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Understanding the Relationship between Performance and Cost

In the first two issues of the Agrosoft Newsletter we have looked at the effect on cost efficiency of the overall shape, by parity distribution, of the herd and how to achieve and maintain that shape in managing the replacement female through her first (critical) lactation where the expectation must be to wean litters from parity one females in excess of 10 pigs and more, 12 is a good figure to have in mind.

 

At this point it is worth highlighting that judging the weaning performance of a parity, needs careful understanding because the average performance can be artificially inflated by the proportion of (extra) foster litters within the parity. For instance one WinPig Herd Analysis report showing 11.6 pigs weaned per P1 female when interrogated showed there were no foster sows included so the figure was a true reflection of performance. Another set of reported data had an average of 11.1 but 5% of the weaned animals had fostered and weaned a second litter at a rate of 10.1 meaning the population actually achieved 10.6 weaned in reality.

 

Some of the previous suggestions for managing gilts may have seemed radical but radical is not such a bad term to use when we look at managing the cost of pig production (CoPP). As we publish further newsletters it is our intention to explore the possibilities presented by data for improving business efficiency. At Agrosoft we are working on accurately modelling performance and cost and we are being enabled to do this by the growing number of customers submitting data, on a regular basis, of a standard that is continually improving as the value of recording becomes more appreciated. In this issue we are presenting the first example of this modelling in which we can demonstrate the value of certain key performance indicators (KPI) and the cost efficiency values of improving them by small increments. It is the results that may seem radical but then a reduction of between 19 and 24 pence per kilogram deadweight would.

 

Below are performance tables 1, 2 and 3. They are identical in structure, each is a cost model based on feed cost per tonne calculated against an annual performance average for each KPI employed. To calculate total cost in relation to the single recorded cost of feed we have attributed breeding and finishing feed as 30% of the Breeding herd total cost and 70% of the Feeding Herd total cost. This is a sound balance. Table 1 report’s farms in the top third for feed cost, Table 2 reports all the farms in the sample and Table 3 reports farms in the bottom third for feed cost. The sample is robust, reporting in excess of 50000 sows with full feed costs. (Agrosoft receive the records from more than three times this number of sows so we would like to encourage more of you to enter things like feed cost to increase the strength of the costing information we want to feed back to you and for those of you that don’t please consider sending in a web-backup it’s very simple, if you have a broadband connection, give us a call and we can show you how). These tables are supported by Table 4, a table of parameters showing the basis on which performance was entered into each cost model. All other parameters reported are consistent, with the farms being ranked solely on feed cost.

 

Understanding Cost:

As an industry it is important for us to understand cost, there are two primary aspects to be considered. The first is what production costs are and this is specific to the individual producer/business when evaluating total CoPP because the levels of capitalisation in our production vary considerably. It is possible for there to be a variation in excess of £0.35/Kg CoPP (See Table 7) in comparative data and this can be made up from a difference in performance and more importantly the impact of current investment levels which can be associated with such factors as a new start, expansion, management strategy to increase long term cost efficiency etc. More importantly; because it is dangerous for the industry to broadcast total CoPP as it can make producers ‘hostage to fortune’, any CoPP comparison or standard (ranked) figures must be relative and equitable set against such factors as Feed, Vet and Med, Straw and Bedding, Labour, Utilities etc. The second aspect to be considered is how costs can be controlled and this is a shared industry objective, it is this aspect that Agrosoft, working with our customers and their suppliers, can make a positive contribution to.

 

Please see Note 1 at the end of this article.

 

 

 

Table 1

Top Third Performance

Key Performance Indicator:

Unit of Change

Current Performance

Current CoPP

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Farrowing Rate %

%

78.93

114.61

2

-0.70

4

-1.34

6

-1.93

8

-2.46

10

-2.95

Non-Prod Days per litter

No.

19.5

As Above

-2

-0.50

-4

-0.99

-6

-1.49

-8

-1.99

-10

-2.48

Born Alive per Litter

No.

