Chapter Six: 150 SOW FARROW-TO-FINISH

Transcription

1 Chapter Six: 150 SOW FARROW-TO-FINISH Kenneth Foster, Chris Hurt, and Jeffrey Hale Introduction This chapter presents two 150 sow capitalization and cost of production models and the associated economic and production assumptions. The first model, called the 150 sow high technology, is similar to the other models in previous chapters in that it is designed to show an operation utilizing as much of the current technology as is feasible to adopt. As discussed in the opening chapter, many of the smaller swine operations around the Midwest were either constructed or renovated in the late 1970s or early 1980s. Therefore, a second model is presented, in this chapter entitled the 150 sow low technology. This model is designed to give an idea what the cost of production may be for an operation that has not yet adopted the current technology available. The 150 sow low technology model will be used in later chapters to show how the adoption of various technologies can affect capitalization and the cost of production. This chapter is divided into three sections. This first section is an introduction to the models. The second section provides details on capitalization, cost of production estimates, and specifications of the 150 sow high technology system. The last section includes capitalization, cost of production estimations, and technical specifications of the 150 sow low technology system. Table 6-1: Summary of Budgeting Results Total Cost of Production Capitalization Annual Per Litter Per Head Per Cwt. 150 Sow High Tech. $505,799 $300,769 $ $99.33 $ Sow Low Tech. $480,919 $256,146 $ $ $47.88 Table 6-1 summarizes the capitalization required to construct for both models presented in this chapter. Additionally, the projected costs of production on an annual, per litter, per head, and per hundred weight basis are presented. 75

2 150 Sow High Technology System Introduction This system is composed of total 180 sows, farrowing 36 litters eight times per year. A total of 337 litters are assumed to be produced each year, with 9.0 pigs weaned per litter, or 3,032 hogs weaned annually. A 6% death loss results in 8.46 pigs marketed per litter, or 2,851 market hogs sold annually. A complete discussion of the production assumptions is located in the section entitled Specifications. The operation is designed as a high investment farrow-to-finish swine unit. Production is confined with the exception of the gestation phase. General technologies employed include: Allin/All-Out production; less than 21 day weaning with two week age variation; split-sex and phase feeding; physical separation of pigs by room for greater bio-security; and medium lean genetics. Capitalization Capitalization is subdivided into five categories: land, buildings, equipment, production inventory, and market inventory. The numbers presented represent a snapshot of the operation at full capacity, on any given day. The full capitalization of the operation is presented in Table 6-2. Land This operation is assumed to occupy a site consisting of 5 acres. The assumed value of land is $1400 per acre, for a total of $7,000. However, this cost was not used in the cost of production calculation. Instead, the lost profit opportunity from not having the land in corn production was used to approximate the annual land ownership charge. It is assumed that land with 113 bushel corn yields would be used for the hog facility site. The cost of production information for 113 bushel corn is derived from 1994 Purdue Crop Guide (ID-166). 42 The price of corn used in the analysis is the mean of the season average prices for the period 1984 through As shown in Table 6-3, the estimated annual opportunity cost from not having the land in corn production was $ per acre, or $ for the entire 5 acres. Table 6-2: Capitalization Land 7,000 Buildings 158,091 Equipment 257,535 Production Inventory 39,270 Market Inventory 43, ,799 Table 6-3: Land Opportunity Cost Analysis Production Cost (per bushel) $1.36 Selling Price (per bushel) $2.26 Net Profit[loss] (per bushel) $.90 Production per Acre (bushels) 113 Net Profit[loss] per Acre $ Total Opportunity Cost (5 acres) $ Doster, Parsons, Christmas, Griffith, Hawkins, and Nielsen Purdue Crop Guide. ID-166. Purdue University Cooperative Extension Service Indiana Historical Price Chart. EC-661. Purdue University Cooperative Extension Service

