Niche Pork Production Records

Authors
Peter J. Lammers
David R. Stender
Example Production Budgets Mark S. Honeyman
NPP 120–2007

Production budgets can be effective budgets and cost projections for their own
planning tools. A budget is as useful as the operation for business planning purposes.
accuracy of the information used. Three
example budgets are presented. The budgets Finishing Pigs in Hoop Barns
are based on a number of assumptions Some niche pork producers purchase
shown. These examples are intended as feeder pigs and feed them to market weight.
models of a production budget. Predicted Hoop barns are structures commonly used
costs of production and return are only for finishing pigs. The following budget
estimates. Producers should generate projects cost of production for finishing pigs
in hoop barns. The following are assumed:

Assumptions for Finishing Pigs in Hoop Barns

Feeder pig price $55.00/hd Batches per hoop barn 2.5/yr

Pig start weight 40 lb Bedding use 200 lb/pig
Pig end weight 270 lb Price of cornstalk bedding $30.00/ton
Overall feed:gain ratio 3.5:1 Dressing percentage 74%
Price of corn $3.65/bu Operating interest 8%
Price of soybean meal $250.00/ton Depreciation and repairs 9%
Price of base mix $0.40/lb Fixed interest 5%
Death loss 4% Taxes and insurance 1%

Operating cost calculations

Feed
1 bu
Corn : 634 lb × × $3.65 /bu = $41.32
56 lb
1 ton
SBM : 154 lb × × $250 /ton = $19.25
2000 lb
Base mix : 18 lb × $0.40 /lb = $7.20
Feed Costs = $41.32 + $19.25 + $7.20 = $67.77

1 ton
Bedding 200 lb cornstalks × × $30.00 / ton = $3.00
2000 lb

Operating interest
Operating Interest =
Operating costs excluding labor × Annual interest rate × Length of production
1 yr
$130.37 × 8% / yr × = $4.17
2.5 turns
 Labor 0.25 hr / pig × $15.00 / hr = $3.75

Operating costs after death loss $138.29 ÷ 0.96 = $144.05

Fixed costs calculations

Facility and equipment investment
Hoop barn $80.00 per pig space
Feed and manure equipment $20.00 per pig space

1 pig space
$100 / pig space × = $40 /turn
2.5 turn / yr

Fixed Cost

Facility and equipment investment × (Depreciation & repairs + Fixed interest + Taxes & insurance)
$40.00 × 15% = $6.00

Fixed Cost after death loss $6.00 ÷ 0.96 = $6.25

Breakeven price calculation
Cost 100 lb
× = Breakeven /cwt live weight
270 lb 1 cwt
Breakeven /cwt live weight ÷ 74% = Breakeven /cwt carcass weight

Example Budget for Wean–Finish Pigs in Hoop Barns

Operating Costs
Feeder pig $55.00
Feed $67.77
Bedding $3.00
Fuel, repairs, and utilities $1.05
Veterinary and medical $1.55
Marketing $2.00
Operating interest $4.17
Labor $3.75
Total $138.29
Total operating costs after death loss $144.05

Fixed Costs $6.00

Fixed costs after death loss $6.25

Total costs per pig sold $150.30

Breakeven price Live Weight Carcass Weight

Operating costs after death loss $53.35/cwt $72.09/cwt
Total production costs $55.67/cwt $75.23/cwt

Page 2 NPP 120–2007

Table 1. Effect of feed:gain ratio on total production costs and break even price.
Feed:gain ratio
Item 3.25 3.50 3.75 4.00 4.50 5.00
Feed, $/pig $62.92 $67.77 $72.60 $77.44 $87.12 $96.80
Operating costs after death loss, $/pig $138.84 $144.05 $149.25 $154.45 $164.86 $175.26
Fixed costs after death losses, $/pig $6.25 $6.25 $6.25 $6.25 $6.25 $6.25
Total costs, $/pig sold $145.09 $150.30 $155.50 $160.70 $171.11 $181.51

Break even price

Live, $/cwt $53.74 $55.67 $57.59 $59.52 $63.37 $67.23
Carcass, $/cwt $72.62 $75.23 $77.83 $80.43 $85.64 $90.85

As table 1 illustrates, feed conversion can significantly affect the cost of production and the
corresponding break even price.

Producing Feeder Pigs for Niche Markets year-round in Iowa. The following budget
Some producers focus on their sow herd projects cost of production for producing
and sell feeder pigs to others for finishing. feeder pigs using a hoop barn for gestation
Hoop barns with individual feeding stalls are and a well insulated building for farrowing.
well suited for gestating sows. An insulated, The following are assumed:
warm building is needed for farrowing pigs

Assumptions for Producing Niche Market Feeder Pigs

Gestating sow feed 5 lb/d Market value of a replacement gilt $200/hd

Lactating sow feed 16 lb/d Price of corn $3.65/bu
Sow weight change 0 lb Price of soybean meal $250.00/ton
Litters per year 2 / sow Price of base mix $0.40/lb
Weaned pigs 7/ litter Bedding use, cornstalks 1500 lb/yr
Lactation length 42 d Bedding use, oat straw 500 lb/yr
Weaning weight 40 lb/pig Price of cornstalks $30.00/ton
Annual sow replacement rate 10% Price of oat straw $50.00/to

