Pork sector success: simple to say, harder to achieve
Tuesday, October 29, 2019
Swine industry experts share tips about business management to help improve your bottom line.
by Geoff Geddes
In some respects, producing pork is like becoming a millionaire: if it were easy, everyone would do it.
In both cases, success hinges on the mastery of many elements. The process sounds intimidating, but profiting in the pork sector - like making your first million - starts by learning from the people who have done it.
Risk Management
"Over my 25 years in the hog business, margins have contracted. The markets are as volatile today as I've ever seen them," says Steve Illick, a former director of Ontario Pork and owner of a 1,200-sow farrow-to-finish operation near Orangeville, Ont.
"This (situation) makes risk management critical" to reduce volatility, he says. "I don't think you can accurately predict if the market will go up or down so, when prices appear that offer some degree of profit, it makes sense to take advantage of them through tools like hedging, options and futures."
Though some people have a knack for risk management, most producers should consult an expert - a broker or a consultancy group - who can get them off to a running start.
marchmeena29/iStock/Getty Images Plus photo
"You need to become educated," says Illick. "Jumping in without knowledge will become discouraging, and you may write off risk management as a tool."
Without proper guidance, pork producers can succumb to two common stumbling blocks: timing and emotion.
"Everyone wants to learn how to hedge and get more for their hogs when the markets are at the bottom, but nobody is interested when prices are high," says Illick.
Producers "go at (hedging) at the wrong time and then, when things turn around, they ask, 'Why did I hedge at that price?'
"People also tend to be overpowered by emotions," he says. "You see what is going on in China in April and think that you had better not be overhedging; in fact, you should be hedging aggressively."
In these situations, a coach can provide invaluable help when you form a plan. A coach can also give you the discipline to follow it, Illick says in an interview with Better Pork.
And, to make sure everyone in your farm operation is on the same page, everyone should buy into the plan, Illick advises.
Labour
"As businesses grow, you need more support to keep the barns running, and there's only so much automation you can use," says Andrea De Groot, managing director at the Ontario Pork Industry Council and a pork producer with a farrow-to-finish operation.
"Having boots on the ground is vital to reaching your goals but finding skilled labour to keep your barn fully staffed is really challenging."
While no easy answers exist for acquiring labour, forward thinking helps. Try to get fully staffed before your workers are stretched too thin.
Increasingly, producers look to temporary foreign workers (TFWs) to fill out their teams. The application and hiring process can test your patience but is worth the effort in the end.
"Although the TFW process takes time and money, the upside is that you get some truly committed people who have left their home country and really want to work," says De Groot.
"We've seen a huge increase in TFWs in pig barns over the last 24 months. It's key to incorporate them (into your operation) in a meaningful and effective way that will make best use of their skills and attitude."
The challenges of attracting labour are growing, so retention is more important than ever.
"It's essential to set concrete expectations from the outset and learn some HR skills to manage people properly," says De Groot.
"Communicating about work roles provides clarity for employees and increases the prospects of job satisfaction," she adds.
Paying attention to the little details can be as important as the big picture.
"We did a survey within the swine sector, and one of the main priorities for staff was a designated lunch or break room that is clean and comfortable. Proper lighting in the barns also made a big difference," she says.
"Combine (those environmental conditions) with showing respect for workers and recognizing their contributions to the business, and you'll be on the right track."
Nutrition
As feed costs comprise at least 60 per cent of a producer's expenses, small improvements can have big effects.
"You can't improve what you don't measure, so we encourage producers to get a good handle on dollars of feed used per kilogram of gain," says Dr. Lee-Anne Huber, an assistant professor of swine nutrition at the University of Guelph in Ontario.
"It's critical to (meet) the pig's nutrient requirements as closely as possible so you're not oversupplying feed and wasting money, or undersupplying (feed) and impeding growth."
One technique that supports this goal is phase feeding. Following this method, producers change swine diets in sequence as the animals grow and their nutrient needs change.
"We commonly do phase feeding in the nursery and at the grow-finish stage, but an emerging area is phase feeding for reproductive sows," says Huber.
"Not a lot of people are doing it right now, but some promising research shows we can improve sow productivity and longevity by precisely meeting her nutrient and energy requirements throughout her reproductive cycle."
Feeder management is also vital and something producers can manage daily.
"In the nursery and grow-finish phases, we recommend that when pigs are fed ad libitum, 50 per cent of the feeder trough should be full. This (approach) ensures that you avoid spoilage and wastage while giving pigs what they want and need to maintain their growth rate," she says.
Jodie Aldred photo
"Proper feeder management is one way to really improve the efficiency of your operation in terms of feed costs."
Animal health/biosecurity
Though the sector focused on biosecurity before the appearance of the porcine epidemic diarrhea virus, these best-management practices have since become even greater priorities in the industry.
"Biosecurity goes back to traffic control on the farm," says Dr. Sue Burlatschenko, veterinarian and owner of Goshen Ridge Veterinary Services in Tillsonburg, Ont.
"Make sure visiting vehicles go to the highest health locations first so they aren't transporting unwanted material," she says.
National Pork Board and the Pork Checkoff, Des Moines, Iowa photo
"I'm big on visual reminders of your biosecurity program such as gated entries for vehicles and locked doors. Even a Danish entry is a great visual. The bench is right there in your path, reminding you to take your boots off and swing your legs over just to get in the barn."
It's also important to understand how pathogens get into your barn. They can be carried on fomites, via pig-to-pig transfer or through the air.
You have so much to remember, so checklists can be valuable - to a point.
"You don't need a list with 30 items, as you're bound to get interrupted by a phone call or you'll have to respond to an animal's needs in the barn, and you may never get back to the list," says Burlatschenko.
"Focus on five or 10 simple things. Walk around once a month to ensure you're doing what is needed.
"Do I have hand sanitizer? Am I changing the boot dip regularly? Do I clean and disinfect the shipping ramps regularly?"
The process sounds simple but, if it's done regularly, it quickly becomes part of your routine. New staff can sometimes assume this duty; they'll bring a fresh set of eyes to spot things others miss.
Don't be so hard on yourself that you get discouraged, though.
"When you finish that checklist or walk around, give yourself a pat on the back," Burlatschenko says. "You deserve it."
Maximizing efficiency
"Especially in the pork business, where markets are constantly fluctuating, you need to know where you can cut costs when necessary and when you have flexibility to take on repairs or added expense," says Tanya Terpstra, manager of Birchlawn Farms Ltd. near Listowel, Ont.
Ontario Pork recently featured Tanya and her husband Darryl in the farm management section of the organization's "An Era of Change and Accountability: 2018 Social Responsibility Report."
"In certain months in the pork business, markets tend to be consistently weak," she says. "But we tend to forget that (trend) sometimes and think that things will always be awesome. Know the cycles and focus on where you can get the biggest bang for your buck."
Paying attention to business details will pay big dividends for your operation.
"Herd health is number one," says Terpstra. "Really nurturing those sows and spending time on each litter can maximize production. Your efforts will be reflected in the finishing barn and getting pigs to market."
Another priority item should be equipment. Ensuring it is well maintained aids in efficiency. Staff spend less time on repairs and more time monitoring the animals.
And communication is key, too.
National Pork Board and the Pork Checkoff, Des Moines, Iowa photo
"It can be as simple as someone saying 'We need to order more feed for Tuesday' and nobody takes that (task) on," says Terpstra. "You can miss the most basic things if communication breaks down, so this is an area where room for improvement always exists."
Even the best pork producer may not net a million dollars but, if your goal is to succeed and sustain, a few changes in the central aspects of the business could prove to be priceless. BP