Earlier this year, Andrew Dickson, general manager of Manitoba Pork in his state of the hog industry to kick off the Manitoba Swine Seminar cautioned farmers it will be very critical how hog producers tend to both ends of their business, inputs, sales, and of course management from sow to finish, depending at when they sell their pigs.

Dickson said producers must make sure they have a margin in there so they can service the fixed costs, which is about 93 per cent of the pig.

Dr. John Carr an international livestock consultant and veterinarian who took in that presentation said when the outlook for pig prices isn’t all that good, sometimes the old thinking of cutting back production sets in.

Do we need to cut back just because people are forecasting that things aren’t going to be as good as what we’d hoped?

“The pig is a classic boom and bust industry. In my experience whatever the cycle is in Canada, five to seven years, for every five to seven years we’ll make a loss, every five to seven years we’ll make a profit,” said Dr. Carr. “What I’ve learned over the years is to just farm. And if I just farm my farm then over 10 years I will be profitable. There are times when I might be less profitable and obviously making a loss, none of us wants to make a loss.”

He said, however, producers need to consider what they mean by the word, loss.

“I mean you could argue, well I’ve lost $4.00 a pig. So then one could say, well if I lost $4.00 a pig maybe that pig shouldn’t have been there. But then think about it, if that pig wasn’t there, the only saving you’ve had is a saving on feed. That’s 65 per cent, but what about the other 35 per cent? The lights are still on, the water is still flowing, and the guys are still employed. The bloody vet is still taking his cut for doing consulting work.”

Dr. Carr said the producer will still have to pay 35 per cent of that cost. So when one looks at the cost of production and the profit concept he encourages clients to look at the margin over feed. Where are the profits?

“If you go to a more English system, which I’m going to be more familiar with, and we have the same boom and bust, and at the moment we’re kind of breaking even a bit,” he said.

He mentioned Brexit for the British hog producer and the same is all over – Politics have played an enormous role. The value of the pound versus the euro; the value of the Canadian dollar versus the American dollar.

“So a lot of influences outside of anything that we can influence, that will have a big impact on whether we make a profit or loss. But you need to look at the whole cost. In England, we probably make a profit on the last eight pigs sold. So we have 10 farrowing crates and we sell 100 pigs. If I only make a profit on the last eight pigs sold, the first 92 pigs are there to cover all the costs. So it’s not that you make a profit on every pig. You’re not going to lose money on every pig. The first pigs were never gonna make money anyway. If I have 10 farrowing crates and I make money only on the last eight pigs? Well if a farrowing crate is empty I always lose money because I’ve not covered all the costs,” he explains.

And so the industry invariably, when the price is going to be low, a lot of people will cut back on their breeding. “And what I do is I actually increase my breeding. You’ve got to make sure the farrowing crate is full. You’ve got to make sure the farm is full. And don’t look at it as the fact I’m gonna lose two or three dollars per pig. You’re gonna lose money on the last pig sold. Now if you can get more efficient on those last eight pigs, well maybe you’ll actually break even,” said Dr. Carr.

“But if you don’t have them you’ve got no choice. You’re going to make the loss. And what you can’t do with modern pig production is you can’t add more pigs next week because where do you quickly get the extra crate.”

He would encourage, while watching the money side, make sure the farm is full. And look at the whole cost. “And I think this concept of margin over feed and, which of the pigs have actually made a profit? It’s an interesting concept,” he said. •

— By Harry Siemens