But the Dumas, TX operator wasn't about to let his complete production facilities gather dust. Through his industry contacts and by applying his hog production knowledge, he cut a contracting deal with Colorado Pork, a 6,500-sow operation in Lamar, CO.
Higley began contract finishing lower-end pigs in late 1999, in effect creating the proverbial silk purse out of a sow's ear. Higley now finishes 8,000 hogs annually on a contract that returns about $16-per-head and gives him virtual production freedom.
The operation is still a dwarf in a land of giants, where corporate hog ventures have emerged in the last decade. Premium Standard Farms; Seaboard Farms; Vall, Inc. and Texas Farms operate dozens of farrow-to-finish facilities in the Texas and Oklahoma panhandle. Numbers top several hundred thousand sows. Virtually all market hogs are processed at a Guymon, OK, Seaboard plant.
In the mid-'90s, Higley had contract finished pigs for Premium Standard Farms, and later, for Seaboard Farms. “A severe case of PRRS (Porcine Reproductive and Respiratory Syndrome), coupled with low prices, forced us out,” he says.
A visit from Colorado Pork owner Gary Swanson provided an intriguing opportunity to get back in business. “We were dissatisfied with the discounts and rejects we were seeing from our own feeder contract buyers,” says Swanson. “We decided to keep those pigs, feed them, then sell them ourselves.”
Swanson struck a deal with Higley to finish low-end Colorado Pork pigs and ship them to Bryan Foods in West Point, MS. Swanson's regular contract allows finishers to reject any pig weighing under 10 lb. and those with blemishes, swollen joints, missing or swollen toes, rough hair or lumps. Those pigs are now destined for Higley's operation.
“We had empty facilities, and Colorado Pork had the need for someone to finish off-grade pigs that didn't meet contract specs,” says Higley. “Basically, Colorado Pork maintains ownership and pays for feed and vet supplies, and we provide the facilities, production management and labor.”
Higley's facilities consist of an 800-pig nursery, two 800-pig grower units equipped with woven wire floors, and four 800-pig finishers with concrete slotted floors. Effluent is pumped from a lagoon and blended with fresh water for a quarter-mile, center pivot irrigation system. The effluent helps fertilize wheat and grain sorghum fields.
The off-grade pigs make the 300-mile trek from Lamar to Dumas, then it's up to Higley to get them straightened out in a hurry.
The pigs rarely have respiratory problems, but they receive a water-based medication (tetracycline or lincomycin) and a penicillin injection to ward off E. coli scours when they arrive. Initial feed also contains a chlortetracycline.
“Some of these pigs are in trouble when they get here,” he says. But Higley's contract contains no specific mortality rate targets, nor does he expect a bonus for holding deaths to a minimum. The mortality rate in the nursery is about 3%.
“If we lose any pigs, it is in the nursery when they first arrive. We keep a close eye on them and can usually get them straightened up in a couple of weeks by putting them in a good, clean environment and providing them with the water medication and access to clean water and proper feed,” Higley says.
“We feed a three-phase nursery diet and a four-phase finishing diet,” adds Swanson. “When they go to the feeding floor, they are no longer on any antibiotics, unless there are some isolated problems. That's where they really perform,” he adds. Mortality rate on grower and finishing floors is about 1%.
Swanson ships vitamin/trace mineral premix, soybean meal and milo to Higley, who grinds and mixes the rations. Higley often sells his milo crop to the feeding operation, priced according to the local grain market.
Pigs are finished in four and a half to five months, weighing about 260 lb. Average gain is about 1.7 lb./day. Feed conversion is in the 2.7 lb. range — not bad for low-end pigs.
“Performance at Higley's rivals the performance of pigs in our regular contracts,” says Swanson.
Higley enjoys a lot of freedoms in his contract feeding operation. “I can move the pigs (from one ration to another) when I think it's time,” he says. “We normally move pigs from the nursery at 30-35 lb., or four to five weeks. Pigs go from grower to finishing pens at 75-80 lb., after another six weeks.
“When it's time to market them, I contact the packer, then Colorado Pork, which sends a truck to ship them to Mississippi. These are some freedoms someone may not have in a contract with one of the large companies.”
Even though the Mississippi market is 18 hours away, freight costs are held to about $1.50/cwt. “The trucks usually have a back haul of southern cattle to Texas or Oklahoma feed yards,” says Swanson. “That holds our costs down to about $700 a load for about 190 hogs. That comes out to less than $1 per loaded mile.”
Final results for Swanson are 55%-lean finished pigs that would have been worth little otherwise. “We are adding value to our bottom line with what I call ‘opportunity pigs,’” says Swanson. “And it has allowed Tom (Higley) to keep his facilities in operation.”
Overall, Higley receives $4/pig for the nursery and about $12/pig for growing and finishing. Add to that a small percentage of the final profit, and it is a profitable program for both parties.
Future plans might create a new market for Higley's Colorado Pork hogs. Seaboard has plans to build a new processing plant in the Dumas area. This could provide a marketing option about 18 miles away instead of 18 hours. “I have had good experiences working with the large companies in the past and would welcome another opportunity,” says Higley.
“Even if the big boys have taken over much of an area's production, there are plenty of opportunities out there for anyone who wants to stay in this business. You just have to take time to find them,” he adds.