production

SwineCast 0246 Show Notes:

• Keeping Teams motivated from FastCompany.com
  
• Slaughter numbers and international markets with Rabo Bank's Fiona Boal
• Better vaccines driving the numbers
• U.S. perspective on those higher figures from Iowa State's John Lawrence
• IMI Global seeks to create value thru traceability

SwineCast 0220 Show Notes:

• In that next interview... dive deep!
  
• Dennis DiPietre looks at China pork landscape
• Jim Long says a good year for producers... if a bit anxious
• Soil quality and manure management
• Sweden's experience with manure digesters
  

Reduction in variation of growing pigs can have significant impacts on both cost of production and on return from the packer. This double impact on both cost and return makes this an especially lucrative subject for both study and the development of strategy leading to standard operating procedure (SOP) creation or amendments. Simply reducing variation is not the goal however since there is no guarantee that this will produce either cost reduction or income increase.

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.

Agricultural production is kind of a strange bird compared to other business processes. In economic terms, one of the real challenges is something called “asset turnover”. Asset turnover is the time it takes to generate the value of all assets used in the production process through sales of finished products. Asset turnover is a key determinate of Return on Equity along with net income and level of leverage employed (see the Dupont Equation if you are a budding MBA).

If you think about it, crop producers purchase a $400,000 combine which they operate a few weeks a year and then it is a high-priced bird perch for the next 10 or so months. This is the killer of asset turnover in most biological production processes since many of them are not continuous.