MAIN IDEA: How does the swine industry of the 21st century compare with that of the mid- to late-1900s?
Since the 1960s, the swine industry has undergone a transformation. Today, fewer producers raise a drastically higher percentage of pigs. It appears as if this trend will continue.
INDUSTRY CHANGES
In the late 1970s and early 1980s the industry began consolidating (fewer producers owning more hogs) and vertically integrating (single business entities controlling several levels of the pork production chain). Following the model developed by integrated poultry production companies, a few producers (mostly in North Carolina) began to view swine production as a primary business instead of part of a diversified grain and livestock operation. Confinement facilities were constructed to house large numbers of hogs. Instead of being grown locally, feed ingredients were imported from grain-producing states, and feeds were manufactured at high capacity mills. Single business entities like individuals, feed dealers or packers owned increasing numbers of pigs.
Along with integration came increased management, genetic and production consistency. For the first time, large numbers of genetically similar pigs were available to packers. Large-scale producers used the resulting volume and consistency to leverage better market prices for their hogs. Large-scale producers not only had financial advantages from a marketing standpoint, but they could purchase discounted bulk inputs. Agricultural inputs are all the purchased supplies and services put into and used by an agricultural production business. In state-of-the-art production facilities with automated feed, water and ventilation systems, fewer people could manage more pigs.
Integration and consolidation are not free of problems. Perhaps the biggest challenge for large-scale producers is keeping large groups of pigs healthy. Large-scale producers learned that diseases spread quickly and can have devastating economic consequences when pigs are kept in large groups. Three management practices that can help large swine producers keep pigs healthy are: 1) all-in all-out (AIAO) management, 2) segregated production and 3) multiple site production.
With AIAO management, an entire group of pigs leaves a facility (room or barn) before the next group of pigs enters the facility. AIAO keeps disease from constantly moving from older pigs to younger ones.
Segregated production keeps similar aged pigs together and separate from other pigs for their entire lives. Used in conjunction with AIAO management, segregated production can help control some disease challenges.
In multiple site production, producers keep sows on one farm or site, nursery pigs (12-50 pounds) on a second site and finishing pigs (50-250 pounds) on a third site. The physical separation of multiple site production helps break the chain of disease transmission.
CURRENT STATE OF THE INDUSTRY
Consolidation continues in the swine industry. Ongoing genetic and management improvements continually increase average production per sow and improve efficiency. Unfortunately, to the detriment of many small swine producers, pig production is no longer consistently profitable. Hog prices dropped to record lows in 1998, forcing many producers out of business and hastening consolidation of the largest companies that could better withstand huge financial losses. Furthermore, some pork packers now own and control swine production facilities in order to sustain a constant supply of slaughter hogs.
Environmental issues tend to limit the number of pigs a given area will accommodate. Nutrients found in liquid manure are expensive to transport to fields, and government agencies regulate manure disposal.
In relatively good economic times, large-scale swine operations may have difficulty finding quality labor to effectively manage pigs. In addition, swine production buildings are expensive to construct. To help overcome these issues, most large-scale operations use contracted facilities where outside farmers or individuals provide a barn in which to raise pigs and provide daily management for a set payment. The owner of the pigs provides the pigs, feed, trucking and veterinary supplies. Many nursery and finishing pigs are grown in contracted facilities.
SUMMARY: Due to consolidation and integration, the swine industry is much different than it was 30 or 40 years ago. New management techniques such as all-in all-out, segregated production and multiple site production have been adopted to deal with disease issues associated with consolidation. Contracting of nursery and finishing facilities has become common to lessen the capital and labor requirements of large-scale systems. Capital is the land, buildings, equipment and other valuable resources used in a business.