What drives change in the industry

Today I will be attending the annual meetings of the Minnesota Pork Producers Association and the Minnesota Pork Board. Topics of discussion that I expect to hear in the hallways and even from delegates and presenters include the EPA decision on ethanol, the status of the Farm Bill, the latest on who has experienced a site breaking with PED virus, and profit opportunities for next year. At the same time, southern Minnesota is under a winter weather watch beginning this evening with 3-5 inches of snow possible. By Friday a major cold front will mean high temperatures in Mankato of only 5F (-15C).

The short list of concerns and opportunities I’ve just cited are why there are fewer people in the industry owning pigs, with more contract production by people who would traditionally have been corn and hog producers. A common thread among contract growers for production systems is – why would I want to own pigs? I get the manure and steady paycheck for my labor and investment. The risk belongs to someone else and I can concentrate on what I like to do best – grow corn and soybeans.

Much has been written about the decline in the number of farms where the production is owned by the person taking care of the pigs. Yet the reality is that whether you grow feed grains or are the consumers of the grains (poultry or pork), the complexities of the business often limit your ability to be an expert in all phases of both crop and livestock production. At times the margins are so slim that one wrong decision results in a financial loss.

On the other hand, producers who own both livestock and crop production enterprises generally are financially better able to withstand the dynamic shifts in prices and production for each individual enterprise. The biggest change – ownership and management of the sow herd. Today a large number of midsized grain and livestock producers have chosen to invest in some type of sow unit where a management firm specializes in overseeing both the labor and decision process for the production unit. In many cases the pigs that are sent to owners wean-finish sites or nursery and grow-fin sites are sold under a common market agreement. Inputs to the post-wean growth may be purchased by a buyers group to take advantage of volume discounts and/or management services.

Yes there are still pork producers who manage their own sow inventory and manage their cropping enterprises. For these producers ‘corn-picking’ and ‘corn-planting’ disease is always a risk. The very good producers are successful at managing this risk, but for a growing number of producers the risk has proven to be too much and other methods of participation in the swine industry have been chosen.

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