Why Replacement Gilts are a Fixed Cost
Consistent, stable and financially sustainable pig production is the reasonable expectation of a breeding herd with a balanced one to five parity distribution as the foundation of its management strategy. Of course that management strategy then involves the production detail pertaining to gilt and sow management and the production of weaned pigs primed to realize their full genetic potential.
The current pig price is only one part of the financial problem currently facing the UK industry the other part of the problem is the cost of production. The level of the cost of production in the UK herd is on average well below the potential of the main ingredients of pig production. These are people, pigs, feed and water, nutrition, veterinary health and infrastructure. A first step on the road to recovery has to be the CLASSIFICATION OF THE REPLACEMENT GILT AS A FIXED COST.
Because improved performance in output lowers production cost against fixed cost. The full value of the return on the investment in a replacement gilt can only be consistently realized if the animal is a fixed cost in the overall understanding of the financial performance of the herd. The herd is what the business is about, it is not fundamentally about the sows. Management of the replacement gilt focusses the business on the investment. If the animal is a variable cost, this cost is set against the value of the cull sow in financial planning, and the business focus is distracted by having to maintain the sow in relation to the level of the management failure, in maintaining the gilt until she becomes a sow, at her second farrowing. This is when she has reached physical maturity sometime after having reached the sexual maturity that enabled the producer to breed her initially.
The REPLACEMENT GILT CAN BE REGARDED AS A FIXED COST in a herd structure parity distribution of one to five because, statistically, the increase in reproductive failure in older sows, in conception, numbers born alive and litter variability, increase the cost of the pigs born alive to these animals against the herd average of the first five parities. Herds that persist in retaining sows for up to 10 parities of production will find that, relative to contributing financial conditions, the culled sow will have cumulative losses that exceed the cost of the replacement gilt and cancel out the market value of the culled animal. The underlying variation caused by this practice increases instability in production in both the breeding and feeding herd performance incurring further variable costs against fixed costs and increasing cost of production.
A good example of REGARDING REPLACEMENT GILTS AS A VARIABLE COST is the exercise of analyzing the production life cycle of the herd when the intake of replacement gilts is suspended for one production cycle. In a one to five parity structure no gilts entering for one reproductive cycle of the herd leads to the following; it takes approximately two and a half years to return the herd to full production, this will seriously increase fixed cost against variable cost, and lower returns. In this case, cost of production increases. Even if action to mitigate this is taken by extending the life of the current parity five sows for another two to three parities it will still take a year and a half to get back to the original production levels but will reduce the feeding herd performance for another year.
The REPLACEMENT GILT AS A FIXED COST is a fundamental and foundational first step in improving breeding and feeding herd performance, providing it changes the current behaviour and thinking of production management. This change in thinking will considerably reduce the difference between the age of the sow at culling and the average number of successful production cycles in the herd. This is when you consider the sow in relation to the herd. This difference is an accurate measurement of the control of reproductive failure and cost.