Finisher Close-outs John Deen University of Minnesota Swine Center

The frustrations: the variability of weights of pigs within a barn the complex pricing grid given by the packer the cost of both maintaining the pigs and the barn the lack of records of contributions to value The work

What can you do? Find an understanding packer Sort out heavy pigs Run barns longer Revise barn design Reduce variation Find alternate markets for lightweight pigs

Proportion sold at lights weights

Rule # 1: shipping is an end decision, not an overall strategy. averages are not applicable in most cases decisions are made on marginal economic performance, usually marginal profit

Rule # 2: Building costs and other fixed costs are only important in capacity decisions. most marketing decisions should ignore fixed costs marketing decisions must focus on opportunity cost in marketing decisions this involves the opportunity cost of not marketing a pig or conversely marketing a pig earlier in AIAO barns this involves the opportunity costs of closing out a group

Is it weight accuracy or timing Weight accuracy by eye:  Absolute is poor  Relative is good  Can people sort out the heaviest pigs?  Is sorting forced by space requirements? Timing of trucks often not in response to season

Proportion light and heavy pigs

Why are differential payments weight- based Lower potential margins on small carcasses Low prices for small primals Increasing supplies of small carcasses Inability to modify processes to fit varying carcass size Association with more lesions

Carcass vs Primal Values

Losses Not cost of production Mostly opportunity costs  Margin over feed costs Resocialization  Especially in small pens

Financial effects Sort loss Opportunity costs Consistency bonuses Alternative rearing systems for slow- growing pigs

Determinants Variation of weights Grid Change in carcass over weight Performance effects of sorting Close-out schedule, profitability Costs of sorting

What is quality in market pig production? contaminant free ethically produced lean good color and water-holding capacity Ease of processing consistent in characteristics, flow and delivery

Why is consistency important? ease of further processing ease of production refinement of inputs reduction of risk increase in demand

Proportion sold into target range

Components of variation of profits

Distributions differ

Definitions Lightweight pigs are either too young at time of market or have not met their expected growth rates Amplified by restricted capacity and little flexibility to address these pigs Age is a minor problem when pigs are raised in age cohorts Slow growth in a proportion of pigs that is too small to justify maintaining those pigs while underutilizing the capacity Do not meet consumer requirements

Unmeasured costs Feed conversion Treatment costs Mortality rates “Typhoid Mary” effect Sorting costs Input costs Planning costs

Why are differential payments weight- based Lower potential margins on small carcasses Low prices for small primals Increasing supplies of small carcasses Inability to modify processes to fit varying carcass size Association with more lesions

Carcass vs Primal Values

Equation for calculating the quality loss of a product. The further the product is from its target state, the greater the loss will be. Definition: Loss function

Marginal Curves

Loss function of market hogs

Definitions Lightweight pigs are either too young at time of market or have not met their expected growth rates Amplified by restricted capacity and little flexibility to address these pigs Age is a minor problem when pigs are raised in age cohorts Slow growth in a proportion of pigs that is too small to justify maintaining those pigs while underutilizing the capacity Do not meet consumer requirements

Total margin over feed costs

MOFC for a single pull system

MOFC for a multiple pull system

Things to do: Reduce losses when lightweights occur  Retain pigs  Sell to alternate market Prevent variation in growth rates  Disease control  Feed intake enhancement  others