11.38

As Above

0.2

-0.69

0.4

-1.36

0.6

-2.00

0.8

-2.63

1.0

-3.23

Pre-Wean Mortality %

%

12.35

As Above

-0.5

-0.23

-1.0

-0.45

-1.5

-0.67

-2.0

-0.89

-2.5

-1.11

Daily Live-weight Gain

Gms/day

669

As Above

40

-0.56

80

-1.06

120

-1.51

160

-1.92

200

-2.28

Feed Conversion Ratio

No.

2.56

As Above

-0.10

-2.92

-0.15

-4.37

-0.20

-5.83

-0.25

-7.29

-0.30

-8.75

Post-Wean Mortality %

%

4.00

As Above

-0.5

-0.15

-1.0

-0.30

-1.5

-0.45

-2.0

-0.60

-2.5

-0.74

Increase Slaughter Pig Live-weight

Kgs

101.3

As Above

1

-0.33

2

-0.65

3

-0.96

4

-1.27

5

-1.57

Total Change (Accrued)

114.61

-5.44

-9.20

-12.75

-16.13

-19.12

 

 

 

Table 2

Average Performance

Key Performance Indicator:

Unit of Change

Current Performance

Current CoPP

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Farrowing Rate %

%

79.23

126.44

2

-0.82

4

-1.57

6

-2.25

8

-2.88

10

-3.45

Non-Prod Days per litter

No.

20.0

As Above

-2

-0.57

-4

-1.13

-6

-1.70

-8

-2.27

-10

-2.83

Born Alive per Litter

No.

11.32

As Above

0.2

-0.80

0.4

-1.57

0.6

-2.32

0.8

-3.05

1.0

-3.75

Pre-Wean Mortality %

%

12.88

As Above

-0.5

-0.26

-1.0

-0.52

-1.5

-0.78

-2.0

-1.04

-2.5

-1.29

Daily Live-weight Gain

Gms/day

637

As Above

40

-0.66

80

-1.24

120

-1.76

160

-2.23

200

-2.66

Feed Conversion Ratio

No.

2.43

As Above

-0.10

-3.30

-0.15

-4.96

-0.20

-6.61

-0.25

-8.26

-0.30

-9.91

Post-Wean Mortality %

%

4.70

As Above

-0.5

-0.18

-1.0

-0.36

-1.5

-0.53

-2.0

-0.70

-2.5

-0.88

Increase Slaughter Pig Live-weight

Kgs

98.6

As Above

1

-0.39

2

-0.77

3

-1.15

4

-1.52

5

-1.88

Total Change (Accrued)

126.44

-6.25

-10.58

-14.67

-18.56

-22.26

 

 

Table 3

Bottom Third Performance

Key Performance Indicator:

Unit of Change

Current Performance

Current CoPP

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Unit of Change

Balance (p/kg)

Farrowing Rate %

%

82.00

124.58

2

-1.05

4

-2.00

6

-2.88

8

-3.68

10

-4.42

Non-Prod Days per litter

No.

18.0

As Above

-2

-0.69

-4

-1.37

-6

-2.06

-8

-2.75

-10

-3.44

Born Alive per Litter

No.

11.59

As Above

0.2

-0.95

0.4

-1.86

0.6

-2.75

0.8

-3.60

1.0

-4.43

Pre-Wean Mortality %

%

12.68

As Above

-0.5

-0.32

-1.0

-0.63

-1.5

-0.94

-2.0

-1.25

-2.5

-1.55

Daily Live-weight Gain

Gms/day

598

As Above

40

-0.62

80

-1.16

120

-1.65

160

-2.08

200

-2.47

Feed Conversion Ratio

No.

2.40

As Above

-0.10

-2.87

-0.15

-4.30

-0.20

-5.74

-0.25

-7.17

-0.30

-8.60

Post-Wean Mortality %

%

5.90

As Above

-0.5

-0.24

-1.0

-0.47

-1.5

-0.71

-2.0

-0.94

-2.5

-1.17

Increase Slaughter Pig Live-weight

Kgs

94.7

As Above

1

-0.51

2

-1.02

3

-1.51

4

-2.00

5

-2.47

Total Change (Accrued)

124.58

-6.52

-11.27

-15.74

-19.94

-23.92

 

 

Table 4

Breeding Herd

Average Productive Females

% Farrowing Rate

Non-Productive Days/Sow/Year   (excl. Maiden Gilts)

