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Articles from 2002 In August

Kennedy Group Loses Lawsuit

A federal court judge in Tampa, FL, has dismissed a major environmental lawsuit against Smithfield Foods, Inc. filed by a coalition of lawyers for Robert F. Kennedy, Jr., and his group, the Waterkeeper Alliance.

In a series of news conferences during 2001, Kennedy announced plans to use this and other lawsuits as a means of “shutting down Smithfield's farm operations.”

Instead, U.S. District Judge Elizabeth Kovachevich dismissed the million-dollar lawsuit and ordered the plaintiff's attorneys to pay attorneys fees and costs.

For more information, visit

Customized Program Manages Pork Profits

Usually, pork producers excel at production. Seldom do they take the same amount of time or resources to track and manage their operation's overall profitability.

They often find themselves at the mercy of suppliers or packers with little room to negotiate their financial position.

Financial Planning Help

Perry Iverson and Gordon Malarkey are the managing directors of Commodity & Ingredient Hedging (CIH), LLC, an agricultural consulting and training company. Its aim is to help commercial agricultural companies better manage the costs and values of their operations.

The pair and their team of advisors customize price management programs for over 100 domestic and international agricultural enterprises from crop producers and feed mills to livestock producers and food companies.

The Chicago firm added a new focus after the fourth quarter of '98, due to the incredible erosion in hog values and the distortion in relationships between producers and packers, explains Malarkey.

He recalls one pork producer client who called to complain he was losing money. Granted, hog revenues were very depressed in the late '90s. But when Malarkey calculated all of the producer's revenue streams, overall, he had still maintained a net profit margin on the operation — he just didn't know it!

That kind of experience made the company realize the need for producers to be able to easily see the true net revenue profile of their hog operations, says Malarkey. CIH developed the Profit Margin Management Service to help pork producers deal with uncertain market conditions. The unique service allows producers to identify their own profit margin using actual or expected input costs and hog revenues.

The four-pronged service features:

  • An easy-to-use spreadsheet calculator to identify and project your profit margin several months ahead and compare results with past performance. CIH typically compares results with performance from up to a decade ago, says Iverson.

  • An evaluation of various contract choices to best manage profit margins.

  • One-on-one consultation in a weekly conference call to review production figures, to ensure their accuracy and increase confidence in making contracting choices, and

  • A worksheet e-mailed once a week that allows the producer to assess and manage his/her net profit margin based on actual and projected corn and soybean meal needs, other feed and non-feed costs, production levels and expected hog basis or minimum return, explains Iverson. The net margin is simply the difference between the revenue generated from hog sales, including all premiums, and total costs for feed and other expenses, says Iverson.

Projected costs and potential revenues are developed using the futures market to set prices for feed inputs and hog sales.

“To develop a producer's unrealized profit margin four quarters out, we use a projected hog basis that could be based on a historical average for the last few years,” he says.

Producer Application

DeKalb, IL, pork producer Bob Johnson has used the services of CIH for 18 months, since they started the Profit Margin Management Service for pork producers.

The service uses a software spreadsheet to take the cost structure data supplied by Johnson Farms and provides weekly e-mailed worksheet reports. “Those reports show (project) how much we can make each quarter, during the current and subsequent three quarters, and how it compares with the past 10 years,” notes Johnson.

“Since its inception, we have used the service's worksheets as a decision-making tool to help us decide to establish hedge and option protection for a portion of our production,” says Johnson, co-owner of Johnson Farms, a 1,200-sow, farrow-to-finish operation.

For example, he says, the hog operation protected just under 50% of its first and second quarter 2002 margin last November and December using an options strategy.

“This strategy did provide $6 per carcass cwt. of downside protection in our margins, which helped this spring (when cash hog prices plummeted),” observes Johnson.

Johnson Farms sells hogs to Hormel on a spot market formula, not on a long-term contract.

Johnson points out that the worksheets are only a tool to use at decision time. “A producer still needs to evaluate his/her own situation and risk-taking capabilities when making marketing decisions.”

However, Johnson adds, the worksheets do help make “the bottom line impact of potential marketing decisions much easier to understand.”

He observes, “It's a way to look at the big picture and what ways are available to lock in profit margins.”

