Pork Professor: Evaluate hog marketing weights for efficient economics

May 23, 2008 03:04 am

— The financial situation facing pork producers has certainly been an unpleasant one the past several months. During this time of high feed prices and mediocre hog prices, I have been suggesting producers focus on several areas in their operations where they may be able to decrease cost, improve efficiency or improve value.
One item I have been suggesting to pork producers is to evaluate their marketing weights. This is a good idea to do occasionally regardless of the financial situation, but is especially important with the current high feed costs.
The past several years, it has made sense to market pigs as heavy as possible, or on the top side of the packer’s ideal weight range, because the additional revenue obtained was almost always greater than the incremental increase in production cost, which is primarily feed.
However, with the high feed costs producers should be re-evaluating whether or not it makes sense to market on the top end of the packer’s ideal weight range or if a lower market weight is optimal.
As pigs get older, they become less efficient converting feed into pork. Therefore, putting additional weight on a pig is not as efficient as previous weight gained. Decreasing market weights without changing any other factors means fewer days to market.
This extra “empty” or underutilized time can be used to aid smaller pigs in catching up, but if one cannot increase the number of turns in the barn (schedule the next group of pigs earlier), much of the potential advantage of emptying out the barn earlier is lost. Further complicating the issue is that many packers have recently increased their desired weight ranges.
Finally, one must also consider natural weight variation that occurs in every group of pigs finished. If the ideal weight to market is 265 pounds, for instance, not every pig on the load is going to weigh 265 pounds, even though the average may be right on. One can decrease the variation in groups of marketed pigs by decreasing the number per load and increasing the number of loads.
This needs to be evaluated compared to the increased cost of fuel and transportation and increase in amount of time spent sorting and loading animals. Regardless, variation is often not considered, but can be the most damaging with regards to maximizing revenue.
To assist in evaluating the optimal hog marketing weight, John Lawrence, an Iowa State University Extension livestock economist, has developed both a simple and advanced spreadsheet model, along with directions on using them. One can access the models through the Iowa Pork Industry Center website at www.ipic.iastate.edu.
The models utilize the concept that the cost of increasing weight increases at increasing rates. Try to say that three times fast. It also provides for input of changes in premiums received. This is especially important to consider. One needs to be able to estimate the spread in weights of a given group of pigs.
Consider the increase in the number of light pigs, which is generally more heavily discounted, and decrease in heavy pigs when lowering average market weights.
Certainly, determining the ideal weight to market your pigs is a complex matter that needs to consider a number of different factors. However, if you are currently marketing similar to what you did three or five years ago, it may make financial sense to decrease your marketing weight some.
This could decrease the amount of feed you are using and stretch your corn supplies, but should only be done after careful consideration.

Copyright © 1999-2008 cnhi, inc.