Benchmarking in Dangerous Times
2008 will be seen as a time of adjustment.
By John Deen and Sukumarannair S. Anil
Benchmarking is a term and a methodology that has been abused, misused and yet, in spite of our faults, it has survived and provided useful guidance to the industry. The etymology of benchmarking is interesting:
A “benchmark” was originally a mark cut into a stone or a wall by surveyors measuring the altitude and/ or level of a tract of land. The cut was used to secure a bracket called a “bench” upon which they mounted their measuring equipment, and all subsequent measurements were made in reference to the position and height of that mark. Voila, “benchmark,” which first appeared in English around 1842, and quickly began to be used figuratively in the “standard of quality” sense we see today... The surveying term is first recorded in 1842, and the figurative use arose by 1884.( http://www.etymologie.info/~e/u_/us-manage. html#Benchmark, accessed March 29, 2008)
In this application, benchmarks are identified as stable points to provide reference for further measures. Often benchmarks have provided that point of comparison, and success in pig farming has been defined through comparisons to such benchmarks.
The problem with the definition of benchmarking and its application is where we have major changes in the industry that can, in some ways, change the basic approach to pig farming and change the expectations of individual benchmarks. To a great extent we are at such a point in the swine industry now. It is unlikely that we will go back down to the historically low feed prices and costs of production that we have seen in the past. In response to this, we will see higher values of pigs as supply adjusts to the new cost structures.
Time of Adjustment
2008 will be seen as a time of adjustment. We need to use the benchmarks we have as a real asset in identifying the strengths and weaknesses of this new market. We may also need to find new variables for evaluation. It is unlikely, particularly for sow units, that we will see many decisions on expansion or major renovation of facilities. Instead, the aim of benchmarking will be to maximize the profits, or minimize the losses, of the facilities that we have.
In North America, we are working with sow unit systems that utilize sunk costs as the major part of the cost of production. In other words, the majority of the costs are independent of the number of sows and the productivity of those sows. Additional output from a sow unit is going to become more valuable than ever. Marginal or extra pigs are the “gravy” of sow units, as it is difficult to identify major extraordinary costs with added productivity.
However, extra pigs also vary in their value. The most valuable pigs occur when productivity is lowest and in recent years the value of a marginal weaned pig to the enterprise can vary as much as 65% as supply varies, with most of this variation being due to seasonal infertility and inventory responses of the sow units. Secondly, extra pigs can also vary in their value based on the quality of those pigs and their performance and subsequent stages of production. Pigs weaned too young due to overproduction or pigs weaned in poor quality due to inadequate management of birthweight both can be major costs to the swine enterprise.
My list of industry-level opportunities includes the following:
- Removal rates: We see high removal rates in many herds and in some recent analyses it appears that removals to improve reproductive performance are often misguided. Conversely high levels of removal due to lameness are probably correct but the root causes of lameness need to be addressed to manage removal rates. Most of all, there is increasing evidence that high removal rates can affect the quality of subsequent progeny performance as gilt progeny are more susceptible to various insults.
- Variation of piglet production: This is another variable that indirectly affects the quality of progeny. Not only are there seasonally low levels of piglet production, but these low levels are often followed by overproduction. We see an inverse relationship between piglet production and weaning age on many farms, so that weaning ages fall below target levels and poorer performance is seen in subsequent stages of production.
As you review the benchmarks of 2007 performance, remember that the opportunities remain the same but the rewards will be increasing. In some ways, the title of the book by Spencer Johnson, “Who Moved My Cheese? An Amazing Way to Deal with Change in Your Work and in Your Life,” is an appropriate theme. We would go a step further and emphasize that the cheese has not disappeared, but it will reappear in larger amounts and in different places. However, this new market will be less forgiving of low productivity. With this reality, this benchmark review should be more appropriate than ever to allow you to emphasize the
real opportunities of improvement in swine production.
Editor’s Note: John Deen DVM PhD is an Associate Professor at the University of Minnesota, and Sukumarannair S. Anil DVM PhD, is a Research Asssociate at the University of Minnesota.