Editor's note: The following article was featured in the March issue of PORK Network. 

As a youth growing up in northeast Missouri, Aaron Gaines thought raising cattle would be his calling. But before the teen could leave home for the University of Missouri, his focus shifted.

“It started really in high school when I worked for a farmer that had 1,000 head of cattle, and he had 150 sows,” Dr. Gaines told swine producers in a packed meeting hall inside the Kansas State University Alumni Center. The vice president of technical resources and support operations for The Maschhoffs was one of the headline speakers at K-State Swine Day last fall in Manhattan, Kan. “[The farmer] didn't care about pigs, so he let me deal with the pigs, and he dealt with the cattle.

“I worked more and more with the pigs and, frankly, just had ownership within [the farmer’s] operation, because he didn't want anything to do with them. I went to college, and about two years later he got rid of the pigs,” Gaines said, to laughter from the audience.

But Gaines did not make light of the financial advantages a pig operation could gain from using benchmarks to identify areas of improvement and set goals to achieve those objectives.

Headquartered in Carlyle, Ill., The Maschhoffs group is one of the largest family-owned hog production networks in North America – annually marketing more than 5 million pigs. For benchmarking, Gaines relies on Agri Stats Inc., Fort Wayne, Ind., which collected data on more than 2 million sows in one example he presented. Agri Stats, an international benchmarking service for the protein industries, gathers data on millions of pigs each year.

Identify Opportunities
“What’s nice about [benchmarking] is it allows you to pinpoint opportunities for improvement in your operation,” Gaines said, offering a production cost example, using an unidentified producer. “It’s an individual producer, and through time, this producer had a really good cost of production, compared to the average of the [2 million sow] population.”

Until 2014, when the producer fell below average. However, the producer in the example could use benchmark data to break down costs and identify areas of improvement, Gaines said.

“Once you identify those opportunities, make sure you don’t sub-optimize profitability,” he said. “Try and focus on one specific improvement goal.”

Three areas represent 95% of production costs – feed (67%), yardage (24%) and veterinary medicine (4%), Gaines said. Yardage includes facilities, labor, repairs and maintenance, utilities, transportation and other associated operational costs.

Multi-Purpose Indicators

Benchmarking programs can serve multiple purposes, Dr. Ken Stalder, animal science professor at Iowa State University, said. Stalder has studied and reported on U.S. pork industry productivity analyses as part of a National Pork Board research initiative.

The National Pork Board Animal Science Committee’s objective in initiating industry analyses is to document the productivity of U.S. pork operations to offer real-world benchmarks. Beyond providing reliable benchmarks, the analyses help make the Pork Checkoff program, academics and other funding agencies aware of research likely to have the greatest effect on productivity, the committee said.  

“Benchmarks can be used to make performance comparisons between countries, companies and farms,” Stalder wrote. “These comparisons can then be used to set goals for increasing herd performance.”

The study’s results are based on information submitted to a national benchmarking system. Previous reports have represented about 35 percent of the U.S. pork industry. The objectives of the most recent study was to quantify the annual production levels and the variation associated with several key performance indicators for the swine industry in all swine production phases (sow farm, nursery, wean-to-finish and conventional finisher facilities) from 2009 to 2014, as well as to quantify seasonal effects associated with the production indicators.

The full report can be found at pork.org/research.

“It is important to set attainable goals where improvements can be made incrementally,” Stalder said. “Once goals are set, a plan must be defined and implemented to achieve the desired performance.”

Benchmarking programs are used across the agriculture industry, and are provided by a variety of services – from academic institutions to private firms.

The University of Wisconsin’s Center for Dairy Profitability’s Agriculture Financial Advisor program assists in collection, analysis and storage of financial data and certain profile information for all types of farms, according to its website.

The program can use profile data to create specific farm-related benchmarks, the website said, as well as generate a variety of financial reports and statistical analysis. For more on this benchmarking program, visit http://cdp.wisc.edu/agfa.htm

Read the full article here.