Better Pork - June 2016

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June 2016 21
Pork News & Views
Use this as a way to position your business for
future profits!
Christoph Wand, Livestock Sustainability
Specialist @CtophWand
519 820 3150
Recap - Banff Pork Seminar 2016:
Optimizing Feed and FarmMan-
agement to Market Conditions
At the 2016 Banff Pork Seminar, Dr. Mike To-
kach from Kansas State University addressed
a breakout session crowd on how to optimize
diets and management practices on farm to
match changes in economic conditions.
Swine producers are used to seeing profit
volatility. Changes to grain supplies and feed
prices, along with changes to pork supply
have major impacts on the bottom line. Since
feed accounts for 2/3 of the cost of raising
pigs, changes to feed prices can have signifi-
cant overall impacts. Dr. Tokach began his
talk discussing the big picture decision of ef-
ficiency vs. throughput. Overall, this decision
depends on the current state of the market.
When income is reduced due to low hog pric-
es, high input costs, or a combination of both,
producers need to focus on managing cash
flow, liabilities and assets. Dr. Tokach suggests
that cash flow can be controlled through
managing costs, reducing capital spending,
renegotiating rental or expense agreements,
and reducing cash dividend removals from
the business. In terms of liabilities, producers
may seek to extend or renegotiate loan terms
as required. Depending on how tight things
become on farm, producers may have to
liquidate a portion of their inventory/assets in
order to pay down debt and remain solvent.
When income is low, producers need to focus
more on efficiency, and utilizing assets to
their utmost ability.
On the flip side, when times are good and
incomes are higher, throughput becomes
the main driver, although efficiency is still
important. Producers should harvest as much
income as possible in order to help prepare
for the next downward turn, and this may in-
volve some cost increases or efficiency losses
in order to maximize throughput.
Regardless of the market scenario, Dr. Tokach
stressed that these types of decisions need to
be based on a cost-benefit analysis rather than
on total expenditures.
The second part of the presentation dealt
with feed and farm management decisions
under good and bad market conditions. Mar-
ket weights and sow inventory were two areas
where Dr. Tokach spent some time before
getting into feed management.
Market Weights
Although the magnitude will change depend-
ing on your processor and packing grid, pro-
ducers may want to increase market weights
towards the top end of their matrix when
returns over feed and facility costs are high. If
the marginal increase in value is greater than
the extra costs incurred as the pig is reared to
heavier weights, it is worth taking advantage
of. Keep in mind, additional space may be re-
quired to keep pigs on feed for additional days.
On the other hand, when market prices are
low and/or feed costs are high, producers
may want to shift market weights closer to the
lower end of their matrix. Heavier pigs have
poorer feed efficiency, which increases mar-
ginal feed and facility costs, and it is no longer
profitable to keep pigs on feed for extra days.
Producers should take precautions to not
lower weights too much though, as this may
trigger severe weight discounts that exceed
the cost of feed and facilities.
Sow Inventory
When times are tight and you are operating
below breakeven, Dr. Tokach recommends
removing lower producing sows from your
herd in order to improve efficiency and to
provide some additional cash flow. Eliminat-
ing the low producing sows will lower feed
costs and allow the farm to focus on maximiz-
ing the efficiency of the sows remaining in
the herd to their utmost ability. He cautions
producers to not lower the herd inventory
too much however, or the income generation
capability of the farm will become limited.
Keep in mind that fixed costs are still present,
and must be spread over as much production
as possible.
When market conditions are good, producers
should maximize their sow herd inventory in
order to produce as many pigs as possible and
fully capture the economic situation available
to your farm.
Although these concepts are relatively easy
to grasp, putting them into practice is a little
more difficult unless long term market trends
are present.
Diet Formulation Changes
Most feed management decisions do not
change with changes to market conditions. It
is common practice to see dietary ingredients
change as the price relationships between
those ingredients shift; however, the recom-
mended nutrient levels in the diet will not
change significantly.
For many nutrients, including most amino
acids (ex. Lysine, methionine, and threonine),
vitamins and trace minerals, reducing levels
in the diet will significantly impact feed
efficiency. From the economic perspective,
any savings in feed cost per ton will be lost
through poorer feed efficiency, thus increasing
the feed cost per pig instead of decreasing it.
Although the levels of most nutrients will
remain the same during low and high market
conditions, nutrients that influence feed
intake and growth rate without greatly impact-
ing caloric efficiency may be subject to change
slightly as economic situations evolve. Some
such examples are the amino acids trypto-
phan and valine, dietary energy and copper.
For tryptophan, valine and energy, feeding
slightly below the requirement level will lower
feed intake without impacting feed efficiency
(feed intake and growth rate are both lowered
together). This may be appropriate when
hog prices are low; however, the savings in
feed cost may not compensate for the lower
growth rate during high priced periods. On
the other hand, increasing copper to growth
promoting levels will increase feed intake and
growth simultaneously, and the extra cost as-
sociated with including additional copper may
be more beneficial during times where market
hog prices are high.
Before making any changes to your nutrient
inclusion rates, talk to your feed company
about the best option for your farm during
different market situations.
In summary, feed and management decisions
should be made with changing market condi-
tions in mind. When times are good and you
are making money, the driver should be to
maximize throughput and weights in order to