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Articles from 2009 In February


Pork Demand Signals Offer Hope

Finally some good news: The University of Missouri’s demand indexes for the three months from November 2008 through January 2009 are all higher than one year ago, some of them sharply so. Table 1 shows Professor Glenn Grimes’ computed percentage changes in demand indexes for the period.

Both pork and hog demand were positive for the period with pork demand gaining 2% and hog demand gaining 1%. Some may wonder how that squares with current market conditions and all of the dire news we hear, but there are good reasons that the numbers came up positive. Consider:

  1. These numbers are for November through January and do not reflect the lack of strength we have seen in cash markets and marked weakening of futures markets over the past few weeks.
  2. The computations use real (i.e. deflated) retail prices. This process almost always results in converting a nominal price to a smaller number due to inflation. That lower number can mean lower demand unless domestic disappearance numbers increase pretty rapidly. From November through January, inflation was actually negative during this time with the Consumer Price Index (CPI) falling by over six points or about 3%. That means that real prices did not fall much at all and that makes the demand index more positive.
  3. Assuming January exports and imports were similar to those of December, which Professor Grimes did, January per capita disappearance (or consumption) was 3% higher than that of December and 3.4% higher than one year ago. Those numbers are largely the result of slowing exports – but it was robust exports that forced per capita consumption lower last summer and contributed to the indexes for 2008 looking so bad.
  4. The lagged effect of last summer’s shorter domestic supplies on retail prices is just not being felt. Retail prices actually fell during the period in question here, but they did not fall by as much as usual, especially when one considers that there was actual deflation during the time period. I have stated several times in these columns that the impact of lower domestic supplies last summer would eventually be seen in retail prices and these computations bear that out, I think.
January’s improvement is quite clear in Figure 2, a chart of monthly real per capita pork expenditures, a figure closely akin to Grimes’ demand indexes. The January figure of $11.03/person is over 8% higher than January 2008.

And why is hog demand lagging behind domestic retail demand? Primarily due to slower exports. Remember that hog demand is driven by domestic pork demand, export demand and packer margins. The hog demand index was helped relative to one year ago by domestic demand, hurt by export demand and helped by the very low packer margins of November through January. You might recall last week I termed them “abysmal.” The last of those can’t continue much longer, so either exports or domestic demand are going to have to carry more of the hog demand “water” in future weeks.

The largest caveat I can see is that these figures represent a relatively short time period. One quarter can be quite different than one year and one quarter definitely does not make a trend. But this piece of good news among all of the gloom is still welcome.

Packer Retrospective
In retrospect, I hope the people at Smithfield Foods were not upset about my characterization last week of their plant at Sioux City as “vulnerable”. And if any of them were, I apologize. I was not really trying to point out which plant was or was not most subject to operational pressure should hog supplies get tight. The point I was really trying to make was that even in highly uncertain times, and at a time when they were making major changes in their business structure, Smithfield chose not to take any action regarding any of its slaughter operations. That, to me, is a clear statement of where they think the business is going and a huge positive for the U.S. pork industry.

Meat processing plants are pretty flexible. The same types of machinery are used to make many processed meat products regardless of the critter from which the meat comes. But slaughter plants are, today, species specific and hardly any pork plant that has once been closed has ever reopened. So keeping them running is critical. Let’s hope that happens through this year and into better times – which I really believe are ahead.




Click to view graphs.

Steve R. Meyer, Ph.D.
Paragon Economics, Inc.
e-mail: steve@paragoneconomics.com

Pork Producers Dismiss Referendum on the Checkoff

Overwhelmingly, pork producers have rejected a referendum on the Pork Checkoff.

The U.S. Department of Agriculture (USDA) announced Feb. 18 that results show by a wide margin too few pork producers and importers want a referendum on the Pork Promotion, Research and Consumer Information Order.

Only 94 valid requests for a referendum were cast – far short of the 10,417 required to trigger a referendum. Of the total requests, 39 were cast in Iowa, 11 in Minnesota, eight in Kansas and six in Wisconsin.

The request for referendum was held from Dec. 8, 2008 through Jan. 2, 2009 at USDA’s county Farm Service Agency offices.

The request for referendum was conducted as a result of a settlement of a lawsuit on Feb. 28, 2001 with USDA and the Michigan Pork Producers Association, Inc., et al.

The settlement agreement called for USDA to conduct a request for referendum among eligible pork producers and importers to determine if they favored holding a referendum on the Pork Checkoff program.

National Pork Board President Steve Weaver of Elk Grove, CA, says the results reflect producer satisfaction.

“The results of the USDA Pork Checkoff Referendum Survey are very consistent with the strong and increasing support for Pork Checkoff programs. A recent scientific random survey of producers across the country showed 77% of all pork producers supported the Pork Checkof programs.

“The Pork Checkoff has been focused on those issues that affect producers’ bottom line. From our profitability challenge work, our efforts on addressing high feed costs, or our work defending our industry against activist attacks, we have been pleased that producers are recognizing the work we have done on their behalf. We think the survey results are a testament to these efforts,” he says.

Through a legislative national Pork Checkoff, pork producers invest $0.40 for each $100 value of hogs sold.

The Pork Checkoff funds national and state advertising programs, consumer information, retail and foodservice marketing, export market promotion, production improvement, technology, swine health, pork safety and environmental management.

USDA Announces Implementation Of Country-of-Origin Labeling Law

Agriculture Secretary Tom Vilsack has announced that the final rule for the country-of-origin labeling (COOL) program will become effective on March 16 as scheduled. Vilsack also sent a letter to participants encouraging them to follow additional voluntary labeling practices.

The rule was published in the Federal Register on Jan. 15, 2009, but has been under regulatory review by USDA in response to a Jan. 20, 2009 memorandum from President Obama’s chief of staff.

“I strongly support county-of-origin labeling – it’s a critical step toward providing consumers with additional information about the origin of their food,” Vilsack says. “The Department of Agriculture will be closely reviewing industry compliance with the rule and will evaluate the practicality of the suggestions for voluntary action in my letter.”

