Lost Income in GrowFinish The Problem of Lightweight by tne54169

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									Lost Income in Grow/Finish: The Problem of Lightweight, Cull and Dead Pigs

                 John Deen DVM PhD Dipl ABVP , Alejandro Larriestra DVM, PhD
                         University of Minnesota Swine Center
                                   St. Paul, Minnesota

One of the big challenges in swine production is to move from a cost of production
approach to an emphasis on identifying methods of maximizing margin. In other words,
the aim of pig production is not always to minimize expenses, but to use the opportunities
presented to maximize profits. Though this is often been presented as synonymous, it is
hardly so.

A good example of the argument is simply this question, “If you drag a dead 100 kg
market hog out of grow finish, how much did it cost to you?” The answer is usually given
in one of two directions. The first is that the losses are the sum of costs invested in that
pig to that point. Both the variable and fixed cost can be included in that answer. The
second answer is simply the value of that pig if it made it to market at its optimum weight
minus the savings realized through death, often the sum of feed saved and transportation.

Once put in such terms, the latter is usually identified as the more accurate representation
of the cost of mortality. We all agree that mortality is a real cost of rearing pigs, and yet
it is not a cost of production. The problem is that it is an opportunity cost - it is the cost
of not achieving a potential. Such costs are not a part of financial accounting, and
financial accounting is usually the limit of accounting methods used in animal
agriculture. It is driven towards the reporting of financial results to governments,
shareholders and lending agencies. Such accounting methods should not be used for
production decisions, and yet we have been driven in that direction.

The absurdity is that mortality is simply not reported in most financial records. Pigs are
treated like feed, as an input, and wastage is considered to be a normal and inevitable part
of production. Feed wastage is important, but difficult to measure. Pig wastage is
measured, and yet not emphasized in many cases.

Wasting pigs that come into the herd occur when the full potential is not achieved. Thus
not only dead pigs are a concern but also pigs that do not achieve optimal market
weights. This can be due to culling or due to slow growth rates that do not allow the pig
to achieve optimal weights before group closeout. We call these lightweight pigs.

We think it is justified to lump these poor pigs together, as the causes are often similar.
Lightweight pigs and cull pigs can differ simply due to culling decisions. Cull pigs can
be dead pigs that are simply treated in time to prevent death or the pig simply survives.
Disease insults usually have an effect on these three areas at the same time.

The losses associated with lightweight and cull pigs usually involves a good
understanding of optimal weights of marketing and the losses associated with not
achieving those optimal weights. A loss function, such as that shown in figure one is an
       $35.00

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        $0.00
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                                                           Wt (lb)

 Figure 1: Loss function for weight


essential part of these calculations. Such functions represent the margin over feed costs
for pigs shipped at differing weights. It represents the effects of changes in weight,
carcass characteristics, but most importantly, the demands of the pricing grid in place.
Loss functions are a part of any quality management exercise. If there is a quality that is
of concern and needs to be addressed, they can be represented in a loss function. Such
loss functions show that the emphases of quality in grow finish is still primarily a weight
issue. This goes against much of the discussion in swine production, but the losses are
really associated with a problem of not achieving a proper weight.

Figure two illustrates the problem of dead, cull and lightweight pigs in some detail. It is
an outcome of a retrospective analysis, trying to identify the sources of opportunity to
improve income in grows finish closeouts. We looked at approximately 140 closeouts in
one system. We standardized that base price received for pigs and the feed costs as well.
Closeouts were on the same 18 week schedule. We then calculated the effect of average
daily gain, feed conversion rate and the combination of dead cull and lightweight pigs in
each closeout. In this analysis lightweight pigs were those marketed at approximately
less than 15 kg from the target weight.

When comparing these three sources of variation in profitability of pigs, it was evident in
this data set and in other analyses that most of the losses are associated with these poor-
doing pigs. It is especially evident when we calculate feed conversion rates and average
daily gain as in this graph. Feed conversion rate is for those pigs that survive and we
calculated the feed eaten by those dead pigs and attribute it to the dead, cull and light
category rather than feed conversion rate. Likewise, average daily gain is only calculated
for those pigs not in that dead, cull and lightweight category.
   60%

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   40%

   30%

   20%

   10%

    0%
                   CDL's                               ADG                                  FCR


Figure 2: Components of variation in profits


Such analyses are not usually done, unless required for management purposes, as they
involve creating pro forma budgets. In other words, we need to create a budget of the
way things ought to be rather than the way things are. We can then see where the
deviations from potential performance and the associated lost income are.

Identifying
where the
farm ought         100
to be is the
challenge.          80
What we
                    60
have is a
potential           40
population
of grow             20
finish pigs,          0
                                         Stillbirths
                               Mummies




                                                       PWM
                      Birth




                                                                                            G/F Mort


                                                                                                       G/F Culls


                                                                                                                   G/F Light
                                                             Nursery Mort




from that
                                                                            Nursery Culls




population
there is
attrition due
to mortality
and slow
growth.
Figure three
shows one
                  Figure 3: Example of attrition curve
such attrition curve. The problem is that we have become accustomed to attrition and
consider it “natural”. Contrarily, in quality terms, it is an uncontrolled variable as
inadequate records and emphasis has been placed on this subject. Thus producers accept
uncommonly high levels of attrition, without realizing the true capability of the system.
As shown in figure three, where we analyzed one system, the losses can exceed 30% of
pigs born. It is hard to identify industries that accept such high losses from a potential.

Thus there are three main steps in approaching the problem of dead cull and lightweight
pigs:

   1. Count them. Mortality and culls are often counted and recorded in closeout
      records. The only additional piece of data is to identify the cutoff weight at which
      losses due to not reaching optimal market weight are significant. Then it is
      simply the job of accounting for these lightweight pigs as well.

   2. Estimate the losses associated with each category. This is simply taking the loss
      in margin and adding savings in expenses. For instance, a cull pig may be
      marketed at $40 instead of $100. This loss of margin of $60 is reduced by feed
      savings of $15. Thus the opportunity cost of a cull pig is $45. This can be
      calculated at closeout to estimate more closely the costs of attrition.

   3. Identify causes of this attrition. Two broad categories of attrition can be
      identified. The first is the quality of pigs at entry and the second is the quality of
      the grow-out phase. Input quality has been underestimated as an effect,
      particularly in the nursery. Tagging pigs of questionable quality and seeing if
      they are more likely to be poor pigs at exit is an excellent exercise. Differential
      treatment of these pigs is often justified, especially considering the opportunity
      costs.

The steps together should be familiar to those involved in six Sigma or other quality
control systems. We have found that a target of quality pigs should be identified and can
often be an excess of 95% of pigs placed in the grow finish barn. It is a change in the
manner in which we view record-keeping. It is also a change in the responsibilities for
nursery and sow barn managers, in predictable quality deficits are more reliably
identified.

The last comment on the emphasis of minimizing poor doing pigs is that it often comes
down to a renewed emphasis on disease control, particularly bacterial diseases. It
appears that poor doing pigs is often a snowballing problem. They appear to be more
likely to carry infectious diseases that seed down the rest of the population. The Typhoid
Mary problem is difficult to measure and yet seems to be evident in many of our systems.
As we address these pigs, management and disease control become simpler and more
focused.

								
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