Chapter Thirteen: THROUGHPUT AND NEAR OPTIMUM CONVERSION

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1 Chapter Thirteen: THROUGHPUT AND NEAR OPTIMUM CONVERSION Don Jones, Chris Hurt, and Jeffrey Hale Introduction This chapter has three objectives. The first is to examine the importance of getting maximum production through a system. The second is to look at the impact on the costs of production to move the 150 sow operation to an intensively managed SEW operation with a weekly farrowing schedule. As such, this system is a near optimum conversion which enables it to incorporate the technology, to gain maximum throughput, and to overcome as many disadvantages of size as possible. Since this system is near an optimum conversion, exploring the impact on costs compared to the 1200 sow system is valuable. The optimum conversion involves major changes. Since many producers will not be able to make the full conversion, the third part of this chapter explores ways to intensify the farrowing schedules to incorporate SEW when an off-site nursery is considered. These stepwise alternatives take the existing 150 sow operation from production of about 2,200 hogs per year up to over 7,000 hogs, and the conversions are made within the existing building systems. Importance of Throughput A quick analysis of the production systems presented in Chapters Three through Six reveals a drastically higher cost of production for the 150 sow low technology system. One of the key reasons for this disparity is the intensity of fixed facility utilization. As an example, in the 150 sow low technology system, the number of market hogs produced annually per thousand dollars of building and equipment investment is 5.5. This compares to for the 1200 sow system. There are a number of items in the costs structure which are largely fixed. These often include the investments in the feed mill and portions of the buildings and equipment. In addition, investments in the breeding stock feed, breeding herd medication, and breeding herd labor are largely fixed. Another large fixed investment is management time. Since many of these costs are fixed, as output increases, the total cost for these items does not rise, and therefore, the costs per hundredweight drops. As an example, in the 1200 sow system pigs are marketed per litter, compared to only in the 150 low technology system. The extra pigs require very little extra effort for management, or extra sow or boar feed, and thus spread these fixed costs over more units of output. The importance of spreading fixed costs over more units of output is among the most critical steps in lowering cost per hundredweight. This point can be illustrated by looking more closely at the systems outlined in this book. Table 13-1 shows the costs per hundredweight for 164

2 some of the key costs items that have some fixed components. These include the breeding herd inventory costs, some of the buildings and equipment, and portions of the labor and management. The differences in these items are dramatic. The total costs per hundredweight for these items in the 1200 sow system are $11.75 per hundredweight, but $21.78 per hundredweight for the 150 sow low technology system, or a $10.03 per hundredweight difference. Assuming that 30% of the costs in these categories were fixed, this means that the impact of fixed costs spreading would be $3.09 per hundredweight, or $7.57 per head as shown on the last line of Table Table 13-1: Estimated Impact of Greater Throughput in Pork Systems ($/cwt.) 1200 Sow 600 Sow 300 Sow 150 Sow 150 Sow High Tech. Low Tech. Breeding Inventory Buildings/Equipment Labor/Management TOTAL (these items) $11.75 $13.21 $14.77 $16.67 $21.78 Difference to 1200 Sow Assume 30% is Fixed $/Head Impact of Fixed Cost +$1.08 +$2.23 +$3.63 +$7.57 While all of the concepts explored in this book are important, most producers have to start with a set of existing buildings and equipment. For this reason this chapter will examine ways to convert a common existing 150 sow system to a near optimum system as well as demonstrate some step-by-step ways to make these conversions for those who may not choose to make the full conversions. Near Optimum Conversion To determine the possible economic ramifications of converting the 7x/year system into a weekly farrowing unit, a production model is presented. The model explores the conversion of the cooperative nursery, Segregated Early Weaning model, presented in Chapter 10, to a weekly farrowing unit with the market hogs moved off-site to a cooperative nursery and on to a cooperative finisher. Central to the weekly model is the idea of several smaller producers banding together in converting their existing farrow-to-finish units to farrowing only and to an accelerated weekly pigflow. A network is required to construct and manage a cooperative nursery. And a cooperative finishing operation is required to handle the increased number of pigs produced on each farm and to produce large enough groups of pigs to take advantage of cost savings from genetic improvement, split-sex feeding, phase feeding, marketing clout, etc. 165

