Submitted by Jan Geurts, Nutrition Partners Inc. Published: Canadian Hog Journal Vol 38 #5, Spring 2017, pp 36-43. Date of Issue May 2017
Hog producers are always looking to improve their farms bottom line by improving performance and reducing costs. To do that producers benchmark their technical/financial performance numbers.
This can be done fairly simply when producers are talking amongst themselves and asking questions such as:,
- “How many pigs do you wean/sow/year?”
- ”What is your farrowing rate?”
- “How high is your born alive/litter?”
These are pretty crude measures, and don’t identify the weak areas on the farm, and what factors contribute the most to improving the bottom line.
Then on the other hand you have the more complete benchmarking numbers like SMS (Swine Management Services). SMS benchmarks the production records of about 1,500,000 sows in the USA and Canada (see Figure below). This gives more detailed information on a farm’s performance, for example the 2016 rolling 52-week averages.
Different categories show the performance of the average farm, the 10% best farms and the 30% worst farms, and enables the individual producer to compare their production with the benchmarked farms, and roughly see how they measure up.
Which factors have the biggest impact on the bottom line?
To make progress improving the bottom line, you need to also know the financial impact of the different parameters and ask yourself:
- What performance parameters can be improved?
- Which parameter adds the most value to my bottom line?
- What is the extra value of an improvement?
- What is the impact of any extra cost (e.g. more expensive lactation feed to improve litter and post-weaning performance)?
To be able to calculate this you have to look at the factors in play, and their connections to each other.
From the return side of things, the left diagram outlines all the factors that influence the financial return of the pigs shipped per sow per year, and the connections between each factor. All the factors that influence the costs per sow per year are outlined in the right diagram below.
NPI Farrow-To-Finish Analyzer
The NPI Farrow-To-Finish Analyzer program, developed by Nutrition Partners, can be used to analyze technical/financial performance, benchmark a farm against another farm’s performance, and run simulations of changing technical/financial parameters.
Farm 1 versus SMS 2016 Average
|Based on wean-1st service interval, lactation length, NPD culled/dead sows and NPD repeats Farm 1 had:
Based on total born, % still born and % pre-weaning mortality, Farm 1 weaned 0.37 more pigs/litter.
Based on % Nursery Mortality, and % Grow-Finish Mortality, combined with the higher litters/sow/year and more pigs weaned/litter, Farm 1 sold 2.74 more pigs sow/year
|The financial summary shows all the numbers per:
Although the net return per shipped pig is only $5.55 higher on Farm 1 than the SMS 2016 average farm ($37.50 vs $31.95), the net return per sow per year and the total farm was much higher on Farm 1 than the SMS 2016 average farm by :
The problem always is, it is hard to see what the financial impact of each factor is because many factors influence the final result. Knowing how the different factors impact the financial bottom line will help to decide what to work on to make the most impactful progress.
The Analysis below shows the financial impact of the differences in all numbers versus the benchmark expressed in $/sow/year.
$ Value of performance numbers with different market prices
With changing market prices, the $ value of performance differences can vary significantly. Logically, if the market price is higher, net returns are better, and the value of every improvement is also higher.
In this scenario we looked at the impact of differences in performance on Farm 1 with three market prices (Index 100): $1.20, $1.45 and $1.60.
This can be very useful when you want to evaluate strategies financially, and puts everything in perspective. For example, if you want to improve your total born/litter, the improved Nurse Sow ration may cost $10 extra/ton. The Nurse Sow feed cost would be $ 3.87 more per sow per year.
To calculate how big the improvement has to be to cover those increased costs:
- At a market price of $ 1.20, +0.1 total born/litter results in $ 6.30 improvement per sow per year. The improvement needed is therefore $3.87 / $6.30 x 0.1. This is a 0.061 improvement needed
- At a market price of $ 1.45, +0.1 total born/litter results in $ 11.33 improvement per sow per year. The improvement needed is therefore $3.87 / $11.33 x 0.1. This is a 0.034 improvement needed.
- At a market price of $ 1.20, +0.1 total born/litter results in $ 14.35 improvement per sow per year. The improvement needed is therefore $3.87 / $14.35 x 0.1. This is a 0.027 improvement needed
You can relate the $10 extra nurse sow ration cost per ton of feed also to the cost of a micro or premix if you wanted to. Sometimes there are added cost from specific ingredients, different vitamin levels, added amino acids. At the end of the day, it is all about the price of the ration (and of course the FCR combined with that ration).
To relate the price of a premix back to the cost of the final ration :
- $10 extra/ton of feed with a 30 kg premix/ton => 1000/30 x $ 10 = $ 333.33 /ton
- $10 extra/ton of feed with a 5 kg micro/ton => 1000/ 5 x $ 10 = $ 2,000.00 /ton
- $10 extra/ton of feed with a 1 kg micro/ton => 1000/ 1 x $ 10 = $ 10,000.00 /ton
- Knowing all your technical/financial performance is critical for a good evaluation of performance.
- In general, technical performance of sows is monitored fairly well with management programs.
- Not enough attention is paid to Nursery-Grower-Finisher performance (ADG, FCR, Mortality, Optimal Dressed Weight, Index), which can have a big impact on the bottom line.