As part of the benchmarking program’s ability to rank the individual closeout, we have created what we call the SMS Production Index (Table 1). It is comprised of 4 numbers:
- Death Loss and DOA's by percentage
- Culls and Lights by percentage
- Average Daily Gain
- Adjusted Feed Conversion (50-270 lb.)
We picked these numbers because they are very comparable numbers across all closeouts and are not affected by changes in markets and feed costs.
Death loss and DOA's have the number-one economic impact on the breakeven price. As you see in the table, Death Loss and DOA’s for the top 25% of farms in the SMS database are at 1.5% versus the bottom 25% of the farms (75-100%) at 5.8%. We performed a calculation in order to show the cost in loss of income caused by pig deaths. The average pig dies at 85 days, so with the value of a feeder pig at $70 + $50 feed +$8 yardage +$7 other cost = $135 invested in a dead pig, or $1.35 added to the breakeven for each 1% death loss for the group.
The second variable is “Culls and Lights.” When you consider pigs in this category are selling for an average $45 less than full-value market hogs, our calculations show that for each 1% in culls you can add $0.45 to the breakeven price.
Average Daily Gain (ADG) determines how much time a pigs spends in the finisher, or how much the pig weighs at marketing. The data shows the average cost for yardage is at $0.11 per pig, per day. And, currently the extra pound of pork equates to a sale price of $0.60 per pound. The data shows the Top 25% of the farms had ADG at 1.91 with average weight sold at 261.1 lb. The Bottom 25% (75-100%) was down to 1.71 for ADG and recorded market weight at 255.3 lb. We can calculate if a producer has fixed days in finishing, the market value difference is 5.8 lb. at $0.60, which equals $3.48 per pig.
Feed conversion is the fourth variable that makes up the SMS Production Index number. We know that there is a lot of variation in both the energy level of diets and diet form (meal or pellet). We feel that it would be very hard to get accurate information on calorie levels of diets used. However with the large variation in starting and ending weights in finisher closeouts, we decided to adjust the weights with starting weight to 50 lb. and ending weight at 270 lb. in order to have an Adjusted Feed Conversion number. For this article, we gave feed an average value of $0.12 per pound. Adjusted Feed Conversion for the Top 25% at 2.62, with the Bottom 25% (75-100%) at 2.92 means a drop to 0.30 lb. of feed per pound of gain. If a pigs gains on average 200 lb. x 0.30 lb. = an extra 60 lb. of feed at $0.12 per pound = $7.20 per head.
Table 1 uses the four variables in the SMS Production Index with added values. The table is set up to show the extra income or loss for the average. The difference in value between the Top 25% and Bottom 25% (75-100%) was $14.03 per pig. The table shows Death Loss & DOA’s as the biggest loss area, with the Top 25% at 1.5%, thus improving the value of these pigs by an extra $2.63 per pig.
At SMS, our mission statement is to provide “information solutions for the swine industry”. The addition of SMS Closeout Benchmarking reports will now allow us to talk about both sows and finisher performance. If your farm would like to be part of the either or both Benchmarking databases, or if you have suggestions on production areas to look at, feel free to e-mail or call us. We are looking forward to the year 2014 and being a part of the National Hog Farmer Weekly Preview team.