CIH's Malarkey emphasizes that each weekly report (worksheet) provides updated information on current and projected margin or worth of an operation. That kind of information can be helpful in identifying the best time to book corn and/or soybean meal orders and when to pull the trigger on hog sales and arranging contracts with suppliers or packers.

Iverson says CIH analysts spend a lot of time with clients going over buying and selling alternatives that provide floors or partial protection for producers hesitant to fully commit to their buying or selling decisions.

For more information on how to obtain a customized commodity price management program for your operation, call CIH at (312) 347-5103 or toll-free 800-241-5498. E-mail or log on to their Web site,

Insurance for Low Markets

Pork producers in Iowa have two new revenue insurance plans available to provide protection against market price risks.

Both new products, introduced July 8, are pilot project spin-offs of the Federal Crop Insurance Program. They include the Livestock Gross Margin (LGM) and the Livestock Risk Protection (LRP) programs, according to the Iowa Pork Producers Association (IPPA).

Two Different Plans

The revenue insured under LGM is actually the return over feed costs. The guarantee is based on projections for three variables — prices for market hogs, corn and soybeans — the most important determinants of gross margin that are beyond the producer's control, says an IPPA report.

Producers will be paid when the actual gross margin is less than the guaranteed value.

IPPA reports that producers who purchase all or most of their feed will achieve the most risk reduction with LGM.

LRP protects against unexpected declines in hog prices. Coverage levels are based on the expected cash lean hog price using the Chicago Mercantile Exchange lean hog contracts. Five guarantee levels are offered in $2 increments. Coverage levels can be fixed for 90, 120, 150 or 180 days into the future.

Producers who depend on the cash hog market, or a formula based on it to sell their hogs, can use LRP insurance.

Unlike some marketing contracts, neither LGM nor LRP ties the producer to a specific packer.

Livestock revenue insurance policies don't create profit, since coverage levels are tied to current futures contract prices. However, they do protect against unexpected drops in the cash hog market.

For more information on LGM, call (712) 325-5721 or Iowa Farm Bureau Mutual Insurance (515) 225-5543. LRP information is at (515) 254-0400 or (877) 585-6285 or by contacting American Agri-Business Insurance Company at or

Also call Iowa State University extension economist William Edwards at (515) 294-6161 or e-mail him at [email protected].

Carthage Swine Conference

The 12th annual Carthage Veterinary Service Swine Conference is Aug. 28 at Western Illinois University, Macomb, IL.

Topics include porcine reproductive and respiratory syndrome, biosecurity, parity flow for disease management, diagnostics, group size dynamics, automatic sorting technology, feeding Paylean and increasing preweaning survival.

For registration, call (217) 357-2811, fax (217) 357-6665 or e-mail [email protected] or visit their Web site,

Oregon Stall Ban Defeated

Activists in Oregon seeking to make it illegal to use gestation stalls or tethers that prevent pigs from turning around, lost their battle to add a ballot initiative in the November election.

Activists needed 66,786 signatures by July 2, but fell short of achieving that mark, says Tim Breeding, president of the Oregon Pork Producers Association.

Smithfield Contests Iowa Law

Smithfield Foods, Inc. has filed suit in federal district court in Des Moines, IA, charging that portions of Iowa's law prohibiting packer control of pork production is unconstitutional.

Smithfield is joined in the suit by Murphy Farms, LLC and Prestage-Stoecker Farms, Inc.

During its legislative session this year, the Iowa General Assembly amended state code. Effective July 1, 2004, vertical integration is legal only for Iowa cooperative associations or for other cooperative associations with links to Iowa. Penalties are set at $25,000 per day.

Iowa Attorney General Tom Miller stressed his office will strongly defend the state statute. “Two successive General Assemblies took action to amend and strengthen Iowa law regulating corporate farming. The purpose of the law stated by the legislature is to preserve free and private enterprise, prevent monopoly and protect consumers.”

New Sow Feeding System

The first U.S. test of an automated feeding system that eliminates the need for crating pregnant sows will be done at Texas Tech University by animal scientist John J. McGlone.

“Trickle feeding” allows sows to be kept in social groups of five in open pens. The concept is used in Europe, where gestation crates are being phased out.

The new feeding system promises to protect sows from competition for food, but without animal isolation. It uses a string of feed hoppers and dispensers that deliver feed to individual sows at the speed of the slowest eater, according to USDA's Agricultural Research Service, partner in the project along with Automated Production Systems, Inc., Assumption, IL.