3 Buildings and Equipment Building and equipment costs represent the largest group of capital requirements. The costs involved in the construction of the operational site are derived from a variety of sources. The largest portion of building and equipment costs are those for construction and inside equipment. The figures used for those costs, outlined in the Cost column of Table 6-4, were compiled from consultations with industry sources. More detailed information regarding building capacities can be found in the specification section under the title of PIGFLOW Output Specifications. Table 6-4: Construction Costs Cost Per Unit Capacity Breed/Gest $10,000 Farrowing $2,100 Crate 36 Nursery $88 Head 324 Finishing $150 Head 972 Table 6-5 shows the specific building and equipment costs. All construction costs were increased by a contingency charge of 5% for equipment and 10% for buildings. This contingency provides a buffer against unforeseen cost overruns. Table 6-5: Building and Equipment Costs Equipment Cost Cont. Invest. Building Cost Cont. Invest. Breed/Gest. 5, ,775 Breed/Gest. 4, ,950 Farrowing 41, ,659 Farrowing 34, ,422 Nursery 15, ,466 Nursery 12, ,113 Finishing 80, ,200 Finishing 65, ,171 Water Supply 12, ,600 Electrical 7, ,875 Tractor 24, ,200 Site Prep. 10, ,000 Feed System 48, ,188 Driveway 9, ,900 Manure wagon 12, ,600 Boar Isolate Mortality Disposal 5, ,849 Total 257,535 Total 158,091 Five other main groups of equipment costs are required: water supply, tractor, feed system, manure wagon, and mortality disposal. The first group is a system for supplying water. The system modeled, at a cost of $12,000, provides for the purchase and installation of: two-200 foot deep wells, at $3,000 each; two pumps; a pumphouse; a surge tank; and pipe. A tractor is required on the operation to perform such tasks as moving manure, pig trailer moving, and general duties. The cost reflects the purchase of a used tractor. All feed, with the exception of some bagged starter feed, is assumed to be produced onfarm. A technical expert representing a large producer and distributor of commercial feed production systems was consulted to aid in the determination of the appropriate size and type of 77

4 mill required. A modular feed grinding/mixing system was selected. The system requires that feed delivery be completed with a feed truck. The system is designed with an auxiliary system of feed production. This redundancy is included as a safety margin. Included in the charge for the feed system is the cost for the grinding and mixing system, the feed truck, an auxiliary system, and the necessary feed storage tanks and bins. Mortality disposal is based on a composting system. Three items, in addition to a suitable site, are required: a concrete slab; hay bales; and a perimeter fence. The cost of these was found from local suppliers and is shown in Table 6-6. Table 6-6: Composting Establishment Concrete Slab $5,000 Hay Bales $240 Perimeter Fence $330 Total $5,570 In addition to the basic construction costs involved with putting up the buildings, four additional groups of items are required: electrical hook-up; site preparation; a driveway; and a new boar isolation facility. These items are shown in Table 6-5, on the lower right side. The electrical hook-up charge consists of the link from the power company s service lines to the main breaker at the production site. This work is generally done by a professional contractor. A local contractor estimated a fee of $7,500. The 5-acre site on which the operation is established must be prepared with respect to slope, drainage, etc., prior to the start of construction. Additionally, after the buildings are up, final grading and fencing work is required. A local contractor was consulted for a per-acre fee for this type of work. The fee provided by the contractor includes the costs of all earth moving and preparation. The fee for ground preparation and installing a perimeter is $2,000 per acre, or $10,000 before the contingency charge. The site requires a 600-foot long by 10-foot wide access driveway. A cost of $1.50 per square foot for preparing and laying gravel on the drive was used to calculate the $9,000 total charge for the drive. New boars entering the operation must first pass through an isolation facility in order to maintain bio-security. This operation requires a pen with the capacity to hold two boars with 15 square feet of space for each. The construction cost used in this analysis is $20 per square foot, or $600 for the total cost of the pen. Waste is disposed of through the use of deep-pits constructed under the buildings. The deep-pits are pumped out periodically, as they fill. The manure collected from the deep-pits is injected into cropland in order to capture its nutrient value. 78

