Database enables comparison of pork operations and helps identify long-term profit opportunities for producers.
The National Production and Financial Database forms the central hub of a coordinated, knowledge-based information strategy developed with checkoff funds. The database was created to receive the standardized production and financial information of pork producers throughout the U.S. Additionally, it is designed to ensure long-term profit opportunities for producers regardless of operation size. Production and financial software vendors have been engaged in this process to make accurate comparisons between different types of operations.
In the past, groups have created databases with either financial or production data exclusively. Standard terms and calculations were not available. Producers commonly submitted data to a service bureau that entered the data. Producers received benchmark-type data after everyone had submitted data.
The National Production and Financial Database has changed all this. The database is outsourced to a firm that builds and manages database applications for Internet use. The National Pork Producers Council (NPPC) administers the program.
Producers access the database through a secure Internet connection to contribute to or view their reports. Data is real-time — it's instantly updated, and current values are used to create reports that can be printed or viewed on screen.
Another benefit of having the database on the Internet is the ease of changing a calculation or adding a new benchmark. All users get all upgrades at the same time.
Producers of any operation size can fulfill the minimum standards necessary to contribute data. Producers' participation will be facilitated by their software, which will automatically organize the appropriate data elements, summarize it in a standardized form ready for uploading to the database.
For the interim, the NPPC has developed Pork Office, a computer program that takes data from existing software systems and assembles it for transmission to the standardized database. The Cooperative Extension Service is adapting spreadsheets to send data to the National Database via Pork Office. Data submissions will undergo a detailed filtering process to prevent errors from entering the database. If producers submit outlying values, they will be prompted to correct or verify them to guarantee their accuracy.
Data definitions and standard calculations are in the Technical Reference Manual and are available from NPPC as hardcopy or on CD-ROM. Software standardization not only allows producers to load comparable data into the database, but it also enables them to switch software without losing historic tracking data because of inconsistencies between software packages.
The database is divided into more than 70 production data elements and more than 100 financial data elements. These data elements are used in various combinations to produce about 250 production, financial or combination benchmarks. New data elements or benchmarks can be added any time and are available to all users.
Currently, producers are able to enter only production data in the database and therefore can use only the production benchmarks. Examples of reproductive benchmarks are shown in Figure 2. (For more details, see “Benchmarking Analysis Drives Action Plans” on page 14.)
Producers have spent the past year setting up their charts of accounts to match the standards and entering their financial data. A full year of data is required before it can be uploaded into the database for benchmarking.
Admission into the database requires a user name and password for secure access. Producers or their consultants can log on to the database, set up, change and manage the structure of their farm and load data. Internet-based access allows producers to load and view their data from home or anywhere at any time of day. The database's address is www.benchmarks online.com.
Producers use a program called an Internet browser, such as Netscape or Microsoft Internet Explorer, to view the database. On the first visit, a producer can register by clicking on the word “register,” providing information requested and choosing a login name and password. Once submitted, an e-mail is sent to the database administrator, who then activates the producer's database access and e-mails him an acknowledgement of the activation.
A trial registration is available for producers to have temporary access to sample farm data. An e-mail is sent to the user noting their access will automatically cease on specific date. A producer must meet specific educational requirements before being granted access to the database.
The first step a producer must take when he logs on as a user is to set up an organization. (Figure 1 shows the first screen after the login.) He can choose how he wants to divide his operation based on how he keeps his financial records.
For example, if a producer keeps financial records as a whole unit, he will only be able to benchmark the operation as a single organization. Their production records will still come in by each phase of production, and they will have production information to benchmark for each production phase. However, certain financial information will not be available.
If a producer has several different operations and keeps financial records for each unit as a separate business, he can enter each unit as a separate organization, and each can be benchmarked as an individual unit.
The database also provides an opportunity for a producer to combine multiple organizations into one group for benchmarking.
Or, a family operation might have several different business organizations. In that case, they can benchmark each operation and then combine them to benchmark the whole operation. If they have three separate finisher sites, for example, they could benchmark each unit separately and then combine all finishing sites into one and benchmark the combined unit.
Similarly, producers in a consulting group could combine their data for benchmarking. This would allow producers to compare their group to the whole database plus compare themselves to the average of their group.
Even with a new level of standardization, the database still does not completely accomplish the goal of comparing all operations on the same terms. Not all operations are alike. The database also includes more than 100 attributes that are specific characteristics assigned to an operation. These attributes are in four categories — general, breeding, nursery and finishing.
The “general” attribute category could include an operation that is part of a marketing cooperative or purchasing cooperative. Or, perhaps, the general attribute could be part of a vertically coordinated system or production network. It also could be defined by the method used in selling the animals (contracted, open market, etc.). This information will help producers determine whether one method of doing business is really better than another.
There are many opinions about whether it is better to be part of a coordinated system or to remain independent. These benchmarking capabilities can help analyze this question.
Another case in which attributes can be beneficial to benchmarking is when facilities are different. The use of attributes allows producers to look at the age of facilities and see if newer facilities are more efficient, for example. There are attributes for whether animals are single source or co-mingled at some point in the production process.
Attributes that could differentiate farrowing facilities might include flooring type, ventilation system, etc. Type of feed processing could be compared. Producers may want to analyze whether home-raised feedgrains are better than purchased.
When using a benchmark for feed cost, it is important to compare it to all operations. However, it also might be valuable to compare your cost to only operations that also raise their feedgrain. Geographic comparisons, by states or regions, also can be benchmarked.
The use of attributes is a good way to make sure you are comparing similar operations or at least identifying specific differences to compare.
The National Production and Financial Database has been developing for more than five years. It will continue to grow in functionality. It will be used to provide information for all producers to help them identify and capitalize on competitive advantages.
Other agriculture groups are looking at the pork production model, and some are developing standards for their segment.
The National Production and Financial Database developers are involved with these groups and continue to play an active role in developing standards for all of agriculture. It is important to the future of food production in the U.S.
Daniel Uthe, National Pork Producers Council