Risk Reduction Plan Stabilizes Herd Immunity

Five-year-old Pro-Net Farms Inc., a 2,400-sow, farrow-to-wean producer alliance in northern Iowa, endured a roller coaster ride of reoccurring bouts of porcine reproductive and respiratory syndrome (PRRS) for much of its early existence.

That experience produced a legacy of mediocre production, high sow mortality and a demoralized staff, states Tim Klein, DVM, South Central Vet Associates, Wells, MN.

To conserve funds and revive production, Klein and his clinic's South Central Management Services (SCMS), along with the 10 absentee producer-owners, decided against expensive and risky depopulation-repopulation. SCMS provides management consulting services across Iowa and Minnesota.

Instead, the team chose to embark on a fairly unusual and difficult alternative on large, absentee-owned operations — setting up an internal multiplication breeding scheme. They also doubled isolation/acclimation (I/A) to four months and strengthened biosecurity.

Their plan has produced fairly solid production figures in the last 18 months, while stabilizing herd health for PRRS, says Klein. Farrowing rates are averaging 80% and pigs/mated female/year is at 20 (Figures 1-2). Pigs/farrowing crate/year has been running about 160 for over a year. Pigs born alive/litter reached a high of 10.5 early this year; pigs weaned/sow is averaging about 8.2/litter. Preweaning mortality has dropped significantly, but still hovers near the industry average of 14%.

By far the most impressive figure is the reduction in sow mortality to about 8% (Figure 3), says Klein. This has helped turn over the herd faster.

Pro-Net is a farrow-to-wean system in which the owners receive 15- to 18-day-old pigs to grow out in their own barns. All of the owners live by the Pro-Net site at Stacyville, IA, along the Minnesota-Iowa border.

Risk Reduction Plan Reviewed

The first step to achieving better production was replacement of the 60-day I/A program in the fourth quarter of 1999, relates Klein. It was a standard I/A program with mature gilts housed in an off-site facility, exposed to cull sows and fed back afterbirth and feces.

The question wasn't whether it was an effective I/A program, but whether it was long enough. It was expanded to isolate gilts from 40 lb. to adult weight — roughly four to five months.

From 2000 to early 2001, Pro-Net still suffered through periodic bouts of PRRS, resulting from its genetic supplier multi-sourcing replacement stock and forcing the farm to return periodically to 60-day isolation.

Performance rebounded by early 2001 as single sourcing of gilts returned and the farm resumed isolation of 40-lb. gilts.

Internal Multiplication

But according to Klein, it was decided the best way to maintain single sourcing of genetics was to raise gilts internally, which would also lower genetic costs. In early estimates, the new genetics can shave $1-3/pig off production costs.

With a steady supply of replacement females being produced right on the farm, isolation has actually been extended, with gilts being isolated as young as weaned pigs to ensure that all breeding animals build the same immunity, says Klein.

Gilts are initially selected as replacements at birth, with additional selection cuts made at 50 and 180 lb., adds Steve Hargis, SCMS production supervisor.

“You have to understand that an internal multiplication program means that you've got three breeding herds instead of one,” explains Hargis. One herd is the existing herd of sows (parents) that makes terminal pigs to market. The second herd is the herd of sows (grandparents) that makes the sows that make the terminal pigs. The third herd is a very small number that are the pure lines (great-grandparents or GGPs) needed to make the grandparents (GPs).

For the new breeding program, producer-owners decided to switch genetics to what is now known as Seghersnewsham Genetics, LLC to restock the operation, says Hargis. Herd rollover is about 50% complete, to be done in the fall of 2003.

The farm will produce 1,440 replacement females each year. About 65% of the parents will be replaced annually, along with 100% of the GGPs and 80% of the GPs.

Klein and Hargis stress there is a lot at stake in keeping track of all three herds. Hargis helps the farm with detailed recordkeeping and identification, with the goal of having an on-farm system that assures the staff person with the least experience can always breed the right sow with the right semen. All replacement females are tagged in each ear in case one tag gets lost. Hargis devised a unique color code identification system for breeding that matches dyed semen and colored ear tags of females. The dyed, PRRS-negative semen is provided by Genes Diffusion, a Seghersnewsham boar stud in Wisconsin.

