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Industry Partners
Prairie Swine Centre is an affiliate of the University of Saskatchewan
Prairie Swine Centre is grateful for the assistance of the George Morris Centre in developing the economics portion of Pork Insight.
Financial support for the Enterprise Model Project and Pork Insight has been provided by:
Contract Finishing: Getting Your Facts Straight
Posted in: Production by admin on January 1, 2006 | No Comments
Labor shortage and the rising Canadian dollar are concerns in the hog industry and have brought about the idea of contract finishing and contracting out manure. Upon analysis, Western Canada should be able to slaughter 1 to 2 million more pigs per year for the next three years with the planned construction of packing plants in Saskatoon and Winnipeg. Higher prices for finished hogs in the U.S., a shortage of Western Canadian slaughter capacity, and an arguable advantage in the U.S. contract finishing cost of production appear to be the reason for increases live exports. This trend will continue if Canadian packing plants cannot offer competitive prices. The general consensus among several large-scale producers is that yes, the U.S. can and will offer better prices over the next few years. Factors that influence the desire to slaughter in Western Canada includes increased slaughter capacity, enough pigs being finished to warrant a double-shift, and low feed costs. The most negative factor was the exchange rate. Contracting finisher barns usually involves the hog owners providing everything necessary for the pigs, but sometimes the barn owner will provide the labor. A 20-year economic model was created for a 2400 capacity finisher operation with earthen manure storage (EMS) and four 2400 finisher capacity operations without EMS. The single 2400 unit produces 1,638,120 gallons of manure per year. Given that the manure is spread on the land once every 3 years, a total of 819.15 acres are needed within close proximity, approximately 2 miles from the barn (the 9600 head unit requires 3,276.24 acres!). Hauling the manure extra distances would add numerous complicated costs to the model.
Bogies and Birdies of Pig Production
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Things have been pretty good since 1998. In fact, pick out any 10-year period since the 2nd World War and they all have been great. Hogs have been the “mortgage lifter” for the farmer. It is a fact that over time the hog production business is and will probably continue being a highly profitable business providing you can overcome swine disease and avoid going broke during “market adjustments”. One strategy is to partner with your packer by having a packer marketing agreement. A market price window relating to the cost of production seems a fair deal to both packer and producer. If spot prices are over the window you, the producer, receive only part or none of the price overage and vice versa for prices below the price window. An important thing to remember is that over time an efficiently run pork production business has had a better return on capital than the packing business. This means the marketing window may not be as high as you might have thought fair. But in return for this lower price window, your partner, the packer, is taking on part of your marketing risk. A packer agreement is a must if you are planning a major increase in the size of your production system by taking on a lot of debt. In fact, it is usually impossible to borrow large amounts of capital without some sort of packer marketing agreement. However, over time, taking on all the price risk is the best strategy. No hedging or no marketing agreement! When you got into the pork production business you correctly assumed it would be profitable enough in the winning years to far offset profit losses in losing years. But, somehow you must avoid going broke during bad years. That’s the paradigm of any cyclical business. How can you do this without hedging or a marketing agreement? This can be accomplished by having enough financial resources behind the hog operation to absorb losses taken during hard times or for that matter when your operation has unusual losses due to disease or other unexpected production problems. What resources do you need? A rule of thumb for farming operations in general is to maintain working capital equal to or greater than one year’s operational expenses plus personal living expense (drawing account). Working capital is short-term assets (cash, hogs, feed and supplies) minus short-term debt (accounts payable and notes due within one year). If the hog operation goes into a negative cash flow, working capital is maintained by taking on long-term debt on other assets or actually selling other capital assets, such as land or stocks. When market prices are low it seems like an everlasting event as you watch your balance sheet slowly deteriorate. This is the paradigm of any cyclical business especially a commodity business. The slightest change in supply or demand has a multiplying effect on the price of the commodity. However, don’t be a masochist and just sit there and go broke. Prepare your financial situation or obtain a packer marketing agreement and above all, operate at maximum efficiency at all times, but especially during times of low profitability.
Validation of new technologies for pig slurry spreading on grasslands
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The spreading of pig slurry is gaining importance on perennial crops, particularly grasslands. In this context, we examined three new technologies aimed at reducing odours with comparison to the common “low” surface sprayer boom equipped with deflector plates. Those new devices are: the surface sprayer boom with trailing drop pipes, the sprayer boom with soil cutting sweeps and finally a combination of the trailing pipe boom and a soil aerator. Our results showed that the trailing pipe boom, with a cost only slightly superior to that of the common boom sprayer, was the most efficient in reducing nitrogen losses by volatilization. Compared with the common sprayer boom, it reduced odours by 50% at spreading. But on this latter aspect, the low boom sprayer with cutting sweeps was the most efficient, emitting an odour concentration of only 25% that emitted by the common sprayer boom. However, this ramp was the most expensive of all and is not yet available in Québec. Finally, the combination of the trailing pipe boom and soil aerator could not be tested as extensively as the other booms, but proved to release less odours, at spreading and three days later, than the trailing pipe boom used alone, and to cause only a little more nitrogen losses. By mounting the trailing pipe boom and the soil aerator together on the same device, one would better align the aerator’s teeth and the trailing pipes and thus better reduce nitrogen losses and odour emissions.
SEAL FORMATION BENEATH ANIMAL WASTE HOLDING PONDS
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A low cost solution for ammonia emission abatement from slurry storage
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