During the regulatory review process, Vilsack decided that implementing the rule and carefully monitoring compliance by retailers and their suppliers afforded the best way to evaluate the program. This evaluation period will determine if more rules are needed to provide consumers with adequate information.

The COOL regulation covers muscle cuts and pork, ground beef, goat, lamb and chicken; fish, vegetables, peanuts and nuts sold at retail. These commodities must be labeled at retail with the country of origin.

The final rule outlines requirements for labeling covered commodities and the recordkeeping requirements for retailers and suppliers. Specific criteria must be met for a commodity to be labeled as “United States Country of Origin.” Provisions are also made for labeling products of foreign origin.

For complete information on the COOL regulation, go to www.ams.usda.gov/cool.

Smithfield Makes Cuts in Pork Plants, Employees

Smithfield Foods has announced that the Virginia-based company is restructuring the pork group including closing six plants by December 2009. About 1,800 jobs will be eliminated.

Affected plants include:
The Smithfield Packing Co. South facility in Smithfield, VA, will be closed. Case-ready pork production will shift to the adjacent Smithfield North plant and a North Carolina facility in December, improving operating efficiency.

A Plant City, FL, facility producing packaged meats will shut its doors in September.

The Smithfield Packing Co. plant in Elon, NC, will close in late summer, eliminating country ham production.

A John Morrell plant in Great Bend, KS, that processes fresh pork and smoked meats will close in July.

The Farmland Foods plant in New Riegel, OH, will shift spiral ham production to other facilities and close in April.

An Armour-Eckrich Meats packaged meats plant in Hastings, NE, will close in July.

Smithfield Foods will also reduce the number of independent operating companies in the pork group from seven to three.

Among other cost-saving measures:
John Morrell and Farmland Foods will merge sales forces.

Patrick Cudahy Inc. will become part of the John Morrell Group.

Smithfield expects these and other actions will save the company about $55 million in fiscal 2010 and $125 million by fiscal 2011.

The Costs of Switching from Sow Stalls to Group Housing

Voters and government are increasingly placing restrictions on methods of pork production, including laws to reduce or eliminate the use of individual stalls for housing sows and gilts in the breeding herd.

The European Union plans to phase out individual sow stalls by 2013. Legislation in Florida, Arizona, Oregon and Colorado has banned or will ban gestation stalls in the coming years.

In November 2008, California voters approved Proposition 2, which restricts the use of sow gestation stalls; other states may follow.

Relatively little analysis has been done on the economic impacts of transitioning from stalls to pens. So in an effort to examine the economic costs of transitioning the breeding sector of the U.S. pork industry from gestation stall facilities to group housing, a comparative study was requested by the Joint Sow Housing Task Force of the National Pork Board and the National Pork Producers Council.

Are Pens Really Better?

A primary objective of voters, as well as some producers favoring these policies, is improved sow welfare. Regardless of economic considerations, it is not yet clear that the elimination of stalls achieves that objective.

A review of prior research on sow productivity and welfare suggests that the type of system does not necessarily determine sow welfare. For example, stalls allow for individual sow management and remove the potential for sow aggression and injury, but sows are incapable of full movement. Pens allow for greater mobility, but also allow sow aggression that can result in injury and also extreme variation in body condition between aggressive and submissive sows.

Prior research has also found no significant productivity differences between housing sows in stalls vs. pens. When asked in a survey if pen housing affected the level of productivity in a commercial setting, producers with both systems said they found no consistent differences. However, respondents indicated several key issues would affect group housing productivity:

  1. Producers must learn to manage sow group dynamics.

  2. Some stall use must be available after breeding for proper embryo implantation.

  3. Base Assumptions for Economic Analysis

    Stalls are needed to isolate sows when they are injured, in poor condition or otherwise fall out of groups.

  4. Feeding for management of body condition variation is critical.

  5. Space allocation per sow relative to pen size is critical.

  6. The potential for catastrophic productivity losses are greater with pens.

In summary, the surveyed producers suggested there are significant risks posed by transitioning the industry from stalls to pens in a short time frame due to variation in management and husbandry skills, which are more important to success with pen systems.

The following economic analysis is based on the economic impact of transitioning from existing gestation stall housing to group pen housing under a regulatory mandate.

Two major cost categories are analyzed:

  1. The capital costs associated with investing in refurbished or new buildings and equipment, including the opportunity cost of refurbishing a building that has not reached the end of its useful life, and

  2. The potential differences in sow and pig productivity during the transition.

Two alternative pen systems are simulated and compared to a conventional gestation stall system. One is a trickle-feed system with small pens of six or fewer sows, and the other features an electronic sow feeding (ESF) system with large pens of 50-60 sows. While there are many pen-based variations for housing sows, these two seem to capture most of the variations between systems.

The trickle-feed system is simpler to operate and implement as a retrofit, may require additional barn square footage and relies on small pens. The ESF is technically more sophisticated with the potential for greater management and maintenance issues, but allows for sows to be housed in large pens, utilizing the same square footage as existing stall systems.

The capital replacement cost is modeled so that the additional cost of retrofitting or replacing an existing barn prior to the end of its depreciable life (about 25 years) results in increased capital costs, but no improvement in revenue is realized if productivity is unchanged. This is modeled as an infinite horizon net present value (NPV) problem.

The NPV method compares alternative systems by standardizing all net cash flows to a single value in current dollars. This allows for comparison of projects with different life spans, as would be the case with replacing different ages of stall facilities.

Estimating industry-wide impacts requires an estimation of the number of barns to be replaced or retrofitted and the average age of the barns to determine their useful life lost. Based on USDA data, it is estimated that 1,725 barns with 1,200 sows would need to be transitioned, and 1,370 barns with 2,400 sows would also need to be transitioned. No information is available on barn age, so the ages of existing barns are assumed to be uniformly distributed over 25 years. That is, 1/25th of barns are one year old, 1/25th are two years old and so on.

