Editor's Note: We're pleased to introduce Dr. David Meisinger as a regular contributor to PorkNetwork. Born and raised on a large livestock and grain farm in Northern Illinois, Meisinger received a B.S. and M.S. from Southern Illinois University in Carbondale. He continued his studies at Iowa State University, receiving a Ph.D. in Animal Science in 1978. He has served in a number of capacities within the pork industry, including Director of Research and Education for the National Pork Producers Council and Assistant Vice-President of Educational Services for the National Pork Board. Since 2005, Dr. Meisinger has been Director of the U.S. Pork Center of Excellence. The mission of this organization is to add value to the pork industry by facilitating research and learning for U.S. pork producers through national collaboration.
With changes in the cost structure of the pork industry, there is an interesting dynamic in terms of which producers are in the best position to survive. For many years, we’ve seen a real incentive to specialize and grow pork businesses. Small producers became mid-sized, while mid-sized producers followed the signs to become large volume producers. A few even became pork powerhouses. Most in this latter category specialized in some activities. While most “mega producers” chose to control their own feed manufacturing, few remained in crop farming. Changes in feed costs and the value of swine manure have swung the pendulum in the direction of diversified producers.
When corn prices rise, there is a lateral increase in seed, fertilizer and other inputs for crop farming, including energy costs. The price of corn is closely tied to the cost of a barrel of oil. Hence, when energy costs go up, so do corn prices, fertilizer prices, etc., and when corn prices and fertilizer prices increase, the value of swine manure as a replacement to commercial fertilizer increases as well.
Randy Walker with DPI Global has a software tool that takes into account hogs, corn and manure. For hog operations that raise at least some of their own corn, the software tool shows there is never a time when they are not profitable. If hogs are not profitable, then manure carries the day. That is why, even in these challenging times, many pork producers are able to not only survive but thrive.
Make the most of your manure value
Several excellent presentations during the 2013 Ohio Pork Congress were on the topic of hog manure, including new technologies, value, systems and producer testimonials. One speaker had data demonstrating that in trials using hog manure compared on an equal basis with commercial fertilizer, hog manure exceeded commercial fertilizer in corn yields. This was true even in extremely dry conditions like those experienced in the Midwest last year. I am convinced that one of the reasons for the incremental improvement is due to micronutrients that are not considered in commercial fertilizer. The reason for the advantage in dry years could well be due to the organic matter in swine manure that holds moisture.
Producers who understand that the manure produced in their operations has value but who do not necessarily have a use for it on crop ground should find neighbors to work out an agreement for application of the product. The neighbor must be close by and must also see a value in using the manure, which usually means that the pork producer is getting rid of the manure at something less than full value.
In fact, the Hord Swine Management Group in Ohio says they work out arrangements so they can at least cover the cost of application, so they are not capturing all the value to help offset their hog production costs.
Input and output integration
Randy Walker of DPI Global talks of input and output integration. He explains that input integration doesn’t usually get as much attention as output integration, even though it’s just as important. The latter would involve contracts for pigs with a packing company and for the manure, if the producer does not have the capacity to utilize all or any of it. He states that one of the reasons that input integration will become more important is that corn is being selected for specific traits. For example, corn raised for ethanol production would not necessarily be optimum for pig nutrition. By having control over their own corn production, producers can select and utilize the varieties of corn that best suit their needs.
It has been interesting to watch how different farmers have captured value in their operations, whether it is from niche marketing, selling by-products or roaster pigs, or from extracting the most value from manure. Several producers have told me pork is a by-product of their production, as they are only in the pork business to use the manure for their crop ground.
At this point in the hog cycle, it is apparent that those pork producers who can control their inputs and get full value for their outputs will be the ones who will survive.