As we approach the end of 2024, I hope all operations share a common philosophy on managing their business. There are a few items that should be standard for every farm in the U.S.
1. Continuous Improvement.
Every farm has areas to improve, whether it’s production on a particular farm, implementing new technology in production or financial areas, reviewing health biosecurity protocols or ensuring you use the best least-cost diets that promote improved gains.
2. Interactive Budgeting.
As we move into the fourth quarter, every business should revise its business plan and work on a budget for the next year. I have gone through that process for our organization and encourage you to put a similar effort into fine-tuning your hog operations.
Prepare a budget that truly reflects your previous years’ operations, particularly regarding performance efficiencies and production levels. Granted, there are outliers, especially if you were hit with porcine reproductive and respiratory syndrome (PRRS) or another disease challenge. Put together a realistic forecast that will allow you to fine-tune your feed budgets, set realistic production goals and determine your cost of production so you can make appropriate decisions with your risk management plan.
I can’t stress enough the importance of having an interactive budget that reflects changes in your balance sheet. Most operations have some financial covenant tied to working capital or the equity level of the operation. This forecast will provide you with the necessary information to start a discussion with your lender about any potential covenant violation. From a lender’s perspective, it is more palatable to discuss a potential covenant violation before it is triggered. It gives you and your lender time to develop a workable plan to address the violation.
I was counting on the end of March and early April market opportunity to carry producers through 2024 at profitable levels. Unfortunately, that opportunity faded quickly. Coverage levels varied greatly. A few producers might end the year with mild profits; however, others will post losses for the second consecutive year. These operations need to be as transparent as possible with their lender.
3. Active Advocacy.
This year is also a major election year. I’m sure you are tired of the political ads and rhetoric surrounding the national races. Regardless of whom you support and your political affiliation, let your representatives at the state and national levels know about the continued obstacles you face in the pork industry. I encourage all of you to be active as constituents to help educate your elected members of Congress on areas of concern for your business.
The National Pork Producers Council (NPPC) does a tremendous job of lobbying on your behalf with Chase Adams and Matt Grill. Adams serves as the assistant vice president for domestic policy, and Grill serves as the senior director of congressional relations for NPPC. These two individuals are as well-respected in Washington, D.C., as anyone. However, what matters most to your congressional representatives is hearing directly from you. Make your voice heard by letting your representatives know the impact their decisions will have on your business.
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