8 March 2002

Towards perfect pigs

As costs tighten and margins fall, it has

never been more important to produce what

the market wants, when it wants it. This

special focus examines a new franchise

beef scheme that claims to do just that

and asks auctioneers whether they will

keep private sale registers going. First,

Simon Wragg quizzes Meadow Quality about

a new software system designed to help

producers hit market specifications.

Edited by James Garner

PIGS that miss contract specification are such a massive drain on profits that one company has developed software to help its members produce a top-notch product that substantially improves margins.

"In some operations the processor literally has no market for under and over-weight carcasses. They are an unwanted burden which have to be sold at a discount," says Greg Mowbray of Meadow Quality.

The situation has worsened due to consolidation in the processing sector. An operation like Meadow Quality is increasingly taking market requirements back to farms, instead of taking finished pigs from farms and finding a market outlet.

"The industry needs leadership. It needs to show producers where the sector is heading, encourage output and then meet demand," he adds.

Although not a panacea for every producer, Meadow Quality is using computer forecasting software at farm level to develop a sense of direction among its suppliers.

The system, Premier Predictor Keys (PPK), offers serious benefits, says the companys Colin Wooldridge. He accepts not all producers are comfortable with information technology, but says no one can ignore the tangible financial predictions it generates.

"We can go to a unit after analysing its historical data from grading sheets and demonstrate how output can be improved."

Using elements such as contract pricing structure, the spread of finishing weights and backfats as well as other on-farm data enables the system to show clearly how profits can be achieved by improving carcass specification (see panel).

"Producers are influenced by a price change of 1p/kg, but some units dont realise theres potential to improve margins by 15-18p/kg in extreme cases."

Meadow Quality is using the PPK system in conjunction with its Market Meter semen scheme, which brings leading AI genetics to members, in a collaboration with JSR Newsham, to help producers improve unit performance.

The swing in attitudes has been rapid but necessary, says Meadow Qualitys marketing specialist Richard Sharratt. "With almost 85% of pigs being finished on contract to processors, producers know they cannot afford to fall outside specification and incur penalties.

"With the PPK system, we can show producers how they are doing against target spec and how they compare with others within the co-op."

Meadow Quality is determined to roll out the PPK system to all its members. Progress has been hindered by foot-and-mouth, admits Mr Mowbray, who adds it could take a further 12 months to achieve that.

"The importance of tools like PPK and Market Meter semen is that they demonstrate there are opportunities to move forward. If it can give back some of the confidence thats been lacking in the industry then it has a future," says Mr Mowbray. &#42

Premier Predictor Keys.

Small changes in the spread of finished weights or carcass quality can have a big impact on income. Producers can see this when they use Premier Predictor Keys (PPK) to predict the outcome in various examples.

A unit achieving an average carcass weight of 80.4kg (spread between 69-100kg) and an average backfat of 11.4mm could achieve a net margin of £20,797/year, assuming performance figures and costs below.

Base calculation assumptions

Unit Performance Costs (£)

FCR 2.42 Labour 11.96

DLWG (g/day) 625 Weaner cost 17.25

Mortality (%) 5.6 Other costs 9.34

Weaner weight (kg) 7 Feed cost/t 131

Pig places 2850 Bonus Nil

Killing Out % 74.5 Deductions 4.86

Base price (p/kg dwt) 100

The same unit achieving an average carcass weight of 80.4kg (but with a tighter spread between 72-88kg) and an average backfat of 11.4mm (spread between 6-19mm) could achieve a net margin of £26,152/year.

Meadow Qualitys Colin Wooldridge says: "In this scenario, the producer has the potential to increase finished weights by 1kg/head, which would lift net margin to £27,540."

If the unit tightened fat depth to an average of 11.4mm, but limited the spread to 7-16mm, net income is increased to £27,366. "Again, the net margin figure is just part of the story. The unit now has the potential to lift finishing weights by another kg and push net margin to £29,139," says Mr Wooldridge.

When the average P2 backfat reading was reduced to 11.2mm from a previous average of 11.4mm, the net income shifts from an original £20,797 to £28,302. "Small changes in output that often seem insignificant on their own can have a substantial effect on income for producers," he adds.

Premier Predictor Keys

Small changes in the spread of finished weights or carcass quality can have a big impact on income. Producers can see this when they use Premier Predictor Keys (PPK) to predict the outcome in various examples.

A unit achieving an average carcass weight of 80.4kg (spread between 69-100kg) and an average backfat of 11.4mm could achieve a net margin of £20,797/year, assuming performance and costs below.

Unit Performance Costs (£)

FCR 2.42 Labour 11.96

DLWG (g/day) 625 Weaner cost 17.25

Mortality (%) 5.6 Other costs 9.34

Weaner weight (kg) 7 Feed cost/t 131

Pig places 2850 Bonus 0

Killing Out % 74.5 Deductions 4.86

Base price (p/kg dwt) 100

The same unit achieving an average carcass weight of 80.4kg (but with a tighter spread between 72-88kg) and an average backfat of 11.4mm (spread between 6-19mm) could achieve a net margin of £26,152/year.

Meadow Qualitys Colin Wooldridge says: "In this scenario, the producer has the potential to increase finished weights by 1kg/head, which would lift net margin to £27,540."

If the unit tightened fat depth to an average of 11.4mm, but limited the spread to 7-16mm, net income is increased to £27,366. "Again, the net margin figure is just part of the story. The unit now has the potential to lift finishing weights by another kg and push net margin to £29,139," says Mr Wooldridge.

When the average P2 backfat reading was reduced to 11.2mm from a previous average of 11.4mm, the net income shifts from an original £20,797 to £28,302. "Small changes in output that often seem insignificant on their own can have a substantial effect on income for producers," he adds.