Characteristics And Production Costs Of U.S. Hog Farms, 2004
Hog production in 2004 was characterized by wide variation in the types, sizes, and economic performance of operations. Operations specializing in a single production phase generated more than three times the product value, on average, of those using the traditional farrow-to-finish approach. Low-cost operations tended to be larger, located in the Heartland, and operated by farmers whose primary occupation was farming. Small and medium operations far outnumbered large and very large operations, but large and very large operations accounted for most of the production. Average production costs declined as the size of the hog operation increased, a result of reduced capital costs and more efficient input use. Hog production was highly concentrated in the Heartland, but the largest operations were specialized hog finishing units in the Southern Seaboard. [Excerpted from website]
A wide variation in the types, sizes, and economic performances of hog operations characterized the industry in 2004. Specialized farrowing, weanling, and hog finishing operations averaged nearly $1 million or more of production value. By contrast, farrow-to-finish operations averaged about $322,000 in production value per year.
Large specialized hog operations had been in business an average of no more than 13 years in 2004, compared with 20 years for the farrow-to-finish operations. The specialized operations also showed more recent investment in production facilities and equipment, and greater technical innovation, using such innovations as artificial insemination, terminal crossbreeding, and all-in/ all-out management, than did farrow-to-finish operations.
Hog farms with the lowest costs of production in 2004 tended to be large, located in the Heartland, and operated by farmers whose primary occupation was farming. Performance indicators–such as pigs per litter, death loss, and feed and labor efficiency–were also better on low-cost operations. The better performance may be due to their greater use of improved technologies in such areas as breeding, feeding, and facilities management.
Small and medium hog operations far outnumbered large and very large operations during 2004, but large and very large operations accounted for most of the production. The use of contracts for finishing hogs increased with size of the operation. Contracts were used by 75 percent or more of large and very large hog finishing operations compared with less than 50 percent of smaller operations. Operators of small and medium operations were generally older and more often reported plans to exit the hog industry in the next 5 years, suggesting that the trend toward fewer and larger operations will likely continue.
[Abstracted excerpted from report summary]