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Margins Every Pork Producer Should Strive For (Article)
By: Kent Bang, Swine Specialist
TAGS: Swine
 
February 14, 2017 -

Setting and establishing performance goals for operations isn’t always easy. In order to set realistic and attainable goals, I have long believed that you first need to find the percent of pigs weaned that are sold to the primary market.

There are many production and financial metrics we can measure, and don’t get me wrong, they are all important and together drive the success of your business. However, if I had one number to compare farm margins, it would be percent primary market sales. In other words, the ratio of the pigs sold to your main market or markets divided by the number of pigs that were transferred from farrowing to nursery or wean-finish.

Getting the actual numbers should be fairly routine for a farm. Closeouts should reflect the numbers that were obtained and should provide a good baseline for current performance over time.


[EVENT: Learn How Your Operation Benchmark’s to the Industry at Swine Industry Outlook Meetings]


What I have used below is a goal of 94% marketed to the primary market. That may not be obtainable today on a specific farm primarily due to the farm or group’s current health status. At any rate, using my number in this example, would indicate a difference in margin of $8.38 per pig placed or $9.03 per head marketed. Cost of production per cwt. difference would be $3.22 on a live-weight basis.


Another way to look at it would be looking at the lost opportunity. Theoretically, we could market 100% of the pigs placed. Looking at it that way, the cost of averaging 86% primary market pigs would $15.15 per pig in my example.

Tracking this margin in this way versus what is attainable helps us focus on ways to capture the value of the pigs we wean and move into the nursery or wean to finish system. It should be on our dashboard of metrics to track and understand to get continual improvement on the farm. Finally, and most important it should help us strive to gain additional margin.

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Kent Bang
Swine Specialist
Kent serves as the swine team leader for AgStar. He has over 30 years of experience in the swine industry, with the last 15 years spent financing large commercial swine production and processing segments.  Prior to that time he was a leader in the swine feed business, consulting across the U.S. and in Southeast Asia for ADM.  Kent has been active in the swine industry as a long-time member of the Pork Alliance, representing the Alliance at Pork Forum, serving on NPPC Committees and the NPPC Political Action Committee board.  He also serves on the National Pork Board’s Financial Management planning committee. 

Kent grew up in eastern Nebraska involved in animal agriculture and graduated from the University of Nebraska in Animal Science.  He and his wife Julie live in Omaha, NE and have two adult sons.
Contact Kent Bang
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