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Determinants of Profitability in Niche Swine Production

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  • Sanders, Dwight
  • Altman, Ira J.
  • Apgar, Gary

Abstract

Production records for swine producers specializing in niche markets (e.g., natural) are analyzed to determine the factors impacting profitability. The data span a cross section of 42 niche pork producers and record their 2006 production costs. Profitability was measured by the net margin (adjusted for inventory and after all costs) per hundred pounds of pork produced. In comparing the 10 most and 10 least profitable producers, there were statistically significant differences in production costs (feed, labor, and other operational costs) and efficiency (feed conversion, labor intensity, and farrowing frequency). Notably, there was not a statistically significant difference in the price received for market hogs. Multiple regression analysis shows that 82 percent of the variation in profitability across producers is explained by feed costs, labor efficiency, production efficiency, management experience, and the production of more specialized niche pork (e.g., certified organic). Profit margins were negatively impacted by greater feed prices, feed conversion rates, labor intensity, and veterinary expenses. Profit margins were enhanced by greater farrowing efficiency (pigs per litter and farrowings per year), years of niche pork production experience, and the marketing of “certified organic” pork.

Suggested Citation

  • Sanders, Dwight & Altman, Ira J. & Apgar, Gary, 2012. "Determinants of Profitability in Niche Swine Production," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2012, pages 1-12.
    • Handle: RePEc:ags:jasfmr:190725
    DOI: 10.22004/ag.econ.190725
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    File URL: https://ageconsearch.umn.edu/record/190725/files/367_Altman.pdf
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    References listed on IDEAS

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    1. Lawrence, John D., 1996. "Factors That Influence Prices Producers Receive for Hogs: Statistical Analysis of Killsheet and Survey Data," ISU General Staff Papers 199603010800001278, Iowa State University, Department of Economics.
    2. Mary C. Ahearn & Henry M. Bahn & Peter J. Barry & Sam M. Cordes & Tracy Irwin Hewitt & George W. Norton & Katherine R. Smith & Amy Purvis Thurow, 1998. "Doing Good by Choosing Well: Priorities for Agricultural Economics," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 20(2), pages 332-346.
    3. John D. LAWRENCE, 1996. "Factors That Influence Prices Producers Receive For Hogs: Statistical Analysis Of Killsheet And Survey Data," Staff Papers 279, Iowa State University Department of Economics.
    4. Lawrence, John D. & Shaffer, John & Hallam, Arne & Baas, Thomas J., 1998. "Factors Impacting Production and Economic Variability in Traditional Midwest Swine Enterprises," ISU General Staff Papers 199801010800001563, Iowa State University, Department of Economics.
    5. Sanders, Dwight R. & Moon, Wanki & Kuethe, Todd H., 2007. "Consumer Willingness-to-Pay for Fresh Pork Attributes," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 25(2), pages 1-17.
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