3 The conversion from Far Nur Finishing Farrowing G estation farrow-to-finish to (75% of space needed) farrowing/breeding/gestation Breed - Gest Breeding only involves: converting (35% of space needed) existing nursery space to additional farrowing space, Figure 13-1 converting existing finishing space to gestation, and continuing to utilize the old breeding/gestation space for breeding. Sow numbers increase from 135 to about 360. However, note that this system would result in a significant amount of unused space in the old gestation unit. This conversion is depicted graphically in Figure The economic impacts of this conversion are dramatic. The costs of production for the 150 sow low technology system incorporating SEW were $43-44, but are dropped to $35.77 with this conversion. The costs savings come from the greater throughput, from better labor efficiency, and from production efficiencies obtained by incorporating all of the technology. The budget for this alternative is shown as follows. With similar genetics used in the sow herds on all farrowing farms, pigs could be sold (transferred) to the cooperative nursery on a weekly basis and then either finished at a cooperative site, sold (transferred) back to the original farrowing farm, or sold as feeders, (Figure 13-2). (Returning them to the original farm site would require construction of new gestation facilities, and would not be as desirable from the standpoint of separation from the sow herd.) With weekly schedules, a consistent number of pigs of the same age would be moved to the nursery each week so that a large group of nursery pigs could be housed in a common room. A weekly farrowing system would have the added advantage of producing a large number of uniform animals ready to leave the nursery each week, permitting the producer who purchases pigs to use their own finishing unit as an All-In/All-Out facility, buying enough pigs to fill all pens at one time so that all pigs in the unit would be of the same age. Larger groups of more uniform pigs result in cost savings through the use of phase feeding and spit-sex feeding. It would also allow marketing a much larger group of pigs at one time and enable finishing to be emptied and cleaned before purchasing additional nursery pigs. 166

4 Table 13-2: Cost of Production for Accelerated Throughput Item Unit Quantity Price Value/ltr Value/cw Value/hd t Direct Charges: Corn bu Soybean Meal ton Other Feed cwt TOTAL FEED Herd Health dol Fuel & Utilities dol Marketing dol Miscellaneous dol Mortality Disposal dol TOTAL DIRECT Indirect Costs: Investment Charge Market Inventory dol % Breeding Inventory dol % Equipment dol % Buildings dol % Land dol Labor dol. 19, Management dol. 25, TOTAL INDIRECT Nursery & finish charge 95, Conversion capitalization 40, % TOTAL COST Along this line, the cooperative concept might be structured to allow producers to specialize if they chose to do so. Smaller, younger producers with a small land base might begin with specialized farrowing to capitalize on their labor and management skills, while older, more established producers with a larger cropping program might elect to specialize in finishing. 167

5 Another arrangement that may be a better fit for some Midwest producers is to convert their existing farrow-to-finish facilities to finishing only. They might then buy into a portion of a large (600 to 1200 sow) specialized farrowing unit. This arrangement may fit the individual resources and interests of more Midwestern crop/hog farmers. This alternative allows producers to continue to utilize their facilities, feed processing equipment, labor, etc. in hog 8 Farrowing Units Sell Excess Cap. as Feeders COOP NURSERY Hd/Rm Figure 13-2 production. It also frees some labor to be used in the crop operation, but continues to capitalize on the complementary nature of the crop/hog enterprises by sharing labor, equipment, and the animal waste nutrient recycling program. Step-by-Step Conversion Finishers The conversion to SEW technology appears to be one of the more important technologies in terms of positive returns. However, there is a second economically important aspect of the SEW conversion involving the use of the original nursery space when the nursery is moved to another location. Table 13-2 summarizes some of the alternative ways of converting existing facilities in a 150 sow operation which is not being used intensively to SEW with intensive farrowing and pig flow. The base is the 150 sow low technology system which has 135 sows farrowing 7 times per year, with a continuous flow production system. The first conversion abandons the existing nursery and builds a new nursery unit at some other location (likely still on the same farmstead). With the incorporation of SEW technology, the pigs are weaned at a average of 16 days, and the number of days to market drops by 30 days down to 170 days. These enhancements allow the operation to increase total annual output from 2,204 market hogs sold to 3,032 head. The next three alternatives convert the old nursery unit into farrowing space, allowing even greater increases in annual production. The third column in Table 13-2, labeled 52 crate 8x, adds 16 crates in the old nursery, expanding the total number of crates from 36 to 52. This enables the operation to expand to 4,380 pigs marketed per year. 10 Wk Age M K 24 Wk 168

