Invest: to put (money) into business, stocks, bonds, etc., for the purpose of obtaining a profit; to spend or pay money with the expectation of some satisfaction (Guralnik, 1982).

A person who invests in stocks and bonds expects a return on the investment. The investment may be a sure thing, or a pretty good-sized risk. It may be relatively inexpensive to invest, or it may require a good chunk of change. Each person must decide on an optimum combination of risk, cost, and possible return on investment. They must also factor in whether an investment is short-term or long-term. Longer-term investments can afford to ride out the ups and downs of the market, as long as the returns continue to grow over time.

So how does this apply to swine genetics? If you've ever implemented a crossbreeding system, chosen to buy animals from a particular breed or line, made decisions about which seedstock supplier to buy pigs from, or had a hand in deciding which animals to keep in the herd, you've invested in genetics. How good an investment it was depends on how well you know your own herd, your understanding of the genetic principles at work, and the skill with which you use the information available to you. Savvy investors know that a good understanding of principles is key, as is knowledge of the cost of the potential investment, the risk it involves, and the potential returns. This presentation will focus on those areas, and lay out some possible investments in genetics.

Review of Genetic Principles

P = G + E. This equation is the starting point in understanding the role of genetics in pork production. In words, the performance (Phenotype) of an animal-whether it be number of pigs born alive, growth rate, or muscle pH-is due to a combination of its Genes and its Environment. The application of genetic principles is predicated on the assumption that we can measure performance with some accuracy and precision, and that we have some knowledge of how genetics and environment influence that performance.

Effective selection-the choice of which animals will become parents-will result in genetic change over time. Traditional selection programs (Cleveland et al., 1998) are analogous to longer-term investments. The incremental changes tend to be small, but gradually accumulate. To practice selection, we must be able to measure performance objectively. We must also be able to tease apart the genetic and environmental effects that make up performance, because only the genes are passed on to the next generation. Because genes are passed on from generation to generation, however, the effects of selection are permanent. Genetic change also accumulates over time as long as the same selection criteria are used. To maximize the rate of genetic change, performance must be measured objectively, accurately and precisely. A trait which is influenced to a greater degree by genetics (more highly heritable; Table 1) will change more rapidly than one which is not. Choosing a minimum number of the best candidates for selection, and replacing older animals as rapidly as possible with better offspring, will also maximize genetic change. Selecting both male and female parents also speeds up progress, as will focusing on a single trait. Trying to improve several traits at the same time will slow down progress, especially if any of the traits are antagonistic to each other (unfavorably correlated; Table 1). For example, a carcass trait like backfat depth is strongly influenced by genetics, which is good; but selection for extreme leanness is likely to hurt reproductive performance and meat quality traits, which is bad. Thus, the choice of traits on which to practice selection is very important. New knowledge and technologies in molecular genetics will allow us to speed up the rate of genetic change by manipulating genes directly (Rothschild and Ruvinsky, 1998), but the principles of selection remain the same.

Because genetic change is permanent and cumulative, the question is often asked, "During tight times, why not just let the herd coast?" Remember that while we tend to talk about genetic improvement, which implies a change in the desirable direction, change can also occur in the opposite direction. Ignoring genetics is not really an option unless you are willing to take the risk of adverse genetic change. More on this topic later in the presentation.

Does selection really work? Sellier and Rothschild (1991) reviewed progress in several populations around the world, and determined that annual rates of change included -0.1 to

-0.5 mm of backfat; 0.2 to 0.5 cm² increased loin area; and an improvement of 0.3 to 0.6 % carcass lean content. Progress in reproductive traits can be expected to be slower, but steady. To remain in business, seedstock suppliers MUST be making genetic progress in traits that are important to their commercial customers (Mabry et al., 1988). Furthermore, successful suppliers must also be thinking two to five years ahead of current conditions, because it takes at least that long for changes in the seedstock herds to trickle down to the commercial level (Schinckel et al., 1987).

Choice of a mating system, in particular a crossbreeding system, often represents an investment in genetics with a shorter-term, more dramatic return than selection. Crossbreeding allows a producer to take advantage of the fact that the combination of genes inherited from the parents can result in an extra boost in performance (heterosis). The fewer genes the parents have in common, the bigger the boost. Even better, traits which do not respond very well to selection because they are lowly heritable often exhibit the most heterosis. And to top it off, lines or breeds can be chosen to complement each other; strengths in one can balance weaknesses in the other. For all these reasons, crossbreeding is almost universal at the commercial level (Ahlschwede et al., 1987).

