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The Economics of Finishing Pigs in Hoop Structures and Confinement

by 5m Editor
22 March 2001, at 12:00am

By Iowa State University Researchers - The evolution of the swine industry has forced producers to re-evaluate their operations and use an increasing amount of risk management. The following two reports are part of an ongoing research project that is being conducted at the Iowa State University Rhodes Research Farm. This research compares two facility types under a wide range of circumstances, evaluating the profitability and risk for hoop and confinement production facilities for finishing pigs during the summer and winter periods.

By Ben Larson, research assistant; and James Kliebenstein, professor; Department of Economics; Mark Honeyman, associate professor; and Arlie Penner, research associate; Department of Animal Science; Iowa State University

Summer Group

Summary and Implications

Results of this trial show a $.50 per pig profit advantage in favor of the hoop system over confinement. Feed efficiency was approximately the same for the two systems. A $.50 per pig difference in profits is a relatively small amount. Average daily gain was better for the hoop system: 1.82 pounds per day compared to 1.69 for confinement. This led to a revenue advantage for the hoop system. This advantage was partially offset by a grade and yield advantage for the confinement pigs. Death loss was slightly higher for the hoop-raised pigs.

Although profits per pig were similar between the two production systems, there were differences in the cost structure. Fixed costs were higher for the confinement system, whereas operating costs were greater for the hoop system. These results are consistent with previous studies and expectations, because confinement systems require large capital outlays for facilities. Hoops require higher operating costs for items such as bedding and feed. Selection between production systems with comparable levels of profit can be difficult. Management style and personal preferences will play a big part. Other important considerations will be access to resources that differ between the systems, such as bedding, capital for facilities, and labor availability.

Materials and Methods

This report provides information for the fourth group of pigs, which was fed from June 1999 to October 1999. Results will be evaluated using the actual production efficiency numbers and the average or typical costs for feeder pigs, feed, etc., along with the average market hog prices. This allows for comparison of expected costs and returns for normal input costs and hog price conditions.

Future reports will examine the risks and efficiency of the use of capital in the two systems. Prior reports have evaluated results for previous groups of hogs raised in hoop and confinement facilities (1,2).

Results and Discussion

Productivity
Production efficiencies have a large effect on the economics of the operation. Important information is the percentage of pigs marketed, feed efficiency, and average daily gain. The percentage of pigs marketed has a direct effect on the systems’ returns because the pigs marketed need to cover the entire system’s costs. Feed efficiency reflects this by using the weight of the marketed animals (at the plant) and the feed consumed by all pigs fed.

During this trial approximately 1% more hogs were marketed for the hoop system compared with the confinement system; 96.53% vs. 95.65%, respectively (Table 1). Feed efficiency was better for the confinement system; 2.92 vs. 2.96 pounds of feed per pound of pork sold.

Pigs fed in hoops had an average daily gain which was more than the confinement pigs: 1.82 vs. 1.69 pounds per day. The hoop pigs started, on average, at a slightly lighter weight (1.5 pounds), averaged fewer days on feed (1.23 days), and weighed 11 pounds more at the plant.

The confinement animals, however, averaged a 1.3 percentage point better carcass yield. Due to the yield differential the difference in carcass weight was only 4.67 more pounds (186.41 vs. 181.74 pounds) for hoops vs. confinement. The lean premium was $.43 more per hundred weight for confinement pigs.

To view the whole Summer report (pdf format) Click Here

Winter Group

Summary and Implications

Two types of pork grow-finish production facilities are hoop and total confinement. Results of this study of a group of hogs showed profit to be $3.46 per pig greater for the confinement-raised pigs. However, there were trade-offs between the systems. As with previous group comparisons, confinement pigs had better feed efficiency, whereas the hoop pigs had lower fixed costs. The hoop pigs gained more weight per day but consumed more feed per pound of gain. A confounding factor in this study is that the confinement pigs were on feed for approximately 10 days longer than the hoop pigs.

The advantage of the hoop system is it low fixed costs, which were $5.78 lower than the confinement system. The results of this trial also suggest that the length of the trial may influence the results due to the difference in fixed costs. Average daily gains, which also may have been influenced by the disparagement of starting weights, favored the hoops.

Materials and Methods

The following is a report that details a group of hogs that were on test from December 1999 to April 1999. Results are evaluated by using the actual production numbers while using the average or typical costs for feeder pigs, feed, etc. along with average market hog prices. This allows for comparison of expected costs and returns for normal input costs and hog price conditions. Future reports will examine the risks and efficiency of the use of capital in the two systems. Prior reports have evaluated results for previous groups of hogs raised in the hoop and confinement facilities (1,2).

Results and Discussion

Productivity
Production efficiencies have a large effect upon the economics of the operation. Important information would be the percentage of pigs marketed, feed efficiency, and average daily gain. The percentage of pigs marketed has a direct effect on system returns because they need to cover the entire systems costs. Feed efficiency reflects this by using the weight of the marketed animals (at the plant) and the feed consumed by the group on test. During this trial approximately 2% more hogs were marketed from the hoop system compared with the confinement system; 98% vs. 96.2%, respectively (Table 1). Feed efficiency was better for the confinement system; 2.85 vs. 3.05 pounds of feed per pound of pork sold.

Pigs fed in the hoops had an average daily gain greater than the confinement pigs by six hundredths of a pound per day. The hoop pigs started, on average, 8.05 pounds heavier, and averaged 10.05 fewer days on feed, with a 10.5 day difference in facility days. The confinement hogs weighed 2.72 pounds more at the plant with a 1.2% improvement in carcass yield. Due to the yield differential the difference in carcass weight was 5.05 more pigs (192.41 vs. 187.36 pounds) for the confinement.

The distribution of average daily gains by using the farm weights is shown in Figure 1. The graph demonstrates that there was a slightly wider distribution of gain in the hoop system. Hoop pigs were marketed during three time periods, whereas confinement pigs were marketed in two groups. This is reflected by the marketing information that is provided in Table 2. It should be noted that this marketing schedule resulted in the confinement reducing the difference

To view the whole Winter report (pdf format) Click Here
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