6 The final two conversions involve moving to a bi-weekly farrowing schedule and ultimately a weekly farrowing schedule. In each of these alternatives, the farrowing is divided into either two or three rooms (as shown in Table 13-2). Sow numbers reach as high as 380, and production expands to as high as 7,397 hogs marketed per year in the weekly farrowing alternative. Diagrams of the conversions are provided accompanying Tables 13-4 to 13-6 and Table Please note that the diagrams do not show the required expansions to the finishing facilities that would be required, but the notes on the figures do indicate the needed head capacity in finishing. For example, the base unit has capacity for 918 head of finishing hogs, while the 36 crate 8x alternative has a finishing capacity requirement of 972 pigs, or about 6 % more finishing space than in the base model. While budgets for each of these alternatives were not developed, it is expected that the costs of production for the last alternative which incorporates a weekly farrowing schedule would be similar to the budget for the Near Optimum Conversion earlier in this chapter. Table 13-3: SEW Conversion Alternatives Modeled Base 36 Crate 52 Crate Bi- Weekly Low Tech. 8x 8x Weekly Shown in Fig 13-3 Fig 13-4 Fig 13-5 Fig 13-6 Fig 13-7 Number of Sows Farrowings/Year 7x 8x 8x Bi-weekly Weekly Old Nursery In-line Abandon Farrowing Farrowing Farrowing New Nursery N/A Off-site Off-site Off-site Off-site Number of Crates Farrowing Rooms (24 each) 3(16 each) Avg. Weaning Age Max Days Market Pigs per Year

7 Table 13-4: Seven Farrowings per Year 36 Crate-7X/Year PRODUCTION SUMMARY Farrow Every 51 days in 1 Room(s)-36 Crate/Rm- 15 Days Open Wean age: Minimum 28 Days / Maximum 36 Days / Average 32 Days Wean Average 8.5 Pigs/Litter 200 Days to Market Pigs Weaned/Sow/Year 61 Pigs/Crate/Year 259 Litters/Year 2,204 Pigs/Year Sow Herd: 135 in 3 Groups of 45 Sows(no culling) Gest Capacity: 90 Sows Breed Capacity: 60 Sows+13 1st Heat Breed Conception Rate: Average= 80% Seasonal= 60% Sows must be bred within 8 days after weaning. Building Size 306 pigs/grp Farrow: 1 Room(s) = 306 (Maximum Age=36 Days) Nursery: 1 Group(s) = 306 (Maximum Age=87 Days) Finish: 3 Group(s) = 918 (Market Age=200 Days) 150 Sow Low Technology (7X/Year) FARROWING BUILDING 36 crates N Load out FINISHING BUILDING Three rooms of 306 hd 22 hd/pen - 12'x14' pens 918 Head 2 to 3 Acre Site NURSERY BUILDING 306 pigs in 14 pens pigs/pen 16 Sows/Pen 90 Sow Gest Bldg (2 grp) Shed and Lot 12 sow Breeding Bldg-Shed & Lot 60 Sows&13 170

8 Table 13-5: Eight Farrowings per Year with Off-Site Nursery 36 Crate-8X/Year PRODUCTION SUMMARY Farrow Every 39 Days in 1 Room(s)-36 Crate/Room- 18 Days Open Wean Age: Minimum= 10 Days / Maximum= 21 Days / Average= 16 Days Weaning Avg.= 9.0 Pigs/Litter 170 Days to Market Pigs Weaned/Sow/Year 84 Pigs/Crate/Year 337 Litters/Year 3,032 Pigs/Year Sow Herd: 180 in 4 Groups of 45 Sows(no culling) Gest Capacity: 135 Sows Breed Capacity: 60 Sows+16 2nd Heat Breed Conception Rate: Average= 80% Seasonal= 60% Sows must be bred within 30 days after weaning. Building Size 324 Pigs/Grp Farrow: 1 Room(s) = 324 (Maximum Age=21 Days) Nursery: 1 Grp(s) = 324 (Maximum Age=60 Days) Finish: 3 Grp(s) = 972 (Market Age=170 Days) 7X TYPICAL->36 Crate-8X/yr SEW(OFF-SITE NURSERY) (Added finishing space not drawn) FARROWING BUILDING 36 Crates, 7X -> 8X Old Nur. N FINISHING BUILDING Three rooms of 306 (918)hd 22 Hd/Pen - 12'X14' Pens Increase to 972 Pigs Convert Nursery To Other Use-Seal Wall at Finishing 16 Sows/Pen SHED AND LOT 90 Sow Gest -> 135 Sows BREEDING BLDG-SHED & LOT 60 Sow/13 -> 60 Sow/8 171

