The run up in feed costs has impacted the profitability of hog operations in a number of ways. One of the relative costs often overlooked is the cost of raising replacement gilts and the associated breakeven as it relates to the market price of newly weaned pigs or market hogs.

Whether producers raise their own replacement gilts or rely on a seedstock supplier, these fluctuating costs must be covered if all segments of the industry are to thrive. Disproportionally high sow culling and mortality rates can be costly.

To examine the effects of input costs and the market price needed to reach reasonable breakeven sow parities, we used three different feed price levels. With the assistance of colleagues at Kansas State University (KSU), we established the “current” feed cost, the “high” feed cost (experienced last summer) and a “midpoint” or “fall” feed cost (set between the current and high averages). KSU feed costs were utilized since the spreadsheet used to calculate the breakeven parity was developed using the KSU phase feeding program and associated feed budgets.

To examine the effects of these values, the average production levels of all herds in the Swine Management Services' (SMS, Freemont, NE) database are highlighted in Table 1. These values include total pigs born, pigs born alive (11.3), and pigs weaned (9.92) per female farrowed.

The production values were used to estimate the market price required for a replacement gilt to attain a positive net present value by Parity 3, when feed costs and market hog prices vary in the range we've experienced across the summer, fall and winter months of 2008. The analysis was carried out using the farrow-to-finish sow longevity calculator available free from Iowa State University Swine Extension at www.ipic.iastate/software.html. This spreadsheet calculates a net present value (NPV), which is explained in the sidebar.

To make the analysis as accurate as possible, number-born-alive-by-parity information is needed to calculate parity adjustment factors for this trait (Table 2). These adjustment factors are used to predict the number of pigs born alive by parity, and to calculate sow feed costs. Preweaning mortality, nursery death loss and grow-finish death loss are subtracted from the number born alive to finally determine the number of pigs sold.

In the examples presented here, grow-finish death loss was increased by 0.5% to account for the number of “slows” and lightweight pigs at the end of the grow-finish period, as those pigs are not full-value pigs.

Table 3 shows the amount of feed consumed by a litter (budgeted by phase), assumed number of pigs per diet phase and feed cost/ton across the three periods (current, fall, summer). This spreadsheet assumes the nursery and grow-finish mortalities occur linearly across the phases; therefore, fewer pigs are fed as phase of production approaches market weights.

Clearly, feed prices reached unprecedented highs last summer, which resulted in nursery-to-finish feed costs of approximately $110/pig marketed ($1,106.31 divided by 10.03 pigs).

As fall approached, feed costs began to decline, dropping the feed cost/pig marketed to just under $92. By mid-December, the current cost/pig marketed had fallen to $61.

In addition to those already mentioned, various production assumptions such as parity discount rate, non-feed costs/litter, cull sow market value, mortality rates at various production phases and for the breeding herd, and a variety of other factors are shown in Table 4.

To arrive at an estimated cost of raising replacement gilts, the feed costs/pig marketed in Table 3 were used and the following values were added:

$35 early weaned pig value;

$20 facility costs ($40/wean-to-finish pig space with two turns/year = $20); and

$80 genetic premium (relatively standard).