Throughput Key To Minimizing Production Cost

bernie peet Peet on Pigs

A relatively small deviation in several parameters may easily add up to a reduction in income of $4-$5 per hog. On 500 pigs per week, that’s up to $130,000 in lost margin each year.

Bernie Peet is president of Pork Chain Consulting Ltd. of Lacombe, Alberta, and editor of Western Hog Journal. His columns will run every second week in the Manitoba Co-operator.

(First of two articles)

In the current economic climate, anything that can be done to reduce production costs will help to reduce losses. Unfortunately, many producers tend to focus on reducing spending rather than the cost of production, often without understanding the likely impact on performance and profit.

Reductions in the purchase of breeding stock, cutting back on labour and delaying barn maintenance are common examples. But one aspect of management that is frequently overlooked is that of maximizing output from the production facility, which usually means achieving the maximum weight of pork sold. The key to doing this is to make optimum use of the facilities to ensure a high throughput of pigs through the system. By maximizing the kilos of pork sold, the fixed costs of the production system, such as facility cost, labour and power, are spread over more output, leading to reduced costs per kilo sold.

Maximizing throughput can be achieved by careful budgeting, planning and monitoring of the production process. However, we often don’t understand the economics of our production system as well as we might, or don’t fully comprehend the financial implications of making changes to it. In addition, there is a tendency to think that, because we are dealing with a natural process, variation in production is something that has to be accepted. Nevertheless, by planning production in detail and monitoring output and efficiency factors, we can achieve a high degree of control over output and profit while reducing variation in output and product quality.

The first stage in the process is to understand what the system is capable of producing, relative to what is actually being produced. This requires the capability of the barn to be understood and some assumptions made about production numbers and efficiency. For example, we need to know the number of stalls or pens at each stage of production and, for nursery and finisher pens, the pen areas. It’s also essential to know how the pen areas per pig relative to weight compare with recommended levels, because overstocking reduces growth rate and throughput. It’s not uncommon to find that facilities are trying to achieve the impossible because of an imbalance in the amount of space at each stage of production. For example, there may be too few gestation stalls relative to the number of farrowing crates or insufficient finishing space for pigs to reach the optimum market weight.

DOING THE MATH

The capacity of each pen, room and barn should be calculated by defining a space allowance per pig according to weight and then dividing that into the total pen space, excluding space taken by feeders or other equipment. Then the optimum pig flow for the facility, in terms of numbers and weights in and out of the system, can be defined using assumed growth rates and the weights in and out of the nursery, grower and finisher pens. These numbers can then be used as production targets.

The key parameters in the growing herd that influence the number of kilos of pork sold and its value are:

Number of pigs transferred to the nursery per week

Nursery death loss (percentage)

Number of pigs transferred to the finisher per week

Finisher death loss

Dressing percentage

Carcass index

Carcass bonuses

These figures need to be monitored relative to the production targets and action taken if there is a deviation from target. Growth rate should also be monitored, although it does not affect the numbers of pigs produced. However, slower growth may result in pigs having to be sold below the optimum carcass weight.

Carcass weight has a major impact on output and requires close monitoring, along with dressing percentage, index and bonuses. If average weight is reduced from 95 to 93 kg, output is reduced by over two per cent or 1,000 kg per week, assuming sales of 500 per week. This results in a reduction in income of $1,500 or $3 per hog at $1.50 per kilo. If carcass index falls from 112 to 110, this will reduce value per hog by $3.66, representing a 2.5 per cent drop in income.

Similarly, if dressing percentage isn’t as high as the target, carcass weight may drop below optimum. All these things need to be monitored and controlled because a relatively small deviation in several parameters may easily add up to a reduction in income of $4-$5 per hog. On 500 pigs per week, that’s up to $130,000 in lost margin each year.

In order to keep output from the system constant, if one production parameter changes, it may be necessary to adjust some of the other targets in order to maintain the required output. For example, if finisher death loss is 2.5 per cent, in order to sell 500 pigs per week, 513 must be transferred from the nursery. But if mortality increases to 3.5 per cent, and this cannot be quickly rectified, the number transferred each week needs to be increased to 518 in order to maintain target market hog sales. Small changes in mortality will not make a massive difference to output, but failing to place the correct number of pigs into the nursery each week will have a much bigger effect. In my next article, I will look at how production planning and monitoring in the breeding herd can ensure a regular number of pigs weaned into the nursery each week.

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