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Producers Encouraged to Focus on Maximum Profits

by 5m Editor
27 January 2009, at 11:38am

CANADA - Canadian swine producers are being encouraged to focus on maximizing profits rather than productivity during tough economic times, writes Bruce Cochrane.

"Bringing Back Profitability" was the theme of the 2009 Banff Pork Seminar, held last week in Banff, Alberta.

Rocky Morrill, with Fahler, Alberta based Peace Pork, says while hog producers are consistently being told higher productivity is better, that may not be the most effective target.

He stresses optimum production doesn't necessarily mean optimum profitability.

Rocky Morrill-Peace Pork

Basically there's a whole different concept of raising pigs when you're losing money and the production parameters that you would be looking at when you're making money.

Too often our research and our guidance is based on profitable times but, for the last three years, she's been very difficult and there has to be almost a paradigm shift on what you're looking at and look at the cost centres.

You've got to look at your fixed costs, you've got to look at your variable costs.

There is no really opportunistic profits.

If your were making 30 dollars a pig and you can make more pigs, well that's more 30 dollars.

The fact, when you're losing 40 or 50 dollars a pig, you really got to understand that fixed costs, yes production will dilute your fixed costs, but when your variable costs, feed fuel, all those things are so high it doesn't take much to shift that.

Most farmers aren't an economist.

They're just trying to go out and raise animals and this is a whole different game now.

You better understand your cost of production and how production affects it.

More production does not mean the cheapest production.

Morrill says the key questions is, how much do you want to expend trying to push for that optimum production at a time when you're losing substantial money?

He suggests producers need to examine the economics in everything and set targets based on their own individual situations not the recommendations of the consultants but understand, it's about economic targets not about production targets.

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