Quotes from the Records Workshop Presentations

Dave Stender – Squeeze a Little More (money out of an already-squeezed pork enterprise)

“What do we worry about? We worry about the market, the market, the market. But it’s the production costs that really make the difference on whether we’re profitable or not.”

“From a lender’s perspective, there are people out there who don’t keep records and have done a good job... (Maybe) they’ve got a lot of equity, and they’re big dogs. The problem that happens when you don’t have records and things don’t start working is... they’ll have a hard time figuring out where to start, which wheel fell off.” (Comment by Roger Schlitter, FCS)

“The industry (based on the past three decades) is trying to shave $7.50/cwt off the cost of production to remain competitive... We need to find another seven dollars and fifty cents to stay in the ballgame... How many pigs does it take to make a living? In the early seventies, it was 320... In the early nineties it was 750... in a high labor system... if it takes more than about 750 pigs to make a living, what are you going to do? Most people are going to quit. And in the early to late nineties, that’s what happened. And as you start pushing up toward 1,000 pigs just to make a living on a system that’s a lot of work, people start baling out. Guess where it is today... with $40 hogs and $39 hogs and a 35 cent breakeven. It’s about 3,000 pigs... And when you’re talking about these (alternative) systems, there’s more variation, which means it’s more critical for people to have records, not less.”

Mark Storlie – Making the Most of Feed and Water

“A feeding budget is a management tool so that we don’t overfeed, especially in the earlier rations.” “Provide the right feed to the right pig, for the right amount of time.”

“If we look at it as simply feed cost per pig, if we just feed two phases, from basically 50 pounds up to 260, we can look at a feed cost of $42.50 per pig, versus if we just start adding some phases, thereby keeping our ration on target for that pig, we can reduce that feed cost... We can save about 80 cents by feeding four phases rather than three.” “In my mind, if we can be feeding about 4 or 5 rations from that grower phase to market, it’s going to be our best economic situation.”

“The particle size of that ration can make a big difference on how well that pig can utilize. And so if we’ve just got cracked corn going in to the ration versus ground corn, that ground corn can be better utilized by the pig. If we look at micron sizes, when we get about 700 microns, for every 100 microns above that, we start losing about 1.2 percent of our feed efficiency.” “We can run into problems grinding too fine. If we get it too fine, we can have a higher incidence of gastric ulcers.”

“In general, we should be adjusting those feeders so that we see about 70 percent of that feeder pan. So there isn’t a lot of excess feed there.” “The economics of feeders is such that if you’ve got a poor feeder, it can be very cheap to go out and buy a good feeder.”

“If you turn around and take the feed off the floor which has been sitting next (to the feeder), it’s only got about 20 percent of the value versus fresh feed... The nutritional value just isn’t there... If the water’s dirty, you don’t want to drink it, and they won’t drink it either.”

“Water (tracking) will lead feed (tracking)... Would anybody like a nice, bright, flashing amber light going off a couple of days before strep was going to break in the barn? Or a couple of days before ileitis was going to break? This (water use) chart is providing that role as a flashing light.”

Feeds Panel – Wayne Fredericks, Ryan Ubben, Mark Storlie

Ryan – Sows can use a coarser ground than young pigs (like 900 microns). Deep bedding also takes care of the fiber need.
Dave – formulated a “high carb” diet for a genetically lean pig that was marketed to a higher fat niche (Niman). He cut back the protein (lysine) and reduced the cost. “You’re feeding a little bit more of a lot-cheaper ration.”
Wayne – the diet that included phytase was 60 cents per ton cheaper in his case.

Dave Stender – Start Simple, But Start!

“There’s a disconnect in the industry between accountants and production people. The accountants say, ‘We gotta screw down and save every dime!’ and the production people are, like, ‘We gotta produce the fastest growth rate, the most pigs per sow per year, we gotta get throughput out the barn!’ They assume maximum production equals maximum profit, while the accounting people don’t want to spend any money to get maximum profit. So the two are always competing. And I see somebody like myself or Mark (Storlie) as somebody that knows the market, somebody that knows production and can say, ‘OK, what about (for example) Wayne’s rations? Can we get decent performance with less cost?’

