INTRODUCTION

The crossbreeding system that maximizes profit for commercial producers in most cases is a terminal crossbreeding system. A terminal cross in which all offspring are market animals offers several advantages over other breeding systems: 1) heterosis is maximized; 2) greater product consistency is possible; 3) it is easy to implement and manage; 4) it allows the best use of genetically selected sire and dam lines. Lines with superior genetic merit for reproductive traits provide females for the crossbreeding system, and specialized lines that excel in growth and carcass traits are used as terminal sires.

The purpose and goal of a breeding system is to maximize profit for the operation. The breeding system can be defined as the design and type of mating (crossbreeding) system and the breeding stock associated with it. The breeding system should produce a consistent, high quality product as efficiently as possible, given a fixed level of inputs (facilities, capital, labor, etc.). The best breeding system will not always have the greatest total production potential or the least capital outlay. It will generate pigs in an appropriate number during a given period of time resulting in optimum pig flow, not necessarily maximum pig flow. Assuming a terminal crossbreeding system as previously discussed is used and a source of breeding stock has been determined, there are three steps in establishing a breeding system: 1) Decide on a terminal crossbred female; 2) Decide on the terminal boar or semen to be used; and 3) Decide on the method of obtaining replacement females. This paper will address the question of buying all replacement females versus implementing a within-herd grandparent system.

The question of whether to purchase all replacement females or establish a within-herd production scheme will depend on each producer's individual situation. Purchasing all gilts from an outside source is most practical for mid-size or smaller production units where a within-herd multiplier system may not be feasible. Gilts may be purchased at various ages or weights, depending on each producer's situation. The advantages of purchasing all replacements include that it is the simplest system to manage, it maximizes terminal production in your herd, and it lets your seedstock supplier do the "genetic work." Potential disadvantages are the cost, limited availability, timing of introductions into the herd, and health risks involved.

In a within-herd multiplication system, a portion of the sow herd is designated to produce replacement gilts for the terminal portion of the herd. These production schemes lower the health risk involved in introducing new animals into the herd and offer potential cost savings, but require extra management ability and reduce the number of females devoted to terminal production. Several examples of within-herd multiplication of replacement females will be discussed.

WITHIN-HERD GILT MULTIPLICATION SCHEMES

Several requirements should be met before a producer sets up a within-herd gilt multiplication system. First and foremost, you must have the willingness and the desire to operate the system due to the extra management ability required. Extra discipline, time, and effort are essential. These systems require identification of all nucleus females, an evaluation and selection program, and management of the production supply. An analysis of the potential benefits and the associated costs is essential before a decision to raise your own replacements is made.

A within-herd grandparent multiplier is one of the most common systems currently used in the industry. An example of this system is presented in Figure 1. Approximately 15% of the sow herd is made up of purchased F1 grandparent females (Hampshire x Landrace) that are mated to unrelated maternal line boars (Yorkshire). Gilts from these matings make up the remaining portion (85%) of the sow herd and are mated to unrelated terminal boars with all their production going to market. The breed combinations shown are examples that would maximize both maternal and pig heterosis. Various other breed or line combinations are also viable alternatives.

Figure 1. Example grandparent program.

Another example which is an extension of the grandparent system is the within-herd great-grandparent program. It includes another level where purebred females are used to produce F1 grandparent females instead of purchasing them from an outside source. Purebred Hampshire boars and Landrace females would be the great-grandparents in the previous example. Approximately 2.5% of the total sow herd would be devoted to production of F1 grandparent replacements, 15% would be used for terminal female production, and 82.5% would be used for terminal market hog production. This system reduces the number of outside females that must be purchased and is ideally suited for using AI. However, it requires even greater management ability and attention to detail, and reduces even further the number of females available for terminal market hog production. It also does not work well in herds smaller than 400-500 sows.

A third option to consider is the rotaterminal system in which replacement gilts are produced by approximately 15% of the sow herd which is maintained in a rotational cross of two or more unrelated maternal lines. These gilts are then mated to unrelated terminal boars for terminal production. This system has an advantage in that startup females are purchased only once. It is, however, even more complex to manage since it is critical that rotaterminal females are mated to the correct breed of boar in order to maintain maternal heterosis. In a three-breed rotaterminal, 86% of potential maternal heterosis is realized if the correct rotation of breeds is maintained. If two breeds are used, potential maternal heterosis is reduced to 67%.

