Optimal hog marketing weights
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Optimal Hog Marketing Weights. James Mintert, Ph.D. Professor Department of Agricultural Economics Kansas State University. Hogs Have Been Getting Heavier for A Long Time. Why Have Weights Gotten Heavier?. Technology Genetics Feeding regimens BECAUSE IT’S PROFITABLE.

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Optimal hog marketing weights

Optimal Hog Marketing Weights

James Mintert, Ph.D.

Professor

Department of Agricultural Economics

Kansas State University



Why have weights gotten heavier
Why Have Weights Gotten Heavier?

  • Technology

    • Genetics

    • Feeding regimens

  • BECAUSE IT’S PROFITABLE


How does weight impact returns
How Does Weight Impact Returns?

  • Three keys to examining impact of weight

    • More pounds

    • Sort Loss

    • Lean Premiums









Economic principles
Economic Principles

Goal is to maximize profits

  • Determine marginal revenue for a weight change

  • Determine marginal costs for a weight change

  • Maximize profit when

    Marginal revenue = marginal cost


Compute marginal revenue
Compute Marginal Revenue

At each weight

  • Estimate base carcass value

  • Estimate expected sort loss

  • Estimate expected lean premium

  • Base + sort + premium =

    Exp. Net Carcass Value

    Calculate revenue gain for additional pound of gain


Compute marginal cost
Compute Marginal Cost

  • Pounds of feed per lb. of gain

    • Increases as weight rises

  • Feed cost per lb.

  • # of feed X cost/lb = marginal cost


Profit is maximized when marginal revenue equals marginal cost
Profit Is MaximizedWhen Marginal Revenue Equals Marginal Cost




Estimating your optimal weight
Estimating Your Optimal Weight

  • Use your kill sheet data to estimate relationship between weight and

    • Sort loss

    • Lean premium

  • Use models to predict sort loss and lean premium at each weight

  • Calculate expected marginal revenue for a one lb. weight gain


Estimating your optimal weight1
Estimating Your Optimal Weight

  • Estimate your marginal costs

  • Know your costs

  • Key is feed costs

    • Pounds of feed per lb. of gain

    • Cost per lb. of feed

  • Other variable costs per lb. of gain

  • Compare your expected marginal costs to your expected marginal returns

  • Profit Max occurs when MR = MC


Next step
Next Step

  • Development of a downloadable spread sheet tool



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