Again, however, paying attention to your genetic investment will pay dividends. Just like selection, crossbreeding is a two-way street. Heterosis is a great concept: it can give a herd a jump-start. But lack of a good plan for a crossbreeding system, or not really paying attention to its proper implementation, can create a jumbled mess. Shortcuts just don't work very well. As a result, many commercial herds today use a terminal crossbreeding system in which all pigs are sold for slaughter. Such systems maximize short-term benefits, but replacement gilts and boars must be brought in, which can mean a further investment in appropriate biosecurity precautions.

For a commercial producer to fully realize the potential from investing in genetics, both selection and crossbreeding must be considered (McLaren and Schinckel, 1987). To accomplish that goal, decisions about the kind of mating system, the breeds, lines or combinations, and (or) seedstock supplier must be made. Finally, the actual boars and (or) gilts should be chosen based on performance testing. EPDs are the most accurate estimate of breeding value (the value of an animal as a parent) we have right now. They do vary in how well they will predict progeny performance, depending on the types and amounts of information available, so the amount of risk in selecting animals will vary as well. Selection risk can be decreased by paying attention to EPD accuracies (See, 1994b). Don't ignore a boar with an excellent EPD but fairly low accuracy. Just don't bet your farm on him by breeding him to all your sows.

It is also important that the genetic program of the seedstock supplier be compatible with what you want to achieve, and that genetic progress is being made at the seedstock level. As See (1996) explains in some detail, a sound genetic improvement program includes 1) accurate, complete performance records; 2) assessment of genetic merit; 3) indexes for multiple trait selection; and 4) selection of the highest ranking replacements based on the indexes. Indexes are important because several traits are usually important to a producer, and indexes optimize progress in all traits that are included (Wood and See, 1997). One of the best ways to evaluate the success of a genetic improvement program is to study the genetic trends to make sure the desired traits are going in the correct direction.

Finally, to make sure the genetic program is working for a particular farm, it is important that management and environment match the genotype. Careful records of results should be kept, even if the producer is buying a genetic package from a seedstock supplier. More and more producers are going that route. They have found that in return for a higher cost up front, the buyer gets the advantages of selection and crossbreeding without the headaches of managing the genetics. In fact, in many ways, the area of genetics has followed the same evolution as nutrition: everyone used to mix their own feed, but now many producers prefer to pay feed companies to perform that task and keep track of new technologies and improvements. Just as it pays to collect feed samples, however, it pays to keep records on the genetics.

Economic Value of Traits

Part of a good investment strategy is to prioritize goals, short and long term. In terms of investing in genetics, consideration of the economic value of traits is a huge factor in deciding which ones to emphasize, and how to improve them. Each producer must make the final decision on which traits to emphasize, based on individual circumstances like current performance of the herd or market premiums and discounts. In today's industry, producers must stay in touch with what is occurring all up and down the pork chain, and sort out what that means for them. Baas (1998) lays it out very nicely. Producers need someone to buy the pigs, while reducing the cost of production to maximize profit. Packers want to keep the customers (consumers) happy, keep the kill line full, maximize lean in the carcass while minimizing meat quality problems, enhance uniformity, and pay as little as possible for the pigs. To meet those (often conflicting) demands, producers must market pigs that come from large litters, convert feed into lean meat efficiently, and yield a product that is acceptable to the packer.

That's a tall order, and genetics won't get the entire job done, but a good place to start is with the economic values in Table 2. For example, based on the values in Table 2, an extra live pig is worth $13.50, a value which far outweighs the relative value of any other trait. But litter size is a lowly heritable trait which will respond slowly, albeit surely, to selection. Heterosis from crossbreeding will give a much greater improvement in litter size in the short term. Should selection for increased litter size be ignored? Of course not. It's worth too much. But under some situations, simply maintaining litter size may be sufficient, which may allow for a larger investment in other traits.

Economic values, coupled with EPDs, are often used to illustrate how much more one boar might be worth than another one. This can be helpful information if the choice is down to one animal or another, but it is always important to keep in mind what is needed for a particular herd.

Putting It All Together

Seedstock suppliers in today's pork industry know the value of genetics, and have invested a great deal of time and money in their genetic improvement programs. All of the major breed associations have programs in place to take advantage of the principles of genetics as they apply to purebred animals. A number of them have also developed crossbreeding systems to help their commercial customers achieve the maximum benefit from the genetics they buy. Companies that sell hybrid seedstock likewise have improvement programs in place, and spend considerable time on developing crossbreeding systems that will profit their customers. Forward-thinking seedstock suppliers are working today to anticipate what will be needed by the industry five to ten years down the road, genetically speaking. In most cases, these projects are costly in that some results (pigs) must be discarded (sold for slaughter, rather than as breeding stock) and the learning curve on new traits can be steep. The bottom line for the seedstock industry is that a reasonable return on investments is needed to continue making genetic progress. For that reason, if no other, many breeding animals are sold on a sliding scale: the more superior the performance, the higher the price.