5 Production Inventory The operation is assumed to use good lean gain genetics. Complete specifications on the performance and characteristics of the production inventory are located in the Specifications section of this chapter. The assumed annual replacement rate in this analysis is 50% for both sows and boars. The average breeding animal is assumed to have a productive life of two years, with a mortality rate of 5%. The breeding plan is two services per sow, with both services being natural. Market Inventory Table 6-7: Production Inventory Requirements Number Cost Unit Mortality Investment Sows 180 $180 Head.05 $34,020 Boars 10 $500 Head.05 $5,250 Investment is required in the production of the market inventory prior to birth and during all stages of production. However, for budgeting, the investment on an average day is needed to determine the interest, tax, and insurance charges. Table 6-8 shows how the investment in the market inventory is calculated. Additional details concerning how the number of pigs on hand at each stage of production is determined can be found in the Specifications section under PIGFLOW Output. Table 6-8: Investment In Market Herd Number Cost Unit Weight Investment All Pigs 1,620 $6.50 Head $10,530 Baby Pigs 324 $.23 Pound 4 $268 Nursery 324 $.23 Pound 30 $2,006 Finishing 972 $.23 Pound 155 $31,099 Total $43,902 In Table 6-8, the All Pigs category is the production investment in breeding, gestation, and farrowing for each pig in inventory. After the roughly 3.5 pounds of birth weight, each pound of gain is assumed to cost $.23. This value covers all direct costs involved with a pound of gain, from Table 6-9. The Weight column represents the average size animal at each stage of production and is multiplied by the cost per pound and the number of head to derive the value invested per stage. 79

6 Cost of Production The compiled cost of production analysis is shown in Table 6-9. The results are presented with respect to litter, hundred weight produced, and head of market hogs sold. Table 6-9: Cost of Production Budget Item Unit Quantity Price Value/ltr Value/cwt Value/hd Direct Charges: Corn bu Soybean Meal ton Other Feed cwt TOTAL FEED Herd Health dol Fuel & Utilities dol Marketing dol Miscellaneous dol Mortality Disposal dol TOTAL DIRECT Indirect Costs: Investment Charge Market Inventory dol % Breeding Inventory dol % Equipment dol % Buildings dol % Land dol Labor dol. 30, Management dol. 10, TOTAL INDIRECT TOTAL COST

7 Feed Costs The cost of feed is based on a series of phased diets and the historical average prices of corn and soybean meal. The direct charge for feed is subdivided into three sections: corn, bean meal, and other feed. As shown in Table 6-10, a whole Table 6-10: Feed Analysis herd feed conversion of 3.2 pounds of Percent Amount Factor Quantity feed for every pound of gain is assumed. Corn To market the expected hundredweight of pork per litter, bushels of Other Meal corn, 0.72 tons of 44% soybean meal, and 2.51 hundred-weight of other feed are required. The price of corn at $2.26 per bushel was calculated by averaging the season average prices for Indiana from 1984 through The price of 44% soybean meal at $ per ton was calculated by averaging the season average prices for Illinois from 1984 through The price of $36.00 for a hundred-weight of combined other feed ingredients includes pre-mix, other inputs, and other costs. 46 Other Direct Charges The charge for herd health in Table 6-9 is for veterinary services and medicine. 47 It comes from Livestock Production Budgets (ID-200) and is modified to reflect conditions modeled in this operation. The charge for fuel and utilities was taken from ID-200 and updated to reflect current conditions. The charge for utilities is smaller at this level, when compared to the systems modeled in earlier chapters, due to the fact that gestation is outside in this system. The charge for marketing is $1.00 per total hundred weight produced. This charge incorporates all transportation and marketing expenses. The cost of $5.00 for miscellaneous items is designed to cover unforeseen direct expenses which tend to occur in every operation. 44 Indiana Historical Price Chart. EC-66. Purdue University Cooperative Extension Service Good, D. Grain Price Outlook. University of Illinois. January, 1993 and April, Adapted from Foster, K., W. Dillon, K. Hendrix, V. Mayrose, and M. Neary. Livestock Production Budgets. ID Purdue University Cooperative Extension Service Foster, K., W. Dillon, K. Hendrix, V. Mayrose, and M. Neary. Livestock Production Budgets. ID-200. Purdue University Cooperative Extension Service

