It’s all about profit, not performance

Of course performance matters, but I feel there’s too much emphasis on it these days, writes John Gadd. This comes mainly from commercial companies that extol the value of how their product can or will improve the performance of your pigs – backed up or not with trial evidence. But they often fail to mention how much it may cost you; what the financial deal entails.

Time after time, I read their adverts and brochures, and feel frustrated by not knowing what the cost of buying/using their goods may be. Possibly they want us to contact them and enquire, and so hook a prospective sale?

It was because of this, and largely on behalf of my clients, that 30 years ago I developed the Return on Extra Outlay (REO) concept, and suggested that clients ask each seller: “Yes, so you say. But you haven’t said how much extra of my limited and hard-earned capital you wish me to put your way. So tell me what sort of financial return I could secure from using your product to achieve the performance you claim! How much return should I secure from my extra outlay?”

The cynic will immediately remark that the vendor can easily skew his calculation by basing it on optimistic performance claims. Just so! And in my next blog I’ll suggest some further questions to sort out likely veracity from “optimistic wishful-thinking”, as one statistician has put it. As far as possible, to sort out the men from the boys in this respect, and at least narrow the odds in your favour.

So, to return to the nitty-gritty, the interesting results in Table 1 come from the records of 44 good producers. Sale liveweights averaged 105kg.

Table 1: Comparing profit with performance
Farms Pigs sold/ sow/year Weight of saleable meat/sow/year (kg) Weight of saleable meat/tonne/feed (kg) Relative net profit per pig sold (%)
13 27.1 2,846 447 110
8 25.2 2,646 428 108
23 24.1 1,808 482 119
Typical units 19.7 1,635 390 100

 

Profit doesn’t necessarily run parallel with performance. All three groups did well on performance. However the third group sold fewer pigs but made more profit because the meat they sold (their primary influence on income) was greater when set against their primary cost factor (food).

We often see adverts saying “buy our genes and you’ll sell the most pigs of anybody”. But will the buyer sell the most meat for the least feed?

An REO enquiry to them will tell you. And allow you to compare their REO with other REOs, and thus get a much better grasp on where best to spend your money.

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About The Author

John Gadd, who has spent 60 years' involvement in pig production, has had more than 2,800 articles about pigs published and has written three best-selling pig textbooks. With hands-on experience that includes managing a grow-out herd at 1,800ft in Banffshire, Scotland, and 20 years in the allied industries with Boots' Farm Department, RHM Agriculture and Taymix, he set up his own international pig management consultancy in the mid 1980s and has now visited more than 3,000 pig units in 33 countries as a pig management adviser. (Photo courtesy Bournemouth Daily Echo)