9 Table 13-6: Eight Farrowings/year with Off-Site Nursery and 52 Crates 52 Crate-8X/Year PRODUCTION SUMMARY Farrow Every 39 Days in 1 Room-52 Crate/Room- 18 Days Open Wean Age: Minimum= 10 Days / Maximum= 21 Days / Average= 16 Days Weaning Average= 9.0 Pigs/Litter 170 Days to Market Pigs Weaned/Sow/Year 84 Pigs/Crate/Year 487 Litters/Year 4,380 Pigs/Year Sow Herd: 260 in 4 Groups of 65 Sows(no culling) Gest Capacity: 195 Sows Breed Capacity: 87 Sows+22 2nd Heat Breed Conception Rate: Average= 80 % Seasonal= 60 % Sows must be bred within 30 days after weaning. Building Size 468 Pigs/Group Farrow: 1 Room(s) = 468 (Maximum Age=21 Days) Nursery: 1 Group(s) = 468 (Maximum Age=60 Days) Finish: 3 Group(s) = 1404 (Market Age=170 Days) 7X TYPICAL-> 52C rate/8x /yr SEW (O FF-SITE NURSERY) (Added finishing space not drawn.) FARROWING BUILDING 36 7X -> 52 crates, 8X N Load out FINISHING BUILDING Three rooms of 306 (918)hd 22 hd/pen - 12'x14' pens Increase to pigs CONVERT NURSERY To Farrowing-Seal Wall at Finishing SHED & LOT 90 Sow Gest.-> 195 Sows BREEDING BLDG-SHED & LOT 60 Sow/13 -> 90 sows &

10 Table 13-7: Bi-Weekly Farrowing with Off-Site Nursery Bi-Weekly, 2 Room PRODUCTION SUMMARY Farrow Every 14 Days in 2 Room(s)-24 Crate/Room- 6 Day Cleanup Wean Age: Minimum= 14 Days / Maximum= 21 Days / Average= 18 Days Weaning Average= 8.5 Pigs/Litter 178 Days to Market(max.) Pigs Weaned/Sow/Year 113 Pigs/Crate/Year 639 Litters/Year 5,435 Pigs/Year Sow Herd: 300 in 10 Groups of 30 Sows (no culling) Gest Capacity: 240 Sows Breed Capacity: 40 Sows+11 1st Heat Breed Conception Rate: Average= 80% Seasonal= 60% Sows must be bred within 7 days after weaning. Building Size 204 Pigs/Group Farrow: 2 Room(s) = 408 (Maximum Age=21 Days) Nursery: 4 Group(s) = 816 (Maximum Age=76 Days) Finish: 8 Group(s) = 1632 (Market Age=175 Days) 173

11 Table 13-8: Weekly Farrowings with Off-Site Nursery Weekly, 3 Room PRODUCTION SUMMARY Farrow Every 7 Days in 3 Room(s)-16 Crate/Room-2 Days Cleanup Weaning Age: Minimum= 12 Days / Maximum= 19 Days / Average= 16 Days Weaning Average= 9.0 Pigs/Litter 178 Days to Market(maximum) Pigs Weaned/Sow/Year 154 Pigs/Crate/Year 822 Litters/Year 7,397 Pigs/Year Sow Herd: 380 in 19 Groups of 20 Sows (no culling) Gest Cap: 320 Sows Breed Capacity: 27 Sows+7 1st Heat Breed Conception Rate: Average= 80% Seasonal= 60% Sows must be bred within 7 days after weaning. Building Size 144 Pigs/Group Farrow: 3 Room(s) = 432 (Maximum Age=19 Days) Nursery: 8 Group(s) = 1152 (Maximum Age=76 Days) Finish: 14 Group(s) = 2016 (Market Age=175 Days) 7X TYPICAL->W EEK LY /3 RM -SEW (O FF-SITE NURSERY) (Added finishing space not shown.) FARROWING BUILDING Convert Far/Nur To 3 RM OF 16 CRATES N Load out FINISHING BUILDING22 hd/pen-12'x14' pens Must Double Capacity from 3 Rm of 306 (918)Hd to 14 Groups of 136 = 1904 Hogs Shed and Lot 90 Sow Gest -> Total Gest.= 300 Sows Breeding Bldg-Shed & Lot Consider AI w/ith 32 sows 174