Notes for the 2011 Swine
This information sheet provides the assumptions that are used to
calculate the monthly OMAFRA Swine Budget. The monthly OMAFRA Swine
Budget provides a guide and format to estimate the cost of production
for a swine enterprise. The cost estimates and assumptions are based
on information from a variety of industry sources. The cost figures
are not obtained from an actual survey. Therefore, adjustments and
interpretations are necessary when applying these figures to a particular
business enterprise. Individual farm figures will vary depending
on the resources, management, production, health status, size, market
conditions, risk, and financial arrangements!
Farrow to Finish - To arrive at an estimated cost
of production for farrow to finish, the estimated production costs
are split into three production phases, Farrow to Wean, Nursery,
and Grow-Finish. The Farrow to Finish Budget is the accumulated
cost of the three phases and is based on 21 market pigs sold per
sow per year. The various costs from the three phases are totalled
on a per sow basis and divided by 21 to arrive at the per pig cost
for the farrow to finish budget. By doing this, a mortality and
morbidity cost is built into budget estimates.
- The Farrow to Wean Phase is based on producing
23 weaned pigs per sow per year. Assuming a 12% preweaning death
loss and 2.35 litters per sow per year; it would take 11.25 pigs
born alive per litter to achieve this. To arrive at a cost per
sow, multiply the per pig figures by 23.
- The Nursery Pig Phase is based on producing
96% of the weaned pigs placed as feeder pigs weighing 27 kilograms.
The nursery pig space is assumed to be turned over 6.5 times per
year or approximately 56 days per turn. To arrive at a cost per
sow, multiply the per pig figures by 22.
- The Grow-Finish Phase is based on marketing
94% of the feeder pigs placed as market pigs. Pigs are placed
on feed at 27 kilograms for approximately 105 days and finished
at the indicated average monthly market weight and index. It is
assumed that each barn space is turned three times per year. To
arrive at a cost per sow, multiply the per pig figures by 21.
- Income - The market pig value is based on the
monthly average Ontario 100% formula price, the monthly average
dressed weight, an index of 110 and a premium of $2.00 per hog.
Market pig value ($/pig) = Average monthly 100% formula price
X average monthly dressed weigh
X 110 index
+ $2.00 premium
- Feed - The feed costs are estimated using corn,
soybean meal, premix or supplement. The monthly corn value is
based on the average of the daily Huron FOB Farm and the Western
Ontario Feed corn prices. The monthly soybean meal value is based
on the average daily Hamilton soybean meal prices plus $20 per
tonne for trucking and handling. A feed processing charge of $20
per tonne is included for feed and storage equipment overhead
costs (depreciation, interest, insurance), operating costs (labour,
repairs, hydro), handling and preparation costs (invisible loss.
No feed additive or medication cost is included in the feed cost
since these are estimated on the health cost line.
- Breeding Herd Feed - This is a combination
of gestation and lactation feed assuming 1,100 kilograms of
feed per sow per year. A five month rolling average feed cost
based on the time of the gestation and lactation feed is used
to produce the market pig (5 to 9 months prior).
- Nursery Feed - This is based on a phase
feeding feed budget using a total of 32 kilograms of feed
per pig. A two month rolling average feed cost is used based
on the nursery period of time to produce the market pig (3
to 4 months prior).
- Grower-Finisher Feed -
This is based on a phase feeding feed budget assuming a 2.8
feed conversion and on feed for an average of 105 days. A
four month rolling average feed cost is used based on feed
costs during the past four months.
- Net Replacement Cost for Gilts - The value
shown is the difference between the estimated cost of commercial
relacement gilts and an estimated cull sow value. The gilt replacement
value is the market hog value plus $130 and a cull sow value is
calcualted from the marketplace. The replacement rate is assumed
at 42%, based on a 35% cull rate and a 7% sow death loss rate.
The calculation is a five month rolling average based on the values
during the time of gestation and lactation.
- Health- These are the estimated costs for prevention
and control of disease within a herd. They would include injectibles,
water and feed treatments. These figures will vary depending on
the health status, protocols, and cost of supplies and services.
- Breeding (A.I. & Supplies) - 100% A.I.
is assumed based on 2.35 litters per sow, an 85% farrowing rate
and $12 per breeding (double dose of semen and supplies).
- Marketing, Grading, Trucking- The market hog
estimate includes the Ontario Pork Universal service fee ($1.00),
the Ontario Pork Marketing Division fee of $0.65 (this will depend
on the marketing agent fee), grading fee ($0.06), and an allowance
for trucking and assembly ($1.85). In some cases a trucking or
transfer fee between the sow and nursery and the nursery and grow-finish
sites should be included. These fees may range from $0.50 to $2.00
per pig. Fees will depend on the volume of pigs moved, the number
of movements per week, and whether it is done commercially or
- Utilities (Hydro & Gas) - These costs have
been estimated and allocated based on individual site barns (i.e.
sow, nursery, grow-finish), farrow to feeder pig and farrow to
finish operations. Costs will vary due to a number of reasons
including barn and equipment efficiencies, cost of inputs, size,
production efficiency, and management.
- Miscellaneous - These are estimated figures
to cover other costs that are allocated to the swine enterprise.