Litters /Sow /Year

% Pre-weaning Mortality

Pigs / Litter

/Sow/Year-Tonnes      (incl. Gilts & Boars)

Feed Cost per Tonne (£)

 

 

Top Third

694

78.93

19.50

2.27

12.35

9.97

1.389

144.295

Average

655

79.23

19.94

2.24

12.88

9.86

1.325

167.665

Bottom Third

628

82.00

17.25

2.25

12.68

10.12

1.332

195.670

 

Feeding Herd

Weight at Start (kg/pig)

Weight of pig produced (kg/pig)

Post-Weaning Mortality %

Feed Conversion Ratio

Daily Live-weight Gain (gm/day)

Feed Cost per Tonne (£)

Average carcass weight per pig (kg)

 

Top Third

7.6

101.3

4.0

2.56

669

168.71

77.0

Average

7.5

98.6

4.7

2.43

637

194.83

76.2

Bottom Third

7.4

94.7

5.9

2.40

598

222.56

72.7

 

 

There are some interesting things that emerge in Tables 1 to 3;

 

The bottom third results have a lower cost of production than the average although the feed cost is higher. However they are more efficient in conception, non-productive days, born alive, pre-weaning mortality% and FCR. The higher the initial CoPP the greater the value of improvement as demonstrated in Table 5 so you would expect the bottom third table to show lower values for each KPI change but it doesn’t. The reason for this is that although the difference in the values is small it does indicate the effect of higher levels of efficiency against higher overall cost. However in Table 6 we compare a single improvement applied on a ‘what if’ basis to rising levels of performance against the original cost of 126.44 pence/kg in Table 2. What Table 5 and Table 6 prove is the assumption that the lower the performance and the higher the corresponding cost the greater the value of each KPI unit of improvement. It can be seen clearly in all the tables that you cannot just add the values together as changes in certain KPI’s influence others so the total value of change is accrued and the eventual value of Total Change does not show a great variation.

 

Data modelling like this demonstrates that whatever an individual’s production performance and CoPP there is value in improving across the board. It is clear that management pressure needs to be applied in every department to achieve this.

 

Agrosoft Ltd has been carrying out trial reporting of this nature with some customers to establish an increasingly comprehensive understanding of the business and will shortly be including it as an additionally charged service to be included in the annual cost of the WinPig program.

 

Table 5

A comparison of the same improvements in the original performance (in Table 2) calculated against three different costs per kg deadweight.

Average Performance

Key Performance Indicator:

Unit of Change

Current Performance

Current CoPP

Unit of Change

Balance (p/kg)

Current CoPP

Unit of Change

Balance (p/kg)

Current CoPP

Unit of Change

Balance (p/kg)

Farrowing Rate %

%

79.23

126.44

2

-0.82

120.11

2

-0.74

114.48

2

-0.68

Non-Prod Days per litter

No.

20.0

As Above

-2

-0.57

As Above

-2

-0.52

As Above

-2

-0.49

Born Alive per Litter

No.

11.32

As Above

0.2

-0.80

As Above

0.2

-0.74

As Above

0.2

-0.69

Pre-Wean Mortality %

%

12.88

As Above

-0.5

-0.26

As Above

-0.5

-0.24

As Above

-0.5

-0.23

Daily Live-weight Gain

Gms/day

637

As Above

40

-0.66

As Above

40

-0.60

As Above

40

-0.55

Feed Conversion Ratio

No.

2.43

As Above

-0.10

-3.30

As Above

-0.10

-3.19

As Above

-0.10

-3.08

Post-Wean Mortality %

%

4.70

As Above

-0.5

-0.18

As Above

-0.5

-0.16

As Above

-0.5

-0.15

Increase Slaughter Pig Live-weight

Kgs

98.6

As Above

1

-0.39

As Above

1

-0.36

As Above

1

-0.33

Total Change (Accrued)

126.44

-6.25

120.11

-5.89

114.48

-5.57

 

 

 

Table 6

A comparison of rising levels of performance, the corresponding KPI value(s) calculated against the same CoPP 126.44p/kg.

