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The Best Invest

by 5m Editor
26 May 2009, at 12:00am

Future efficiency, expansion and success all relate directly to investment. In simple terms, the more you put in, the more you get out. In order to remain competitive, UK pig producers need to channel their investments. Glenn Dames, Managing Director at JSR Farms, takes a detailed look at how the best invest.

Too often JSR Genetics is told that the UK pig industry is not competitive enough and that it is only capable of producing products for the higher, niche market. The industry has experienced significant challenges since 1999 – from the implementation of sow housing legislation unique to the UK, low pig prices, Classical Swine Fever (CSF), Post weaning Multi systemic Wasting Syndrome (PMWS) and two cases of Foot and Mouth Disease – all compromising investment in those areas which would enable us to become more profitable by capitalising on the genetic advances made by the breeding companies.

Many UK producers continue to look over the water at the reproductive figures produced by the Danish farmers without taking into account the differences in structure. Danish producers have continued to invest, with the support of their finance houses and industry structure, enabling them to achieve both breeding and reproductive performance closer to the animal’s genetic potential, albeit at the expense of rather a lot of sows.

This is in stark contrast to UK producers being challenged by a lack of investment, poorer health and increasing legislation. They are further hindered by the extra cost requirements to meet the added value contracts. These are all factors that prevent UK producers from achieving the full reproductive, growth efficiencies and carcase quality from their chosen genetics.

These challenges have instigated change, with more innovation through supply chain initiatives, greater planning and longer term assumptions in decision making. A new generation of pig producer is developing, adopting a business approach to decision making rather than allowing the heart to rule the head.

Today, the JSR Farming Group operates 3,700 sows in commercial production compared to the figure of 350 commercial sows of 10 years ago. The growth of the commercial herd has been on the back of consistently good performance from our genetics, investment, good people development and longer term views on the purchase of feed.

In 2002, JSR Genetics recognised the need for change and that it had to review how it used some of our facilities. The company produced a seven-year production and financial plan that plotted the route forward and set various targets along the way. The plan controlled costs, optimised output from the facilities and highlighted investment requirements both in buildings and health. It also enabled the company to develop the business and make the most of the genetic gains achieved from its breeding programme.

Today, JSR’s largest breeding herd is 1,700 sows, having increased from the 540 sows in 2001. The company had made some significant investment in the late 1990s to comply with the sow legislation but after a few years, it was decided that it needed to adopt a different strategy for a number of units, taking into account their location, suitability to produce high health breeding stock and our forecasts for the future.

The plan was to increase the average herd sizes on a gradual basis with each increase positioning breeding, gestating and farrowing animals in accommodation previously occupied by rearing pigs.

In one example, JSR required an initial capital investment of £145,000 for 105 farrowing crates to facilitate an increase to 950 sows from 540 sows. A significant increase in herd size generally delivers a far quicker payback, especially when no major increase in resource is required to operate the facility and good performance is achieved.

During the next five years, the company continued to expand by utilising all the buildings with some simple conversions, steadily increasing the herd and in 2007, its largest herd was increased to 1,700 sows by replacing the old feed mill on site with a purpose-built gilt mating and gestation facility followed by the conversion of a grower house to provide 80 extra farrowing places at £700 per crate. These conversions will prolong the life of the existing buildings.

Contract rearing sites were identified at various stages of the expansion within a certain distance of the unit, working with producers still requiring an income from their empty pig facilities. The specialisation allowed the team now to focus on optimising reproductive performance whilst someone else took care of the rearing pigs.

In order to monitor progress, the teams are supplied with weekly summaries reporting on the eight main Key Performance Indicators, i.e. herd size, matings, pigs weaned and comparing one unit against another. There is also a comprehensive production recording system for analysis and to help improve performance. Since 2002, the team has consistently exceeded productivity, enabling the business to invest with confidence and realise the financial benefits.

With any investment, it is vital to consistently achieve the output targets set. This can be achieved by flexing the mating programme in the event of any performance shortfalls and by operating an effective replacement programme – as an empty pen does not produce income). Today, the herd is averaging 24.2 pigs produced per sow, weaning 11.2 per litter and the combination of performance and scale have reduced the overhead cost by 11 pence per kilo from the 2000 figure.

The next move is to construct an 8,700-place weaning-to-finishing facility, enabling JSR to capitalise on the genetic potential demonstrated in the breeding programme and further reducing cost of production (nine per cent improvement in feed efficiency). JSR is positioning the business to be able to deliver acceptable profitability during periods of higher fuel and feed prices whilst also making more use of the slurry (Liquid Gold) on its own land.

Today, JSR's largest facility is producing 42,500 pigs per annum from 1,750 sows compared to 11,200 pigs from 540 sows nine years ago (and the same size team). The target for the commercial pig business is to average 25 slaughter pigs sold per sow per annum and produce at least 325 kilos of saleable meat per tonne of rearing feed by 2011. This particular unit has almost achieved its current goal and these will be reviewed for the future.

JSR sees an exciting opportunity for the UK pig industry as people return to profitability, invest in the future and continue to benefit from the significant improvements being experienced in both breeding and rearing herd performance.

This article was published in the March 2009 issue of Weekly Tribune.

May 2009