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Three Tricks to Improve Profits in Hog Production

by 5m Editor
1 February 2008, at 12:00am

By Steve Dritz, Kansas State University. The following paper is taken from a presentation to the Shakespeare Swine Conference in Ontario.

Trick 1 – Monitoring Grain Particle Size

It is well recognized that a reduction in grain particle size leads to increases in nutrient digestibility. The increased digestibility is due to increases in grain particle surface area providing for more exposure of enzymes to break down nutrients for absorption. The thumb rule we use to value grain particle size is a 1.2 per cent improvement in finisher feed efficiency for every 100 micron reduction in particle size. As a general thumb rule we used to value this improvement in finisher as $0.50 per 100 micron reduction. However, with increased grain prices this value has increased to greater than a $0.75 per 100 micron reduction. Thus, a reduction from 900 to 600 microns is expected to improve returns by $2.25 per pig.

While detailed procedures have been provided by the American Society of Agricultural Engineers for accurate measurement of grain particle size, we find the procedure difficult to implement at the farm level. Therefore, we have developed a simpler and lower cost method to regularly monitor grain particle size on farm or in the mill to provide immediate feed back. Mill adjustment scan then be made and documented immediately. Briefly, this procedure requires an accurate scale and three different sized sieves. The procedure includes weighing a known amount of ground grain and hand shaking on the sieves. The remaining amount on each screen is then weighed.

The amounts are then entered into a spreadsheet and particle size is outputted based and a regression equation (spreadsheet can be down loaded from www.ksuswine.org under particle size information).

Other tips for monitoring particle size:

  • Establish a regular schedule of monitoring
  • Plot the results on a chart
  • Add notations of mill adjustments to the chart
  • Only monitor ground grain
  • Lower variation in particle size results in less flow ability problems.

Trick 2 – Strengthen Biosecurity and Sanitation

The work at Purdue and Minnesota on biosecurity procedures have clearly demonstrated that simple procedures such as entrance protocols, washing hands, and changing boots and coveralls can reduce the spread of PRRS virus . Also, the work of Butch Baker and Bob Thompson has clearly indicated the importance of sanitation of transport vehicles.

Recently, we have completed an analysis of data from a production system from Northwest Iowa. The objective of the analysis was to explore the risk factors for Porcine Reproductive Respiratory Syndrome Virus (PRRSv) contamination of sites and quantify the value of biosecurity practices. The data was derived in a production system where the sow farms were negative for PRRSv and nur series were known to remain free of contamination.

Categorization of finishing groups was done by ELISA screening of blood from a s ub sample of pigs in each finishing group. Prevalence of PRRSv negative groups was 46 per cent.

Growth rate, feed efficiency, mortality, and percentage marketed were all better in the PRRSv negative groups. We estimated that pigs in PRRSv negative groups were $4.10 per pig more profitable than those from positive groups. This is in close agreement with previously published estimates (Neuman n et al., 2005). Further analysis of the data was performed by auditing the number of other pig spaces within 1.5 miles of each of the sites.

Sites were categorized a s being in less dense areas (<5,000 pig spaces) or more dense areas (>5,000 pig spaces). The range in densities for the 1.5 mile radius was from 0 to 15,000 spaces. After analyzing the density data several different ways, we failed to detect any influence of pig density on PRRSv prevalence, growth performance, or mortality rates.

Groups also were categorized as having failing or passing biosecurity practices. These practices were mainly comprised as adherence to sanitation, entrance, and load out protocols. Those with a passing score were found to have a lower PRRSv prevalence, higher growth rate and better feed efficiency. The economic value of those groups with a passing biosecurity category was estimated as $5.03 more than those with failing biosecurity practices. Our conclusion from the data is that biosecurity factors are much more important than location factors for preventing spread of PRRSv.

This analysis has been a useful educational tool for production managers and growers as to the cost of disease. The further analysis has eliminated the mentality of some of the growers in high density areas that "I can not change the location of my barn so it is not my responsibility." Finally, this analysis has been a powerful tool for focusing the resources and efforts of the service people to focus on practices that make an impact.

Trick 3 – Study Behavioural Economics

Fun fact: The MRI brain scan of a cocaine addict is virtually identical to that of someone, who thinks he is about to make money (quote from book by Jason Zweig, 2007).

We are all aware that the pig industry is a highly cyclic and risky business. Interestingly, there is a whole area of science that people are stu dying the relations hip between concepts in neuroscience, economics and psychology to explain some of the biology driving our decision making process. For example in the summer of 2006 there were many factors in place in North America to indicate that feed costs were going to increase. However, few swine producers had priced feed ingredients due to the wide basis and the fact that in the previous three years hedging ingredients had been costly. Again in the summer of 2007 the same scenario has played on the revenue side of the equation. There is a whole area of scientific research that can help us understand our decision making errors. Hopefully, with understand we can make better decisions. Some examples include adapted for pig production include (Haas, 2007):

Overconfidence. We all tend to think we are above average.

Mental Accounting. This is the tendency to value some dollars less than others. We see this commonly in the nutrition world. When times are good feed ingredients of questionable value are not scrutinized as closely. Conversely, when times are tough we get a number of calls to review diets and scrutinize things closely for unneeded expense.

Loss Aversion. This is the tendency to feel more pain by losing money than you would feel satisfaction in gaining an equal amount of money. We see this commonly when price is severely below the cost of production and decisions are made to reduce nutrient levels to reduce diet cost which increase short term cash flow but increases long term cost from reduced performance.

Status Quo Bias. This is the tendency to want to keep things the way they are. How many examples of this can you think of in your own business or life?

Regret Aversion. This is the tendency to avoid taking an action due to a fear that in hindsight it will turn out to have been less tha n optimal. Paralysis by analysis!

Recency Bias. We tend to associate more importance to recent events than we do to less recent events. We tend to think good or bad times will last forever.

Information Cascades. This is the tendency to ignore our own objective information and instead focus on emulating the actions of others. We see this in production systems that do their own research and follow the herd instead of following their own data.

Credulity. While we might like to believe that we are all perfectly rational, reality is far different. Unfortunately, we tend to be susceptible to the manipulative messages. A corollary is that the farther you are from home the more credible you are as a consultant!

References:

Haas, E. 2007. Psychological /Behavioural Investing Pitfalls. http://altruistfa.com/behavioralinvestingpitfalls.htm.

Neumann, E. J., J. B. Kliebenstein, C. D. Johnson, J. W. Mabry, E. J. Bush, A. H.Seitzinger, A. L. Green, and J.J. Zimmerman. 2005. Assessment of the economic impact of porcine reproductive and respiratory syndrome on swine production in the United States. JAVMA 227: 385-392.

Zweig, J. 2007. Your money and your brain: how the new science of neuroeconomics can help make you rich. Simon & Schuster.

November 2007
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