With less capital tied up in margin calls this year than last year and following a year of overall profit, many producers are reinvesting in production facilities. The USDA December Hogs and Pigs report documented that we’re growing the US breeding herd. Missouri showed the largest year over year increase with 55,000 more animals in the breeding herd in 2014 than in 2013.
While grow-finish space was somewhat plentiful last summer because of the impact of PEDv, space availability has become tight this winter as growing pig inventories relative to the breeding herd have returned closer to normal. The US currently has 10.07 pigs in the kept for market category for every 1 pig in the kept for breeding category. While lower than the 10.25 in the December 2013 report or 10.41 in the December 2012 report, it is up considerably from the 9.5 in both the March and June 2014 reports when PEDv was devastating many production sites.
With more pigs per breeding animal growing to slaughter weight and more females being added to our breeding herd, the demand for new production facilities is growing in the upper Midwest. Based on the very large number of client calls this week I expect a large number of new grow-finish and wean-finish facilities to be constructed this summer. I’ve heard from one source that inquiries to slat suppliers is already building.
I came across a 1996 Iowa State Swine Report written by Dr Jay Harmon, extension ag engineer that reported the results of an industry survey documenting the average construction costs for the early 1990’s in Iowa. Survey responders (144 producers) reported only 45% of the finishing facilities constructed were deep pit with 24% being pull plug and 30% scraper manure systems. Two-thirds of the pull plug and scraper systems emptied into earthen storage. 76% of the facilities used a hybrid ventilation system (most often curtain sided but some would have had tilt doors back then) and only 11% were mechanical (tunnel or fans distributed along the side walls).
The average reported cost of construction was $148 per head with a maximum of $208 per head. The report doesn’t specify what was included in this cost.
I haven’t seen many specific bids for new construction this summer yet, but I would expect grow-finish barns to cost in the range of $225-250 per pig space, depending on the bells and whistles added for offices, how much site preparation is involved, etc. These costs do not include water, road or electricity to the site expenses. Nor do they include any legal or engineering expenses associated with local and state permit processes. These added costs can push the final cost to $275-300 per pig space quickly and I’ve seen some as high as $325/space with everything accounted for.
Quite a difference in 20 years. Today almost 100% of the wean-finish and grow-finish facilities are constructed with full slats and deep pits. Almost all are either curtain sided (mostly grow-finish) or tunnel (wean-finish or grow-finish). This is driven in part by restrictions on earthen manure storage devices and local zoning regulations. In many cases it’s easier to permit a deep pit barn (zero chance of a manure discharge from the storage device) than permitting anything with above ground or in-ground manure storage separate from the facility.
Wean-finish barns were not an option 20 years ago. All pigs went through a nursery before going to the finisher. While no exact numbers are available I’m guessing as much as 40% of the production in the upper Midwest is now wean-finish.
My experience suggests at least 2/3 or more of the new construction is wean-finish. This driven in part by lenders. There is less lender risk associated with a wean-finish facility than a nursery and x number of finishers.