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July 8, 2008

Lighten up: Now's not time to market heavier pigs, expert says

WEST LAFAYETTE, Ind. - Pork producers feeling the weight of high feed prices should consider marketing lighter pigs, said Allan Schinckel, Purdue University Extension swine specialist.

With corn and soybean meal prices climbing, producers can cut their losses $4 to $5 per head by selling their animals to processors at the minimum acceptable weights, Schinckel said.

"We have corn at $7 a bushel and soybean meal at $350 a ton - a more than doubling of feed prices," he said. "Market hog prices haven't gone up to compensate for those higher prices, and producers are in a position where they are unprofitable and losing money.

"They can minimize those losses by taking the pigs to the pork processor on the lower end of the pork processor's acceptable weight range. If there's no discount for pigs above 250 pounds, you would market pigs semi-load by semi-load at just above 250 pounds."

Processors pay the highest market price for pigs weighing 250-280 pounds, Schinckel said. When corn was $2.50 per bushel and soybean meal $180 per ton, producers could maximize their profits with pigs weighing at least 271 pounds, he said.

Now, survival is the name of the game for pig farmers, Schinckel said.

Research by Schinckel and fellow Purdue animal sciences and agricultural economics colleagues Paul Preckel, Mark Einstien, Todd Hobbs and Brian Richert found lower acceptable weight marketing is a producer's best strategy in high feed cost cycles. The findings were based on the percent lean requirements of three major pork processors: Tyson Foods, Indiana Packers Corp. and Farmland Foods.

Marketing lighter pigs is more labor-intensive, Schinckel said.

"A producer is going to have to sort pigs," he said. "They will go into each pen and separate the heavier animals two additional times per finishing unit. That comes out to about another six to 10 man-hours of labor per thousand-head finisher barn."

Producers who follow a lighter pig marketing strategy will make more frequent trips to the processor, Schinckel said.

"In the past a producer would take one semi-load of the very heaviest pigs and 10 to 14 days later take a second cut of two semi-loads per thousand-head finisher, and then 14 to 18 days later empty out the barn," he said. "In this strategy the producer would take three or four individual semi-loads every five to seven days. So instead of selling pigs three times to empty a barn, we're talking four or five times."

The Purdue researchers also found that producers save on feed costs with pigs that maintain a higher lean growth rate and better feed conversion at heavier weights.

"Each producer needs to know the marginal feed conversion of their pigs between 230 pounds and about 280 pounds," Schinckel said. "They also need to know if their pigs are dropping in percent lean enough that the percent lean discount is changing as the pigs go to the heavier weights.

"In general, low to average percent lean pigs require more feed per pound of liveweight gain and are dropping in percent lean, and should go to the lower market weights. So pigs that stay lean to heavier weights and have a higher lean gain are a little bit less sensitive to high feed prices than pigs which are fatter and less efficient."

Eventually, market prices paid to producers are going to have to catch up with feed costs for the industry to remain viable, Schinckel said.

"In the long term, market hog prices are going to need to increase so that pork producers can stay in business," Schinckel said. "In the next 14 to 18 months we're going to have to see market hog prices in line with the increased feed costs. Feed costs are 60 percent of the cost of raising pigs. If corn and soybean meal prices continue to increase, we may need as much as an 80 percent increase in market prices to maintain profitability for our pork producers."

The Purdue study, "Impact of Increasing Feed Prices on the Optimal Market Weights and Marketing Strategy of Finishing Pigs," Extension publication FF-403-W, is available online at http://www.ces.purdue.edu/extmedia/AS/FF-403.pdf.

Writer: Steve Leer, (765) 494-8415, sleer@purdue.edu

Source: Allan Schinckel, (765) 494-4836, aschinck@purdue.edu

Ag Communications: (765) 494-2722;
Beth Forbes, forbes@purdue.edu
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