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Senior Advisor

Revenue Structure For Contract Hogs?

Wat is the revenue structure for contract hog finishint?

Who owns the hogs?

Who pays for the feed?

What price incentives or penalties does the grower gain or lose for various events, and what are those events?  (rate of gain, death loss, etc)

Who pays for the medecines?

 

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Honored Advisor

Re: Revenue Structure For Contract Hogs?

Contracts take many forms. Ours have all been for integrator-owned pigs. They provide feed, transportation, veterinary support and supplies, and pay us a nickel a shot for vaccinating. We provide buildings, labor, electricity and waste management, which includes mortality composting. They pay all but a small part of our propane costs. Am I forgetting anything?

We have gotten paid basically two ways in twenty years. One was so many cents per pound of gain, plus feed conversion bonus. The other us per-space pay monthly, plus quarterly livability and a smaller feed conversion bonus.

Deads cost you either way, whether as lost end weight, so the feed conversion rises, the bonus falls on the first type of contract ; or, by actually lowering the bonus for live pigs shipped over a standard percentage.

To be honest, there hasn't been that much difference between the money we made, either way. As long as you get decent pigs, we do great. Sorry ones, and space pay is better, unless a contract minimum is guaranteed per lot closed out. The first type of contract has always included that, with our integrator.

There are dozens of different types of contracts for the same production work. We anticipate a new contract any day now. I dread figuring out its ins and outs.
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Honored Advisor

Re: Revenue Structure For Contract Hogs?

I should add that we are nursery growers. Finishers get paid differently, but along the same lines.
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