For identification at Pro-Net, a pink tag represents GGPs; a blue tag, GPs; a green tag, original Seghersnewsham parent stock; and red tags, GGPs selected for grandparent replacements.

For mating of the GGPs, the 12-13% of the total sow herd (nucleus) bred to produce only twice a year, staff added another layer of assurance. They put Sprayola paint on the backs of the animals that correspond with the color of semen and ear tags, points out Hargis.

Klein and Hargis have seen that the identification plan makes this breeding program practically fool-proof, ensuring accurate breeding, even on weekends.

There is a safety check for the breeding system, says Hargis. For the parent lines that are made from the GPs (blue ear tags and blue dyed semen), matings are done every four weeks. “The week after the matings are supposed to happen, I run a PigCHAMP report that breaks down the breeding schedule. It enables me to ensure that the right sows got bred to the right semen. If there was a mistake where we didn't get enough females bred, or we bred the wrong match, I've got a seven-day window where I can correct it,” he says.

Producing 25 gilts a week provides a steady flow of replacements to meet breeding targets, while providing ample opportunity to make voluntary culls, states Hargis. That has helped reduce sow mortality over time.

At SCMS's request, Seghersnewsham Genetics staff have conducted periodic audits to ensure the internal multiplication breeding program is on track. Comments have been very positive, says Hargis.

PRRS Vaccination

For two years now, a modified live virus PRRS vaccine has been used. Replacement gilts are vaccinated twice, once in the grower and again in the finisher two to four weeks prior to entry into the sow farm. Every 13 to 14 weeks, all sows on the farm are revaccinated for PRRS, he says.

“The whole goal is to have a continuous, similar level of immunity to at least one PRRS virus — the one in the vaccine — with the hope that if we can get this immunity across the whole sow herd internally, we can get whatever benefit of cross-strain immunity there is when a new strain makes its way into the operation,” suggests Klein.

“There aren't any guarantees that gilts won't get PRRS,” says Glen Zubrod, producer-owner and president of the board. “But at least now our gilts will be acclimated to whatever we have.”

To prevent transfer of the PRRS virus by needles (cited in recent University of Minnesota research by Scott Dee, DVM), needles are changed after each sow injection and also after each litter is vaccinated, notes Klein.

“We are trying to immediately apply proven scientific research, in this case that needles are implicated in the spread of the PRRS virus.

“Again, PRRS reduction is a multi-piece puzzle, and we feel that avoiding needle transfer is a piece worth addressing, and it has worked very successfully,” he says.


With PRRS circulating in the area, biosecurity at Pro-Net is very tight. Farm traffic is virtually limited to employees, the veterinarian and the owners. Visitors must be approved by the unit manager, SCMS or the producer board.

A key biosecurity barrier is a large floor mat in the office hallway which separates the “dirty” area from the “clean” entry area to the showers. Outside shoes must be placed in a shoebox before stepping onto the floor mat on the way to the showers. The goal is to reduce debris being carried into the showers from “dirty” areas.

The farm has six shower-in, shower-out stalls for employees. A seventh shower stall has been converted into a sprayer system for use as a disinfectant chamber. Based on another recent University of Minnesota study that suggests the PRRS virus may be carried on objects, the exterior surfaces of all packages that come into the farm are thoroughly disinfected. Scott Dee's Minn-esota research suggests the bottom of the package that comes into contact with floors or other surfaces is especially at risk for contamination, comments Klein.

Disease Symptoms Reduced

Hargis says the use of a number of management tools at Pro-Net has led to successful control of PRRS. The virus has not been detected in the operation, based on Klein's periodic testing of a representative sample of nursery pigs and testing of the sow herd 4-6 times a year.

Secondary diseases have also been reduced, says farm manager Harry Wallem. Haemophilus parasuis, Pas-teurella multocida and Mycoplasmal pneumonia are all much less of a problem.

Some E. coli scours occurred in baby pigs early in 2001 after the change in genetics. Regular feedback of farrowing house manure to sows before farrowing has effectively reduced the problem, says Klein. Feedback should occur at three and five weeks pre-farrowing, fed for three days consecutively.


Despite all the effort that has been expended to control PRRS, veterinarian Klein remains a realist. He believes it is only a matter of time before another strain of the virus comes calling on Pro-Net's PRRS-positive herd. He just hopes that when it does, all the programs that have been developed are enough to keep it at bay.