“To try to apply high cost system management strategies to a low-overhead cost (alternative) system, you get yourself in trouble in a hurry, and that’s why we need the records and the benchmarks with your own types of operations; you need somebody from the outside to come in to say, ‘Look, is it making sense here? Are we really attaching our facilities to our resources correctly?’”

“Everybody’s gotta have numbers – some numbers. But if you don’t have numbers, you have to start somewhere. And you may as well start simple and get some ‘triage’ numbers so that you can start making these management decisions (like Wayne). You can find $5 that quick if you know where to look... That’s why you need a production-numbers specialist to look at your operation. Not just numbers, not just production. It’s gotta be the combination, really, to find these things quickly.”

On getting started with records: “It’s pretty easy. The formula is you take (closing weight plus sale weight) minus (opening weight plus purchase weight)... That’s the formula for the denominator. That tells me how many pounds you produced on your farm. In farrow-to-finish, most of that’s going to be on five scale weights and one estimated weight, on the year. And so there we have the denominator, that’s the hundredweights produced. All we need to do on our record system then is pull off the expense side, that’s the numerator. How much did you spend for your feed? How much did you spend for your vet bill? How much did the buildings cost to sit out there? How much do you need to pay for family living and labor costs? And those are the numerator. And in a nutshell, that’s our record system. We’d love to have the numbers pulled out of an accounting program, but they can come off of tax records. You need to start with something! Because once you see these numbers, you’re going to graduate yourself to a system.”

Group Tracker, Mark Storlie

“When you change the way you look at things, things can change.”

“Group Trakker is (based on) an Excel spreadsheet that I put together to do group closeouts. So now we go back to what I view is the real management basis that you work with on a daily basis, that is a group of hogs. Group Trakker is a closeout program that will work for nurseries, grow-finish, wean-finish, those types of applications where we know the starting weight and we’ve got an ending weight.”

“Why group records? Certainly to monitor change in your operation. To compare. Different building types, different producers, different equipment within those systems can be looked at for management decisions. Also why to have good records is as a communication tool with suppliers or your co-workers, with your lenders, with your veterinary, and certainly with your neighbor as well.”

Wayne Fredericks – Standards-Based Accounting

“I use all three of these systems (discussed today). The question is which cost of production is mine? $37.55, $41.04, $40.12, $44.69, $43.71, or $39.61? They are all off of systems, and they are all my cost of production. We either had a gain of $9.46 per head, or... a loss of $9.67 per head. Depending on which system that you analyze your farm records under... If you’re going to make business decisions – whether to go ahead in the business or discontinue a business – that’s not accurate enough in my opinion, it leaves you out in the lurch as far as where you’re going.”

Traits of standards records are different (than other enterprise records). All costs are allocated. No longer are you trying to determine which costs you have to put in the blank. All costs you have have to go somewhere... All costs and profits get allocated back into those (profit and cost) centers... And family living costs become part of the equation. And this is one cost most of us leave out... What costs get lost in the cracks? The main one is G&A, or most people call it General and Administrative costs. These costs are our business insurance, property, liability insurance, professional fees, dues, office expenses, accounting expenses, human resources in some of the larger operations, computer costs, farm share of auto, farm truck, and then family living costs... You go back to the enterprise system and it doesn’t necessarily capture that, and if you don’t pick it up under Other, it gets lost.”

“I think the nice part about the system is that there’s no cost left out. Everything’s there. It’s put in the management center so you can sit down and manage. It’s easy to go back and see where weak areas, strong areas are in the system.”

“Finally I transitioned from my old (record system), because it was all internal. And there gets to be a point (with) internal you don’t learn a whole lot more. I wanted to get some external benchmarking. So I’ve gone to Group Trakker, and I’ve also worked with Dave’s system, just to find where’s the variability, how we can help one another, sometimes we can help one another improve on systems. I’ve got a strong feeling for records and cost accounting, and anything we can do to get producers on some sort of system, I think, is a real step forward.

“I think we envisioned, especially for producers in the niche groups, to work with Dave or Mark, hopefully that those people can work a similar type of program, and where they can benchmark among themselves. ‘Cause I think there’s real value to small group benchmarking. If you’ve got a guy way up here on costs, and another one that’s way down here, ‘What’s this guy doing right?’ Is he willing to share that and help others in the group? And I think that’s some of the power that can come out of a benchmarking session.”