Foster, S. 2012, Enterprise Budget, Hoop Barn Swine Wean-to-Finish Production, Nevada, 2012, University of Nevada Cooperative Extension, FS-13-45

Introduction

In 2012, University of Nevada Cooperative Extension received a USDA federal grant to assist beginning farmers and ranchers in Nevada. The goal of our Beginning Farmer and Rancher program is to help beginning agricultural producers succeed by providing them the opportunity to utilize the latest financial management tools, develop entrepreneurial skills, receive on-the-ground training in production agriculture, and get assistance in marketing Nevada agriculture products.

Swine hoop structures consist of arched pipes or trusses in a Quonset-shaped structure, covered with an ultraviolet-resistant polyethylene fabric tarp. The hoops are attached to wooden posts with wood sidewalls that are 4 to 6 ft. high. The ends are open most of the year, except for winter when one or both ends are closed or partially closed. Most of the floor is earthen and covered with bedding material. Bedding can be cornstalks, straw, wood shavings or other absorbent organic material. Bedding is added to form a thick manure pack until cleaned out after each group of pigs. The high-traffic area around waterers and feeders is covered with concrete.

Pigs normally are not allowed outside of the hoop, but they can occupy the entire structure. Gates across the end openings keep pigs inside the structure, but allow access for bedding material to be place inside.

The “2012 Enterprise Budget, Finishing Pigs in Hoop Barn Facility”, an interactive spreadsheet, was developed to assist people who may be considering swine production using hoop barn structures. Similar to all enterprise budgets, it should be used only as a guide to estimate costs and returns for swine “wean-to-finish” production in hoop facilities. Enterprise budgets contain several cost components. Determining which budget should be considered for a given decision, can often be difficult, because production costs are unique to each farming situation. A budget is as useful as the accuracy of the information used to develop it. The attached interactive spreadsheet should assist producers who input accurate estimates for their local area/production system.

The most common categories used in an enterprise budget are income/receipts, and variable and fixed costs. Income/receipt values are calculated from estimated production levels and expected prices to be received from the product produced.

Variable costs are those that vary within a production period. Examples include feeder pig price, feed, and veterinary and medical expenses.

Fixed costs include machinery/equipment costs, taxes and building costs. Sometimes a management fee is included as a fixed cost. These costs are considered to be “fixed” because they generally remain the same within a production period and do not vary with the level of output (Riggs, et al, 2005).

Total costs are calculated by adding variable and fixed costs. Ideally, producers want to earn a profit above total costs every year.

Assumptions

Pork production is not a typical agricultural enterprise in Nevada. Therefore, some of the values used for production costs in the model budget are based on enterprise budgets from Iowa State (Lawrence, et al, 1998).

Other assumptions include:

  1. Average pig space recommended for hoop barn production is 12 square feet per pig space.
  2. Groups or batches put through the facilities per year equals 2.5.
  3. Due to the lack of corn production in Nevada, straw is used for calculating bedding costs.

Building Costs

The hoop barns have the advantages of low initial cost, versatility and simplicity. The initial cost of hoops for finishing pigs is $50 to $60 per pig space. This includes the cost of the hoop structure and feeders, and the cost of manure and feed handling equipment. This initial cost is approximately one-third to one-half that of curtain-sided, slatted-floor confinement barns with a deep pit.

The hoops are versatile because they are modular, usually built in units holding 200 finishing pigs, whereas the confinement buildings are often found in units of 1,000 finishing pigs. The hoops can also be used for other agricultural purposes, such as storing hay, grain or machinery (Honeyman, et al, 1999).

Production

Feed efficiency or feed conversion (pound of feed per pound of gain) is very important in swine production. Feed costs can comprise 60 to 70 percent of the total cost of production.

Pigs raised in hoop barns generally require more feed per pound of gain than pigs raised in modern confinement facilities. Also, the finished carcass may be slightly less lean than for confinement pigs. In addition, there are documented differences in pig performance between summer and winter production (Lammers, et al, 2007).

Labor Costs

Part or all of labor may be a variable cost if paid labor varies with acres farmed. It is a fixed cost if labor costs do not change with acres farmed. Labor costs are calculated at a rate of $13.50 per hour, but may be adjusted to specific areas.

Management Charge

If a consulting firm or other entity is being used to help with management decisions, then this expense would be reflected in the management charge. If the owner/operator is making management decisions, then he/she should receive additional compensation above the average labor charge.

Discussion

The enterprise budget provides the best means to evaluate the potential profitability of a given enterprise or farm income source. Developing an enterprise budget allows for the identification of costs, both variable and fixed, and returns associated with the production and marketing of a product.

By understanding the basic concepts and formats of an enterprise budget, users can analyze their short- and long-term fiscal scenarios, and evaluate changes in profitability, due to fluctuating break-even prices caused by variation in input costs and market pressures. Enterprise budgets developed by University of Nevada Cooperative Extension provide producers an example format they can use to evaluate current and potential profit centers in their agricultural operations (Riggs, et al, 2005).

References

Honeyman, M.S., Harmon, J.D., Kliebenstein, J.B., Richard, T.L. 1999. Feasibility of Hoop Structures for Market Swine in Iowa: Pig Performance, Pig Environment, and Budget Analysis, Journal Paper No. J−18247 of the Iowa Agriculture and Home Economics Experiment Station, Ames, Iowa, Project No. 3142.

Honeyman, M., Koenig, F., Harmon, J., Lay, D., Kliebenstein, J., Richard, T., Brumm, M. 2010. Managing Market Pigs in Hoop Structures, eXtension, Managing Market Pigs in Hoop Structures.

Lammers, P., Stender, D., Honeyman, M. 2007. Niche Pork Production, Iowa State University, IPIC NPP110. Lawrence, J., Vontalge, A. 1998. Livestock Enterprise Budgets for Iowa - 1998. Iowa State University, University Extension, Ames, IA.

Riggs, W.W., Curtis, K.R., Harris, T.R. 2005. University of Nevada Cooperative Extension, Importance & Use of Enterprise Budgets in Agricultural Operations, Special Extension Publication 05-12.

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