Swine Livestock Facilities - Are They Holding Their Own?

Hog building 1 blog 8179adbbc9c3c

Occasionally, poultry-laying or finishing complexes are noticed.  It used to be a common sight to see sows enjoying a mud hole after a rain, but those days seem to be gone.   Everything has gone under roof, where it has been found that efficiencies in the operations far exceed the previous days of open-lots and influence of weather factors.   

There is a reason for livestock facilities to be located in the above mentioned states.  We have the abundance of feed stuffs, mainly corn and soybean products, which when fed through livestock and poultry, become a ‘value added’ product.   The manure has a place to be disposed of as well.   Because the livestock is raised in this part of the country, livestock slaughtering plants are here also.  This scenario doesn’t work well in many other parts of the United States.   

The swine industry has gone through several generations of confinement facilities, each lasting 25 – 40 years, which is typical of the economic age of the facilities.  Many times, these earlier generation facilities were owner-operated, with the farmer doing the farrowing, weaning, and finishing the pigs.  Today, many of the buildings are owned by the farmer, but vertically integrated companies own the pigs and provide the feed and health care, while the farmer provides the facility and labor.  

Typical sized swine finishing buildings today will hold approximately 2,400 head.  If the pigs are fed from 45 pounds to 275 pounds, there will be 2.4 turns a year in this building, or 5,760 pigs per year sold from the building.  They will consume approximately 1,800 ton of feed per year.  Raising the feed on a 640-acre farm, with 300-acres of corn production and 250-acres of soybean production, would adequately fulfill the feed requirements.   

The building owner is responsible for the handling and disposing of the manure.  Many times it can be injected or spread on the adjacent cropland from where the feed stuffs were grown.   A value of approximately $5 per pig marketed is seen in the industry from the manure.   It is shown that 24 pigs from 45-275 pounds will fertilize one acre of corn producing 170 bushel.  This illustrates the value of the manure. 

With current contract offerings, a new swine structure can be paid off in 7 – 9 years, so this is attractive to the grower.  We find in valuing of swine finishing facilities that there is a demand for used structures and buyers pay-up for a well-maintained, used structure.   New structures have an approximate construction cost of $300 per pig.  Over the past several years, we find that buildings which may be 10 years old or more will sell for $200 to $225 per pig.      

Public acceptance is always a concern for placement of any type of livestock facility, as there are odors which come from the facility.  Some areas have sternly objected the confinement approach to raising livestock, creating strict zoning laws.  The rural demographic has changed, with a considerable number of residents not involved with agriculture, thus not wanting livestock facilities ‘down-wind’ from their home.   The odor from manure is not always considered as the ‘smell of money’.

After all of this is said, we wonder if the ongoing construction of confinement buildings will continue in the Midwest.   There are a lot of positives which would say, “Why not?”  We have seen cyclical ups and downs of the swine market, as well as the cattle market, over the past several years.  The grain market of several years ago created a slim margin, or lack of margin, in feeding.  Even so, we seem to see continuing construction of new facilities at a steady pace.  

With some well thought-out plans and foresight, an addition of a finishing facility appears to be a ‘win-win’ option to a crop-intensive farming operation.  It appears that the use of the crop as the feed stuff and the deposit of manure back to the soil is an organic approach to positive cash flow and being good stewards of the farm.   


Auction Calendar