On the other hand, the perspective from the commercial producer is somewhat different. The commercial producer wants breeding stock that will produce market hogs that meet packer demands while lowering production costs, and at as low a purchase price as possible. In today's market situation, short-term costs and benefits can certainly outweigh the longer-term ones. Hence the questions that are heard so often: "How much can I afford to pay for a better boar/gilt? What kind of crossbreeding system should I use? How much can I really afford to spend on genetics?"

Examples of determining what a good boar or gilt is worth are easy to find. Ensminger and Parker (1997) calculate that a boar whose progeny exhibit a 5% improvement in feed efficiency, gain 5% faster, bring a $1.50/cwt premium at slaughter, and include an extra 0.1 pig sold per litter could increase profitability by $16,000 in one year, assuming the boar sired 1,496 pigs. See (1995) calculated that for every 0.1 in (2.54 mm) reduction in backfat, there is an 11.8 lb reduction in the amount of feed required per pig per day, and a $1.50/head carcass premium. By reducing the number of days to market by one day, 3.1 lb less feed is required and fixed costs are reduced by $0.17. All this information was used to calculate the difference between buying genetically improved gilts and keeping gilts from a herd with no genetic improvement. In his example, the improved gilts were 0.1 in leaner, had 0.3 more live pigs per litter, weaned 0.2 more pigs, and improved litter weight by 5 lb. Assuming the sows averaged four litters and 10 pigs per litter, the additional value of the purchased gilts would be $128.80 each. Using results from NPPC's Genetic Evaluation Terminal Line Program (Goodwin and Burroughs, 1995), it is even possible to compare individual animals from the various populations that participated in the program.

As for the kind of crossbreeding system to choose, at the commercial level there are two types that seem to make the most sense in today's industry: terminal systems and rota-terminal systems. The traditional rotational cross gives up too much heterosis (86% vs. 100% for a terminal cross) for a lot of producers, results in less uniform groups of animals, and makes selection programs harder to implement (Ahlschwede et al., 1987).

In most cases, the choice of a terminal or rota-terminal system comes down to the decision about raising or buying replacement gilts, especially now that artificial insemination and commercial boar studs have made it possible for even smaller herds to obtain superior genetics on the boar side at a reasonable cost (See, 1996). In addition to the kinds of calculations given in the previous paragraph, other costs and intangibles often play a role. "Service after the sale" comes with the purchase of gilts oftentimes; raising gilts may lower total investment in breeding stock (plus capital gains in some cases). According to simulations conducted by See (1994a), there was only a $300 range in net return for three gilt options: purchase of commercial lines as a package, purchase of specialized grandparent lines for multiplying, and rota-terminal (home-raised gilts). The simulation assumed equal genetic merit for all three options. Obviously, the cost of germplasm could change that range. One example would be the cost of your grandparent stock compared to what semen would cost to produce your own replacements in a rota-terminal system.

Another factor to consider is management. To make a rota-terminal system work requires an excellent record-keeping system, a good understanding of performance testing, and a willingness to keep after it. Frankly, if an enterprise has been ignoring genetics, it probably would be best to consider depopulation and a total change in breeding stock. The short-term costs will be high, but the long-term results would be well worth the expense.

If the decision is to go with buying a terminal system "package" that includes gilts and boars, then the logical next step is to determine which one(s) fit each particular situation, and the budget. Good, terminal-cross lines are going to cost more. The types of calculations outlined above can be used to "comparison shop" different product lines, but always be sure you are comparing like to like. To really get a good handle on how much a better animal is worth to you, you have to first know exactly where your current animals are for the same trait(s). And if the traits are new, like some of the meat quality traits that are being considered by packing companies as payment criteria, availability of animals can become a real issue. Do commercial producers need to worry about those meat quality traits right now? A year or two ago, the answer was to keep an eye open. Now, the answer probably should be in the form of a question, "What pork quality issues most interest my packer?" Are those quality traits measurable objectively? Examples include those in Tables 1 and 2, but that list is not comprehensive. Do those traits have a significant genetic component to them?