Page 3 NPP 120–2007

Operating cost calculations
Feed
1 bu
Corn : 2136 lb × × $3.65 /bu = $139.22
56 bu
1 ton
SBM : 517 lb × × $250.00 /ton = $64.63
2000 lb
Base mix : 96 lb × $0.40 /lb = $38.40
Feed Costs = $139.22 + $64.63 + $38.40 = $242.25

Bedding
1 ton
Cornstalks : 1500 lb × × $30.00 /ton = $22.50
2000 lb
1 ton
Oat straw : 500 lb × × $50.00 /ton = $12.50
2000 lb
Bedding Costs = $22.50 + $12.50 = $35.00

Replacement gilts
50 sows in herd × 10% replacement rate = 5 gilts annually
5 gilts × $200.00 / gilt = $1000.00 replacement cos ts
$1000.00 ÷ 50 sows = $20.00 annual replacement cos ts per sow

Operating interest
Operating Interest =
Operating costs excluding labor × Annual interest rate × Length of production
$341.45 × 8% / yr × 1 yr = $27.32

Labor 7.0 hr / sow × $15.00 / hr = $105.00

Fixed costs calculations

Facility and equipment investment
Gestation hoop barn and farrowing facility
(New gestation hoop & equipment and farrowing facility / expected useful lifespan) / number of
litters per sow space
$850 / 15 years = $56.67 per sow space / 2 litters per space annually = $28.33 per litter

Page 4 NPP 120–2007

Example Budget for Producing Niche Market Feeder Pigs
Annual Operating Costs per sow per litter per pig weaned
Feed $242.25 $121.13 $17.30
Bedding $35.00 $17.50 $2.50
Replacement gilts $20.00 $10.00 $1.42
Fuel, repairs, utilities $14.40 $7.20 $1.03
Veterinary and medical $19.80 $9.90 $1.41
Insemination supplies $10.00 $5.00 $0.71
Operating interest $27.32 $13.66 $1.95
Labor $105.00 $52.50 $7.50
$473.77 $236.89 $33.84
Fixed Costs $56.67 $28.33 $4.05
Total $530.44 $265.22 $37.89

Table 2. Cost per pig by number of pigs weaned per litter.

Cost per Pig
1 Litter 5 pigs 6 pigs 7 pigs 8 pigs 9 pigs 10 pigs
Operating $236.89 $47.38 $39.48 $33.84 $29.61 $26.32 $23.69
Fixed $ 28.33 $5.67 $4.72 $4.05 $3.54 $3.15 $2.83
Total $265.22 $53.05 $44.20 $37.89 $33.15 $29.47 $26.52

Table 2 demonstrates the impact of weaning more pigs per litter. As number of pigs weaned
increases, the cost per pig drops dramatically. If feeder pig market price is $55.00 per head, the
producer weaning 10 pigs per litter will receive five times the return on investment as the
producer weaning 5 pigs per litter.

Farrow-to-Finish Pig Production for shows cost of production for 1 pig using the
Niche Markets information from the previous scenarios.
Most niche pork producers raise pigs The following are assumed:
farrow-to-finish. The following budget

Assumptions for Farrow-to-Finish Pig Production for Niche Markets

Gestating sow feed 5 lb/d Growing pig feed:gain 3.5:1
Lactating sow feed 16 lb/d Bedding use, cornstalks 1500 lb/sow
Sow body weight change 0 Bedding use, oat straw 500 lb/sow
Litters per year 2 /sow Bedding use, cornstalks 200 lb/pig
Annual sow replacement rate 10% Price of cornstalk bedding $30.00/ton
Market value of replacement gilt $200 Price of oat straw bedding $50.00/ton
Pigs weaned 7/litter Weaning weight 40 lb/pig
Lactation length 42 d Market weight 270 lb/pig
Price of corn 3.65/bu Post-weaning death loss 4%
Price of soybean meal $250.00/ton Batches per hoop barn 2.5/yr
Price of base mix $0.40/lb Dressing percentage 74%

Page 5 NPP 120–2007

Example Budget for Farrow-to-Finish Pig Production for Niche Markets
Operating Costs
Sow feed $17.30
Pig feed $67.77
Bedding $5.50
Replacement gilts $1.42
Insemination supplies $0.71
Fuel, repairs, utilities $2.08
Veterinary and medical $2.96
Marketing $2.00
Operating interest $6.12
Labor $11.25
$117.11
Post-weaning death loss $5.76

Fixed Costs $10.05

Post-weaning death loss $0.25

Costs per pig sold

Operating costs after post-weaning death loss $122.87
Fixed costs after post-weaning death loss $10.30
Total $133.17

Breakeven price Live Weight Carcass Weight

Operating costs after post-weaning death loss $45.51 $61.50
Total production costs $49.32 $66.65

Page 6 NPP 120–2007

Additional Resources

Iowa Pork Industry Center.

109 Kildee Hall. Iowa State University,
Ames Iowa, 50011. 515-294-4103.
in Iowa: 1-800-808-7675
[Link]

Iowa State University Extension. 2007.

Ag Decision Maker. Iowa State
University. Ames, Iowa.

Purdue University Extension, 2007.

The New Pork Industry Handbook.
Purdue University. West Lafayette,
Indiana.

Page 7 NPP 120–2007