Managing variation in pig production involves examining what can be accomplished within the current production system model.
For example, if we realistically look at the potential output of a typical grow-finish barn, we can see huge differences in performance and financial rewards.
My definition of variation is not meeting the potential of a high-quality output. A high-quality output is where the number of pigs sold is equal to the capacity of the barn, and each pig is sold or transferred at its economically optimum weight.
In many ways, we fail miserably at this aim of creating a high-quality output.
So where do we fail?
There are five broad areas in nursery and grow-finish barns, listed as follows:
Barns are not filled to capacity. In other words, there are empty spaces in the barn that are not earning an income. This is recognized as a real revenue loss and is to be avoided on most farms. The challenge, in many cases, is for the sow farm to be more vigilant in managing variation of reproductive output.
The capacity of a barn is filled, but some pigs are not marketed due to death. Late-stage mortality is particularly expensive to a hog operation.
A portion of the pigs grows slowly and is sold to a secondary market as cull pigs.
A portion of the pigs grows slowly and is sold to the regular slaughter plant, but at a discount. This discount can either be on the base price, or simply based on a lower amount of margin due to less pounds sold.
A portion of the pigs grows quickly and is sold above optimum weight, which also results in discounts. This is managed on most farms by early marketing.
For analytical purposes, under-filling barns are analyzed separately in many cases, as it is a result of variation in reproductive output. Likewise, overweight pigs are analyzed separately, as the challenge is in sorting and marketing.
The main quality concerns are actually in the area of what we call DCLs, known as “dead pigs, culled pigs and light pigs.” The major quality constraints are when the pig stops breathing or stops growing.
In most hog barns in North America, the causes of mortality and slow growth are often interrelated.
For most infectious disease challenges, we see a wide range of disease expression — from sudden death to subclinical signs of disease with slower growth. It is often useful to group all poor-quality pigs into one category. In doing so, DCL rates are often over 10% in grow-finish barns.
The first challenge in any analysis is to attribute some sort of financial cost to the problem. Figure 1 shows a simple graph where we examined the margin over variable costs for 110 closeouts of grow-finish barns within one system. We kept all prices equal, and simply compared the financial performance of the groups by defining the variability of the margin attributable to three variables.
The first category consists of the DCL pigs.
The next category represents average daily gain for those pigs outside of the DCLs. We have emphasized average daily gain, as fixed costs of the building and contract costs are often the second-largest cost category in rearing grow-finish pigs.
The third variable is feed conversion for the pigs that survive to market weight. Historically, we have emphasized feed conversion as the major opportunity for profit improvement because it is the largest cost of rearing grow-finish pigs.
Time and time again, we have seen that the feed conversion of the DCLs provides the most contribution to variation in profitability, and thus comprises the area of greatest opportunity for improvement.
I think the reason this area has often been underemphasized is because, as an industry, we have emphasized cost of production instead. Cost of production analyses rarely categorize pigs in terms of deads, culls or lights.
In doing so, cost of production analyses do not recognize unrealized income. The real losses due to poor-performing pigs are in the area of reduced value, often called an “opportunity cost” or money left on the table.
To understand the opportunity cost problem, I often ask producers to estimate the losses associated with a good, 250-lb. pig dying in the grow-finish barn. The common answer is the pig could have been marketed at 280 lb. at a value of about $125. The only production cost “savings” is the feed the pig would have eaten from 250 to 280 lb. — about $5. The difference, $120, is the opportunity cost of that pig dying. This is captured in Figure 1, but is not captured in normal profit-and-loss statements.
Another example: Lightweight pigs sold at a discount may bring in $90 instead of $125, with feed savings of $10. Sale price and feed savings equals $100, leaving a loss of $25 in opportunity costs that are never captured in our current record-keeping systems.
Financial analysis, for the purposes of analyzing variation, thus involves some level of pro forma analysis. In other words, we need to estimate what income the farm could earn if a pig did not die or grow slowly.
These are calculations beyond the profit-and-loss statement, but can be done easily by producers. This process involves simple “what if” questions such as, “If the pigs did not die, how much extra profit would there be?”
Combining the elements of the DCL category often result in an opportunity cost of greater than $10/pig placed. A characteristic of this opportunity cost is the huge variation from group to group and from farm to farm. In quality control terms, it can be viewed as an uncontrolled cost.
The wide variation brings into question whether farm management is conducting adequate analysis and control efforts.
I would argue that variation has been under-analyzed and thus is a much greater cost than it should be.
Variation can have two broad sources. The first is the quality of the inputs. In this case, we are particularly looking at the quality of the pigs that entered the barn. The old saying, “Well begun is half done,” still resonates in the pig world. However, we rarely analyze quality of pigs at entry.
The second source of variation is within the barn. Problems crop up that cause some pigs to fail. This is an easy divider, though the more we look at this area, the less obvious the split between quality of pigs at entry and the variation processes that occur afterwards.
The big problem in growing pig records is that the focus has been on managing averages. This is useful when looking at interventions that may have a similar effect across all pigs.
Usually, nutritional interventions are expected to have the same impact on each pig. However, the opposite is quite often true when it comes to disease control.
Managing averages is different than managing individual pigs. A strong argument can be made that the essence of good pig care is in differentiating the needs of pigs. Yet records and management emphasize that the averages tell the story.