Manure Disposal - A cost is
estimated for each phase based on a yearly volume of manure
calculated using the NMAN computer program. Costs will vary
depending on the volume of manure, the distance to be hauled
and the number of times spreading occurs each year. Within some
operations the cost to handle and spread the manure produced
maybe assumed to be covered by the economic value the manure
nutrients supply to the cropping enterprise. Therefore, no cost
would be charged to the swine enterprise.
Repairs and Maintenance - These
are estimated using 1% of the estimated building, equipment,
and site investment values.
Labour Cost - These costs will
vary depending on the number of employees, wage and benefit
level, number of hours worked and management and owner-operator
labour allocation. For the purposes of this budget, an estimated
cost of $48,000 per person is used. Labour estimates used are
farrow to wean labour cost based on 300 sows per person and
the nursery and grow-finish on 4,000 pig spaces per person.
If an allocation of 2,500 nursery pig spaces per person was
assumed the labour cost per feeder pig would be $2.95. If an
allocation of 3,500 finishing pig spaces per person was assumed
the labour cost per grow-finish pig would be $4.57.
Operating Interest - Calculated
on one-half of the operating costs less the marketing costs
at the prime chartered bank rate plus 1%. The farrow to wean
interest cost is based on 22 weeks, the nursery on 8 weeks and
the grow-finish on 17 weeks. The nursery phase also includes
an interest cost based on the cost of producing the weaned pig
and the grow-finish phase includes an interest cost based on
the cost of producing the feeder pig.
Fixed Costs - (Depreciation, Interest,
Taxes, and Insurance) - These costs are based on a
ten year average using estimated building, equipment and site
costs from 1998 to 2007. The estimated investment values used
are $1,600 per sow for the farrow to wean, $230 per pig space
for the nursery, and $340 per pig space for the grow-finish.
Investment cost over the years have varied depending on a variety
of items including the quality of equipment, site conditions,
supply and demand of inputs, site services costs, upgrading
costs, and the year the buildings were constructed.
- Depreciation - Depreciation is the estimated
by dividing the investment value by 20.
- Interest - The interest cost is estimated
using 40% of the investment value at a rate of 8%.
- Taxes and Insurance - These are estimated
using 1% of the investment value.
- Summary of Costs - This section provides a
summary of the costs within each production phase. The Other Variable
Costs include the applicable lines from Net Replacement Cost for
Gilts to Operating Loan Interest and the Fixed Costs include the
Depreciation, Interest, Taxes and Insurance.
- Summary - this section provides
the following information:
- Net Return Farrow to Finish - this is the
difference between the Market Pig Income at the top of the
budget and the total variable and fixed costs on a per pig
- Farrow to Weaned Pig Cost - this is the
estimated total variable and fixed costs to produce a weaned
pig five months prior on a per pig basis.
- Farrow to Feeder Pig Cost - this is the
estimated total variable and fixed costs to produce a feeder
pig three to four months prior on a per pig basis.
- Wean to Finish Cost - this is the estimated
total variable and fixed costs to produce a market hog for
sale in the stated month based on the nursery and grow-finish
costs on a per pig basis.
- Farrow to Finish Breakeven Base Price ($/ckg,
100 index) with $2 premium - the following formula
$/ckg, 100 index price
= [total variable and fixed costs ($/pig) - $2 (premium/pig)]
÷ 1.10 (index)
÷ average dressed weight (ckg)
- Farrow to Finish Breakeven Base Price ($/ckg,
100 index) with no premium - the following formula
$/ckg, 100 index price
= total variable and fixed costs ($/pig)
÷ 1.10 (index)
÷ average dressed weight (ckg)
The OMAFRA Swine Budget provides a format and guide to estimate
a cost of production. The variation in production practices gives
rise to a large variation in costs of production. Interpretation
and utilization of the information will require adjustments to apply
these figures to an individual swine production enterprise. Therefore,
it is important for individual operations to determine their cost
of production based on their records. Accurate and up to date information
is essential to determine an individual farm cost of production
and to make management, financial, and marketing decisions.
OMAFRA Interactive Swine Budget
A new feature using the information from the OMAFRA swine budget
is the OMAFRA Interactive Swine Budget. It is available to download
from the OMAFRA website.
Producers can choose the type of hog operation from the following
- Farrow to Finish
- Farrow to Wean
- Farrow to Feeder
- Wean to Finish
The interactive budget allows the producer to input their costs
for their type of operation. The results are presented as a financial
number, as a percentage of their own budget and how it compares
to the Ontario industry accepted benchmark for pork production.
The program also provides a graphical summary of the variable expenses
between the producerís operation and the OMAFRA swine budget.
Data summarized every six months from the 2009 and 2010 OMAFRA
Monthly Swine Budgets is provided for comparison purposes. This
financial tool allows producers to compare their costs against an
Ontario industry standard and provides direction and discussion
points for future management decisions in their operation.
If you have questions about the OMAFRA Interactive Swine Budget
or the monthly OMAFRA Swine Budgets, or would like to receive the
monthly swine budget by e-mail, please send your request to email@example.com.
For more information:
Toll Free: 1-877-424-1300