The percentages of the herd needed to raise replacement gilts that are included in these three options are rule-of-thumb estimates. Actual number of females needed will depend on production levels, replacement rate, and selection intensity desired.

Another method of obtaining replacement gilts that is growing in popularity is the network multiplier or user-group multiplier. These systems consist of a group of producers that establish a separate venture to produce replacement breeding stock for the group members or users. One of the previously described mating schemes is used and the group is generally tied directly to a seedstock supplier. Each member purchases shares (stock or sows) in the group multiplier in relation to the number of females their individual herd will require. Network multipliers are designed to maximize genetic improvement and health (biosecurity), and to reduce costs associated with decreased production efficiency and the extra management ability required to maintain grandparent or great-grandparent females. Startup costs will probably be greater, but this system has the potential to reduce genetic costs and maximize long-term genetic gain.

GENETIC MERIT

An important consideration is that of the relative genetic merit of the purchased vs. home-raised gilts. It should be remembered that the genetic merit of home-raised gilts in a grandparent system is a direct function of the genetic merit of the grandparent females and the maternal sires to which they are mated. Gilt selection efforts will contribute very little to the genetic improvement of the herd and are relatively unimportant when compared to the importance of the genetic merit of the grandparents. Because of the relatively small number of grandparent females needed and the premium generally paid for them, it is extremely important that they have performance records and are selected from the top end of a herd that is making consistent genetic improvement. It is also important that these females are mated to the best maternal sires available. Artificial insemination has become a powerful tool in making the best maternal sires in the industry available to commercial pork producers to use in siring their replacement females.

Equally important or perhaps of even greater importance is the genetic merit of purchased terminal gilts. If these gilts come directly from a multiplier herd that is supplied by a nucleus herd making significant genetic improvement, this improvement will be channeled directly to the commercial herd and genetic lag will be kept to a minimum. If the multiplier herd is using average or below average females from a nucleus herd, genetic progress in the commercial herd will be limited. It is equally important to select both boars and gilts from herds that have a sound testing and selection program.

COST COMPARISONS

Accurate cost comparisons between the various systems (buying vs. grandparenting) should be made to determine which will be the most cost effective for each individual herd. Each system may have a different genetic cost depending on such factors as structure of the breeding herd, initial purchase price, replacement rate, expected production levels, and economic values specific for the herd. It is important to remember that the value of different alternatives will vary from farm to farm and the lowest genetic cost may not be the best. The genetic merit of the pigs produced must also be considered in evaluating the benefits of the various systems. Two methods were used to evaluate the feasibility of buying gilts versus producing replacements using a within-herd grandparent program.

GENCOST-GENETIC COST ANALYSIS WORKSHEET

GENCOST is a spreadsheet program developed by Dr. Matt Culbertson and Dr. John Mabry at the University of Georgia. It provides a framework to make accurate comparisons of the genetic costs associated with various production schemes. It uses a series of inputs for each system to allow the user to make informed decisions about the use of alternative genetic systems.

Two terminal crossbreeding systems were compared. The first system is a 600-sow unit in which all replacement females are purchased. The second system is a 600-sow unit that uses a within-herd grandparent program in which 15% of the breeding females are devoted to production of replacements and the remaining 85% are used for terminal market hog production. Table 1 lists the assumptions that were made in this comparison.

The GENCOST analysis program outputs genetic cost in three forms: 1) cost per cwt. of pork sold, 2) cost per pig sold, and 3) annual genetic cost for the system. Table 2 gives the results of the comparison between the two systems for genetic cost/cwt. of pork sold. Note that the genetic cost/cwt. of pork sold for the two systems would favor buying all replacements if they could be obtained for less than $220 per head. On the other hand, if they cost more than $220 each, genetic cost using the GENCOST program would favor the grandparent system. Producers should remember that any genetic premium or royalty paid to a seedstock supplier must be added to their purchase price. In addition, extra costs (i.e., labor, identification of GP females, royalties, etc.) that may be associated with the grandparent program are not included in this example.

