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Low prices bring hog producers together, increase bottom line

Low prices bring hog producers together, increase bottom line

Low prices bring hog producers together, increase bottom line

It all started with really low market hog prices.

Kentucky hog producers have boosted their profitability substantially with assistance from the University of Kentucky College of Agriculture. Increased bottom lines attest to the success of two producer enterprises -- the Central Kentucky Hog Marketing Association and Producers Interested in Gain.

Producers in PIG work with a regional stockyard that groups their pigs with others to sell in large numbers to the processing plant that has the best price. Selling the type animal that satisfies market demand and reducing production costs are integral parts of the program.

"It has been a lifesaver for us. I feel certain that the majority of people in this group, including me, wouldn't be in the hog production business today if it weren't for PIG," said Butch Case, a Harrison County producer. "We had few marketing alternatives in this area, so we had no choice but to work together to get a better price for our animals."

Members of the marketing association use a twofold approach to boost profitability by producing animals that bring a premium price and resource management to lower input costs. Its size helps producers accomplish both goals.

"Marketing hogs as a group has given us access to more packers," said John Medley, a Washington County producer who has been a CKHMA member since it was formed in 1991. "By selling as a group, we can send tractor-trailer loads of pigs on a consistent basis and this makes our animals more attractive to packers. We've also lowered input costs by buying feed, veterinary supplies and equipment as a group."

"Members of the marketing association have created a hog that's worth $14 more than

other hogs by using genetics to produce a uniform, quality product that meets today's market demand," said Rick Greenwell, Washington County Extension agent for agriculture. "In addition, they've generated another $28 in profits by cutting production costs, primarily through bulk purchases of inputs."

Education is another benefit of the marketing association, according to Medley.

"We do a series of educational meetings each winter, primarily with Richard Coffey and Gary Parker. They've worked with us on a continuing basis. Doug (Overhults) also has helped us by designing buildings and watering systems," he said.

(Coffey and Parker are Extension swine specialists at the UK Research and Education Center in Princeton. Overhults is an agricultural engineer at the research center.)

Producers taking part in PIG have a good, viable market and a consistent price each week, according to Gary Carter, Harrison County Extension agent for agriculture. They save a considerable amount on production costs by combining input purchases. The group also takes part in educational programs on management practices such as improving production methods.

"They know more about the current market situation because they are involved in a pricing structure with a processor. Their prices are based on how well their hogs perform; they're rewarded with a premium for raising hogs with a good rate of gain," he said.

Carter attributed the remarkable improvements to Coffey's and Parker's work with PIG, especially pre-mix recommendations they developed and update for the group.

"Feed companies bid for the contract to make the pre-mix. Buying in bulk has saved me about $80 a ton," Case said.

The marketing association began when a group of producers who were dissatisfied with

low prices decided to make a pro-active change. It is composed of 20 herds in Washington, Marion and Nelson counties, according to Greenwell.

PIG started about four years ago as an informal program when a group of producers got together to talk about how to get a better price for their animals, according to Glenn Mackie, Bourbon County Extension agent for agriculture. About 60 producers from central and east central Kentucky have taken part in PIG.

For more information on the CKHMA or PIG, contact your county Extension office.

Contact Information

Scovell Hall Lexington, KY 40546-0064