Average Performance

Key Performance Indicator:

Unit of Change

Current Performance

Current CoPP

Unit of Change

Balance (p/kg)

Current Performance

Balance (p/kg)

Current Performance

Balance (p/kg)

Current Performance

Balance (p/kg)

Farrowing Rate %

%

79.23

126.44

2

-0.82

84.00

-0.69

88.00

-0.61

92.00

-0.54

Non-Prod Days per litter

No.

20.0

As Above

-2

-0.57

18.0

-0.52

16.0

-0.50

14.0

-0.47

Born Alive per Litter

No.

11.32

As Above

0.2

-0.80

12.00

-0.69

12.50

-0.62

13.00

-0.56

Pre-Wean Mortality %

%

12.88

As Above

-0.5

-0.26

11.50

-0.24

11.00

-0.22

10.00

-0.20

Daily Live-weight Gain

Gms/day

637

As Above

40

-0.66

680

-0.64

730

-0.60

780

-0.56

Feed Conversion Ratio

No.

2.43

As Above

-0.10

-3.30

2.33

-3.59

2.23

-3.90

2.13

-4.21

Post-Wean Mortality %

%

4.70

As Above

-0.5

-0.18

4.00

-0.16

3.50

-0.14

3.00

-0.13

Increase Slaughter Pig Live-weight

Kgs

98.6

As Above

1

-0.39

100.0

-0.34

105.0

-0.30

110.0

-0.27

Total Change (Accrued)

126.44

-6.25

-6.16

-6.24

-6.33

 

Table 7 below demonstrates the points being raised in the paragraph on ‘Understanding Cost’. As previously stated all the CoPP figures produced in these tables are derived from feed cost as a percentage of the total operating cost in each of the two herds, breeding and feeding. The figure possibly in excess of £0.35p/kg CoPP was suggested as the variation in cost between businesses carrying higher capital commitment and poorer physical performance. The table suggests that this figure could be conservative when comparing the cost variation between example A and example F, the variation being 40.87p/kg caused by a combination of higher capital commitment with the share of feed being 10% less of total cost in each herd and physical performance being the difference between average and top third/top 10% in terms of individual KPI’s. Also demonstrated in Table 7 is the level of the percentage share feed is of Total cost when the breeding herd and feeding herd feed is combined. The range of change in Table 7 dispenses with subtlety (five percent increments) because of the limitation of space in this presentation, it is however possible to model feed as a percentage share of total cost based on reported feed cost against reported physical with more finesse and decimal points.

  

Table 7

Average Performance

Key Performance Indicator:

Unit of Change

Current Performance

Current CoPP

Current CoPP

Current CoPP

Current Performance

Current CoPP

Current CoPP

Current CoPP

Feed as % of Total Cost:

Breeding Herd Cost

25%

30%

35%

25%

30%

35%

Feeding Herd Cost

65%

70%

75%

65%

70%

75%

Combined Herd Cost

49.49%

55.53%

61.33%

50.79%

56.78%

62.54%

Farrowing Rate %

%

79.23

141.86

126.44

114.48

88.00

124.36

111.23

100.99

Non-Prod Days per litter

No.

20.0

As Above

As Above

As Above

16.0

As Above

As Above

As Above

Born Alive per Litter

No.

11.32

As Above

As Above

As Above

12.50

As Above

As Above

As Above

Pre-Wean Mortality %

%

12.88

As Above

As Above

As Above

11.00

As Above

As Above

As Above

Daily Live-weight Gain

Gms/day

637

As Above

As Above

As Above

730

As Above

As Above

As Above

Feed Conversion Ratio

No.

