In Minnesota pork producer Scott Hislop's mind, independent pork producers must become interdependent to be pork industry survivors long-term.
"Some of us used to be very independent and did everything ourselves, producing pigs the way that we wanted to. Those days are gone."
Hislop's operation at Mapleton, MN, is no exception. He still describes it as an independent, 1,600-sow, farrow-to-finish operation that's been in the family since 1866. It is run by Scott; his wife, Michelle; his father, Harvey; and his mother, Audrey. There are a total of 20 families involved, including employees and growers.
Interdependence A Plus But Scott Hislop says the interdependence that took shape on the farm back in the early '90s hasn't lessened the independence of the operation as much as it has provided direction and support.
Since 1991, all grow-finish pig production has been contracted out to growers who own their own buildings. "We retain ownership of the pigs, providing feed and veterinary care while the contract growers supply labor and housing." Because of the conscientious nature of the growers, Scott can spend more time on what makes the operation money, business and financial details.
Vertical Coordination Hislop believes independent producers can compete with the integrators but there needs to be vertical coordination that starts with the packer and runs back through production. Working closely with a packer to market pigs is a second area of interdependence. Hislop Farms was among the first to sign a long-term procurement agreement with Hormel, contracting 100% of production.
"Start with a packer, know what he wants and produce a product specifically for him," Hislop points out.
A packer contract can provide some market security and takes a level of stress away. "The contract has helped us through these tough times," he adds. "A couple years back, most producers were getting $60/cwt. for their pigs and we weren't, so it worked the other way. You didn't hear much about packer contracts then. Everyone was concerned about missing the top of the market.
"Our concern was more about the bottom of the market and protecting ourselves from situations like what happened the last six months. When hogs were $10/cwt., we were covering our costs." He says total production costs range from the middle to the upper $30s/cwt. With a packer contract, he has made money on hogs during the price downturn.
The Hislops have gone one step further in working with their packer. Using 100% artificial insemination, they pay 50 cents more per dose of semen for a particular bloodline identified for its high meat quality. None of the pigs from the new bloodline have been marketed yet.
"We are doing this because we want to maintain the trust with our packer long term and provide him with what he wants," declares Hislop.
Quality Assurance Quality assurance is another area where he believes producers must toe the line to earn packer and consumer trust in their product. "You hear a lot of talk about the Pork Quality Assurance program but a lot of people don't really do it," he observes. "We follow through with that pretty heavily, recording treatments down to the individual pen and the pig from the time it was born." It gives their system a full medication history, and to their benefit, a better handle on whether those medications are working.
In addition, the Hislops measure the total production costs for each group of pigs, so they know the profit and losses in every age group, daily. Everyone involved in the Hislop production system, employees, growers, support staff, etc., recently met.
The purpose was to make sure everyone was focused on the same goal. "On a lot of farms, people in different departments all have different goals and different objectives. I know for a fact that not everyone really knows what the overall farm objectives are, even though they work there," he states. "I think that is real important. All of us think about our own situation. But it is important that everyone involved in a vertical coordination system be focused on the same goal."