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Finishing hogs is a margin business. Based on
expectations for what we anticipate the future price will be for market
hogs, and what current grain and feed prices are, a market will exist for
feeder pigs valuing them at or near a price that would result in a remaining
margin to cover overhead costs associated with facilities and labor and meet
some additional profit objective. Competition within the industry drives
this expected margin low and near breakeven. Possibilities of greater than
expected profits are possible when feeding costs are low or there is a
rising market. Losses are likely if hogs are sold at prices below projected
or feeding costs are higher than anticipated.
Certainly a hedge against low prices is low production
cost. Additionally, contracting at a set price for future delivery with a
processor or selling futures contracts can lock in prices and needs to be
considered when profit opportunities exist. Avoiding price discounts
associated with out of weight or low yielding animals and capturing some
price premiums for high indexing carcasses is important in a narrow margin
business. Low feeding costs result from high performing hogs minimizing
days to market, low death losses and treatment costs, and use of
competitively or advantageously priced feed. High performance is closely
tied to ration formulation, animal comfort, and health status.
Growing-finishing hogs eat a ground or pelleted grain
based ration supplemented with appropriate protein, minerals, and vitamins.
Their nutritional requirements to maximize performance change over the
feeding period as the composition of growth changes and they mature such
that rations need to be adjusted a number of times over the feeding period
to minimize ration costs primarily through reducing protein levels. Corn is
most often the grain of choice as it often represents the cheapest source of
energy in the ration. In areas where corn is not grown, and additional
freight is incurred to bring it in, alternative grains grown in the region
are most likely least cost. In many northern or western regions this is
likely feed barley or damaged wheat (frosted, sprouted, etc..) ; however,
scabby grains high in vomitoxin are not suitable for hogs.
Although barley is higher in protein, it contains more
fiber, less energy, and has a lower test weight bushel measure than corn.
On a bushel basis barley would have about 78% the value of corn. On a
nutrient cost basis, $1.90 corn is roughly equal to $1.48 barley in latter
phases of growing-finishing when intake and fiber level are not of much
concern. A standard source of protein in hog rations is soybean oil meal.
It is a highly concentrated source of protein (42-50% CP), high in energy,
palatability, and the amino acid lysine which is typically first limiting in
feed grains. However handling and freight costs in areas distant to where
it is produced add to its cost. Lower cost protein alternatives that can
replace some or all soybean meal in hog rations exist where field peas are
produced and in proximity to ethanol or bio diesel processing plants with
favorably priced high protein byproducts as dried distillers grains or
canola meal.
Due to current prices field peas are of particular
interest in reducing ration and feeding costs where available. Peas have a
medium protein content and are high in energy. Depending on price they may
be fed at limited amounts as a protein source, or as is the case now being
similar in price to feed grains can be fed at higher levels replacing
greater amounts of cereal grains. Pea protein is rich in the amino acid
lysine but relatively low in methionine and cysteine which contrasts and
compliments cereal grains and canola meal. Some concern exists for feeding
peas to very young pigs as they are sensitive to some compounds considered
to have anti-nutritional factors present in peas at low levels. Therefore
peas are often limited to replacing no more than 20% of the soybean meal in
starter diets.
In growing finishing diets peas can be included up to
30-40%. In barley based rations this can essentially replace all of the
soybean meal if fed with feeds complimentary for methionine or if synthetic
methionine is included as a supplement at about .2% of the ration. Peas
have performed well in pelleted and ground diets with similar gain and
conversion and with no differences in carcass characteristics to traditional
soy meal based diets.
Hog feeders operate in a competitive margin
environment. Profitability is enhanced by achieving low feeding costs.
This is particularily the case as supply cylces pressure hog prices. There
are changing opportunities to minimize feed costs by formulating rations to
take advantage of least cost feedstuffs. It is important with any feedstuff
being incorporated into the ration that the final diet has been properly
formulated to meet nutritional requirements to maintain high performance.
Feed dealers, nutritional consultants, and extension specialists can assist
producers in evaluating feeding alternatives and projecting feeding
returns. Within our state known for its quantity and diversity of grain
production there are associated opportunities for pork production.
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