Early October's hog prices looked pretty bad. But Howard "Butch" DeLoach just shook his head. He'd seen this before. He knew the hog operation he managed for 13 years in the Texas Panhandle would weather yet another downturn. His records confirmed he'd just closed August with over $20,000 cash for the month. Added to a January-July positive of nearly $150,000, the 1,200-sow, farrow-to-finish operation was doing pretty well.
What DeLoach couldn't foresee was the record drop in hog prices ahead. Even the farm's low $35.33/cwt. cost of production wasn't low enough to head off the severe market drop that closed out the last three months of 1998.
But true to his word, the hog farm survived without outside capital. He and his wife, Gynette, counted their blessings that they could hold the year's losses to only $46,000.
New Year's Eve also signaled the end of DeLoach's hog management career, one that spanned nearly four decades. He and Gynette headed home to Georgia to be near their family.
But the experienced manager left a legacy for success at the Texas farm that was known for its dismal state when he took over management in 1985. How he turned the operation around is a lesson in paying attention to the basics.
Assessing The Situation Built in 1972, the Texas hog farm was named New Way Pork Co. At the time, it was the largest hog farm in Texas Panhandle with 1,200 sows. Nineteen investors put money into the unit.
During the first 15 years of operation, the unit experienced a steady decline in productivity and rarely generated a profit. In 1986, only 12,000 market hogs were sold.
It was in this state of disrepair that DeLoach entered the scene. He and Gynette had been in a family hog business in Georgia for many years, but were ready for a change. In fact, National Hog Farmer featured DeLoach and his father, Fate, in a story that ran in 1977. At the time, he was president of the Georgia Pork Producers Association and well known for his hog production skills. But during his first visit to New Way Pork, DeLoach learned that some farms weren't in as good shape as his. He knew it would be a big job to fix it. "But I guess I just love a challenge," he says.
DeLoach had his work cut out for him. Pigs born live averaged 7.8/litter. Medication costs ran $3/cwt. And average non-productive sow days mounted to 74 days/year.
"All the rules were violated," DeLoach says. "None of the basics were followed. The only thing they didn't do was run the pigs out on the highway."
Labor appeared the biggest problem. "Just us showing up for work was good for the operation," he says. "The first day, I fired an employee in the first 10 minutes. Word got around that I was either crazy or wouldn't tolerate stuff. So some employees didn't show up again. I didn't need to fire anyone else after that. The labor problem just took care of itself."
DeLoach brought two key employees from Georgia with him. Between the three of them, he says they were able to demonstrate to the old and new employees how to work together. They also taught promptness on the job and proper hog care.
After 60 days, DeLoach attended the annual stockholders meeting. He had spent most of those first two months rescuing live pigs and pulling dead pigs out of the units and was ready to talk to them.
"I think I shocked them," he recalls. "I recommended shutting the unit down due to its poor conditions. Here I had just moved 1,300 miles and I was willing to shut it down and move back."
At this first meeting the only decision was to keep it running for another year. DeLoach felt they wanted him to prove himself before they made a major cash outlay. He was told to see what he could do with minimal cash for repairs. During that first year he worked on production, made a few repairs and cleaned up the farm. He believed the outside appearance would motivate employees to be more sanitary in their work area.
After a year, the owners were ready to hear DeLoach's plans for revitalizing the miserable unit.
His first choice was to shut down the existing unit and build a new one. But due to cash flow problems, the owners talked him into keeping the old unit going while building new facilities.
Moving Ahead DeLoach had help planning his next steps. He used swine consultant Jim Allison, DVM, Corsicana, TX, to review the operation's performance every 90 days. With Allison's help, DeLoach was able to turn things around.
First, he moved to PigChamp records. New Way Pork did not have a computer when he arrived. "Instead, every record kept on finances or production was kept on cards," he relates.
DeLoach enlisted help from his wife to transfer past records to PigChamp. She also took over all the recordkeeping for New Way Pork. Developing the records served as a road map to improving the business. Once they could see where the problems were, they could work to solve them.
Allison taught them to use the assumption rule, which is "never assume anything."
"If you couldn't show Doc the records on it, he didn't want to hear about it," DeLoach says.
The rule also applied to management of the hogs. Don't assume things are done, DeLoach relates. Managing the crew of 13 employees meant making sure everything was done right, every time. Every day he spent time walking through the buildings, checking the employees' work.
