M.S. Culbertson and J.W. Mabry
Department of Animal Science, University of Georgia
Swine producers currently have numerous alternatives available
for the acquisition of breeding stock and design of replacement
breeding stock systems. These include a wide range of both genetic
suppliers and production schemes. These production or multiplication
schemes include either the purchase of terminal breeding stock,
the use of grandparents and/or great-grandparents within an in-herd
multiplier or networking into a group multiplier. Different semen
delivery systems are also available. including purchased semen
for AI, within herd AI semen collection and processing, natural
service and pen mating. Therefore, a need exists for an accurate
measure of the costs associated with these alliterative genetic
systems. The purpose of this program is to provide a framework
from which potential genetic systems can be compared on a consistent
and accurate basis. This will then enable swine producers and
industry personnel to make informed decisions when considering
implementation of alternative genetic systems.
Keywords: Swine, cost of production, genetic system, spreadsheet
Genetic costs are defined as those costs associated with the application of a genetic system (Mabry and Culbertson, 1995). A genetic system is composed of two primary components: replacement female production or procurement and a semen delivery system. The most obvious component of genetic costs are the direct expenses of acquiring tae replacement boars and gilts for a swine herd. For calculation purposes, this can be defined as the difference between are placement animal's cost and its salvage value. This net cost Will be directly influenced by the purchase prices or production costs of the animals and their annual replacement rate. In addition, other components must also be considered: however, these prove somewhat harder to identify. An interest cost must be paid on the purchase price or production cost of the animal held in inventory until the animal is culled from the herd and some salvage value can be realized. There are also opportunity costs associated with non-terminal cross production in a within herd multiplier The goal of this research was to develop a user-friendly computer program that will allow for an accurate cost comparison between potential genetic systems. By accurately estimating performance differences a swine producer or manager can determine the relative cost effectiveness of their alternatives and make informed decisions regarding their choice of a genetic system.
FACTORS INFLUENCING GENETIC COST OF PRODUCTION
A summary of the major factors which can influence the genetic cost-of-production are as follows:
Structure of the Breeding Herd
The total number of sows and boars in the herd, sub-divided into how many are used as terminal parents, as grandparents or as great-grandparents is quite variable between different genetic systems and must be considered. In addition, the cost and salvage value of each animal at each of these levels must be accurately identified.
Semen Delivery System
The cost of maintaining a boar in the herd must be accurately considered in evaluating different semen delivery systems. If natural service matings are used. the sow:boar ratio and expected reproduction rate from the two options for natural Service (hand mating or pen mating) are uged for this estimation. If artificial insemination (AI) is used, the cost of semen/dose, number of doses/mating and expected reproduction rate from Al are utilized.
Use of an In-herd Multiplier
If a swine producer uses a portion of the herd to produce replacement breeding animals, the performance of the portion of the herd dedicated to that use must be considered. When using an in-herd multiplier, it is common to observe a reduction in the performance of the grandparent and/or great-grandparent portions of the herd compared to the terminal matings. If pureline sows are used as grandparent or great-grandparent stock, the maternal heterosis in that portion of the herd will be lost. This lost productivity must be accounted for in the estimation of the costs of producing replacement animals. In addition to these reproductive differences, the market hogs produced by these maternal-oriented animals will probably exhibit reduced performance compared to the offspring from terminal matings. There is a potential for lost performance in days to market, feed conversion and carcass merit which needs to be accounted for in estimating true genetic cost-of-production.
Expected Production Values
The economic value of an additional pig weaned and an additional day to market along with the cost of feed must be considered in comparing different genetic systems. Also, the average market weight, post-weaning feed conversion, pigs weaned/sow/year, post-weaning mortalitv and boar cost/day will vary greatly from one farm to the next. These items must be estimated for each farm in order to accurately compare different genetic systems for use at a specific farm. In particular, there are farm-specific differences in annual replacement rate and non-animal capital investment that must be accounted for to accurately estimate genetic cost of production.