Disease produces differential effects on pigs, particularly in the case of bacterial disease. We see some pigs that are not affected, while others are devastated.
Thus, an intervention with any disease control method will benefit some pigs more than others. The DCL pig category often captures the great majority of pigs affected by a disease mechanism. With the challenges and variation we see in most herds, the DCL pig category is often the best description of problems in variation.
Specifically, the problem of tail-enders is an example of not meeting a minimum specification for growth. This constitutes a better measure of variation than classical measures such as standard deviation or coefficient of variation.
Our best successes and understanding of variation have been in identifying causes of these DCL pigs. We have three major questions for analysis at this point:
What are the characteristics of pigs at entry that make them more likely to be poor-quality pigs at exit?
Do the problems of poor-quality pigs at entry precipitate disease outbreaks?
What can we do?
The first question is where we have spent most of our time. We have found that the quality of a pig at entry, particularly in the nursery, has a huge effect on the likelihood it will survive and thrive. To assess that risk, we use odds ratios, which are the ratio of the success rate between good pigs and pigs at risk.
For instance, we have found that the failure rate (of DCLs) in one herd was 5.1% for pigs entering the nursery at greater than 8 lb. For pigs entering at less than 8 lb., the failure rate was 16.8%. Therefore, the odds ratio of failure, due to pigs entering the nursery at less than 8 lb., is 3.3 times greater than pigs entering at greater than 8 lb. (16.8% divided by 5.1%).
Other factors found to increase the odds of failure in the nursery include the parity of the dam, gender, crossfostering, source herd and age.
In our experience, weight is the biggest consideration for entry into the nursery. Pig weight has a direct effect on its ability to grow, and often, mount an immune response. Lightweight pigs are much more likely to be chilled and mount a poor defense against infectious disease challenges. They also may have more competition for resources, such as heat and feeder space.
In our analyses of pigs within groups, older pigs with the same weight as younger pigs actually had a higher odds ratio of failure. A pig that grows slowly before weaning is often a problem after weaning.
Gilt progeny also present a challenge. They are more likely to die, and tend to grow slower in the nursery. Pigs from gilt litters may also have a reduced ability to mount a good defense against infectious disease challenges. Gilt progeny are also more likely to be lightweights, a factor contributing to their poor performance.
The second problem with poor-quality pigs at entry is that disease problems are more prevalent. This is a difficult area to study, but it appears that some of the outbreaks of disease we see precipitated in nursery and grow-finish barns are actually due to a high prevalence of susceptible pigs.
We see this especially with either lightweight pigs or progeny of gilts. Once we reach a certain threshold, say 40% of the nursery pigs from gilts, we see a higher likelihood of infectious disease outbreaks, such as Haemophilus parasuis. This may be because these pigs are more likely to carry agents into the barn or because they are more likely to be susceptible to infections.
With quality management, we must recognize that we have pigs with different requirements coming into our barns.
The challenge is twofold. First, we must create a population that is more homogeneous. This puts pressure back on the supplier of pigs. Sow units must spend more time creating a homogeneous population from week to week, in terms of age, weight of weaned pigs and parity profile, for example. This puts real pressure on the sow unit to look at factors other than simple output of weaned pigs. Factors such as stabilizing the number of sows bred and number of gilts introduced, which may have considerable value in downstream pig quality, are also important.
Focusing on DCLs also allows for better differential care, with stockmanship helping to lower the odds of the pig failing. In many ways, the best test of stockmanship is the ability to manage poor pigs. Many of our reward systems fail to recognize this because our recordkeeping systems are inadequate.
We must also recognize that extraordinary efforts are valid for a subpopulation of pigs within our barn. High-quality feed, extra heat and intensive disease control are all quite rewarding for at-risk pigs.
There are also processes that create DCLs not associated with quality at entry. In some cases, this may be due to inadequate data, or there is nothing available to control. Here disease control methods are definitely still needed. For instance, vaccinating for Mycoplasmal pneumonia is a solid method of disease control.
Management must be able to evaluate the financial impact of variation. This will involve more pro forma budgets of the potential incomes created when we get this problem under control. Opportunity costs of poor pigs must have a central part of the discussion in management circles. As long as we focus on cost of production, variation will be underplayed.
The real challenge with managing variation is in managing the decision-making process. The swine industry has gone through a time of emphasizing improvement in productivity and then minimizing costs.
We are in the next level of challenge now — managing quality and improving the value of our product. Where there is a large amount of variation in performance, there is the greatest opportunity to improve the quality of the product. Mortality and slow growth are the first two qualities that we must look at more closely.
Switching from a cost-minimization management model has its challenges. We have to move away from a simple management strategy that focuses on average performance and average costs. We must collect more data at the correct level. Our pigs are evaluated at the individual pig level, and therefore our data must reflect that.
Our losses are also seen when individual pigs do not meet minimum requirements. Again, our records must reflect that. Finally, once we have collected that data, we are in good shape to do the correct analyses and improve the value of our pig crops.
Reducing variation not only has financial rewards, it makes management simpler. One of the biggest problems in our management of pig performance is “noise.” In other words, the range of performance is so wide that we cannot accurately detect changes.
We need more stable and predictable performance before we can truly refine pig production and actually lower costs. That is a vision that few pork producers currently carry, but it is an exciting one.