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Contributor

Need advice in Starting up a finishingoperation

Hello,

 

Just looking for opinions on finishing hogs. Looking at seting up a wean to finish or feeder to finish operation to compliment our grain farm in Central North Dakota. Any thoughts on this or good avdise would be greatly appreciated.  Thanks

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10 Replies
Veteran Contributor

Re: Need advice in Starting up a finishingoperation

Need a lot more info.  Are you going to contract finish or own your own?  How big of operation.  Who are you contracting for or where will you sell?  Are you hauling the manure or do you have someone to do custom.?  Are you managinf the building?  Does your area have hogs now?  Do you have experience with hogs?  How old are you?  How are you financing the building, the hogs?  A lot more questions but only you can answer.

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Contributor

Re: Need advice in Starting up a finishingoperation

HI,

 Guess I was a little vague, but had left it that way because I'm looking to hear anyones angle on it. But my basic plan is That it is going to be a contract operation starting out with a 2400 head barn. I have a couple outfits that we are in contact with to work with . I am doing this as a way to get started and learn the ropes per se. I grew up with cattle and hogs, cow calf and farrow to finish but have never done it on that large of a scale and I'm 30 years old now so aolot of what I learned growing up may not apply here. As far as the manure goes I would be just having a custom apllicator do it for now. Honestly this is the main reason for doing all this is to have the manure to use on our grain farm. I wouldn't be opposed to owning some equipment and doing it myself later on if we expand our numbers but not for now as there is not really any others in the area that I could hire out to justify the cost of the equipment and also theres a issue with finding qualified labor around here so that's another issue I have to deal with. As far as financing goes theres always bank financing but as we all know thats not as easy to come by as it used to be, also looking into some type of partneership deal with one of the growers.   That is about as far as I have gotten so far as this project is still in its infancy and I'm working with extension and some Indusrty folks to get a good plan in place and also some freinds in the business but opinions from those can be sometimes skewed as they are also seling you something as well. One number I have gotten to build a 2400 hd barn with the pit underneath is $250 -$260 per pig space give or take by the time all land, building utility and construction costs are accounted for. And a contract rate of around the upper $30's per space. Does any of that sound like it makes sense? Any good advice from someone with experience will be greatly valued and appreciated. Thank you

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Frequent Contributor

Re: Need advice in Starting up a finishingoperation

So, how many year contract are you getting offered? 3 seems to be the magic number right now.
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Contributor

Re: Need advice in Starting up a finishingoperation

Was thinking about trying to get a little longer than that, but I guess 3 maybe isn't the worst incase inflation goes crazy , but mid term I might be more worried about the Chinese economy going to hell along with a good share of the developed world and what that would do to the industry in general. Of course the Central banks probably just keep printing which would probably make it attractive to have the shorter contract. But then again, if I knew the answer to that, I would be in a different line of work. What are your thoughts?? Thank you

 

 

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Veteran Contributor

Re: Need advice in Starting up a finishingoperation

What has happened many times in this area is that after the building is paid for the integrators will not offer as favorable a contract.  I put a barn up with a 10 year contract 5 years ago and this year I sold the barn to the contractor before the value got to far below the remaining rental contract.  The big benefit as you know is the manure and I have retained the rights for the life of the building for the manure.When I built my barn it was $235 per pig space but that included everything including a generator, limestone around the building, well, turn key.  After 5 years maintanance was becoming an issue as well as utility costs since this was a tunnel barn.  Is your barn going to be tunnel vent or curtain?

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Frequent Contributor

Re: Need advice in Starting up a finishingoperation

I don't see how you're going to get a bank to go along with a 3 year contract unless you throw in some land.
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Senior Contributor

Re: Need advice in Starting up a finishingoperation

    Your biggest drawback is the contract itself,if it is not lucrative enough to see you through the expence,then it is not worth the price of toilet paper just like any other ag contract! If a lot of ag would opperate  without contracts,finals would be a lot higher!

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Contributor

Re: Need advice in Starting up a finishingoperation

That makes sense, a neighobr of mine back home (southern MN) sold out their barns last year when the newer ones were only maybe 3-5 years old and I nevre got a good answer from them as why, Just seemed like Christiansons wanted them bad enough. As for barn style it is going to be a tunnel barn. What did you run into for maintenance issues. From what Ive seen there aren't alot of moving parts. Auger and fan motors? Is it mostly waterers, feeders and gates and such ,or are ther more structural issues to deal with. The company I'm working with has built a lot of these and tried to tell me that there would be minimal maintenance for 15 to 20 years and expect 20 to 30 out of the building itself. I think thats is quite a stretch. I mean I'm more familiar with beef and dairy, but I've seen 5 year old dairies that are shot. Another question I have is if I have halfway decent well water is there any benefit in getting rural water? I know we've seen a big improvement in dairy performance and lifespan of equipment with treated water, but I am not looking forward to a $1800/Monthly water bill, or if the grower requires it would it be standard practice for them to pay the water as well?? Also, what insurance does one need to have to cover the animals if here is a loss due to say fire or natural disaster, and how is regular death loss handled as far as who bears the expense.

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Contributor

Re: Need advice in Starting up a finishingoperation

Ray,

 

Yes, I agree with you for the most part, but if I went to the bank to ask for this without a contract he would probably shoot me. But as far as contracts go, they are only as good as the word of the man you sign it with. Just like my MN land I rent out If he goes under or can't get his loan a $300 contract isn't worth the paper its printed on.  I try as much as I can to deal with folks that a handshake is all you need and once in a while you get burned, but those guys probably would have taken you even with a contract. The main thing I have found is to never extend credit to relatives or freinds unless you're comfortable just giving them the money cause thats how it usually ends up anyway.  Thank you!

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