changes in management for pork contracts

Changes in Management for Pork Contracts

Tim Safranski

State Swine Breeding Specialist(573) 884-7994

Contracting

• Reduce fluctuation in cash flow

• Decrease risk (i.e. shared)

• Share costs

• Have a guaranteed market

• Access to $$$

Contractor or Contractee?

To contract, or not to contract….• Predictable cash flow • Predictable cash flow

To Contract, or not to contract….• Predictable cash flow• Forces record keeping

• Predictable cash flow• Forces record keeping

To Contract, or not to contract….• Predictable cash flow• Forces record keeping• Production plan and

outside assistance

• Predictable cash flow• Forces record keeping• Production plan and

outside assistance

To Contract, or not to contract….• Predictable cash flow• Forces record keeping• Production plan and

outside assistance• Strict biosecurity

• Predictable cash flow• Forces record keeping• Production plan and

outside assistance • Strict biosecurity

To Contract, or not to contract….• Predictable cash flow• Forces record keeping• Production plan and

outside assistance• Strict biosecurity• Facilities meet

minimum standard

• Predictable cash flow• Forces record keeping• Production plan and

outside assistance• Strict biosecurity• Facilities meet

minimum standard

To Contract, or not to contract….• Predictable cash flow• Forces record keeping• Production plan and

outside assistance• Strict biosecurity• Facilities meet

minimum standard• Waste control is legal

• Predictable cash flow• Forces record keeping• Production plan and

outside assistance Strict biosecurity

• Facilities meet minimum standard

• Waste control is legal

To Contract, or not to contract….• Predictable cash flow• Forces record keeping• Production plan and

outside assistance• Strict biosecurity• Facilities meet minimum

standard• Waste control is legal• Consistent genetic source

• Predictable cash flow• Forces record keeping• Production plan and

outside assistance• Strict biosecurity• Facilities meet minimum

standard• Waste control is legal• Consistent genetic source

Other Considerations

• Finisher– mixed sex– feed supplied, how to sell corn?– incentives

• Farrow– replacement rate/culling decisions– breeding system (P = G + E + GxE)– incentives

Litter Size Weaned

Ovu. Fert. Birth Alive Wean

1817

11.510.7

9.6

0

2

4

6

8

10

12

14

16

18

Ovu. Fert. Birth Alive Wean

# of potential pigs

Other Considerations Continued• Reliability of other party

– company– another farmer

• Personalities• Specialization of labor• Long-term asset, short-term contract?• IPPA Swine Contract Approaches

– (section 5 in notebook)

• NPPC Guide to contracting

Thoughts for Extension Personnel

• Who are we working for?

• What is our role?

• Are costs of production known?

• Are goals known?

Standard Normal Distribution

-3 -2 -1 0 1 2 3

Standard Deviations From Mean

freq

uen

cy