8 A direct charge for mortality disposal is included in the budget. This cost reflects the regular replacement of some items in the composting system and the repair of others. The general composting system was modified to coincide with the particular production system used in this analysis. 48 The direct costs involved with the composting system are shown in Table Indirect Charges Table 6-11: Direct Composting Charges Replacement Tarps $50 Annual Fence Repair $20 Replacement Hay Bales $30 Fuel and Utilities $100 Sawdust $100 Annual Total $300 Direct Cost per Litter $.89 The investments in market inventory, production inventory, equipment, buildings, and land are shown in the section of this chapter entitled Capitalization. The capitalized value calculated earlier shows up in the cost of production budget, Table 6-9, under the column Investment. The numbers found in Table 6-9 were calculated by taking the capitalized value and dividing by the number of litters produced. For example, the market inventory is capitalized at a value of $43,902 (Table 6-8), and 337 litters are produced each year. Therefore, the investment shown in Table 6-9 is $43,902/337 = $ This same type of calculation is done on each of the capital components. Each of the investments per litter in capital items is multiplied by a fixed percent charge to determine the per litter charge for capital items. The charge on the market inventory of 8.63% assumes a 9.5% nominal interest rate for.75 years and 1.5% for taxes and insurance. A nominal interest rate was used in the charge for the market inventory due to the short life of these animals. It is assumed that the effects of inflation will be so small during the time that these animals are part of the operation that adjustment is not required. The charge on the production inventory assumes a 6% real interest rate and 1.5% for taxes and insurance. The charge on equipment assumes a 6% real interest rate; 3.5% for taxes, insurance, and repairs; and an eight-year useful life. The charge on buildings assumes a 6% real interest rate; 3.5% for taxes, insurance, and repairs; and a 16-year useful life. All charges were determined with the use of an amortization schedule based on the parameters outlined above. The opportunity cost calculation on the land required for the operation was discussed in the Capitalization section, Table 6-3, and is $ Labor for the operation requires one manager and one part-time employee. The manager is paid a salary of $20,250 per year. In addition, a benefits package is provided, calculated as 15% of gross salary. The employee is paid an hourly wage of $6.00 an hour. Employee benefits are considered to be 25% of gross pay. 48 Foster, K., Department of Agricultural Economics, Purdue University. October

9 Salary Benefits Total Cost Manager $20,250 $3,038 $23,288 Production Assistant $5,760 $1,440 $7,200 $30,488 In addition to the labor, a fee was charged to compensate the management team. The purpose of this fee is to provide a return to the management personnel who make the decisions that guide the operation through the long-range horizon. It is likely that these decisions are made by the owner(s) of the operation. However, if this service was contracted out, a fee would have to be paid. The management charge, presented in Table 6-13, is calculated as 3.5% of gross market hog sales, or $10,267 per year, assuming the price of market hogs is $42 per hundredweight. Table 6-13: Management Fee Number of Head Sold 2,851 Cwt. per Head 2.45 Price per Cwt. $42 Total Management 3.5% $10,267 Health Program 50 Facilities 1. Perimeter fence 2. Entry facility 3. Dead animal disposal 4. Screened and rat-proofed buildings 5. Isolation facility Management Specifications 1. Weaned in less than 21 days 2. All-In/All-Out production Nursery - (1 for pigs) Finishers - (1 for pigs in 2 rooms; four feed tanks) 3. Separation of buildings for bio-security 4. Segregated early weaning procedures 49 Salary and benefit rates from industry sources. 50 Kirk Clark, DVM, School of Veterinary Medicine, Purdue University

10 Medications 1. Medication for H. parasuis 2. Penicillin + Azium for S. suis 3. Antibiotic fed to #75 (Apralan & Mecadox) 4. BMD - 3 weeks - Tet 1 week rotation in finisher Vaccination program 1) Gilts: a) Porcine Parvovirus, Erysipelas, 5-way Leptospirosis b) Vaccination to occur at 5 and 2 weeks before breeding c) Vaccination for E coli and others to occur as needed prefarrowing 2) Sows: a) Porcine Parvovirus, Erysipelas, 5-way Leptospirosis b) Vaccination to occur after each weaning c) Vaccination for E coli and others to occur as needed prefarrowing 3) Other vaccinations (herd dependent) Genetics Program 51 Gilts and boars purchased from an independent seedstock supplier. Medium lean growth pound fat-free lean gain potential. Barrows Gilts 1.00 in. backfat at 245 pounds % lean (fat-free) 1.15 in. backfat at 260 pounds % lean (fat-free) 0.90 in. backfat at 245 pounds % lean (fat-free) 1.00 in. backfat at 260 pounds % lean (fat-free) Feed Conversion Gilts purchased at $180 each from 60 to 245 pounds meal diets 2.96 from 60 to 260 pounds meal diets 51 Allan Schinckel, Department of Animal Sciences, Purdue University