Three scenarios are analyzed:

  1. The productivity costs are unchanged between stall- and pen-based gestation, and the only cost is the capital cost of retrofitting stall facilities or building new pen systems;

  2. In addition to the capital costs, it is assumed that productivity decreases for two years during the transition as people adapt to pen systems (the most likely scenario); and

  3. The productivity decreases are persistent for the life of the facilities (the worst-case scenario).

Barn-Level Economic Impacts

The most likely impacts of a transition to pen housing, assuming a uniform distribution of the age of existing facilities at the time a regulation is initiated, is shown in Table 1. Industry losses will range between $1.87 billion and $3.24 billion. However, if productivity is reduced throughout the life of the barns, then costs more than double to about $7.3 billion.

Several factors affect the level of these losses. To evaluate the relative impact of these variables, a sensitivity analysis was completed, varying the level of key input variables used in the simulation. Figure 1 shows the relative impact of a 10% change in these input variables on the net present value producers will receive after the transition.

As expected, productivity variables such as total pigs born per litter and farrowing rate have the greatest impact on profitability. Therefore, it is imperative to determine expected productivity impacts prior to implementing regulations. Capital costs are not as crucial, because the one-time transition is eventually amortized from the production system.

Market-Level Adjustments

As the transition to group housing drives production costs higher, hog and pork prices are expected to increase. A market supply and demand model, including trade, is used to analyze the market level price/quantity adjustments. Table 2 shows the impacts on consumer and producer surplus, which is a net measure of the price increase and quantity reductions from market response to higher costs of production.

The key implication is that under the most likely scenario (Figure 1, Scenario #2), pork producers lose $1.5 billion dollars, less than half the approximately $3.2 billion they lose if market adjustments are not accounted for. Typically, cost increases in a commodity market are passed on to consumers who bear most of the cost increases. Therefore, the additional cost to consumers is estimated at $5 billion.

Beef and chicken producers benefit because consumers switch to these meats and their prices rise as well. A similar substitution effect occurs for imported pork products, which increase to replace the more expensive domestic pork products. Consequently, regulations to restrict sow housing will place the U.S. pork sector at a competitive disadvantage to other domestic meat sectors and to international pork production if they don't adopt similar standards.

A common argument is that increased animal welfare is demanded by consumers and they will compensate producers for the effort by paying higher prices. As shown, the market alone will not compensate producers; to do so would require an additional 25% increase in consumer willingness to pay for U.S. pork products from sows housed in pens.

The problem is that only a small subset of consumers is actually willing to pay a large difference for animal-friendly practices. Consumers not willing to pay for these practices are essentially taxed by a regulation that mandates costly production practices such as the transition to pen housing.

Policy Implications

Any regulation that mandates transitioning existing stall-based to pen-based housing prior to the end of the useful life of existing facilities will result in increased costs to the pork industry. Ultimately, these costs will be borne by consumers.

These costs can be mitigated by allowing producers to transition barns at the end of their useful life, but even those policies will create structural competitive differences because facility ages vary by region and firm. Producers with older facilities will benefit more, relative to those with newer facilities.

More importantly, regions, including international competitors who do not have such restrictions, will gain even greater relative cost advantage.

Given the results showing the tremendous cost potential of any change in productivity, it should be determined if there are, in fact, no reductions in productivity or sow welfare due to pen housing. Further research — preferably commercial-scale research — is needed which should include an evaluation of the difficult-to-measure management quality implications. We have the potential to significantly reduce sow welfare if pen systems cannot be effectively managed when implemented on an industry-wide basis.

Finally, to reduce costs to consumers and producers, perhaps the best alternative is to develop labeling and certification programs that allow producers and consumers who share concerns about gestation stalls to more effectively participate in market-oriented transactions. This would avoid the aggregate cost impacts of a large-scale, mandatory transition, and allow consumers to target their spending to preferred animal rearing methods and products.

Full Report Posted

To obtain copy of the complete 72-page report, “Economic Impact of Transitioning from Gestation Stalls to Group Housing in the U.S. Pork Industry,” go to the National Hog Farmer web site, www.nationalhogfarmer.com; or contact Brian Buhr, Department of Applied Economics, University of Minnesota, 1994 Buford Ave., St. Paul, MN 55108-6040. Phone (612) 625-0231 or e-mail bbuhr@umn.edu.

Juries Rule Livestock Not Odor Nuisance

The year 2008 may have marked a “turn of the tide” when it comes to nuisance lawsuits filed against Iowa livestock operations, says Eldon McAfee, Des Moines, IA, attorney for Beving, Swanson & Forrest, P.C.

Speaking at the Iowa Pork Congress in Des Moines in late January, he reports that all three Iowa nuisance cases that went to trial this past year turned out in favor of the defendants — the livestock producers.

In one case, a Polk County (Des Moines area) jury found that spreading hog manure was not a nuisance. And the jury rejected a claim by the plantiffs that spreading manure caused permanent brain injury to their daughter.

McAfee says a second case in Cedar County (eastern Iowa), was a very important precedent. A jury not only found that a 100-cow, dry-lot calf operation wasn't an environmental nuisance, but also awarded the defendants $30,000 for “limitation or loss to their cattle business” due to the plantiff's “use of the legal process for an improper purpose.”

The third case involved a hog farmer in Lyon County (northwest Iowa) suing a nearby cattle feedlot for nuisance from odor and effluent runoff. The jury found that the feedlot, runoff basin and center pivot irrigation system were not an odor nuisance.

However, the court did award $40,000 to the plantiff for manure and snow melt runoff from a large 2007 snowstorm, that resulted in runoff from a farm field where solid manure had been applied, being diverted into the plantiff's property and basement.

In a fourth case in Kossuth County (northwest Iowa), a nuisance suit was filed before construction of a hog operation, alleging that a nuisance “will necessarily result” and an injunction should be granted prohibiting construction. The Iowa Supreme Court denied the request.

