CRC Perspectives on constraints, opportunities and priorities

Colin KayPork Producer, Director NZPIB

November 2005

Key issues

• Sustainability

• Profitability

Sustainability

• Manure disposal – treat as a resource• Odour reduction• Country health status• Animal welfare – group housing• Marketing/promotion• Pork quality – boar taint• Pork industry image• Unfair trading - dumping• Obtain, train, retain good staff

Profitability

• Operating profit (EBIT)EBIT = Gross income – variable costs – fixed costs

• Cost of production

All research should result in increase in profit or reduction in COP

% COPVariable Feed costs 628,340 66.36% 1.69

Animal Health 33,750 3.56% 0.09General 29,450 3.11% 0.08Effluent 5,000 0.53% 0.01R&M 30,000 3.17% 0.08Stock replacements 50,050 5.29% 0.13Consultancy 2,000 0.21% 0.01Freight 20,136 2.13% 0.05

798,726

Fixed Power 30,000 3.17% 0.08Vehicles 5,000 0.53% 0.01Labour 100,000 10.56% 0.27Rates 2,000 0.21% 0.01Insurance 3,700 0.39% 0.01Accountancy 3,700 0.39% 0.01Admin 3,700 0.39% 0.01

148,100 Total 946,826$

Cost of capital 60,852$ 0.16

Sows 250 100.00% 2.71No pigs sold 22.17 5,543 CWgt 67 Total DWgt 371,381 COP / Kg CWgt 2.71$

COP relationships

• Price of feed vs. FCR-Use low value by-product – lower

feed costs but higher FCR

-Lower costs but reduce kg sold

COP Feed = cost/kg feed x FCR

COP relationships

Skilled Staff

• Mating area - ↑ total pigs born & ↑ No. litters

• Farrowing area -↓still born & pre-weaning mortality

• Will increase no pigs weaned/sow/yr

• Daily feeder adjustment - ↑ intake, ↑ growth rate & ↓wastage - Aim to ↓ FCR

COP relationships

Breeding stock

• Improved carcass traits - killing out %, backfat and lean yield

• Increase total pigs born/litter

• ADFI + ADG + FCR

Effect of scale of production

• Compare two herd sizes

–250 sow herd

–500 sow herd

• Marketing 22.17 pigs/sow/year

• Carcass deadweight 67kg average

COPVariable costs Feed costs 1,256,680 71.99% 1.69

Animal Health 67,500 3.87% 0.09General 58,900 3.37% 0.08Effluent 10,000 0.57% 0.01R&M 60,000 3.44% 0.08Stock replacements 100,100 5.73% 0.13Consultancy 4,000 0.23% 0.01Freight 40,272 1,597,452 92% 2.31% 0.05

Fixed costs Power 30,000 1.72% 0.04Vehicles 5,000 0.29% 0.01Labour 100,000 5.73% 0.13Rates 2,000 0.11% 0.00Insurance 3,700 0.21% 0.00Accountancy 3,700 0.21% 0.00Admin 3,700 148,100 8% 0.21% 0.00

Total 1,745,552

Cost of capital 100,000$ 0.13

Sows 500 No pigs sold 22.17 11,086 CWgt 67 Total DWgt 742,762 COP / Kg CWgt 2.48$ 100% 2.48$

COP

Double sow herd to 500• Double variable costs 84% → 92%

• Fixed costs same 16% → 8%

• COP $2.77 → $2.48

• Increase pigs sold/sow/yr 22.17 → 24

• Increase carcass wgt 67kg → 72kg

• COP $2.48 → $2.40

Profit

• ($/kg – ((cost/kg feed x FRC) + variable costs/kg+ fixed costs/kg))) x volume kg

Constraints

• Scale

• Environmental

• Cost of cereal grains

• Labour

Opportunities

• ↑ Utilisation of feed - ↑ intake ↓ wastage

• ↑ Digestibility of feed ingredients

• By product feeds

• ↓ Reproductive wastage

• Group housing management

• Outdoor production

• ↑ Carcass weights

• Staff training and recruitment

Priorities

• ↓ Feed costs/kg carcass (COP Feed = cost/kg feed x FCR)

• ↑ Digestibility + utilisation of feed • ↑ Reproductive productivity• Meat quality-boar taint-tenderness• Technology transfer• Staff training and recruitment• Outdoor production systems