11 Nutrition Program 52 Nursery 1. Four to five diets, sequencing rapidly in order to decrease cost. 2. Diets based on health status and genotype. Will usually feed a specified amount of each diet, or feed for a specified amount of time. Grow-Finish 1. Minimum of three diets for each sex, decreasing in lysine content with time (weight). 2. Split-sex feeding after 70 pounds. The first two (or three) diets will be fed at a fixed amount per pig based on liveweight growth. Diets after 150 pounds will be based on liveweight. Sow feed Gestation: 15-16% crude protein corn-soy plus a laxative. Feeding level increased last 2-3 weeks. Lactation: 17% crude protein corn-soy with 5% added fat. Boar feed Gestation feed used. Production Assumptions and PIGFLOW 53 Several assumptions were made concerning production which directly affect costs. Those production assumptions are described in this section. Nine pigs are assumed to be weaned from each litter farrowed. After deducting a 6% death loss, 8.46 pigs are marketed per litter. Based on the number of sows, the length of the weaning period, and settling rates, 337 litters are assumed to be produced each year. Annual market hog production is estimated at 2,851 pigs. A flow and space requirement planning software tool entitled PIGFLOW 54 was used to determine various aspects of herd size and building design. 52 T. R. Cline, Department of Animal Sciences, Purdue University Don Jones, Department of Agricultural Engineering, Purdue University Jones, D. and V. Mayrose. PIGFLOW Version 1.6. Purdue Research Foundation

12 Based on these assumption, PIGFLOW provided the following results: Farrowing unit consists of one room with 36 crates each. One group farrowed every 39 days. Rooms are empty 15 days for cleaning, and sows enter 3 days prior to farrowing. Weaning age: Average 18 days Maximum 21 day. Sow herd consists of 180 females in 4 groups of 45 sows. Conception rates: 80% average 60% seasonal Breeding on second heat after weaning. Table 6-14: Building Capacities Breeding 60 sows and 8 boars Nursery 1 groups for a total of 324 hogs (maximum age = 60 days) Finishing 3 groups for a total of 972 hogs (maximum age = 175 days) Manure Management Deep-pit construction with manure injection capacity. IDEM Guidelines 140# N/acre acres. Table 6-15: Estimated Manure Analysis lbs./100 yard. lbs./year Available N ,307 P 2 O ,042 K 2 O ,505 86

13 Table 6-16: Acreage Requirements for 113 bu/acre Corn Production Crop Requirement Application Rate Area Required (lbs./acre) (gal/acre) (acres) N 140 8, (N-basis) P 2 O , (P-basis) K 2 O 170 7, (K-basis) Site and Building Drawings The drawings for the site and individual buildings are presented on the next several pages. 87

14 150 Sow High Technology System N 300' FARROWING BUILDING 36 Crates FINISHING BUILDING Three Rooms of Pigs Total 180' 16 Sows/Pen NURSERY BUILDING 324 Pigs 230' GESTATION Shed & Lot BREEDING Shed & Lot 60 Sows& 8 Boars 5 Acre Site 88

15 24' 150 Sow High Technology System 96' FARROWING BUILDING 36 Crates 89

16 150 Sow High Technology System 24' 42' NURSERY BUILDING 324 Pigs 90

17 36' 150 Sow High Technology System 218' 70' FINISHING BUILDING Three rooms of Pigs Total 91

18 44' 150 Sow High Technology System 96' 112' 16 Sows/Pen sows Boars 90 SOW GESTATION Shed & Lot BREEDING Shed & Lot 60 Sows & 13 Boars 92

19 150 Sow Low Technology System Introduction This system is composed of total 135 sows, farrowing 36 litters seven times per year. A total of 259 litters are assumed to be produced each year, with 8.5 pigs weaned per litter, or 2,204 hogs weaned annually. A 7% death loss results in pigs marketed per litter, or 2,047 market hogs sold annually. A complete discussion of the production assumptions is located in the section entitled Specifications. The operation is designed as a high investment farrow-to-finish swine unit. Production is confined with the exception of the gestation phase. The building facilities assumed to be used are in-line and joined together. Capitalization Capitalization is subdivided into five categories: land, buildings, equipment, production inventory, and market inventory. The numbers presented represent a snapshot of the operation at full capacity, on any given day. The full capitalization of the operation is presented in Table Land This operation is assumed to occupy a site consisting of 2.5 acres. The assumed value of land is $1,400 per acre, for a total of $3,500. The same opportunity cost for the land that was used in the 150 sow high technology system is assumed here. For the 2.5 acres, the opportunity cost calculation is $ Buildings and Equipment Table 6-17: Capitalization Land 3,500 Buildings 147,798 Equipment 251,943 Production Inventory 33,110 Market Inventory 44, ,919 This system assumes the same cost of construction as is found in the 150 sow high technology, Table 6-4. Table 6-18 shows the specific building and equipment costs. All construction costs were increased by a contingency charge of 5% for equipment and 10% for buildings. This contingency provides a buffer against unforeseen cost overruns. 93