“These results are very good news for Iowa livestock producers. Although these operations, like all livestock operations, produced some odor, the juries found that they were not a nuisance.”

He declares: “These cases illustrate that it is critical that all livestock producers use odor-reducing management practices to minimize the impact on neighbors.”

Nuisance Protection

Standard farm liability policies normally don't cover nuisance suits against livestock, McAfee says. But the producer should always check with the insurance company and/or his/her attorney for an answer.

Environmental policies are available that provide coverage for claims and the cost of defense in court.

But don't overlook steps to avoid a lawsuit — even if you have nuisance insurance, McAfee adds.

Key features of protection include:

  • Location. Provide proper separation distance between farms when building and allow for prevailing winds.

  • Tree buffers. Complement existing or slower-growing trees by planting fast-growing trees to provide visual screening around your farmstead.

  • Biofilters. A number of commercial or self-designed products can be installed to filter air exhausted from livestock buildings and reduce odor.

  • Clean pigs and buildings. “Research has shown that a lot of odor can come from above the slats, so providing good ventilation keeps pigs comfortable so they are cleaner and produce less odor,” he points out.

  • Manure treatments and additives. Search out products that may be of benefit with manure pit management.

  • Timing of manure pit agitation and application. Plan activities when they have the least impact on neighbors.

Trickle Feeding Fits Sow Housing Remodel

Ten years ago, Sean Dolan and his father, Jim, hooked up with Aaron and Kenny Cook to invest in equal shares of Newton Pork, a 625-sow, breeding-gestation site near Coggon, IA. In 2002, the Cooks built another sow unit and sold their shares to the Dolans.

Like most hog facilities, the Newton Pork operation's gestation stalls and feeding system began to show plenty of wear and tear after a decade of use. The 1997-vintage breeding-gestation barn's cement troughs were leaking and feeding tubes were badly rusted, making feeding more “by guess and by golly” than the individual sow feeding they were designed for. Additionally, Sean felt the 22-in.-wide stalls were too narrow for big sows. “We knew we had to do something,” he relates.

Dolan's search for remodeling options began in earnest in late 2006. A key consideration was their shared finishing capacity for 6,000 pigs — Sean and his brother, Mark, each with a 1,500-head, wean-to-finish barn, and their dad with a 1,000-head nursery that flows pigs to two, 1,000-head finishers and another 1,000-head wean-to-finish barn. All barns are divided into 500-head rooms.

“In January 2007, we moved from continuous farrowing to group farrowing in a two-week rotation because we saw the benefits of having single groups going into the finishers,” Sean explains. Two rooms of 24 crates each are filled every two weeks.

Although he prefers gestation stalls, having sat through numerous meetings of the National Pork Producers Council's animal health and food safety committee and the U.S. Animal Health Association's animal welfare committee, Sean saw some major changes in sow housing coming. “Dad has always instilled in us to try to stay ahead of the curve, so I thought I would get a jump on the pen-style housing,” he explains.

Various group pen configurations and electronic sow feeding were considered. In the end, Sean chose a large pen design with a trickle-feeding system. The extensive remodeling plan was set in motion on June 1, 2007, and what followed was a series of sometimes “hard lessons” that he shares openly in hopes that others might benefit from what he has learned.

Hard Lesson No. 1

The first lesson came with the decision to temporarily move the sow herd into two outside lots. Breeding and feeding challenges ensued, and the penalty for this decision showed up later in the form of much lower farrowing rates.

“The sows were strung out when we moved them back into the gestation barn, so we were behind the eight ball right from the start. Looking back, if we could have found a finisher for temporary sow housing, that might have been better,” Dolan says.

Remodeling Package

The first remodeling challenge was that there were very few trickle-feeding systems installed in the country, so first-hand knowledge about installation and management was hard to come by.

Dolan turned to local equipment and service providers he was familiar with. The first order of business with the large pen design was the ability to identify, track and sort sows easily and effectively. Eastern Iowa Pork (EIP) Mfg., Earlville, IA, had equipped other buildings, and they helped coordinate a package that included the Automatic Gestation System (AGS) manufactured by Schick Enterprises. Automated Production (AP) Systems and Big Dutchman provided feed drops and delivery lines.

Four rows of gestation stalls (448 stalls) were removed. Feed delivery lines, feed drop boxes and controllers were installed. The AGS sorter was positioned over a slotted floor, adjacent to an alleyway that runs the length of the building.

Here's how the system works: Each morning at 6:30, the system automatically turns on the feed delivery augers to fill the adjustable drop boxes with 2.25 lb. of feed. At 7:15, the controller actuates the automatic cable system (like those used for natural ventilation curtains) to raise the drop box balls and engage the starter motors. As the feed drops into the second feed line (below the drop boxes), the auger turns at a rate of 3.5 revolutions/min., slowly moving feed to an offset feed drop tube that delivers feed to an 18-in.-wide concrete slab, divided by 18-in.-long gates anchored at 22-in.-wide increments. The feed drops at the rate of ¼ to ⅓ lb./min. A timer allows the sows 20 minutes to eat. The feeding cycle is repeated in the afternoon, thus allocating 4.5 lb./sow/day.

“One of the reasons for the trickle feeding is sows stay at one (feeding) station,” Dolan explains. “The theory is the sows will realize that they can't get feed any faster by going station-to-station.”

In mid-December, on the advice of John Sonderman, technical service manager for Danbred North America, Dolan moved the feeding times closer together — to 6:45 a.m. and 8:30 a.m. — in hopes that the heavier “boss” sows would load up during the first feeding, giving the more timid sows a better chance of getting the feed they need during the second feed drop.

“I feel the switch has helped,” Dolan says. “The sows seem more content when I walk through during heat checks.”

After sows have eaten, they generally move through a one-way gate into the water court equipped with two, 4-ft. stainless steel water troughs. Then, at their leisure, they will gradually move back through the AGS sorter, their only access back to the feeding and loafing area.