ISU SWINE PRODUCTION VENTURES CASH FLOW MODEL

A feasibility analysis conducted using the Swine Production Ventures Cash Flow Model developed by Carl Watson, TEAMPork coordinator at Iowa State University, was used to provide an additional comparison of the two systems. In this example, cash flow projections based on the same assumptions listed in Table 1 were used to compare gross margin above all variable and fixed costs for the two systems.

Table 3 shows the gross profit margin per cwt. of pork sold for different levels of market price, replacement rate, and pigs weaned/litter for a 600-sow unit using a grandparent program. Grandparent females make up 15% of the herd and are purchased for $375/head. The first column in each table gives various levels of the cost to raise replacement females to 250 pounds.

These tables can be used to determine the effect of additional costs that may be incurred in the payment of genetic premiums or royalties, or in the evaluation and selection of home-raised replacement females. For example, if the replacement is 45%, a genetic premium that increases the cost of raising a replacement female from $150/head to $200/head would decrease gross profit/cwt. from $4.05 to $3.68.

As a base example in the grandparent program that could be compared to purchasing all replacements, a gross profit margin of $4.05/cwt. of pork sold was used. This value corresponds to a cost of raising the home-raised females of $150/head, along with a market price of $48/cwt., 45% replacement rate, and 8.93 pigs weaned/litter. This weaning average assumes a slightly lower level of production for the grandparent females. It is calculated as 9.0 pigs weaned/litter for 85% of the herd made up of terminal females and 8.5 pigs weaned/litter for the grandparent females (15% of the herd).

Table 4 can be used to determine the feasibility of various gilt purchase prices compared to the grandparent program. If the gross profit margin of $4.05/cwt. in the grandparent program is used, a producer could afford to pay approximately $220-$225/head for gilts if market price is $48/cwt., replacement rate is 45%, and pigs weaned/litter is 9.0. If the terminal market pigs produced by the purchased females realize a $1.00/cwt. premium (market price of $49.00/cwt.), a purchase price of $300/head could be justified. On the other hand, if replacement rate for the purchased females goes to 50% and no additional lean premium is received, $200/head is the highest price that could be justified. Table 4 also underscores the effect of pigs weaned/litter on profitability by demonstrating the dramatic increase in gross profit margin as pigs weaned/litter improves.

Table 1. Assumptions used to compare buying gilts vs. grandparent program
Both Systems
Value of a pig born alive	$15.00
Cost of an additional day to market	$.15
Value of feed/ton	$140.00
Average market weight	250
Feed efficiency on terminal market pig	2.85
P/S/Y in terminal production	20.23
Post weaning mortality	5%
Replacement rate	45%
Terminal semen cost	$7/dose
Farrowing rate	85%
Salvage value of cull females	$150
Grandparent System Only
Maternal semen cost for grandparent matings	$22/dose
P/S/Y in grandparent herd	19.23
Cost of grandparent females	$375
Cost of raise replacement females to 250#	$150

Table 2. Change in genetic cost per cwt. of pork sold for various gilt purchase prices compared to a within-herd grandparent program.
Gilt Purchase Price, $	Genetic Cost/Cwt. Sold, $
125	.93
150	1.21
175	1.49
200	1.77
225	2.05
250	2.33
275	2.61
300	2.89
Grandparent program	1.96

