them to the local buying plant, but call around and get bids," he says. Producers need to work to get the best price possible for their hogs.

5 Talk To Your Lender If ever there was a time to keep your lender informed, it is now. Many producers face cash flow binds with the continued low hog prices. They should not hesitate one second to keep their lender informed, reports Steve Stanton, Farm Credit Services of the Midlands, Perry, IA.

Although many producers will not need to make changes, some will, he adds. One possibility is balancing debt load to meet their cash flow. Other options include reducing debt where possible and taking advantage of flexible loan terms.

It is also very important to work with a lender who understands the hog industry. Stanton says the hog market cycles and these low hog prices will pass. "It is important not to panic," he stresses.

No lender for a pork producer should be surprised by low hog prices. Stanton says a key thing lenders look at before making a loan is a producer's ability to withstand low prices.

What he wants to see from borrowers is a commitment to hog production and a commitment to being a low-cost producer. If prices continue to stay low, producers will really need to look over their operation for inefficiencies. And they must be willing to make the necessary changes to stay in the business for the long term.

6 Streamline Breeding Herd Producers should tighten up their breeding herd to keep from feeding and housing poor-producing animals, according to Todd See, North Carolina State University extension swine specialist. If you don't, poor performers will only add to your costs.

See suggests promptly removing sows with high, non-productive sow days. Cull boars not producing pigs with carcass premiums. If you use artificial insemination, sell boars with consistently low sperm volumes.

"Make sure the boar-to-sow ratio is where you want it to be," he says. He suggests 15-20 sows/boar for natural mating. Sow numbers per boar go up with AI.

7 Lower Sow Replacement Rates Producers might want to lower their replacement herd rates right now, See says. But don't lower it too much so that the herd becomes old.

"You don't want to stop turning over the sow herd with a replacement rate of zero," he says. Then the sow herd will be too old in the future and production problems will result.

If a farm is at 50% replacements, for example, he suggests moving to a 30% replacement rate.

Resist the urge to pull replacement gilts from finishing animals. "Don't go to the finishing floor to pick up gilts, which is what we see happen in situations like this," he emphasizes. Stay with your current replacement lines, or your breeding program will suffer, he cautions.