Maximizing profitability by using the correct marketing strategy
An effective swine marketing strategy can help maximize facility utilization and profits for the producer. Producers may choose to market animals on a fixed time or fixed weight basis. Considerations in the decision include the flow of pigs into a facility, the production goals such as final body weight and feed efficiency, the variability of the weights of animals in the facility, the availability of transportation for hogs from the facility, and shackle space at the packing plant. Producers in the U.S. typically market hogs over multiple events toward the end of the finisher period to reduce carcass weight variability. However, this depends on the accuracy of trained individuals sorting hogs and/or the use of automatic sorting technology such as sorting scales or machine learning.
- Understand fixed time versus fixed weight swine marketing
- Understand marketing strategy impact on economic return
- Topping pens for market hogs
Optimizing Marketing Strategy
The goal of an ideal swine marketing strategy should be to increase productivity and profitability of your swine operation. Pigs are given free access to feed and allowed to maximize their individual growth potential which creates some variation in body weights of the animals within pens. To be successful, it is important to start marketing animals before any extremely heavy pigs are in the group because the carcasses will be subject to discounts at the time of purchase. Similarly, keeping back the lightest hogs until the final load from the barn will allow those animals to gain weight or considering sending light hogs to a processor with a more favorable carcass purchase matrix can help in maximizing profitability for the producer. It is important to determine and update the optimum market weight for each group depending on the swine and grain market prices and the flow of pigs into your facility (Srivastava et al., 1998; Tokach and Henry, 2008; Khamjan et al., 2013).
Fixed time marketing strategy
The fixed time marketing strategy (aka space short) involves carefully managing the feeding program to maximize average daily gain and regularly monitoring growth of pigs to ensure that they reach a target weight by a specific date. For example, the strategy may involve feeding pigs a high-energy diet during the early stages of growth to maximize protein deposition rates, followed by a reduced-energy diet as they approach their target weight. When pigs reduce feed intake and, subsequently, grow slower in the summer months due to heat stress, a fixed time marketing strategy can be applied.
The benefits of fixed time swine marketing include allowing producers to accurately predict the amount of time required to produce a market-ready pig. This enables producers to plan their operations more effectively to ensure that they have shackle space booked at the plant and that they can be ready for the next group of pigs destined for their facility. Furthermore, marketing swine on a fixed time basis may provide opportunities to contract better finished hog prices on the futures market.
In addition to the benefits of predictability, fixed time hog finishing can also reduce the cost of feed and other inputs. By carefully managing the pig’s diet and growth, producers can minimize the feed required to produce a market-ready pig. Although accelerated growth can be more expensive, the strategy can significantly reduce the cost of production, leading to increased profitability (Song and Miller, 2002).
Fixed weight swine marketing
Fixed weight swine marketing (aka space long) is a management practice used in the swine industry to ensure that hogs reach a specific weight target before being sent to market. Under this strategy, dietary formulations that add cost to the diets to reduce the number of days pigs are on feed tend to decrease profitability. Hogs are typically sold by carcass weight and the price per pound can vary depending on the current market conditions. Therefore, dietary or management strategies should be regularly evaluated for the economic impact. Multiple marketing events help producers to manage the natural variations in body weight when the market-ready hogs are sold before any other hogs in the group.
This method of hog finishing can be beneficial for both producers and packing plants. For producers, it helps to maximize the efficiency of their operations by ensuring that hogs reach market weight at a consistent rate. For packing plants, it can help to ensure that pork products are of a consistent quality and size. Therefore, packers apply premiums and discounts to the hog carcass purchases from the producer to encourage or discourage weight or carcass traits (Tokach et al., 2008; Srivastava et al., 1998).
Topping pens for market hogs
Topping pens for market hogs refers to selling the market-ready hogs from barns or pens and leaving behind those pigs that still need more time to grow and gain weight. The purpose is to ensure that only hogs that meet the desired weight are sent to market, which is important for the economic success of the producer (Coble et al., 2018).