Over the years, new buildings were added. DeLoach learned even new facilities require tight management, like the ventilation controls and manure flushing systems.
"When I started with Doc Allison, I thought I knew the basics," he says. "You put a sow out there and make sure she has some feed. But teaching us the basics and us being willing to implement them and not get lax is the hardest thing in the world to do."
Employees must fill out records every day. DeLoach and Gynette use these records to make sure jobs are completed and production remains high. Gynette's job was to watch records and prompt DeLoach when trouble appeared.
Filling Buildings With a 10-pigs/sow/year record, DeLoach knew his attention also had to go to filling the buildings with hogs because most were only half full. He discovered sows in farrowing crates weren't even pregnant. Some sows were recycling and rebred several times without success.
So he fell back on a plan he used successfully in Georgia to prevent this recycle-rebreed problem. The plan required him to cull any sow that recycles instead of rebreeding it. Next, they overbred the number of sows and gilts to insure farrowing rooms were full.
DeLoach ended up with a high culling rate and low sow parity figure. But it was cheaper for him to do this than let the buildings go half empty.
Non-productive sow days dropped substantially from 74.4 in 1990 to 42.9 in September 1998 (see Table 1). "We just don't breed any recycles," he says. "We felt like these animals with a recycle history will breed that problem into the herd."
He's been able to keep his sow herd producing even through a switch to 100% artificial insemination in mid 1995.
Rebuilding While DeLoach was getting a handle on production problems, he also organized the steady rebuilding of New Way Pork. Today, the only buildings still used from the original set is the office and the shell of four farrowing houses.
First on the construction agenda was finishing floors. The original layout of the operation required the crew to move every pen of hogs on the farm every week. That had to stop, so he hired his own construction crew and they immediately built two new finishing buildings. Then they shut down the original finishing buildings, used the pits and rebuilt new structures over the top.
Next on the building agenda was a new gilt development barn. The farm had no place for gilts, which he needed to accommodate his no rebreeding rule.
Nurseries were next and badly needed because mortality rates were at 38%. DeLoach had trouble convincing the owners to invest in new nurseries, however. So he built one new nursery to prove how much better it could be. Meanwhile, he lowered mortality in the existing buildings by putting in 5x5 ft. pens, raising them 3 ft. off the floor, and adding a new heating system.
By 1993, DeLoach convinced the owners to make a big investment in new buildings, allowing him to push the operation's performance up another notch. His planning team, including Allison and a financial consultant, put together a $1.8 million building plan, which called for constant construction for nearly two years.
The building crew started in April 1994 with new breeding and gestation buildings. Then the crews moved on to build six new nurseries. This enabled DeLoach to use all-in, all-out and wean pigs at younger ages. Last on the building agenda were eight new finishing facilities.
Diet Quality A big performance improvement came from changes in the feeding program. Their records had identified the problem. Feed efficiency and sow productivity dropped periodically. After testing their diets, they were able to tie it to poor grain quality.
"This is cattle country and they can get away with poorer grain quality," DeLoach laments. But hogs can't. Gynette sent out milo samples for testing and found a wide variation in quality. Dryland milo, especially, was of poor quality. Irrigated milo, on the other hand, was good.
In 1991, DeLoach put an end to most of the diet problems by building a new, computerized feed mill. It cost the hog operation $60,000, but he figures it was paid for in one year just through improved feed efficiency.
Today, they use only corn. They've incorporated four different nursery rations and five finishing rations. Allison helps formulate the diets.
DeLoach continues to closely watch corn quality. He will occasionally refuse delivery of corn when the quality is poor.
Feed costs generally are higher in Texas. Corn last October cost $2.56/bu. delivered from Dumas. In the Midwest, it was well below $2/bu. Total feed costs ran $23.54/cwt. of pork produced last year.
The Future New Way Pork is now being managed by Jim Allison Jr., the son of DeLoach's consultant. DeLoach believes the unit will continue to improve and prosper under this new management.
He's just proud of what he and his crew accomplished. "We left the farm with some long-term facility indebtedness," he says. "But the farm has done outstanding, financially."
In 1997, the farm reaped good profits. Some of the profits were held in reserves just in case a poor year turned up. After last winter's severe price slump, that was obviously a smart plan. "I think we're one of just a few farms who ended up in this good of shape," DeLoach says.