Every sow carries a Destron-Fearing radio frequency identification (RFID) tag. “The tag reader logs each sow when it goes through the sorter and performs a function if one is assigned to a tag,” he explains. “If it is programmed to sort a sow out for farrowing, she will be sorted into the alleyway. Thin or light sows can be sorted to a smaller pen where they receive extra feed.”

The AGS task management feature will also paint sows to be vaccinated or pregnancy-checked, or when they have lost their tag. Sows with unreadable or lost tags are allowed through the sorter, but they are spray-painted a specific color, making them easy to find and retag.

“The sorter times out at about 8 seconds and lets them go through, so they don't disrupt the flow,” he notes.

Dolan's barn has two pens with water courts at the ends. One has 192 feeding spaces, the other 240 feeding spaces. When filled to capacity, square footage per sow drops to about 17.5 sq. ft.

“I think that's too crowded, so we try to keep 165-170 sows in the smaller pen (Parity 0-3) and 200-220 in the larger pen (Parity 4 and above).”

More Hard Lessons

Initially, Dolan was concerned about constantly adding sows to groups. “It seems with a dynamic group in these larger pens, the sows don't fight a whole lot when you introduce new sows,” he says. “The newly weaned sows will fight amongst themselves for a while, but the others don't really bother; they just stay out of the way.”

At weaning, sows are held in stalls until they are bred, then added to the group the next day. “I usually wait a day to be sure they are out of heat. I don't want them riding and hurting themselves or the other sows,” he says.

“I figure if they've been in a farrowing crate for three weeks, then they sit in a gestation stall for another 35 days (post-breeding), they're sitting there for eight weeks without much movement. Then if you put them in a pen and expect them to move around to get food and water, they're likely to be sore for a while,” he adds.

Herd performance numbers suffered as they worked through the sows coming in from the outside lots. He still struggles to hit 80% farrowing rates, but in the summer-fall of 2008, pigs born alive/litter hovered between 11.1-11.4 and weaning average has held between 9.8-10.2 pigs/litter.

Sow mortality rates are nearly twice what they were with gestation stalls, however, rising to 15% at times. “It's mostly feet and leg problems,” he explains.

Sows are walked through a footbath containing copper sulfate as they go to farrowing rooms and as they return to the gestation barn. “That's helped,” he says. “But, you have got to have a dedicated spot for lame sows so they can be treated, because they don't respond well (to treatment) in the big pens.”

In an effort to reduce the number of torn dew claws, Dolan also removed most of a bar that ran down the center of the sorter to prevent sows from lying down there. It has helped.

And, he's reduced the level of distiller's dried grains with solubles fed in gestation diets because manure was building up on slats and making them slicker.

One challenge he didn't anticipate was how group housing has brought out the orneriness in sows. “They are a lot more independent,” he explains. “They are tougher to move. I think it's because in stalls they were limited in where they could go. Now, they are so used to an environment where they go here to eat, walk through the one-way gate to get a drink and walk through the sorter to lie down. Even when we move them from one pen to another, like when they move from the Parity-3 pen to the Parity-4 and higher pen, they will be messed up for a week. They'll try to walk through the sorter to get to the water area — just because it's facing the other way.”

Another big hitch in sow flow is making sure sows don't get jammed up as they move through the sorter. It's important to have breaks in the feeding station rows every so often so sows can move away. “Some sows think they have to lie by the sorter and greet every sow that comes through,” he says.

Gilts are a whole different challenge. They are reluctant to go through the sorter, so they have to be pushed through.

“Some gilts are really timid; they are not used to a big group because most of them have been in a (breeding) stall for a while, so when they get out in a pen and get moving, they fight and get sore. It's a good week before some of them catch on to the sorter and one-way gates to the water court,” he continues.

To help resolve the problem, Dolan has added one-way gates and water courts to the pens in his gilt isolation barn to pre-train them.

Recently, he penned off a section of the large pen and added a water trough for about 30 gilts. “I plan to breed and gestate the gilts in this pen so they are used to eating at the feeding stations,” he explains. The first group were also the first gilts pre-trained to the one-way gates in the isolation unit.

Finally, there's the simple matter of which ear to put the RFID tag. The tag reader in Dolan's sorter is on the left side, so sows are tagged in the left ear.

“Do you know how hard it is for a right-handed guy to tag a sow in the left ear — especially in a large pen?” he asks. “You're always reaching across yourself to put the tag in. We could switch the reader to the other side, but then we'd have to switch all of the tags. It's something to think about.”

Do It Again?

“I thought the trickle-feeding system would be less work,” Dolan admits. “It's not less work; it's just a different kind of work. It's totally different than managing stall-housed sows.

“If I were building a new unit, I might build a different system. But in a remodel, I probably would put this system in. I'd add more solid area and put more breaks in the feeding stall rows so the sows could get away from the sorter more easily.

“I do like the fact that if the sorter goes down, I still have the ability to feed sows. With some other systems, hand feeding is not an option,” he says.

“If you're thinking about making a change, ask a lot of questions, because there's definitely going to be some challenges,” he advises. “It has a steep learning curve.”

One challenge he didn't anticipate was how group housing has brought out the orneriness in sows. “They are a lot more independent,” he explains. “They are tougher to move. I think it's because in stalls they were limited in where they could go. Now, they are so used to an environment where they go here to eat, walk through the one-way gate to get a drink and walk through the sorter to lie down. Even when we move them from one pen to another, like when they move from the Parity-3 pen to the Parity-4 and higher pen, they will be messed up for a week. They'll try to walk through the sorter to get to the water area — just because it's facing the other way.”

Another big hitch in sow flow is making sure sows don't get jammed up as they move through the sorter. It's important to have breaks in the feeding station rows every so often so sows can move away. “Some sows think they have to lie by the sorter and greet every sow that comes through,” he says.

Gilts are a whole different challenge. They are reluctant to go through the sorter, so they have to be pushed through.

“Some gilts are really timid; they are not used to a big group because most of them have been in a (breeding) stall for a while, so when they get out in a pen and get moving, they fight and get sore. It's a good week before some of them catch on to the sorter and one-way gates to the water court,” he continues.

