Although Joe Dykhuis lives on the same farm his grandfather started in the 1950s, things look a little different in the barn these days. His roots may run deep in agriculture, but his eyes are focused on the future. Every day he honors the legacy of the generations before him by evolving quickly enough to ensure the farm remains competitive in an increasingly volatile global market.
“Farming is really complicated nowadays, and that’s before you start the farming part of it,” he laughs. “Everyone in the production chain must do the things that help the pig be profitable. If the pig can’t pay the bills, no one’s going to succeed. We must create more value and figure out ways to make pigs thrive. If we can do that, we can cover our expenses and have profit at the end of the day that works for everybody.”
As the owner of Dykhuis Farms, a large sow farm that relies on contract growers to finish 450,000 pigs a year, he has a unique perspective on how to align people, resources and the pigs themselves to make sure everyone thrives.
Evolution of Contract Growing
The economic landscape for finishing hogs has shifted. Today’s high interest rates and construction costs require a more sophisticated approach to management and contract pricing.
“The people who got into contract growing in the ‘90s and early 2000s ended up making one of the greatest investments in agricultural history, in my opinion,” Dykhuis says.
But the economics of contract finishing have changed. From the high cost of buildings to interest rates you “actually have to calculate,” Dykhuis says the financial environment farmers are operating in now is challenging.
“If this industry wants to grow in any significant way, the cost for additional facilities has to be closer to the cost of new, and that’s historically way over what contract prices have been,” Dykhuis says. “On top of that, a bunch of the costs that contract growers are experiencing have also have more inflation than what they used to, so cost of energy is higher, and the cost of labor and the accessibility of labor is also higher.”
He believes contract hog production can still be a good investment for people if they secure a contract that pays enough to make it work. As an owner, Dykhuis feels pressure to figure out how the pig is going to pay more so he can pay more for the contract partners he works with as costs rise.
“It’s very humbling to think about how many people are impacted under the umbrella of Dykhuis Farms, from direct family members to employees and their families to our contract growers,” he says. “I think that’s a weight that everybody who sits in my seat feels.”
For Dykhuis, partnership isn’t just a line in a contract – it’s a 2 a.m. phone call. When a tornado recently devastated a contract grower’s barns, the Dykhuis team didn’t look at the legalities—they looked for a home for 8,000 pigs who now needed one. By rallying other growers who weren’t yet ready for pigs to step up early, they proved that a community-based approach to production creates a safety net that no individual farm can provide alone.
The High Cost of Health
One of the hurdles on his mind now is the staggering financial impact of disease strains like porcine reproductive and respiratory syndrome (PRRS) L1C, noting that the “old rules of thumb” for costs are outdated.
“It’s not good,” Dykhuis says. “I spent my morning working on a model to figure out how much a PRRS L1C break would cost per sow because I really need to understand that better. They say on a 2,500-head sow farm, it will probably cost you a million bucks. That’s way out of date.”
His “quick and dirty math” shows a L1C strain break would cost closer to $1,000 to $1,500 per sow.
“That is crazy,” Dykhuis says. “We’ve got to figure out a way to work together to defeat this pathogen before it wipes a number of us out of the business.”
He encourages fellow producers to do a real assessment of what disease outbreaks mean to their business and work on their risk mitigation plans.
“Personally, for our business, I need to figure out how I can get all my sow farms filtered ASAP and work together with other growers in my area to figure out how to keep disease from coming into areas where we don’t have it already,” Dykhuis says. “I think we have to think hard about what we do when we have sick pigs. We just can’t move them all over the place and not expect to have collectively terrible results.”
The High-Risk Reward
While the math of disease and construction is calculated, the way Dykhuis approaches these problems is rooted in a lifelong “learner’s mindset.” This openness to change is what his sister, Pipestone veterinarian Dr. Cara Haden, calls his “superpower.”
“I think Joe is unique because he’s not stuck in any particular way,” she says. “He recognizes the way that we did things growing up is not necessarily the way forward, and he’s very open to change.”
He credits that mindset to his father, Bob, who taught him that high-risk environments provide a better return to management.
“When I came back after graduating from Purdue University, it was right during the ethanol boom,” Dykhuis says. “We went through an extremely challenging time in our business then, and I was lamenting about missing the good old days where there was cheap feed.”
He will never forget what his dad said next.
“He said, ‘Joseph, you realize that a high-cost or high-risk environment provides a better return to management. And, if you’re in the position of management, shouldn’t you want to be able to compete in a situation where there’s a higher return?’” Dykhuis says. “Those are humbling words to think about, but that’s the business we are in today. We are in a much higher risk environment than we ever have been, but we can still thrive in that.”
He believes the weight of leadership is a privilege. By ensuring the pig thrives, he ensures that the families under the Dykhuis Farms umbrella thrive, too. In a high-stakes market, he isn’t just raising pork; he’s managing a legacy that is built to last another three generations.
Discover more about Dykhuis’ journey into the business and his perspective on the industry by watching “The PORK Podcast” on YouTube or by listening to it anywhere podcasts are found.
