By Clint Schwab, The Maschhoffs
Looking ahead to 2019, I anticipate the entire hog industry will continue the roller coaster ride of uncertainty that was the hallmark of 2018.
Access to international markets, the global spread of African swine fever, packer capacity, labor challenges—all these topics will continue to drive volatility in the industry. In these uncertain times, the adoption of new and emerging technologies takes a backseat to good old-fashioned execution.
To remain competitive in 2019, U.S. producers need to sharpen their pencils and start sketching out a plan for controlling costs and managing margins.
Recognize and Reward Your People
We all know that what we plan to accomplish solely depends on our teams. Ultimately, the most impactful employees are those who behave like owners of the business—we should incent them to behave as such.
A foundation on “the why” of what we expect of them should be the backbone of our training platforms. Everything is more complicated without an engaged team, and a continued focus on their education with a critical focus on training the why is a foundational element to weathering volatility in the market.
As leaders, we don’t have the ability to observe daily details as much as we’d like. When we witness or learn of exemplary performance, we need to recognize it. It’s not just the right thing to do, reinforcing our team’s importance to the outcome is something we need to do. Celebrate the wins that come along the way.
Feed is King
Historically, 65% to 70% of production costs are feed. Management of feed costs should be near the top of all producers’ lists for 2019. The successful coordination of your nutritionist, feed mill manager and animal caretaker will drive the greatest impact to feed cost on your financial statements. Stick to the basics: minimize out-of-feed events, control waste and get the right diets to the right pigs.
Diet formulation is a key driver and should involve routine updates to ensure changes in ingredient quality are translated into the right nutrient value for the pig. Don’t ignore alternative ingredients as they can be a key lever in your formulation strategy for managing feed costs.
What happens at the mill is paramount. Mill efficiency is an obvious control point—but whether it pertains to particle size or flowability, close attention to feed quality must remain part of the strategy. Though they seem to be in constant contradiction with each other, throughput and quality are the primary points of emphasis at the mill level.
In-barn feed management is critical. Close attention to feeder adjustments can go a long way, but the in-barn perspective tells us whether we’re properly executing our phase-feeding strategy on a daily basis. We have to constantly align weights with our feed budget.
Protect the Farm
Without health stability, everything else is more complicated. With that said, you can easily argue this is the most important factor for maintaining a cost-competitive system.
Biosecurity is the foundation, and to take a page from Under Armour’s playbook, the on-farm culture needs to support doing everything possible to “Protect this House.” Very few of us are managing the ideal asset. Understand the weaknesses of the sites we manage, and through management of appropriate countermeasures, orient biosecurity practices to protect against those risks.
Health stability is not just epidemic disease management. Improve gilt acclimation processes and elevate execution of processes such as farrowing house sanitation to set pigs up for success downstream. Don’t get so focused on treating the finishing herd that you fail to address potential root causes upstream.
Execute the Breeding Basics
This topic can quickly resemble a story of the “chicken-or-the-egg.” Systemic issues (such as health), can elicit added variation in sow farm reproductive performance. Variation in fertility management can create system issues that turn into performance bottlenecks down the road. Regardless of where you perceive the origin, variation in managing the macro breeding process amplifies variation in the supply chain from there forward.
It starts with gilt management. If you don’t have a process in place to set gilts up for long-term success, don’t expect your parity distribution to stabilize or reproductive longevity to improve. View each and every breed group in a sow farm as a critical lever to capture value.
We seldom focus on the composition of the breed group as a driver to system performance, but if we focused on the make-up of each group on a weekly basis (optimize gilt breeds, minimize opportunity females and focus on those in-prime parities), we can impact our 2019 financials and set ourselves up for long-term success.
Tools can increase breeding process efficiency and reduce cells per mating, which are fundamental in leveraging genetic merit. These are critical value drivers for the business but can’t come at the expense of fertility. Tools such as bulk semen delivery, PCAI and SFTAI will drive efficiency, but if they create a breeding process that incents lower quality breeds, we need to re-evaluate where they fit on a farm-by-farm basis.
Focus on Key Stress Points
As an industry, we’ve designed a system that imposes several points of stress in a pig’s life, and to no surprise, that’s where the primary points of attrition occur. We know how to manage those stress points, and our ability to execute on the basic principles will have a big impact on the bottom line when it’s all said and done.
Every system has a unique design, but in general, if we can manage a few different points in the pig’s life, we can position ourselves for success. The wean pig start-up process should be top of mind. Daily execution of pre-fill readiness and TLC principles thereafter are big financial drivers as it relates to wean-to-finish economics. This is where the bulk of our costs live, and enabling the pig to do what it’s inherently capable of has significant financial value.
Careful execution of processes relating to marketing will minimize losses, particularly those that are the most expensive, represented as transport losses at the time of marketing. Keep the basics of stress reduction for market loads in mind: take proper group sizes, ensure a well-lit and draft-free path and allow proper recovery time for stressed hogs. Finally, ensure market trailers are set up properly for winter weather.
Don’t Get Distracted
To sum up the theme for 2019, focus on what you can control. Pork is the most widely consumed meat in the world. Playing on a global stage comes with the temptation to be distracted by things that are out of our control.
By no means am I advocating we ignore contingency planning as part of a solid business plan for 2019. Rather, I’m advocating that fanatic discipline toward the basics is the foundation to managing risk in the year ahead. Prioritizing focus on items under our direct control is how we not only manage the uncertainty, but also set ourselves up for a more competitive position on the back side.
Note: Dr. Clint Schwab is the vice president of science and technology at The Maschhoffs. He leads the direction of the technical platform focused on innovating the business in the functional areas of health, animal care, genetics, nutrition, reproduction, R&D, animal housing and technical support.