To help resolve the problem, Dolan has added one-way gates and water courts to the pens in his gilt isolation barn to pre-train them.

Recently, he penned off a section of the large pen and added a water trough for about 30 gilts. “I plan to breed and gestate the gilts in this pen so they are used to eating at the feeding stations,” he explains. The first group were also the first gilts pre-trained to the one-way gates in the isolation unit.

Finally, there's the simple matter of which ear to put the RFID tag. The tag reader in Dolan's sorter is on the left side, so sows are tagged in the left ear.

“Do you know how hard it is for a right-handed guy to tag a sow in the left ear — especially in a large pen?” he asks. “You're always reaching across yourself to put the tag in. We could switch the reader to the other side, but then we'd have to switch all of the tags. It's something to think about.”

Do It Again?

“I thought the trickle-feeding system would be less work,” Dolan admits. “It's not less work; it's just a different kind of work. It's totally different than managing stall-housed sows.

“If I were building a new unit, I might build a different system. But in a remodel, I probably would put this system in. I'd add more solid area and put more breaks in the feeding stall rows so the sows could get away from the sorter more easily.

“I do like the fact that if the sorter goes down, I still have the ability to feed sows. With some other systems, hand feeding is not an option,” he says.

“If you're thinking about making a change, ask a lot of questions, because there's definitely going to be some challenges,” he advises. “It has a steep learning curve.”

Getting a Start in the Hog Business

To help job seekers get started on a successful career in the pork industry, the Pork Checkoff has created new Web tools designed to help potential employees better understand the skills, knowledge and experience required.

“It's important to recruit good employees for our industry, and pork producers have requested new resources to help meet this goal,” reports Stacy Revels, a project coordinator for the National Pork Board.

In response to producers' requests, the Pork Checkoff recently launched the Careers in Pork Production site on Pork.org at www.pork.org/Careers/.

The site, which includes links in the “Resources” tab for job postings, also includes an organizational chart to provide an overview of the vast array of the available jobs in pork production. These include production-managers, human resources, accounting, environment, logistics, nutrition, marketing/communications and purchasing/facilities.

Fix These Costly Ventilation Mistakes

In the pork industry, there are few “benchmarks” available for comparison of energy expenses by the swine enterprise. Most producers, facility managers and contract growers attempt to manage this expense by making ventilation system management decisions that impact not only the pig's environment, but the resultant consumption of electricity and propane.

The key to management of energy expenses lies in the selection and control of the ventilation equipment. In my work with pork production systems, the four mistakes I most commonly see are:

  • Incorrectly sized, minimum-ventilation fans;

  • Mistake # 1 - Incorrectly sized, minimum-ventilation fans

    Incorrectly managed, variable-speed fans for minimum ventilation;

  • Incorrectly sized heaters; and

  • Incorrect ventilation controller settings for furnaces and variable-speed fans.

Heat loss of production units occurs via the ventilation system (air exchange) and via the building shell (insulation). A common obstacle to effective management of propane expense is a lack of knowledge about the ventilation system capacities in the facility vs. the estimated requirements for moisture control.

The Midwest Plan Service recommendations for minimum-ventilation rates in cold weather are listed in Table 1. These rates are designed to remove the moisture produced by pigs and their associated activities.

While many producers can recite the values in Table 1, they often cannot translate these values into capacities associated with their production facilities.

Table 2 lists approximate fan capacities for fan sizes often associated with minimum-ventilation fans. Note that Table 2 is an approximation, as specific fan performance is influenced by fan housing design, blade design and other items such as shutters, deflection hoods and discharge cones.

Specific fan performance details are available from the University of Illinois BESS Labs testing results (www.bess.uiuc.edu) and the performance estimates of specific fans from manufacturers.

Farrowing rooms are most commonly the victims of incorrectly sized, minimum-ventilation fans. This is because of the relatively low ventilation rate required for very cold weather.

At 20 cfm (cubic feet/minute) per crate, in cold weather, a 24-crate farrowing room only needs an estimated 480 cfm of fan capacity to maintain humidity levels. Many farrowing sites that I have visited have 14-in. or 16-in. diameter fans installed as the minimum-ventilation fan. Fans of this size often have estimated capacities of 2,000-2,500 cfm. To obtain 480-500 cfm, these fans must operate at 25% of their estimated capacity. Slowing variable-speed fans to this very low percentage of capacity almost always results in fans stalling, or at best, operating very poorly. As a consequence, managers often operate these fans at speeds — 1,000 cfm or higher — for minimum-ventilation rates.

Mistake # 2 - Incorrectly managed, variable-speed fans

The net consequence of this “small” error in fan sizing is that heat loss from the ventilation system goes from an estimated 540 Btu/hr/°F to 1,080 Btu/hr/°F. This change in rate of heat loss means the furnace must come on to provide supplemental heat when the outside air temperature is approximately 10°F warmer than when the ventilation rate is correct.

If the farrowing room is maintained at 70°F, and the outside air temperature is 20°F, this mistake in ventilation rate is the equivalent of 27,000 Btu of extra energy consumption. If unvented propane furnaces are used as the supplemental heat source in the farrowing facility, this amounts to almost 7.5 gal. of extra propane usage per day.

At one site I worked with this past summer, the over-sizing of farrowing room minimum-ventilation fans, and their associated inadequate minimum speed settings, resulted in propane expenses for the past three winters that were equal to facilities in the same production system having twice as many females in inventory.

Mistake # 2 - Incorrectly managed, variable-speed fans

This mistake happens in all types of facilities. I recently visited a breed-to-wean site where the manager was told by the builder that the 16-in. minimum-ventilation fan should operate at 100% speed for each of the 24-crate farrowing rooms. As installed, the fans were rated at 2,500 cfm (104 cfm/crate), which is more than four times the recommended minimum rate.

While the moisture levels in the farrowing rooms were very good, the complaint was a very high propane expense relative to other units.