The goal is to accurately estimate the differences in genetic cost of production between alternative genetic systems. The costs, returns and units used in the calculations are summarized in the following:
Cash Costs and Returns
The costs incurred in purchasing or producing replacement animals for each multiplier segment in the breeding herd (terminal females. grandparent females, etc.) are accounted for by using the inputs of number of head, cost/head and annual replacement rate. The costs associated with AI purchases are calculated by considering the components: number of sows inseminated, cost/dose of semen, number of doses/mating, litters/sow/year and farrowing rate. Any selection fees, royalties or additional production costs are accounted for by number of head, fee/head and annual replacement rate. Boar maintenance costs are represented by number of boars, cost/day and 365 days/year. The cash returns the producer can realize for each animal segment in the breeding herd are included by using the inputs of number of head, salvage value/head and annual replacement rate.
The costs incurred from the use of capital to purchase breeding stock are estimated by using the number of head in the segment of the breeding herd, cost/head and annual percentage rate. The interest costs associated with the purchase of semen and supplies are represented by the components previously discussed for artificial insemination cost as well as annual percentage rate. The interest costs of maintaining a boar in the herd are estimated from boar maintenance costs and annual percentage rate. Interest costs as a result of any non-animal capital investment required by a genetic system are accounted for by the factors of dollars spent and amlual percentage rate.
In-herd Multiplier Costs
The costs associated with the difference in performance between the Segment of the herd devoted to in-herd multiplication compared to the terminal segment of the herd must also be included. Any difference in reproductive rate (as measured by pigs weaned/sow/year) is accounted for by using the factors of number of females devoted to in-herd multiplication, deviation in pigs weaned/sow/year from the terminal females and the economic value of an additional pig weaned in the specific herd. Any difference in the feed conversion of the pigs produced by the matings of the in-herd multiplier animals is calculated by using number of females devoted to in-herd multiplication, deviation in post-weaning feed conversion from the terminal market animals, pigs weaned/sow/year, feed costs and market weight, Any difference in the value of the animals as market hogs is computed by using the number of females devoted to in-herd multiplieation, deviation in market value from the terminal market animals and pigs weaned/sow/year. Any difference in growth rate of the animals is estimated by using the number of females devoted to in-herd multiplication, deviation in days to market from the terminal market animals, pigs weaned/sow/year and the economic value of an additional day to market.
USE OF THE TEMPLATE
The program is a template supported by Microsoft Excel or a comparable spreadsheet application. After loading the program, a series of inputs is entered. These inputs include the structure of the breeding herd, animal costs and salvage value, AI costs and inputs, in-herd multiplier deviations, expected production values, additional costs/pig, replacement rates and any selection fees or royalties as shown in Figure 1. The format of the input cells corresponds very closely to the sections previously discussed. The spreadsheet is in protected form and therefore will only allow input in the correct cells. All inputs which require a percentage entry (i.e.: replacement rate, farrowing rate, interest rate) must be made in decimal form (50% = 0.5). After entry of the desired inputs. the resulting estimate of genetic cost of production is outputted in three forms at the bottom of the template as shown in Figure 1. These forms are: 1 ) genetic cost per hundredweight sold, 2) genetic cost per pig, and 3) annual genetic cost for the system. The most important result is not an individual estimate of genetic cost of production. It is most important to evaluate the differences in genetic cost of production between alternative genetic systems. This program calculates a very thorough and complete cost estimate, one which is unbiased when compared directly to those derived for alternative genetic systems.
The genetic cost of production can be directly compared between alliterative genetic system for estimates of potential savings. However, it must also be noted that a) the system with the lowest genetic cost of production may not be the most profitable and b) not all alternatives will have the same worth to all producers. After calculation of the costs, the market return of the market hogs produced by each genetic system must be considered. If "System A" has a genetic cost of $5.00/pig and "System B" has a genetic cost of $5.75/pig, system A would appear to be the less costly of the two. However, if the market hogs produced by system B can out-return those of system A by greater than $0.75/pig, then system B becomes more profitable. This increase in return could be seen in better growth rate, feed conversion or carcass merit. This estimation of return was intentionally omitted from GENCOST and should only be considered when substantiated from an unbiased source such as the NPPC Terminal Sire Evaluation project (NPPC, 1995).
Mabry, J.W. and M.S. Culbertson. 1995. "Developing a genetics plan for my operation to increase my profitability," in: Proceeding of the NPPC Pork Profitability Summit, Des Moines, IA, USA, November, 1995.
NPPC 1995. Genetic Evaluation: Terminal line program results, National Pork Producers Council, Des Moines, IA, USA.