20 Table 6-18: Building and Equipment Costs Equipment Cost Cont. Invest. Building Cost Cont. Invest. Breed/Gest. 5, ,775 Breed/Gest. 4, ,950 Farrowing 41, ,659 Farrowing 34, ,422 Nursery 14, ,551 Nursery 12, ,329 Finishing 75, ,522 Finishing 61, ,161 Water Supply 12, ,600 Electrical 7, ,875 Tractor 24, ,200 Site Prep. 10, ,000 Feed System 48, ,188 Driveway 9, ,900 Manure wagon 12, ,600 Boar Isolate Mortality Disposal 5, ,849 Total 251,943 Total 147,798 Five other main groups of equipment costs are required: water supply, tractor, feed system, manure wagon, and mortality disposal. The costs of these are assumed to be the same as in the 150 sow high technology system. Additionally, electrical hookup, site preparation, driveway, and new boar isolation are assumed to be the same as the 150 sow high technology. Production Inventory The operation is assumed to use good lean gain genetics. Complete specifications on the performance and characteristics of the production inventory are located in the Specifications section of this chapter. The assumed annual replacement rate in this analysis is 50% for both sows and boars. The average breeding animal is assumed to have a productive life of two years, with a mortality rate of 7.5%. The breeding plan is two services per sow, with both services being natural. Market Inventory Table 6-19: Production Inventory Requirements Number Cost Unit Mortality Investment Sows 135 $180 Head $26,123 Boars 13 $500 Head $6,988 Investment is required in the production of the market inventory prior to birth and during all stages of production. However, for budgeting, the investment on an average day is needed to determine the interest, tax, and insurance charges. Table 6-20 shows how the investment in the market inventory is calculated. Additional details concerning how the number of pigs on hand at each stage of production is determined can be found in the specification section under PIGFLOW Output. 94

21 Table 6-20: Investment In Market Herd Number Cost Unit Weight Investment All Pigs 1,530 $6.50 Head $9,945 Baby Pigs 306 $.23 Pound 4 $278 Nursery 306 $.23 Pound 30 $2,082 Finishing 918 $.23 Pound 155 $32,264 Total $44,568 Cost of Production The compiled cost of production analysis is shown in Table The results are presented with respect to litter, hundred weight produced, and head of market hogs sold. Table 6-21: Cost of Production Budget Item Unit Quantity Price Value/ltr Value/cwt Value/hd Direct Charges: Corn bu Soybean Meal ton Other Feed cwt TOTAL FEED Herd Health dol Fuel & Utilities dol Marketing dol Miscellaneous dol Mortality Disposal dol TOTAL DIRECT Indirect Costs: Investment Charge Market Inventory dol % Breeding Inventory dol % Equipment dol % Buildings dol % Land dol Labor dol. 30, Management dol. 7, TOTAL INDIRECT TOTAL COST