- Typically done by visual inspection, workers identify hogs that meet the desired weight and size criteria.
- Selected hogs may be moved directly from their pen and onto the truck or into a holding pen (less common) until they are transported to market.
- When it is time to send the hogs to market, they are loaded onto a truck and taken to the processing facility.
Market-ready hogs may also be selected using automated sorting technology. Barns may incorporate automatic weighing and sorting scales into the facility design. In these facilities, pigs must walk over the scale to get to feed or water and the scales are programmed to sort pigs above certain weights into a different pen for marketing (Brumm, et al., 2008). Automatic weight detection can also be based on image-analysis and machine learning technology that identifies the market-ready pigs (Muhfuz et al., 2022).
In the following example (Figures 1 and 2), the first two truckloads of market hogs (172 head each) were scheduled to leave one week apart from the finishing facility. The day before loadout, the heaviest pigs in each pen were identified. The pigs selected for marketing were sorted out of the pens on loadout day and then transported to the slaughter facility. After reviewing the kill sheets data, it was apparent that the heaviest hogs were not removed from the barn, thus reducing profitability.
Figure 1. Kill sheet data from market hogs sold one week apart. Hog carcass weights not subject to discounts are indicated by the green shading. Note that both the first and second truckloads contain heavy hogs purchased by the packing plant at discounted carcass values thus reducing the total paid to the producer by $1,360.00.
Figure 2. Projected kill sheet if the lightest hogs that were sent in load 1 were instead held back for one week and replaced by the heaviest hogs that were sent in load 2. Note that the lightest hogs were projected to move up two carcass weight classes and the heaviest hogs projected to move down two carcass weight classes. In this scenario, the producer is instead subject to $880.00 in total discounts.
Dedicating time to consider and evaluate the swine marketing strategy is important to improve profitability of the swine operation. Facilities should consider pig flow, production goals, and the current swine and grain markets as part of marketing strategy decisions. The distribution of animal weights within a group can impact profitability and, therefore, must be managed. In general, U.S. swine producers utilize multiple marketing events where they select the heaviest hogs for each load (i.e. topping pens) and leave the lighter hogs more time and space to grow. However, all events must occur within the constraints of needing the barn cleaned and disinfected before a new group of pigs arrives. The use of automated sorting equipment and/or machine learning technology can help producers to know the average weight of the group and inform marketing decisions.
Brumm, F., S.J. Moeller, K. Bernick. 2008. Automatic Sorting Technology for Large Pen Finishing. Pork Information Gateway.
Coble, K.F., M.B. Menegat, J.S. Bergtold, S.S. Dritz, M.D. Tokach, J.M. DeRouchey, R.D. Goodband, J.C. Woodworth. 2018. Using network flow modeling to determine pig flow in a commercial production system. Comput. Electron. Agric. 155:190-202. doi:10.1016/j.compag.2018.10.022.
Khamjan, S., K. Piewthongngam, S. Pathumnakul. 2013. Pig procurement plan considering pig growth and size distribution. Comput. Ind. Eng. 64:886-894.
Mahfuz, S., H.-S. Mun,. M.A. Dilawar, C.-J. Yang. 2022. Applications of Smart Technology as a Sustainable Strategy in Modern Swine Farming. Sustainability 14:2607. doi:10.3390/su14052607
Tokach, M.D., S.C. Henry. 2008. When, Where, and Why: Marketing decisions based on packer matrixes and pig flow. Swine Profitability Conf. p. 49-62.
Song, Y., G.Y. Miller. 2002. Effects of marketing decisions on net present value of pork production for independent and allied swine producers. Appl. Econ. Perspect. Policy 24:181-195 doi:10.1111/1467-9353.00090
Srivastava, R., G.-W. Ziggers, L. Schrader. 1998. Vertical Coordination in the Swine Industry: A Multi-Country Study. Can. J. Agric. Econ., 46: 539-548. doi:10.1111/j.1744-7976.1998.tb00978.x