Many producers assume that the minimum speed setting in their ventilation controllers correlates to the relative ventilation rate for the fans connected to the controller. This may or may not occur. Variable-speed fan output is controlled in most controllers by changing the amount of voltage sent to the fan motor. Fan motors respond to voltage by changing their rpms, which is directly related to their cfm rate.

Each brand and size of motor has a specific response function to voltage. As a general rule, small fan motors respond within a narrow range of voltages, while larger fan motors respond over a wider range of voltages. That is, small motors (common to 12-in. and 14-in. fans) often increase rpms in relatively large increments when voltage changes as little as 2-3 volts in a 230-volt system. These fans often go from minimum speed to almost maximum speed as voltage signals change from 100 volts to 140 volts. On the other hand, motors typically installed in 24-in. fans often go from minimum speed to almost maximum speed as voltage signals change from 120 volts to 210 volts.

To compensate for this dramatic difference in fan motor response, many controllers have user-selectable “motor curves” installed. The purpose of the curve is to allow the user to tell the controller how to “talk” to the variable-speed fan to maximize the response of the fan over the desired operating range.

For example, one curve might send a voltage signal of 154 volts, while another curve may send a signal of only 96 volts at the same minimum speed setting with the controller reading 50% minimum speed for both curves.

Users of variable-speed fans should also recognize that 50% motor speed does not translate into 50% of the estimated fan ventilation capacity. A good rule of thumb is that 65% motor speed equates to 50% of fan capacity.

Mistake # 3 - Incorrectly sized heaters

No one wants to have a facility with heaters that can't keep up on the coldest day of the year, stocked with the smallest pigs. In addition, large-capacity furnaces are often priced very similar to smaller furnaces. As a consequence, the furnaces installed in many facilities are over-sized. The net effect is very short run times, with rapid fluctuations in temperatures as the furnace(s) operate.

A correctly sized furnace is one that just turns off on the coldest day of the year with the ventilation system operating correctly. As long as the furnace shuts off occasionally, it is putting out sufficient heat.

A common mistake with furnaces is to install two, 250,000-Btu furnaces in a 1,000-head nursery room. In these rooms, it is not uncommon for the air temperature to fluctuate 5-8°F with every furnace on/off cycle. In addition, the very rapid rise in air temperature associated with the furnaces cycling often results in the ventilation system increasing the ventilation rate, which leads to Mistake #4.

Mistake # 4 - Controller settings

A sure way to increase propane expense is to have the variable-speed fan increase the ventilation rate every time the propane furnace cycles on/off. To illustrate how much this can cost, see Figure 1.

Figure 1 plots the furnace run time (minutes/hour) for a 1,200-head, wean-to-finish room a few days after the pigs were placed into the facility. In addition to three, 250,000-Btu direct-fired propane furnaces, the pens were equipped with propane-fired infrared brooders located in the sleeping zone of each pen.

In the morning, after every furnace run cycle, the variable-speed fans on Stage 1 minimum ventilation increased their speed, effectively increasing the ventilation rate to the room. During this period, the controller was set to turn the furnaces off when air temperature was 1°F below the set point, with the minimum-speed fans increasing speed whenever air temperature was 0.1°F above set point.

At noon, I reset the controller to have the furnaces turn off at 1.5°F below the set point. For the remainder of the day, the run time of the direct-fired propane furnaces was 0 minutes.

The net result of changing the furnace off temperature setting by 0.5°F in this facility was a savings of $4.50/furnace/day in propane when propane was priced at $1.20/gal.

In general, furnaces should be set to turn off at 2°F below the set point temperature of a facility. If the variable-speed fans still occasionally operate after the furnaces cycle on/off, this should be increased. Variable-speed fans should never increase speed following a furnace heat cycle, as variable-speed fan increases are designed to remove heat, causing the furnace to cycle on/off sooner.

Feed Focus is a Balancing Act

With 195,000 pigs on feed, and the majority of them being fed out in wean-to-finish barns, it's no wonder Dykhuis Farms' Brandon Hill is a stickler for details when it comes to swine nutrition.

Hill is finishing production manager for this Holland, MI-based hog operation, and with a master's degree in swine nutrition from Purdue University, he's also in charge of diet modifications and monitoring for pigs, and the 20,000 sows in the farrow-to-finish operation.

Balancing ration costs and performance starts with an older weaned pig, he asserts. By weaning a 21- to 24 day-old pig, Dykhuis Farms has been able to eliminate the first starter diet, and in the process, observe that the 15- to 17-lb. pigs flourish.

“We have seen a 0.05-lb. difference in average daily gain, or a 14-lb. increase in total live weight gain between a 11-lb. earlier-weaned pig vs. an older weaned pig,” Hill states.

“Certainly, you have more cost in your sow facilities by putting more (farrowing) crates in, but we think the payback there on pig performance and the elimination of early diet costs makes it easy to justify,” he says.

Weaned pigs still receive some milk products, fishmeal, etc. in the second diet, but of less duration and cost than if they were fed the first starter diet ($650/ton vs. $1,000/ton).

Pushing By-Products

At Dykhuis Farms, the high cost of corn-soy diets has spurred use of by-product ingredients. Depending on availability and price, rations may include up to 40% by-products.

The “big three” by-products consistently fed to wean-to-finish pigs are distiller's dried grains with solubles (DDGS), wheat middlings and bakery products, Hill relates.

DDGS inclusion rates start at 10% in the late nursery, ramp up to 15% in early grow-finish, then bump up to 25% in mid-finishing (140-220 lb.) before dropping back down to 15% in late finishing. Feed flowability can be an issue when it is hot and humid.

With Kellogg's (cereal manufacturer) just to the east in the Battle Creek/Kalamazoo, MI, area, wheat middlings from flour and bakery products provide good sources of alternative ingredients. Wheat midds can replace up to 15% of the ration if priced right, he says.

Meat and bone meal is a fourth by-product fed in nursery and early grow-finish, providing a great source of available phosphorus and protein.