2.43

As Above

As Above

As Above

2.23

As Above

As Above

As Above

Post-Wean Mortality %

%

4.70

As Above

As Above

As Above

3.50

As Above

As Above

As Above

Increase Slaughter Pig Live-weight

Kgs

98.6

As Above

As Above

As Above

105.0

As Above

As Above

As Above

Total Change (Accrued)

141.86

126.44

114.48

124.36

111.23

100.99

 

 

 

Table 8 below demonstrates the relationship between accrued change and cost by reporting both the accumulated and the accrued value of change in increments from left to right in the table. There is one area that we believe raises discussion and that is the value of Daily Live-weight Gain (DLwtGn) and the relationship between DLwtGn and Feed Conversion Ratio (FCR) in terms of performance which require complex algorithms (See Note 1). The very basic effect of change in DLwtGn is expressed in days to sale/slaughter. The cost model does not take into account any element of feed efficiency relating to DLwtGn this is levied solely on FCR. Therefore the reported cost change in the model’s ‘What if’ function that we are using to produce the tables in this article calculates the value of DLwtGn in terms of days lost or gained and a +/- maintenance cost of pence per pig. The cost includes the appropriate fixed and variable cost (See Table 9).

 

Table 8

Average Performance

Key Performance Indicator:

Unit of Change

Current Performance

Current CoPP

Unit of Change

Balance (p/kg)

Farrowing Rate %

%

79.23

126.44

2

-0.82

-0.82

-0.82

-0.82

-0.82

-0.82

-0.82

Non-Prod Days per litter

No.

20.0

As Above

-2

-0.57

-0.57

-0.57

-0.57

-0.57

-0.57

Born Alive per Litter

No.

11.32

As Above

0.2

-0.80

-0.80

-0.80

-0.80

-0.80

Pre-Wean Mortality %

%

12.88

As Above

-0.5

-0.26

-0.26

-0.26

-0.26

Feed Conversion Ratio

No.

2.43

As Above

-0.10

-3.30

-3.30

-3.30

Post-Wean Mortality %

%

4.70

As Above

-0.5

-0.18

-0.18

Increase Slaughter Pig Live-weight

Kgs

98.6

As Above

1

-0.39

Total Change (Accumulated)

-0.82

-1.39

-2.19

-2.45

-6.41

-6.59

-6.98

Total Change (Accrued)

-0.82

-1.38

2.15

-2.40

-5.71

-5.88

-6.25

Daily Live-weight Gain

Production cycle loss/gain

Days

8.45

Operational Maintenance Costs

Pence/Pig

48.80

 

 

Note 1

In the paragraph on Table 8 the relationship between DLwtGn and FCR is raised and it is explained how this is calculated in the Cost Model used for this exercise. In tables 1, 2, 3, 5, 6, and 7 the value of DLwtGn in relation to lost or gained days to sale/slaughter is reported but it is not accrued in the Total change because the model is simplistic and does not include any calculations employing algorithms to calculate the relationship between DLwtGn and FCR.

 

The range of Production cycle loss/gain and Operational Maintenance Costs for the three main tables 1, 2 and 3 is reported in Table 9. In this table we are looking at the original CoPP in the first data column and then in the subsequent columns from left to right we are looking at the change in the CoPP in terms of pence/kg deadweight the reduction in days to sale/slaughter and the total operational cost saving of the reduced days.

 

  

Table 9

CoPP

Unit of Change 40 gms/day

Unit of Change 80 gms/day

Unit of Change 120 gms/day

Unit of Change 160 gms/day

Unit of Change 200 gms/day

Daily Live-weight Gain

Table 1 (Top Third)

CoPP

114.61

114.05

113.55

113.10

112.69

112.32

Production cycle loss/gain

Days

-7.90

-14.96

-21.30

-27.03

-32.23

Operational Maintenance Costs

Pence/Pig

-42.31

-80.11

-114.07

-144.75

-172.61

Table 2 (Average)

CoPP

126.44

125.78

125.20

124.67

124.20

123.78

Production cycle loss/gain

Days

-8.45

-15.96

-22.67

-28.71

-34.17

Operational Maintenance Costs

Pence/Pig

-48.80

-92.15

-130.92

-165.80

-197.35

Table 3 (Bottom Third)

CoPP

124.58

123.96

123.41

122.93

122.49

122.10

Production cycle loss/gain

Days

-9.15

-17.23

-24.40

-30.82

-36.59

Operational Maintenance Costs

Pence/Pig

-43.80

-82.42

-116.75

-147.45

-175.07

 

 

We hope that these tables have helped to explain the relationships between the level of production performance and cost and that you find them interesting. In the next issue we will be looking at some of these things in more detail in terms of what can be derived from data and so can be achieved on farm to make the radical possible.

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