Husbandry Profit | Cost and return of a pig

Background

In the year of 2021, pig farming is like SITTING ON A ROLLER COASTER that stimulates the nerves of every pig farmer. In this year

* Cost increasing sharply, around 40%

- Cost from feed, increase around 20%, 3000-->3600 yuan/ton, in which

• corn price increase 50%, 2000 --> 3000 yuan/ton

• soybean price in crease 20%, 3000 --> 3700 yuan/ton

• other ingredients, such as whey powder, amino acids, increased by 30-50%

- Cost from hardware and facilities, biological control, management increased about 20%

* Price of pig falling all the way, around 60%

Price of binary sow is reduced by 50%, 4500 --> 2500 yuan/sow

Price of piglets is reduced by 80%, 1000 --> 200 yuan/piglet

Price of fatten pigs is reduced by 63%, 38 --> 14 yuan/kg

* Deep loss in profit, around 40%

Cost of each kilo meat production increase 40%, in integrated companies, 14 --> 20 yuan/kg

Loss from each pig is around 600 yuan, profit decrease from +1000 to -600 yuan/pig

What can we do under such industry environment?

SHORT TERM measures: reduce cost while maintain the same performance or reduce cost and decrease the performance

• From management perspective

Reduce inventory and eliminate low-yield breeding pigs and

Adjust the vaccine program to reduce unnecessary cost from excessive prevention

• From feed nutrition perspective

Energy: substitute high-cost ingredients by low-cost ingredient, such as wheat, barley, rice, etc

Protein: reduce diet protein level while increasing absorption and deposition efficiency. For example, use deep processed protein.

Additives: remove non-essential types with uncertain effects

LONG TERM measures: improve production performance to decrease cost for per kilo meat production

PROFIT = RETURN - COST.

Return in total: total weight of slaughter pigs * pig price (affected by the balance status between supply and demand, which is uncontrollable)

Cost in total: feed expense (account for 60%) + amortization of sow + depreciation of fixed assets + labor + water and electricity + epidemic prevention cost (including vaccine, medicine, treatment) + farm running expenses

Cost for per kilo meat production

• Cost of per kilo meat production = total investment / total weight of meat for sale

• Three key indicators that may affect: PSY, FCR and survival rate from weaning to slaughter

• The gap between excellent production performance and poor performance is 2-4 yuan/kg.

Note: running cost of integrated companies, around 2 yuan/kg, while 10 yuan/kg in company-farmer style, is not included in the cost mentioned in the chart here.

To get same or better production performance, decrease the cost of each kg meat production is the key for a healthy business!

* Inter relations between PSY and cost of weaning piglets

• When PSY > 20, an increase of 1 piglet, cost for each weaning piglet will decrease 15-20 yuan, cost for per kg body weight of weaning piglet decrease 4-6 yuan.

• When PSY < 20, an increase of 1 piglet, cost for each weaning piglet will decrease 20-30 yuan, cost for per kg body weight of weaning piglet decrease 6-8 yuan.

• Increase litter weight at weaning: the number of qualified piglet will increase. These piglets grow faster in latter stage with less disease, lower FCR and meat production cost.

Note: the cost for a sow in a year including

1. feed cost in gestation and lactation stage: 5116 yuan

2. breeder cost (50 kg, 2000 yuan/animal, use for 3 years): 667 yuan

3. gilt feed cost (90 days, 3 kg each day): 414 yuan

4. vaccine, medicine, treatment: 800 yuan

5. depreciation of fixed assets: 1000 yuan

6. labor, water, electricity: 150 yuan

Table 3. Cost of a sow in a year

* Inter relations between FCR and and cost for per kilo meat production from weaning to 120kg

• When FCR decrease 0.1, per kilo meat production cost will decrease 0.4 yuan

Note: FCR of the whole stage of same batch is calculated based on the total feed consumption, including culling and death.

Table 5. Feed consumption and cost of a pig

* Inter relations between survival rate and cost for per kilo meat production from weaning to 120 kg

• When survival rate increase 1%, cost of per kilo meat production of the whole batch will decrease 0.06 yuan.

Note 1. Sharing cost from death of a pig including piglet cost (400 yuan), labor & electricity (50 yuan), vaccine & medicine & treatment (50 yuan), fixed assets depreciation (50 yuan).

Note 2. The feed cost has been calculated into the influence of FCR on the cost, so it is not considered here.

Note 3. When survival rate is 95%, the cost of 5 dead pigs is allocated to the other 95 pigs; when the survival rate is 90%, the cost of the 10 dead pigs is allocated to the other 90.

Summary

Nowadays, breeding companies are facing tremendous pressure on profitability. Improving production performance is one of the most effective way to apportion costs. By increasing the PSY, weaning litter weight, reducing the FCR and improving survival rate, the cost for per kilo meat production could be effectively reduced and help farms to successfully pass over the pig cycle.