An industry economist and a production consultant teamed up to offer pork producers a few tips to get through these trying times.
Steve Meyer, founder of Paragon Economics, Inc., Des Moines, IA, led off acknowledging that the challenges facing pork producers are different than they've experienced before — “so you're going to have to learn a few things,” he explained during a World Pork Expo seminar in early June.
These four tips rose to the top:
Stay alert for buying opportunities to lower feed costs
“Use ‘call options’ to put a lid on feed prices,” he urges.
“Call options give you the right to buy a futures position at the strike price. I know the premiums are high and I realize you may not be used to them. But premiums are based on volatility and time. As you get out into the future, the time value starts getting pretty high. Still, I encourage you to use call options because if we get some heat in June and July, we could still see a decent crop and feed prices could go down. If we had 2004 yields of 160+ bu./acre, we could see corn for less than $5/bu. So, rather than take a futures' position, I'd suggest using call options. Plus, you don't have to face margin calls with call options.
“You're going to have to be more nimble than you have been in the past when these buying opportunities come,” Meyer adds.
Build a strategic reserve of corn
“I'm real concerned about the availability of corn next summer, depending on where you are. I suggest having 2-3 months of physical corn in bins somewhere, then go back on the market and go hand-to-mouth between now and next summer using your call options to limit your exposure. I know storage isn't cheap, but I think you've got to have corn on hand to get through next summer. I'll bet if you asked the local ethanol plant managers, they are doing the same thing,” Meyer says.
Plan for the long term
“I would certainly recommend that you talk to corn growers in your area and try to make deals to secure your corn supply. Now they're not going to price it. You will buy it at the market price, but at least you will have an agreement that says, ‘I will buy it and you will sell it to me, not the ethanol plant down the road.’ Do it contractually,” Meyer continues.
“That is a good procedure for at least a portion of your corn needs. At what percentage will be decided based on your comfort level.”
Get your operation lean and mean
Not a new philosophy, and for those who have made it this far, something you are probably already doing. “Still, it is more important now than ever,” Meyer stresses. “All those things from adjusting feeders to fine-tuning rations, watching feed budgets and, maybe, pulling market weights down a little are going to be so important.”
Mike Brumm, founder of Brumm Swine Consultancy of North Mankato, MN, continued with four more strategies to reduce production costs and improve efficiencies:
Brumm offers a new twist to this common chore. “Walk the barn with the person who will be adjusting the feeders. Take a digital camera with you. Then, you and that person agree on what a proper adjustment looks like. Take a picture and post it in that barn. Now, the picture in the barn belongs to that person. You will get better feeder adjustments,” he assures.
As a footnote, Brumm said the feeder adjustment guideline cards posted at the Kansas State University web site (www.KSUSwine.org) would soon be revised.
“They will show more feed in the pan,” he explains. “Based on the K-State research and the experiences I've had, you should have about 40% of the pan covered with feed, optimum. If you set them tighter, you will have limited feed availability in some cases.”
Be wary of out-of-feed events
Brumm list three causes of these very real occurrences.
First cause: You are. Be sure there is feed in the bulk bin; slide management on tandem bins require attention, too.
Second cause: There's feed in the bin but you can't get it out because of bridging.
Third cause: Equipment failure.
“The consequence of any of these events is the pigs get no feed — and it appears to affect growing pigs more than finishing pigs. If pigs weighing from 40 to 120 lb. miss a meal, they don't make it up. It impacts their daily gain,” he explains.
“In our work at the University of Nebraska, a once-a-week out-of-feed event resulted in an 8-lb. lighter pig. The biggest impact is on lights and culls. If lights and culls go from 5% up to 10% of your barn, it will cost you $3/head finished in that barn. That is real money,” he emphasizes.
The cost of getting feed in the bin
“This is an area most people haven't thought much about. How many of you have talked to your toll miller about a discount if you could get 80% of your feed delivered in mid-week?” he asks. Avoiding feed deliveries on Mondays and Fridays could save you $3-5/ton.
Another cost that is catching on with toll millers is the “full-load delivery price,” applied regardless of how much feed is actually being delivered.
“You've got to get better at ensuring that when a feed truck comes onto your place, that truck is completely full,” he notes.
Managing heating and cooling costs/payback
“The electronic controller is where the decisions are made to control energy use. We don't do a very good job of understanding what is there and how to use it,” he admonishes.
One adjustment many producers have not made is allowing for more body heat generated by modern-day genetics. “People think they have to keep barns warmer today because pigs are leaner, and they don't have any backfat for warmth,” he explains. “But, the deposition of lean creates more heat than the deposition of fat, so today's genetics have 15-20% greater heat output than the genetics of the '80s.”
To set temperatures more effectively, be sure to measure the temperature at pig level before establishing the set point for temperature, he suggests.
On the flip side, producers need to do a better job of cooling pigs during the hot summer months. “Start sprinkling pigs at 80° F. and be sure to wet all pigs,” Brumm says. He suggests two minutes of “on” time, covering no more than 60% of the pen. “And remember, cooling happens when pigs are drying, not when they are being sprinkled. The key is a big water droplet.”
Brumm also suggests plumbing drippers from the center of the barn outward. When drippers are plumbed from one end of the barn to the other, the “on” time required to get the last pen wet means the first pens receive excess water. Plumbing from the center reduces “on” time, conserves water and ensures more uniform coverage in each pen.