Close-Knit Producer Group Defies the Odds

A nearly 30-year-old feeder pig business has withstood the gloom and doom of the last four years, and succeeded when most of its counterparts haven't.

Most people probably have never even heard of the 1,600-sow Watonwan Feeder Pig Cooperative (WFPC) in Lewisville, a tiny town southwest of Mankato, MN.

The co-op has quietly excelled when most such co-ops born in the '70s or early '80s have failed or floundered.

They've survived despite keeping the same genetics and not rolling over the herd, fighting nearly every major hog disease, continuing to use old buildings and high personnel turnover.

Up until 2002, WFPC was plagued by porcine reproductive and respiratory syndrome (PRRS) problems for three straight years. The farm manager was terminated back in 1994, and employee turnover has been an ongoing trouble spot for years.

They've survived through consistent production averaging about 20 pigs/mated female/year (See selected PigCHAMP data in Table 1.) and a well-trained eye guarding the finances.

Family Ties

WFPC is in its second generation of ownership. The four original father and son partners continue on the board of directors. They've been joined in the last half dozen years by three new members and their families.

WFPC has succeeded as a close-knit family and pork producer team that emphasizes unity, cost control and consistent level of productivity, adds board chairman Tom Blackstad. The family/team ties have worked to the co-op's advantage, not its detriment, says Blackstad of nearby St. James, MN.

“I think a lot of those other co-ops failed simply because the members couldn't get along,” adds original board member Bob Swanson, also of St. James. This co-op has survived because its members have gotten along extremely well, without the hassle of competing egos, he says. And members always work through their differences and emerge united, adds Blackstad.

The co-op also benefited from some luck and some solid ties early on, says original board member and its only treasurer, Dale Eckstrom. When the co-op began operations in the mid-70s, pig prices were fairly favorable and grain costs were low. The feeder pig co-op connected with a local feed co-op and a St. Paul agricultural bank, affiliations they still retain.

And WFPC was one of the first operations to buy genetics from a new, foreign supplier offering lean, productive lines, Pig Improvement Co. (PIC today) from England. They've also maintained that relationship.

Key Decisions

As time progressed, a few key decisions were reached which helped define their financial well-being.

The single-site breeding/gestation/farrowing and nursery facilities constructed in 1974 by Sands Livestock Systems were well-built structures. Instead of total replacement, capital improvements have been made on all but a few of the external walls and solid concrete floors, which have been patched in spots. Replacements were made in heating and ventilation systems, complete electrical rewiring, insulation and equipment.

This has been done using a “staged expenditure” budget, paying for repairs on a cash basis only, explains Tom Wetzell, consulting swine veterinarian, South Central Veterinary Associates (SCVA), Wells, MN.

Board members don't even own a credit card for WFPC, declares Steve Hargis. He is in charge of production at WFPC, part of a “team manager” approach being tried to guide production decisions. He works as a production specialist for South Central Management Services (SCMS), an arm of SCVA.

Eckstrom still does the financial records by hand, keeping a tight rein on capital expenditures. Hargis says Eckstrom called him one time to inform him his purchase of light bulbs exceeded the electrical budget by $2.50.

With that cost-conscious approach, WFPC has been able to operate virtually on a debt-free basis, says Hargis.

But he is quick to point out that when a capital expenditure is really needed, owners have come through nearly every time.

A prime example was last summer when the co-op experienced major sow death loss (22.5%) in gestation barns. The south barn holds 650 head, the north barn 700 head. Replacement gilts are raised in off-site, leased facilities. Original Sands cool towers were replaced with cool cells and bigger, 40-in. exhaust fans, cooling down the tunnel-ventilated barns. Sow mortality dropped immediately and now runs 11%.

“There's been an annual budget for staged expenditures, and each year the owners try to figure out what to improve upon next. This year's program is replacing the last original sow feeding system,” remarks Blackstad.

The WFPC members stress that though costs have been controlled, there have also been changes made to grow the operation and make it more efficient.

In 1994, the operation expanded from 700 sows to the current 1,600 sows, producing 30,000-32,000, 50-lb. feeder pigs annually for the members to finish. Then in 1995, old nursery facilities were converted to farrowing, increasing to 225 crates, and one nursery building was remodeled into a second gestation/breeding barn.

The biggest change was construction of a two-barn, 5,000-head, offsite nursery one mile away from the main farm.

In the last few years, pig flow was converted to all-in, all-out production and biosecurity was stepped up, points out Blackstad. WFPC installed one of the first shower-in, shower-out units back in 1974. “Actually, our owners can't go on the site within 24 hours of seeing a pig from their own place,” he says. “A lot of times, we don't get in there unless we make prior arrangements.”

When they pick up the 600 feeder pigs produced weekly at the nursery, co-op owners must not enter the chute area or the barn, and nursery staff must not enter member trucks.

Production Costs

Those 50-lb. feeder pigs currently cost $42 to produce. Sometimes owners end up paying a few dollars above cost to cover capital improvements, says Swanson. But more than likely, production efficiencies will result in producer-shareholders getting part of that money back later in the form of co-op dividends.

A marketing contract, held by the majority of owners since '95, has helped out during the last four years of depressed prices, says Blackstad. “And we've tried to keep feeder pig prices low to help producers weather the storm. We all made it, but it was tough,” he admits.

Personnel

Because of nearly complete staff turnover in 1994, SCMS was brought in to help with personnel, production, facilities and pig management. Hargis says much of the turnover has been due to area demand from several large hog production companies and veterinary clinics and related agricultural service companies.

Despite the turnover, employees have done a good job, say co-op members. Owners have shied away from trying to micro-manage the operation. “Owners come to the meetings and we don't touch the inside — the employees do that,” stresses Blackstad.

Health, Production

Employees have had their hands full with animal health problems, says Swanson, from bloody scours and pneumonias to TGE. They were also one of the last pseudorabies-quarantined hog systems in Minnesota (2000).

Blackstad stresses WFPC has always followed a conservative fiscal approach. None of the barns has ever been depopulated. Instead, the group has chosen to weather animal health storms and avoid cash flow interruptions caused by production downtime.

One particular struggle with the old barns has been with mice, says Hargis. It's known they can cause building damage and be a source of disease. Hiring an exterminator company (Plunketts) has helped. They rotate baits, regularly replace bait inside (including attics) and outside the units.

PRRS is by far the biggest disease threat today. Hargis says the disease seems to be at a manageable level since the farm went to 100% artificial insemination and closed the herd to new introductions about two years ago. Now all gilts are produced internally. An off-site farm is leased for gilt isolation/acclimation. Mass sow immunization with a PRRS modified-live virus vaccine is done quarterly.

“Since we closed the herd and went to this PRRS control program, WFPC achieved over 22 pigs/sow/year during a couple of quarters in 2002 for the first time in six-plus years,” observes Hargis. Pigs are weaned at 17 days of age averaging 11.6 lb.

Another vital production statistic is nursery performance. Staff and owners have a very clear definition of the type of pigs they want out of that unit, notes Hargis. They don't want the runts, poor-doers, belly ruptures and the like, which are averaging about 1% of production, adds Wetzell.

“Each week, before we move a shipment out, there is a ‘pre-selection process’ that involves a thorough walkthrough of that room to check for any junk pigs to ship out,” he states. Those pigs are siphoned off to cull or sent to other markets that sell compromised feeder pigs.

That makes for more consistent groups of feeder pigs for finishing. A key to success has been uniform weights within uniform-sized groups.

“The owners at WFPC have learned how to survive in the pig business with average but consistent production,” concludes Wetzell.