If you answered "Yes" to the last two questions, then it's probably time to start looking for a seedstock supplier who is already working on a genetic improvement program that includes those traits, because the genetic lag time can be considerable. Commercial producers who wait for implementation of buying systems that include quality measures before doing anything about it will be in the same situation as those who waited for the big push on grade and yield buying systems implemented in the past five or six years: playing catch-up.

Reality Bites

"How much can I really afford to spend on genetics?" With $17.00 hogs, that question is very difficult to answer objectively. From a geneticist's point of view, the answer has to be, "As much as you can," but that's not very useful to someone who is swimming in red ink. As with so many such decisions, it probably hinges on whether a producer (and the banker) is an optimist or a pessimist, or somewhere in between, and how adverse to risk they are. If hunkering down and waiting for the market to shift is your style, then no one is going to be able to convince you to spend much money on any kind of improvements, genetic or otherwise. If you believe the market is going to head back up and you want to be ready to take full advantage of that inevitable turn, then investing a significant amount of capital to make sure the genetics are right could be a wise move. If you are convinced that investing in genetics is the right thing to do, and you really do want to make improvements, but laying out a lot of cash right now is an ulcer waiting to happen, then temporize. Improve your record keeping if necessary to keep track of genetics and performance on your farm. Use EPDs in buying replacement animals, and consider paying a bit more for a better boar. Who knows, you may get a pretty good deal. Investigate the new traits and various seedstock suppliers. Include investments in genetics as part of your long-term management plan so you'll be ready to make a major investment when the time is right.

The Bottom Line

We often get asked, "Can I afford to invest in genetics?" I would turn the question around: "Can you afford NOT to invest in genetics?"

References Cited

Ahlschwede, W.T., C.J. Christians, R.K. Johnson, and O.W. Robison. 1987. Crossbreeding systems for commercial pork production. In: Pork Industry Handbook (PIH-39). Purdue Univ. Coop. Ext. Serv., W. Lafayette, IN.

Baas, T.J. 1998. Genetics play important role in bottom line. Feedstuffs 70(43):11.

Cleveland, E.R., A.P. Schinckel, and C.M. Stanislaw. 1998. Genetic principles and their applications. In: Pork Industry Handbook (PIH-106). Purdue Univ. Coop. Ext. Serv., W. Lafayette, IN.

Ensminger, M.E., and R.O. Parker. 1997. Swine Science (6^th Ed.), pp 55-56. Interstate Publishers, Inc., Danville, IL.

Goodwin, R., and S. Burroughs (Ed.). 1995. Genetic Evaluation: Terminal Line Program Results. National Pork Producers Council, Des Moines, IA.

Guralnik, D.B. (Ed.). 1982. Webster's New World Dictionary of the American Language, Concise Ed. The World Publishing Co., New York.

Mabry, J., G. Isler, and W.T. Ahlschwede. 1988. Selection guidelines for the seedstock producer. In: Pork Industry Handbook (PIH-58). Purdue Univ. Coop. Ext. Serv., W. Lafayette, IN.

McLaren, D.G., and A.P. Schinckel. 1987. The economic impact of genetic improvement. In: NSIF Swine Genetics Handbook (NSIF-FS 1). Purdue Univ. Coop. Ext. Serv., W. Lafayette, IN.

Rothschild, M.F., and A. Ruvinsky (Ed.). 1998. The Genetics of the Pig. CAB International, New York.

Schinckel, A.P., C.J. Christians, and R.O. Bates. 1987. Boar selection guidelines for commercial pork producers. In: Pork Industry Handbook (PIH-9). Purdue Univ. Coop. Ext. Serv., W. Lafayette, IN.

See, M.T. 1994a. Should replacement gilts be raised or purchased? ANS Factsheet (ANS 94-802S), North Carolina Coop. Ext. Serv., Raleigh.

See, M.T. 1994b. Using expected progeny differences for swine selection. ANS Factsheet (ANS 94-801S), North Carolina Coop. Ext. Serv., Raleigh.

See, M.T. 1995. The economic value of genetic improvement. Swine News 18(2).

See, M.T. 1996. Efficiency of genetic transfer using AI technology. In: Proc. of the Amer. Assoc. of Swine Practitioners 27^th Ann. Mtg. Mar. 2-5, 1996, Nashville, TN.

Sellier, P., and M.F. Rothschild. 1991. Breed identification and development in pigs. In: Maijala, K. (Ed.) Genetic Resources of Pig, Sheep and Goat, World Animal Science, B8, pp 125-143. Elsevier Sci. Publishers, Amsterdam, The Netherlands.

Wood, C.M., and M.T. See (Ed.). 1997. Guidelines for Uniform Swine Improvement Programs. National Pork Producers Council, Des Moines, IA.