That outcome will ultimately be decided by staff, which so far has admirably met the challenge, agree Hargis and Klein.

Farm manager Wallem says workers remember all too well the production shortfalls, missed bonuses and the sharp blows to morale caused by repeated breaks with PRRS. He is confident staff will take the steps needed to avoid a return to the past.

PIC Sells Pigtales

PIC USA has sold its Pigtales North American swine recordkeeping business to PigCHAMP, a division of Ltd.

Pigtales software includes Instant Data System, Pigtales Production Manager, PigCare Standard and Analyzer packages.

“Our organization is extremely excited about providing these complementary software offerings to PigCHAMP customers,” reports David Farnum, vice president and general manager of PigCHAMP.

High Court Backs State Law

The North Carolina Supreme Court has unanimously ruled that state law preempts attempts by counties to further regulate the swine industry.

The high court's opinion, written by Chief Justice Beverly Lake, states that “…the Swine Farm Siting Act and the Animal Waste Management Systems statutes are so comprehensive in scope that the General Assembly must have intended that they comprise a ‘complete and integrated regulatory scheme’ on a statewide basis, thus leaving no room for further local regulation.”

The ruling was based on a 1998 suit filed by a hog farmer and the Chatham County Agribusiness Counsel against the county, questioning the legality of certain ordinances enacted to regulate hog farms.

Walls Built Fast to Last

In the swine business, speed usually means turns per year, driven by faster growth or improved conception. To the progressive Forest River Hutterite Community of Fordville, ND, the term is related to the pace of new building construction and the new technology behind it.

Located in the northeast corner of North Dakota, less than 50 miles from Manitoba, the Forest River Community (FRC) watched the Canadian swine industry boom in the last five years, including expansion of Hutterite pork production. What intrigued the livestock managers of Forest River most about new facility growth up north was the ability to get buildings up fast — with quality that would last.

Paul Maendel, general manager at FRC, and swine managers Wayne and Daniel Maendel, got first-hand knowledge of the wall system technology by viewing swine facilities in Alberta and talking with dealer Ed Dornn of Excel Construction in Manitoba. That connection led them to a Woodbridge, Ontario company called Royal Building Systems (RBS).

In 1970, RBS began manufacturing rigid extruded polymer components that serve as the finished formwork for a variety of concrete walls, including bearing, non-bearing, retaining and foundation applications — initially sold for building homes, medical centers, apartment buildings, schools and more.

“In the mid-1990s we realized this technology had a good fit into the agricultural market and have since built several hundred swine facilities in Canada and the northern U.S.,” says Chris Jones, agricultural specialist for RBS. “We've built everything — from farrowing barns to wean-to-finish to farrow-to-finish facilities.”

The quick-and-simple assembly of durable, relatively maintenance-free walls is attractive to pork producers. “The vinyl resin we use can withstand any abuse — whether it's from animals, chemical cleaners, urine or manure. Our walls are airtight, eliminating rodent problems and the damage/diseases they can cause. Plus, we offer forms with injected insulation that have R-Values of R22 for cold climates to R37 for hot climates,” Jones explains.

Mechanical Ventilation

Total mechanically ventilated swine buildings are still uncommon here in the U.S., says Larry Jacobson, extension agricultural engineer, University of Minnesota. “The only mechanically ventilated barns now are sow units. In the last 10 years, the open-wall curtain barn (grow-finish) has been the norm, basically because of economics and a desire to not mechanically ventilate. But all these building types have advantages and disadvantages,” he says.

“I examined this type of wall technology in some Canadian swine facilities several years ago, and it makes a lot of sense,” he continues. “It is ideal for keeping rodents out, there's no corrosion, and they should last longer, perhaps up to 20 years — or double the current longevity of post-frame swine units.”

Two challenges with mechanically ventilated buildings are materials cost and the ability to move enough air in the summer to get rid of the heat. But new technology has helped improve summer cooling, and building longevity is helping reduce overall building costs per animal, Jacobson adds.

Paul Maendel has been very pleased with the roof ventilation so far. “At full capacity, even with the outside temperature at 108° F. recently, our computer-controlled ventilation is doing its job of getting the humidity out and keeping the inside air at 89° F. Drippers are keeping the sows cool and content,” he says. “We've also allowed more space per sow, designing in 1 sq. ft. more room per sow crate (6.5 × 7.5 ft. crate). We believe sows that are more comfortable will produce better and there's less pig loss.”

