You are here

Pork Powerhouses 2007: Run-Up in Rations

Some things you can just take to the bank. Sow herd expansion among the Pork Powerhouses would fall into that category -- even in the face of the biggest run-up in feed prices in history. Click here to see the Pork Powerhouses list.

This is the fourteenth year of Successful Farming magazine's annual ranking of the Pork Powerhouses. The only constant in all that time is that the 20 biggest farms will add more sows every year, bringing further consolidation to the nation’s swine herd.

This year, they added another five percent for a total of 3.155 million sows. The largest, Smithfield Foods, now has more than 1 million sows in the U.S. and 1.2 million worldwide. The June USDA Hogs and Pigs Report said there are 6.12 million breeding animals in the U.S., meaning these largest producers control almost half of the nation's swine breeding herd.

It's for certain that these 20 Pork Powerhouses produce more than half of the pigs in the U.S. That's because they save more pigs per litter with their high-tech genetics and facilities. USDA says farms with over 5,000 head save almost half a pig per litter more than smaller farms. There is good evidence that these largest producers, which average over 1 million pigs per year, save even more pigs per litter and produce 55% to 60% of all U.S. pigs.

The incredible thing about expansion this year is that it comes in the face of the ethanol-driven explosion in the price of feed. (Granted, most of the new barns were under construction before the run-up in grain prices.) A year ago at this time, pork producers had been feeding corn that was at least $1 per bushel less than it has been for most of 2007.

Iowa State University estimates of the costs to finish hogs say that during the 2001-2006 time period, the cash price of corn averaged about $2.05 per bushel, and the feed cost to finish market hogs averaged $49 a head. If corn averages $3.60 a bushel in the future, the Iowa State estimates say the feed cost to finish a hog will be $69 -- 40% more than before the ethanol boom.

The largest producers are tight-lipped about their costs, but one manager says there is about a $6 per cwt range in cost of production from low-cost to high-cost among the Pork Powerhouses. The Iowa State numbers would say the break-even price to raise hogs is up $6 to $8 per cwt in the last year, to the mid-$40s.

Even at those prices, most Pork Powerhouses have made good money in the last year, with strong pork demand and market prices around $50 per cwt live weight.

One thing the largest producers do to control feed costs is feed more by-products from ethanol facilities. The high-fiber distillers' grains (DG) work better in cattle feeds, but their high protein levels can also work for hogs in limited doses. The savings are fairly modest: With corn at $120 a ton, dried DG at about $95, and DG feeding levels of 10% to 30%, the savings per hog of feeding DG could be $1 to $3 per head.

The Iowa Falls, Iowa, feed mill of Christensen Farms (one of five partners in Triumph Foods, number two on the list) makes 10,000 to 12,000 tons of feed a week for growing-finishing pigs. Nearly 10% of that feed is DG, trucked from a nearby Hawkeye Renewables ethanol plant.

Eric Christianson, vice president of nursery-grow-finish operations for Christensen Farms, says they are comfortable feeding between 10% and 15% DG, particularly in nursery and early-finishing rations. They don't see a reduction in feed intake at those levels, and they don't have pork quality issues, either. At higher levels and if fed in the final finishing phase they do have quality concerns.

"Excessive feeding of DG leads to softer, oily fat in the pork products," says Christianson. "This is undesirable, especially to some of our export customers. And, soft bellies can lead to difficulties in cutting bacon domestically."

The Maschhoffs Inc. (number seven on the list) feed DG at levels up to 30% of some rations, says Aaron Gaines, director of nutritional services.

"The limitation of using DG is the potential for reduced carcass yield and soft pork fat," he says. "However, if DG is fed correctly these limitations can be mitigated. One additional concern is plant-to-plant variation. Our approach is to work with a limited number of sources and conduct extensive lab analyses on the DG."

One of the things that is helping the Pork Powerhouses in this era of high feed costs is their tremendous productivity advances. In interviews to compile the list, several producers said they are "on a roll" in productivity gains, particularly in their farrowing operations.

"The whole industry is hitting new levels of sow productivity," says Bob Christensen of Christensen Farms. For the last 10 years, he says, the target has been 25 pigs per sow per year. But Christensen Farms now exceeds that number for their whole farm system.

"We've increased by two pigs per sow per year in just the last 30 months," he says. "Our best four farrowing units now approach 30. That's the new target."

Christensen says such productivity is not rocket science or magic. The genetics are definitely better, he says, but mostly "it comes down to employing good people and executing day after day the little things we've known about for years."

Managers also say productivity increases may be due to two other developments:

  1. A trend to older weaning ages of 21 to 24 days, rather than 10 to 14 days previously.
  2. The effectiveness of vaccines for circovirus, which was devastating to some herds in recent years. One manager said the vaccine is "the closest thing to a wonder drug we've ever had. We still can't get enough of it to vaccinate 100% yet, but we should have enough by November."

Jake Barrow of L.L. Murphrey Co., a weaned pig producer in Farmville, North Carolina, says the number of pigs to be marketed in the fourth quarter of this year will be very large, partly due to the use of circovirus vaccine. "In my opinion, it has made a big difference for North Carolina producers," says Barrow.

Further expansion of the Pork Powerhouses in the coming year would seem a certainty, given their 14-year track record. But growth will be held in check by high feed prices and the uncertainty surrounding the acreage shifts for farm crops.

A year ago, some of the Pork Powerhouses were able to contract feed at attractive prices for 2007. Those opportunities appear to be gone for 2008.

The cost of new building construction -- up 50% in the last five years -- is also limiting hog expansion.

One manager says the presence of circovirus may have been somewhat of a blessing in disguise. Keeping expansion in check led to better prices this year that kept hog farms in the black, despite the record run-up in feed prices.

Read more about

Talk in Marketing

Most Recent Poll

Will you plant more corn or soybeans next year?