22 Feed Costs The cost of feed is based on a series of phased diets and the historical average prices of corn and soybean meal. The direct charge for feed is subdivided into three sections: corn, bean meal, and other feed. As shown in Table 6-9, a whole herd feed conversion of 3.5 pounds of feed for every pound of gain is assumed. To market the expected hundred-weight of pork per litter, bushels of corn, 0.74 tons of 44% soybean meal, and 2.57 hundred-weight of other feed are required. The price of corn, soybean meal, and combined other feed ingredients is assumed to be the same as in the 150 sow high technology system. Other Direct Charges The charges for veterinary services and medicine; fuel and utilities; and mortality disposal is assumed to be the same as in the 150 sow high technology system. Indirect Charges Table 6-22: Feed Analysis Percent Amount Factor Quantity Corn Meal Other Labor for the operation requires one manager and one part-time employee. The manager is paid a salary of $20,250 per year. In addition, a benefits package is provided, calculated as 15% of gross salary. The employee is paid an hourly wage of $6.00 an hour. Employee benefits are considered to be 25% of gross pay. Salary Benefits Total Cost Manager $20,250 $3,038 $23,288 Production Assistant $5,760 $1,440 $7,200 $30,488 In addition to the labor, a fee was charged to compensate the management team. The purpose of this fee is to provide a return to the management personnel who make the decisions that guide the operation through the long-range horizon. It is likely that these decisions are made by the owner(s) of the operation. However, if this service was contracted out, a fee would have to be paid. The management charge, presented in Table 6-24, is calculated as 3.5% of gross market hog sales, or $7,374 per year, assuming the price of market hogs is $42 per hundredweight. Table 6-24: Management Fee Number of Head Sold 2,047 Cwt. per Head 2.45 Price per Cwt. $42 Total Management 3.5% $7, Salary and benefit rates from industry sources. 96

23 Specifications Health Program 56 Facilities 1. Perimeter fence 2. Dead animal disposal 3. Isolation facility Management 1. Weaned in less than 39 days Medications 1. Medication for H. parasuis 2. Penicillin + Azium for S. suis 3. Antibiotic fed to #75 (Apralan & Mecadox) 4. BMD - 3 weeks - Tet 1 week rotation in finisher Vaccination program 1) Gilts: a) Porcine Parvovirus, Erysipelas, 5-way Leptospirosis b) Vaccination to occur at 5 and 2 weeks before breeding c) Vaccination for E coli and others to occur as needed prefarrowing 2) Sows: a) Porcine Parvovirus, Erysipelas, 5-way Leptospirosis b) Vaccination to occur after each weaning c) Vaccination for E coli and others to occur as needed prefarrowing 3) Other vaccinations (herd dependent) 56 Kirk Clark, DVM, School of Veterinary Medicine, Purdue University

24 Genetics Program 57 Genetics in the 150 sow low technology system are assumed to be the same as those in the 150 sow high technology system. Production Assumptions and PIGFLOW 58 Several assumptions were made concerning production which directly affect costs. Those production assumptions are described in this section. Eight point five pigs are assumed to be weaned from each litter farrowed. After deducting a 7% death loss, pigs are marketed per litter. Based on the number of sows, the length of the weaning period, and settling rates, 259 litters are assumed to be produced each year. Annual market hog production is estimated at 2,047 pigs. A flow and space requirement planning software tool entitled PIGFLOW 59 was used to determine various aspects of herd size and building design. Based on these assumption, PIGFLOW provided the following results: Farrowing unit consists of one room with 36 crates each. One group farrowed every 51 days. Rooms are empty 11.7 days for cleaning and sows enter 3 days prior to farrowing. Weaning age: Average 36 days Maximum 39 day. Sow herd consists of 135 females in 3 groups of 45 sows. Conception rates: 80% average 60% seasonal Breeding on first heat after weaning. 57 Allan Schinckel, Department of Animal Sciences, Purdue University Don Jones, Department of Agricultural Engineering, Purdue University Jones, D. and V. Mayrose. PIGFLOW Version 1.6. Purdue Research Foundation

25 Table 6-25: Building Capacities Breeding 60 sows and 13 boars Nursery 1 group for a total of 306 hogs (maximum age = 60 days) Finishing 3 groups for a total of 918 hogs (maximum age = 175 days) Manure Management Deep-pit construction with manure injection capacity. IDEM Guidelines 140# N/acre 76.7 acres. Table 6-26: Estimated Manure Analysis lbs./100 yard. lbs./year Available N ,730 P 2 O ,281 K 2 O ,879 Table 6-27: Acreage Requirements for 113 bu/acre Corn Production Crop Requirement Application Rate Area Required (lbs./acre) (gal/acre) (acres) N 140 8, (N-basis) P 2 O , (P-basis) K 2 O 170 7, (K-basis) Site Drawing The drawing for the site is presented on the next page. 99

26 150 Sow Low Technology System FINISHING BUILDING Three Rooms of 306 Head NURSERY 306 Pigs FARROWING 36 Crates SOW GESTATION Shed and Lot BREEDING Shed and Lot 2.5 Acre Site 100