Paul and Judy Lust left the hog business in 1972, long before their son, Matt, was born. Now, contract finishing eases their son back into the family farm.
In the early '70s, the Bucyrus, OH, family finished about 300 feeder pigs in three different barns. Labor demands and the need for better buildings were the main reasons the Lusts exited the business.
In 2002, the couple began contemplating the hog business again. “It wasn't our idea,” explains Judy, strolling down the gravel lane to a new 82 × 217-ft. wean-to-finish building equipped with a Raytec WayPig Auto Sort system.
Contract finishing 5,000 pigs/year provided a way to bring Matt, now 23, back to the farm, explain the Lusts. Their 1,500 acres of corn, soybeans and wheat wouldn't generate enough income to support two families.
“I'm excited,” admits Paul as he prepares the shiny steel building for the first 240, 14-day old pigs that will arrive in three days.
The Lusts brush off $30 cash hog prices, unconcerned about starting back in the business now. “It doesn't matter to me what hogs are selling for. They're not my hogs; we only get paid to feed them,” explains Paul.
As a contract grower, the family supplies the buildings and labor, and Hord Livestock Co. Inc. provides the pigs, feed and medication. The family is paid a daily rate by Hord Livestock, plus bonuses for good feed conversion (2.75 or better, wean-to-finish) and low death loss (3.5% or less, wean-to-finish).
Matt always wanted to become a pork producer, sporting a black shirt with the farm's “Brandyswine” logo. “I think it will be good over time; the first couple of years will be hard,” Matt says as his easy grin tightens.
Doing Some Homework
The several-hundred-thousand dollar building investment wasn't made lightly. Before bringing pigs back, the family spent a year budgeting, planning the building and talking to contract growers. Matt spoke to about 20 different growers when he hauled feed for Hords as a sideline. Paul tagged along, too, learning that most families who built a barn decided to add a second.
As a result, the Lusts built a doublewide barn. Paul points out, “I think if it works out, we'll look to build another one in three to five years.” They anticipate paying off the building loan in 15 years.
Matt, a crop protection applicator at a local co-op, realizes that balancing pigs, a family and a full-time job is a plateful. But it's a risk he's willing to take.
For Paul and Judy, part of the payoff is having their only child back on the farm. Matt and his wife, Holly, are expecting their first child in August.
“If the bottom would ever fall out of the market, I don't know what would happen…but I guess there's a risk with everything in agriculture,” says Matt, walking down the spotless wooden ramp where the first pigs will arrive.
Contracts Require Top Efficiency
Hord Livestock, a seven-family member operation, owns several thousand sows and has contract finishing agreements with 35 growers. The company's web page tells that during WW II the Hord family received a ceiling of 16-18¢/lb. for cash hogs. After the war ended, the Bucyrus, OH, family had windfall profits of 32¢/lb. But hog prices in the ‘30s this spring can hardly be described as a windfall.
The Hords have been through low hog prices before. Production manager Matt Davis says, “Basically, we need to focus on being as efficient as we can. It has also been necessary to take some form of risk protection in the market, which includes a blend of a marketing contract with a packer, forward contracting and the board of trade.”
Davis oversees the contract grower operations. The growers have five-year contracts and are paid on a per-day basis. “They're paid whether they have 2,000, one or zero [pigs]. It holds us more to the fire to keep the pigs moving. There's also more guarantee to the grower that the barns will be full,” Davis adds.
The Ohio-based company had six growers and nine barns in 1995. Presently, their 35 growers finish hogs in 50 barns.
“We've had very consistent additions for the past seven years,” Davis adds. “From a contractor angle, there's very good return on investment compared to almost anything in agriculture.”
Like any other business, surviving and thriving in the pork industry in the future will mean lowering the cost of production by improving efficiency and performance. Look anywhere you can to save a nickel or dime and not hurt performance or production, Davis suggests.
He suggests targeting these management areas in finishing barns:
Keep a close eye on ventilation controls.
Keep up with repairs. If it's broken, fix it. If it's going to break, fix it.
Watch for water leaks. With 160 nipple waterers in a barn, a constant drip can put a lot of water into the manure pit. A minor leak can add up to 50-60 gal./day. That costs time and money spent pumping the pit.
Labor will continue to be a major challenge. Contract growers in the area often have to pay $20/hour to find workers to load hogs. Trading labor with other growers is one way to ease the labor issue.