Page 123 - Calculating Agriculture Cover 20191124 STUDENT - A

CH 11 Calculating Agriculture 11-13

Swine Management
In recent years the swine industry has been moving toward more specialization. Some producers
maintain breeding herds and provide feeder pigs that are sold when they weigh about 40 pounds.
Other producers will purchase feeder pigs and feed them to market weight. Often the grower must
estimate the value of a 40-pound pig in terms of what it will bring as a slaughter hog. The three
factors influencing profits include:

(a) Initial purchase price of 40-pound feeder pig.
(b) As Price of corn varies.
(c) Expected sale price of slaughter hog per hundred weight (cwt).

Table 11.6 is a budget for feeding one pig from 40 to 220 pounds. This budget includes variable
cost and fixed costs. It assumes that labor and ownership (overhead) costs are fixed and, therefore do 11
not change. The next problems are “what if problems” based on a changing price for corn. The
maximum price to pay for feeder pigs will be determined for the specialized grower. The question to
be answered in these next examples is what price changes occur when the price of one input changes.
These are important calculations to perform and evaluate to maximize profits. When evaluating the
variations in these types of problems take into consideration changes in feed costs, market prices,
operating costs and overhead. Another influence will be the mortality rate during the feeding period
to market.

Table 11.6 Budget for one 40-pound pig fed to 220 pounds

Feed requirements for 180 pounds of gain

560 lbs. corn (10 bu.) @ $3.40/bu. (10 bu x $3.40/bu =) $34.00

90 lbs. soybean meal @ $10.00/cwt. (90#/100# x $10 =) 9.00

Mineral, vitamin, salt,
and antibiotics @ $2.43/cwt. of gain 4.37 .
TOTAL FEED COST $47.37

Operating cost (utilities, veterinary medicine,
grinding and mixing, insurance, trucking, and marketing
charges) $ 5.55
TOTAL COST $52.92

If all costs are to be included, add $2.00 for labor and $4.88
for ownership (overhead) costs. ($2.00 + $4.88 =) $ 6.88

GRAND TOTAL $59.80

(a) Purchase price of 40-pound feeder pig with a variation in mortality rates

Example 1. Using Table 11.6 Budget, a pig farmer has an approximate 2% death loss on his pigs. He
expects to receive an average price for his 220# market hogs of $97.02. What is the
Maximum price to pay for 40# pigs when the cost of Feed and Operating Costs per pig is
$59.80.

Solution:
[(1 – death loss%) (Market Sale Price/Hog)] – [(1 – death loss%) (Total Cost/Hog)]
Maximum price for pigs = ——————————————————————————————————
(1 – death loss %)

[(1 – 2%) x ($97.02)] – [(1 – 2%) x ($59.80)]
Maximum price for pigs = ——————————————————–—
(1 – 2 %)

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