The principal motivation for contract swine production by those who employ it has been to allow the growth of the operation. The owner of the animals typically invests in the sow farm, animals, feed mill and related capital items and lets contracts for the facilities post-weaning. By inviting investment in the very capital intensive production process by others, added scale can be achieved.
I'm not sure anyone has ever thought that contract production was a low cost method of production but it allows additional scale to be achieved which offsets some of the added cost associated with it.
