Producer question: How do I know when to cull sows so I’m maximizing the return on my investment?

Stalder and Lacy’s answer: Reproductive problems (failure to c°cle, conceive,

farrow, etc.) represent the main reason to cull sows from commercial herds. Otherreasons include soundness problems, old age, rebreeding challenges and inadequate milk production.

Early weaning appears to create more reproductive problems than previous weaning programs. This is particularly evident when weaning age is 14 days or younger. Early weaned sows have more nonproductive-sow days than sows whose litters are weaned later than 14 days of age.

Increased culling, regardless of the reason, boosts a herd’s replacement rates. There are several direct expenses associated with replacing a sow with a gilt. They include the cost of the gilt as well as feed and housing costs during isolation and acclimatization prior to entering the breeding herd. You want to increase the productive life of females because it ultimately reduces replacement costs per pig produced.

Determining how long a sow must remain in the herd before she has paid for herself is as complex as the reasons for culling her. We, along with extension economist Tim Cross, have attempted to model the number of parities a sow must have to pay her way.

To do this, we calculated a net present value based on a set of assumptions as follows:

- Net present value (NPV) takes an initial investment made today (gilt costs) and adds future revenues generated (pigs sold) plus terminal value (the cull value of the sow) and, based on the time value of money (some discount rate), allows you to compare investment alternatives in today’s dollars.

- Therefore, a NPV greater than zero indicates an investment is profitable in the long run. An NPV of zero indicates the investment is a breakeven proposition. A negative NPV shows an investment will lose money in the long run. 

We chose to evaluate the impact of sow longevity in a farrow-to-finish example. You could conduct a similar exercise if you sell weanling or feeder pigs.

For discussion purposes we assumed the following points:

- Price of replacement gilt: $200.

- Gilt development cost (feed and housing prior to breeding): $45.

- Annual percentage of replacement gilts entering the breeding herd: 90 percent.

- Number of pigs sold per litter farrowed: 8.5 (21.3 pigs weaned per mated female per year based on 2.3 litters per mated female per year and 8 percent death loss from weaning to finish).

- Weight of market hogs sold: 240 pounds.

- Price of market hogs: $46 per hundredweight (live weight).

- Market hog feed cost per pig sold: $60.80 (26-cent feed costs per pound of gain, wean to finish).

- Litters per year: 2.3.

- Cull sow value: $128.

- Equity in operation: 50 percent.

- An annual discount rate: 3.28 percent.

Based on these assumptions, the length of time a sow must remain in the breeding herd is mainly influenced by market hog prices, number of market hogs sold per litter and feed costs. The original cost of replacement gilts and the percent equity in an operation influence the replacement females’ NPV to a lesser degree.

The accompanying tables represent sensitivity analyses for the number of market hogs sold per litter, market hog price per hundredweight and price of replacement gilts on the parity at which you reach a positive NPV.

The results based on our assumptions:

- A female must stay in the herd only two parities to be profitable if her pigs sold per litter averages 8.5.

- If average pigs sold per litter drops to 7.75, she must remain in the herd four parities to be profitable.

So less than a 10 percent decline in pigs sold per sow per year doubles the time a sow must remain in the herd to reach a positive NPV.

- If market hog prices drop from $46 to $44 per hundredweight live, and we hold all other assumptions constant, the female’s profitability requirement jumps from two parities to five.

- In this case, less than a 5 percent decline in market hog prices boosts the parity required for a positive NPV by 2.5 times.

- Likewise, paying $50 more for a replacement gilt ($250 vs. $200) raises the parity for a female’s positive return from two parities to three. The price paid for the market gilt has less impact on when a sow reaches a positive NPV than the number of pigs sold per sow per year or market hog prices. 

What does this mean for you? Like most things in pork production, the time a sow must remain in the breeding herd to generate a positive NPV differs from one operation to the next.

Determining optimum longevity goals isn’t easy. You need accurate financial and production records to assess how many parities a replacement gilt must remain in the herd before she has earned her keep.

Remember our example assumes a specific number of pigs sold per litter. As production costs increase or revenues decrease, sows must remain in the herd longer. Reducing problems that prompt culling before sows reach the most productive parities will improve profitability.

When selecting replacement gilts, note the animal’s structural conformation, udder quality and other issues that could result in an early exit from the breeding herd.

Genetic differences for longevity exist between and within breeds and lines of females. Consider sow longevity and productivity when selecting seedstock sources. Ask to look at records.

Our analysis also assumes production is constant as parities increase. In truth, productivity increases until the third parity. Parities three through six tend to be the most productive. Some sows are productive longer.

We don’t suggest you keep nonproductive sows in the herd just to reduce replacement rates. We do suggest you address problems resulting in high sow-replacement rates through genetics and management. 

We are working on a computer spreadsheet program to assist you in determining the length of time sows must remain in the herd to have a positive NPV. If you would like more information, contact us at (901) 425-4705.

Ken Stalder is a geneticist and Curt Lacy is an area farm management specialist with the University of Tennessee in Knoxville.

 

Table 1: More Pigs = Faster Payback

The number of pigs sold per litter influences the parity at which a sow reaches a positive net present value. This is based on assumptions detailed previously in the article. Dollar amounts shown here indicate the amount of profit above breakeven.

PIGS SOLD   PARITY
PER LITTER   1    2    3    4    5    6
7.50                                $17
7.75                      $12  $50  $88
8.00                 $10  $60 $110 $159
8.25                 $46 $108 $169 $230
8.50             $7  $82 $156 $229 $300
8.75            $32 $118 $204 $288 $371
9.00            $56 $155 $252 $348 $442
9.25            $80 $191 $300 $407 $513
Source: Ken Stalder and Curt Lacy, University of Tennessee

 

Table 2: Market Hog Prices Affect Sow Value

The data in this table shows the influence of market hog prices on the parity at which a sow reaches a positive net present value. Dollar amounts shown here indicate the amount of profit above breakeven.

MARKET HOG PRICES
PER HUNDREDWEIGHT   PARITY
(LIVE WEIGHT)         1      2      3      4      5      6
$42                                              
$44                                             $33    $67
$46                         $7    $82   $156   $229   $300
$48                        $87   $201   $314   $424   $533
$50                 $12   $167   $320   $471   $620   $766
Source: Ken Stalder and Curt Lacy, University of Tennessee

 

Table 3: High Replacement Costs Demand Longevity

In this table, you can see the effect replacement gilt prices have on influencing at which parity a sow generates a positive payback on your original investment in her and her net present value.  Dollar amounts shown here indicate the amount of profit above breakeven.

REPLACEMENT GILT    PARITY
PRICES (PER HEAD)    1      2      3      4      5      6
$150                      $63   $138   $212   $284   $356
$175                      $35   $110   $184   $256   $328
$200                       $7    $82   $156   $229   $300
$225                             $54   $128   $200   $273
$250                             $27   $100   $173   $245
Source: Ken Stalder and Curt Lacy, University of Tennessee