To replace the energy provided by corn in the diet, there is no substitute better than liquid fat, even though price has quadrupled in the last few years, according to Hill.

“The energy density of diets must be balanced in relation to the expected return on investment in improved feed conversion and the corn-to-fat price ratio,” he says. Some producers in Michigan have substituted pet food, but Hill says he hasn't tried it yet.

Alternative Sow Feed

As Michigan is a large dairy state, with numerous creameries near Dykhuis Farms, sows are routinely fed the equivalent of 1.25 lb. dry matter as liquid whey or yogurt. It cuts feed costs while providing a good source of protein, phosphorus and calcium, Hill says.

Sows not on liquid whey - lactating sows and gilts - are fed 80 lb. of meat and bone meal that reduce costs $1.50/ton, while providing complete replacement for inorganic phosphate in the diet.

Sows are fed up to 20% DDGS in gestation and 5% DDGS in lactation diets without an apparent reduction in feed intake, he notes.

Besides flowability, the other main issue with DDGS is mycotoxin contamination, but Hill says staff monitors toxicity levels closely.

Available phosphorus inclusion has been reduced by a tenth, from 0.55 to 0.45%, lowering manure phosphorus levels and cost in sow diets.

Hill adds: “We will continue to evaluate this level and potentially reduce it again if we are comfortable, because there simply has not been enough good research completed in the industry to know exactly where we can take this.”

Along with that, adding almost 500 phytase units/lb. of feed vs. 250 units/lb. of feed in sow diets can save about $2/ton of feed, depending on ingredient pricing.

Supplements Adjusted

Three supplements have been pulled or cut back from sow rations. High levels of zinc were used in gilt development for feet and legs, “but the data just isn't there to say the results are conclusive,” he says. Data was also somewhat inconclusive for chromium. Biotin inclusion was reduced but not eliminated. “We left in a little bit for sows in pen gestation just because there are potentially more feet/hoof issues,” he notes.

All of those reductions in nutritional ingredients and supplements add up. “We've gone from a conventional corn-soy diet a few years ago at 1,500 lb. of corn/ton of feed, to about 900 lb. of corn/ton of feed on average in the finishing period,” Hill says.

Similar adjustments have been made on soybean meal as rations have been ratcheted down, lowering crude protein and replacing amino acids with synthetic amino acids for a $4/ton savings. For mid- to late-finishing, soybean meal has been reduced from around 325 lb./ton of feed down to 150 lb./ton of feed.

“You can achieve that reduction by adding synthetic amino acids, lysine, threonine and methionine to balance that reduction in crude protein. Our goal is to maintain performance while lowering our feed costs, and we have been able to do that to this point,” Hill declares.

Overall, he estimates that hundreds of thousands of dollars are being saved annually by using alternative feed ingredients and making ration changes.

Feed Additives

The only antimicrobial routinely used in grow-finish diets is Stafac (Phibro Animal Health); injectable antibiotics are used for spot treatment.

Paylean (ractopamine), the growth-enhancing feed additive from Elanco Animal Health, is one product Hill says should remain in finishing pig diets.

“We use Paylean to boost efficiency and gain on all of our production because research has proven it works time and time again in university and in-house trials. We see an advantage in feed efficiency, average daily gain and in carcass performance. However, as with any feed additive, you must continually evaluate if it is paying for itself,” he emphasizes.

Feed Quality, Management

Micron size is a huge issue when dealing with costly corn and six different toll mill partners for contract growers in Indiana and Michigan. Toll millers are contacted biweekly to assure micron size is being met.

“We are shooting for 550 to 650 microns with a 2.3 or lower standard deviation. Standard deviation is as important as the micron size, because you can have a micron size of 600, but if the standard deviation is say 3.5 or higher, a large portion of that feed could be 1,200 microns and some of it could be 400 microns,” Hill explains.

Feeder adjustment has been a big focus. Dykhuis Farms uses exclusively wet-dry tube feeders from Thorp Equipment because they adjust more closely than a dry feeder and are easier to monitor.

Barn Flow

Dykhuis Farms operates four pig flows that are commingled in order to fill large sites quickly. Keys to making that work include no more than a week's difference in age, similar health status and all-in, all-out production flow.

“If we identify a PRRS (porcine reproductive and respiratory syndrome)-positive flow, then we will try to segregate those pigs into their own flow if finishing space allows,” Hill notes. Small weaned pigs, under 8 lb., are segregated to a separate, small pig flow.

Pig placements are overstocked to decrease facility costs. The 1,000-head barns are traditionally stocked at close to 1,070 head, but sometimes at 1,150 head if space demand is great. Overstocking by 15% has not impacted average daily gain as long as the first cut of market hogs is done earlier — at 265-270 lb. — instead of their traditional market weight of around 280 lb.

Proof in Performance

Hill stresses good growers are carefully recruited and strongly retained. Dykhuis Farms gets plenty of calls from potential growers, because farmers want the valuable manure from the pigs.

But he says they are “picky,” choosing to rely mostly on references from existing growers and evaluating the true motives for building a facility.

Existing growers are prized and hopefully emulated. “We tell all of our guys how our first grower, who started in 1994, has taken immaculate care of his buildings, and we've signed him on for another five-year contract,” he says.

Each grower provides a quad building (four rooms of 1,000 head), labor and land for manure application, and Dykhuis Farms provides regular consulting and marketing services, veterinary care and feed.

Weaned pigs are hauled to growers in Indiana and southern Michigan in two specially designed, four-deck trailers. Each holds 2,200-2,300 pigs, saving labor and fuel.

Technical service staff visits all barns in the system once a week. They are highly trained to identify problems and post pigs. “Our field staff are stockmen and husbandry people who are dedicated and a huge value to this company,” Hill says.

Hill credits the team of field service technicians and dedicated growers for playing a vital role in the success of wean-to-finish performance with average daily gain reaching 1.85 lb./day and barn closeouts hitting 4% or less death loss.