Table 3. Gross profit margin per cwt. of pork sold for various levels of market price/cwt., replacement rate, and pigs weaned/litter for a grandparent program at various raised female prices
	Market Price Received, $/cwt.
Raised Price, $	47.50	48.00	48.50	49.00	49.50	50.00
125	3.92	4.23	4.54	4.85	5.15	5.46
150	3.74	4.05	4.35	4.66	4.97	5.28
175	3.55	3.86	4.17	4.48	4.79	5.09
200	3.37	3.68	3.99	4.29	4.60	4.91
225	3.19	3.49	3.80	4.11	4.42	4.73
250	3.00	3.31	3.62	3.92	4.23	4.54
275	2.82	3.12	3.43	3.74	4.05	4.36
300	2.63	2.94	3.25	3.56	3.86	4.17
	Replacement Rate
Raised Price, $	35%	40%	45%	50%	55%	60%
125	4.33	4.28	4.23	4.18	4.13	4.08
150	4.19	4.12	4.05	3.97	3.90	3.83
175	4.04	3.95	3.86	3.77	3.68	3.59
200	3.90	3.79	3.68	3.57	3.46	3.35
225	3.75	3.62	3.49	3.36	3.23	3.10
250	3.61	3.46	3.31	3.16	3.01	2.86
275	3.47	3.30	3.12	2.95	2.78	2.61
300	3.32	3.13	2.94	2.75	2.56	2.37
	Pigs Weaned/Litter
Raised Price, $	8.00	8.50	9.00	9.50	10.00	10.50
125	1.93	3.06	4.43	5.66	6.77	7.78
150	1.73	2.86	4.24	5.48	6.60	7.62
175	1.53	2.67	4.06	5.31	6.44	7.46
200	1.22	2.48	3.88	5.14	6.27	7.30
225	0.90	2.28	3.70	4.96	6.11	7.15
250	0.59	2.09	3.51	4.79	5.94	6.99
275	0.28	1.90	3.33	4.62	5.78	6.83
300	(0.04)	1.72	3.15	4.44	5.61	6.67

Table 4. Gross profit margin per cwt. of pork sold for various levels of market price/cwt., replacement rate, and pigs weaned/litter for purchased gilt replacements at various price levels
	Market Price Received, $/cwt.
Raised Price, $	47.50	48.00	48.50	49.00	49.50	50.00
125	4.35	4.66	4.97	5.28	5.59	5.90
150	4.18	4.49	4.80	5.11	5.42	5.72
175	4.01	4.32	4.63	4.94	5.24	5.55
200	3.84	4.15	4.46	4.76	5.07	5.38
225	3.67	3.98	4.28	4.59	4.90	5.21
250	3.50	3.80	4.11	4.42	4.73	5.04
275	3.32	3.63	3.94	4.25	4.56	4.86
300	3.15	3.46	3.77	4.08	4.38	4.69
	Replacement Rate
Raised Price, $	35%	40%	45%	50%	55%	60%
125	4.76	4.71	4.66	4.61	4.57	4.52
150	4.63	4.56	4.49	4.42	4.35	4.29
175	4.49	4.41	4.32	4.23	4.14	4.06
200	4.36	4.25	4.15	4.04	3.93	3.83
225	4.23	4.10	3.98	3.85	3.72	3.60
250	4.09	3.95	3.80	3.66	3.51	3.37
275	3.96	3.80	3.63	3.47	3.30	3.14
300	3.83	3.64	3.46	3.28	3.09	2.91
	Pigs Weaned/Litter
Raised Price, $	8.00	8.50	9.00	9.50	10.00	10.50
125	1.58	3.21	4.66	5.97	7.15	8.22
150	1.38	3.03	4.49	5.81	6.99	8.07
175	1.19	2.84	4.32	5.64	6.84	7.92
200	1.01	2.66	4.15	5.48	6.68	7.78
225	0.82	2.48	3.98	5.32	6.53	7.63
250	0.61	2.30	3.80	5.15	6.37	7.48
275	0.41	2.12	3.63	4.99	6.22	7.33
300	0.22	1.94	3.46	4.83	6.06	7.18

SUMMARY

Choice of a system for obtaining gilt replacements depends on management ability, herd size, expected reproductive performance, and availability and cost of breeding stock replacements. All must be considered when evaluating the merits of an individual system. The purchase of replacement females for terminal crossbreeding systems is an alternative that should be given careful consideration. If a consistent supply of genetically superior females is available from a reliable supplier, a high level of productivity in an easy-to-manage system can result. Properly designed terminal crossbreeding programs will achieve maximum levels of both maternal and pig heterosis.

Purchasing all replacement females must also be considered relative to the cost and the potential disease risk involved. Home-raised females in a grandparent system can be cost effective and greatly reduce the disease risk involved in the continuous introduction of replacement gilts. Artificial insemination (AI) is ideally suited to a grandparent system and is especially helpful in small herds to overcome inefficient boar use with natural matings in the grandparent portion of the herd. It also allows the use of superior maternal boars that might not be available through natural service.