Initial Costs Higher

After many years of upkeep, repair and painting of its existing wood-framed facility, FRC knew it needed more durable and longer-lasting buildings, especially since they were shifting from a small grow-finish operation to an 800-sow unit, with plans to add a grow-finish facility later.

“Due to the large initial cost, we wanted to get the building up and running quickly and efficiently to initiate cash flow earlier,” says Daniel Maendel, who helps run the new facility. “With this wall system, we were able to complete our entire wall setup for this 127 × 284 ft. building in four days, followed by two days to fill them with concrete. If we had framed this with wood, that part of the construction process would have taken at least three weeks.”

Paul Maendel was quick to admit that the initial cost for RBS walls is probably 10 to 20% higher than wood. “But when we factored in a 50% savings in labor, plus longer term maintenance savings and many other variables, we figured we'd save 20% over the cost of wood in the long run,” he adds. The 800-sow unit, completely equipped, cost $800,000 ($1,000/sow). Members of the Hutterite community supplied most of the labor.

According to the 2001 University of Nebraska Cooperative Extension “Leasing and Valuing Swine Facilities” guide, the FRC's $1,000/sow figure is in the ballpark. The guide lists replacement costs for a farrow-to-wean complex from $800 to $1,000/sow ($27.25 to $33.50/ sq. ft.).

Interconnecting Walls

One labor/time saver compared to post-frame construction was the quick-and-simple method of connecting wall sections. Paul Maendel says sliding the forms together into 8-ft.-wide sections took six teenage girls only three days. The sections were then lifted with a small crane and slid from the top down to adjoin the standing wall section. “Another time saver was the ease of how doors and windows were quickly installed due to the integrated adjustable jambs,” Paul Maendel adds.

To build this structure, FRC used the 6-in. concrete + 2-in. insulation forms for the outer walls, 6-in. concrete forms for interior hallways and load-bearing walls and 4-in. concrete forms for all other interior walls. Five wall types are available: 2.5-in., 4-in., 6-in. and 8-in. concrete walls or 6-in. + 2 in. of insulation.

Once all walls were up and before the concrete started to fill them, the electrical channels were slid into the framework to wire the entire building. “We just had to router out the vinyl along that channel in walls where we needed a switch or outlet, pop a box in and connect the wires,” Paul Maendel says.

When the walls were finished, a standard wood rafter roof was installed. As for the rest of the components inside this shower-in, shower-out facility, “everything else is pretty much basic equipment you'd find in any 800-sow facility,” Paul Maendel says. “We used Crystal Springs equipment for all the stalls and components, and we used Envirotech Ag Systems for the ventilation and feeding systems. All animals are fed by computer so the sows don't get riled up … which reduces pig loss because the sow doesn't get up and down every time it sees a human,” he adds.

“One component we did change that's different from most swine buildings is the use of schedule 80 gray PVC pipe. It's extra thick and is UV resistant so it won't get brittle with age like the white PVC pipe,” Paul Maendel adds.

The building features nine farrowing rooms with 18 crates/room. They farrow two rooms at a time with the goal of shipping 500 pigs/group every week. They're continuously rotating four sets of 36 sows each, keeping one farrowing room open for cleaning, disinfecting and drying out. The breeding area consists of four sets of 36 sows, with the same for the gestation side.

Coal Heating

Another unique feature — and a big money saver — is a coal boiler used for heat during the long, cold North Dakota winters. “So far, it has cost us very little to heat the building. From December through April, we only used four semi-loads of coal for a total cost of $2,000, which is a fraction of the cost of facilities we know that are heated by electricity and propane,” he says.

Paul Maendel says now that all sows are in, they wouldn't have done anything differently. “We've even let the walls go three weeks without cleaning the manure as a test. A simple once-over with a pressure washer had them looking nice and clean. This structure and all the components are working even better than we thought it would. This barn is definitely worth the money.”

For further information on this wall system, visit Royal Building Systems' Web site at or call toll-free (877) 747-WALL (9255). For information on the building and swine operation, contact Paul Maendel, Forest River Community, (701) 865-4112 or [email protected].