Economics

Most people think about Rachel Carson's book, Silent Spring, written in the 1960s as a key turning point or perhaps even the birth of the modern environmental movement in the United States. Rachel Carson was a biologist and author (http://www.rachelcarson.org/) who brought forward the belief that the pesticide DDT (especially), widely used in agricultural applications post WWII, was having a serious negative impact on wildlife, especially birds--hence, the ultimate culmination of such practices being a spring season without the music of songbirds.

Rachel Carson seemed to believe that booming agricultural production systems which were coming into a euphoric period of efficiency gain after the second world war needed to be awakened to the impact of some of their practices. In other words, she could be considered an optimist with respect to systems potentially seeing their error and reforming. Her book was essentially an awakening call. Indeed a tremendous amount of progress has been made in "detoxifying" agricultural chemicals, especially in terms of their more generalized impact and sharpening their focus to the unique set of problems they are meant to target.

The use of GPS guided spraying technologies which precisely target the application of herbicides, pesticides and even commercial fertilizers are another promising technological advance that is minimizing wasteful overapplicaition of agricultural chemicals.

SwineCast 0256 Show Notes:

• Mo Agastino, Senior Risk Management Consultant at Farms.com Risk Management, shares some advice on how to prepare for the unexpected
• Let's proactively manage odor before our neighbors and our government teach us how to
• Tom Elam, FarmEcon.com, explains the economics of biofuels 

     Let's take another crack at this optimal selling weight idea.  In general, for a single pig (to get the theory down), you want to add weight as long as the next lb added returns a profit.  That is, the cost of adding that pound is less than the return it receives.  Somewhere in late finishing, a pig will start receiving less and less for each pound added.  This is because feed efficiency is deteriorating and the packer matrix will at some point discount the lb because the pig is too heavy.  Even though all lbs are discounted when the sort matrix indicates a penalty, as long as the last pound was at a profit, it should be added.

    Reducing variation requires first an understanding of the source(s) of variation, the likelihood of mitigation strategies to successfully reduce the variation and the cost/benefit trade-off in source mitigation. As we have discussed, the typical farm record systems and the procedures which are considered practical to perform, work against developing the necessary data and anaylysis to gain a clear understanding of the return for variance reduction.

    However, one of the most powerful aspects of variance reduction strategies is that if they are successful, they favorably affect both revenue and cost simultaneously. This results in a double bang for the buck when considering the potential financial outcomes of variance reduction investments.

    Since little was understood about the role of production variance on net income; building systems, equipment systems, management systems, contract production systems and pig flow rules of thumb etc. have been put in place over the years causing inflexibility and making it difficult to deploy certain new strategies.

    For instance, contract production systems save equity and allow for greater expansion of the sow base since the capital of the grower forms a significant portion of the total investment required. Many growers elect to make this investment because the returns are generally very high to equity and the value of the manure has been increasing dramatically where it can be used as a commercial fertilizer substitute.

Causes of variation in pig production are many and not well understood. One of the key issues arises from the spread in pig weights which begins through a kind of competitive process among the pigs beginning well before birth. Competition in the uterus and during lactation results in a sometimes widely spread distribution of potential in pigs by the time they reach weaning. Some common management procedures are implemented beginning at birth to attempt to reduce variation but their outcome is often marginal, while others, such as processing and castration introduce new challenges to subsets of pigs. Pigs of different weights require different environmental temperatures, feed types and other conditions, yet as variation increases, "average" conditions are provided which probably miss the ideal environment for all but a very small number of pigs.

Some producers are experimenting with simply euthanizing the smallest pigs either at weaning or prior to weaning. An arbitrary percentage is chosen, such as the smallest 3-5% as candidates for euthanizing. Recently published trials (Wolff, Lehe, Keffaber and Deen, "A Producer's Tool for Measuring Attrition", IPVS, 2006) suggest that the weight of the pig, relative to its cohort at both weaning and the end of nursery phase are sentinel indicators of eventual final quality with the weight at the end of the nursery phase a stronger predictor. The result was obtained with all other things held constant so it isn’t clear if targeted or more intensive individual interventions aimed at the smallest pigs at weaning and feeder pig stages would affect the outcome.

SwineCast 0214

• CircoVirus impact on marketings with Paragon's Steve Meyer
• Klaas Okkinga of Boehringer Ingelheim shares on the development of Ingelvac CircoFLEX vaccine
• New, clear, edible, packaging technology
• Country Of Origin Labeling from north of the border
• National Pork Board hosts panel on Pig Crop Report

Variation is a natural part of biological systems and a characteristic that cannot be eliminated. However, the wise producer will institute procedures from the boar stud to the final loading of the finished animals which at a minimum, does not increase the natural variation in growth. Variation costs money, lots of it. Since we adopted systems which produce weekly lots of pigs, the pigs flow through the farm in age-segregated groups, often moving two or three times to different locations. When their growth performance begins to spread, the time and the cost associated with their completion and marketing begins to rise.

So we are talking about not adding to the fundamental problems which biological production systems deal out just because of their nature. Some of those problems include seasonality, the complexity of growth mechanisms as a key variance enhancer (compared to non-biological production—like automobile manufacture etc.) and the fixed periods of production which cannot be speeded up with an extra shift (like gestation). I’m contending that the next major movement forward in competitiveness is the producer’s ability to manage (certainly never eliminate!) variation more effectively. There is lots of money on that table.