Adding Value the Ferengi way.

In light of my recent post about different ways of raising hogs, dad suggested it would be worthwhile to explain why hogs are raised in confinement at all…and why this isn’t likely to change.  Since I have a sense of humor I thought I could explore this while having a bit of fun.  What follows is my understanding of why farmers raise hogs in confinement mixed with a dash of Star Trek.  Yup, Star Trek.

Now, I want to be clear.  I am neither apologizing for nor accusing the practice of hog confinement.  I am merely attempting to describe my understanding of why farmers do it…and showing my inner nerd.

So.  Why do farmers raise hogs in confinement?

Because farmers grow grain.

Need more detail?  OK.  Farmers grow lots of grain.  And interest rates were low and bankers were very, very much in favor of hog floors years ago.  That didn’t turn out too well in the ’80’s but interest rates are low again and…well, here we go.

Click on link for image source

Let’s say I was the kind of a farmer who grew acres and acres of corn.  Corn, corn, corn, corn.  Being from Illinois, I’m probably going to rotate soybeans through the same ground alternate years.  Every 10 years or so I’ll sow alfalfa, spread lime, etc. but for the most part, we’re talking corn.  Oh, and to get this corn to grow well we have to add fertilizer.  That costs money.  Boy does it ever.  And we’ll have to do something to make sure the weeds don’t out-compete the little corn plants.  Either we’ll cultivate or spray.

A bushel of corn weighs 56 pounds.  I should get 150 bushels of corn per acre on our kind of Illinois ground.  (Maybe 200 but we’ll stick with the 150).  That’s 8,400 pounds of grain that has to be hauled and stored somewhere for every acre and I may be farming 2,000 acres if I want to be a medium-sized farmer.  That’s almost 17 million pounds of corn.  I could maintain my own fleet of trucks to do the hauling or hire a trucking firm to haul for me.  How far do we haul?  The nearest elevator?  Next town over?  Each mile costs money and time.

Worse, what do I return to the land when I haul all of my crop away?  Really just the crop residue.  Remember, I have to buy fertilizer.

Well, what if there was a way to avoid hauling the corn, add value to that corn, increase my profit percentage and lower my hauling costs AND make fertilizer I can sell to the neighbors or return to the soil?  That’s why there is hog confinement.  It’s not simply a bunch of greedy, heartless, evil farmers throwing as many pigs as possible into the least space possible to squeeze profit.  It’s a way of taking something of surplus and low value and turning it into something of higher value.

To bring Star Trek into the picture, there are several Ferengi Rules of Acquisition that apply here.  Law of Acquisition #2 says:

The best deal is the one that brings the most profit.

I think that’s pretty self-explainatory.  At one time, every house on the road had a few sows out on dirt.

Click on image for source

They are thrifty, independent and marketable animals.  When you look at the bottom line and begin to evaluate how Pareto’s Principle applies to your farm, pigs usually look pretty good.  If a few pigs look good, more pigs look better.  How many pigs can we raise before efficiency and the market snap us back to reality?  This brings us to Law of Acquisition #45:

Expand or die.

It didn’t take long.  Farmers went from a few pigs at every home to larger groups of pigs at fewer homes.  Then they started building Cargill floors and, ultimately, climate-controlled hog houses.  But, at each stage of the way, the farmer was looking for a way to bring home a little more income to the farm…and every farm needed more money, especially at the time when confinement houses were becoming popular.  You get from healthy, environment-enhancing pastured pork to unhealthy, destructive pastured pork to confinement pork in just a few easy steps and it is well summarized in Rule #98

Every man has his price.

Click on image for image source

But I have gotten ahead of myself.  Why did the farmers have pigs in the first place?  Partly because bacon tastes great but mostly because they already had the feed.  Should we move the mountain of grain to the pig or move the pig to the mountain of grain?  If nothing else, the pig can walk.  Transporting meat makes more financial sense than transporting feed.  I mean, with $6 corn it costs me $0.33 to make $0.61 worth of lean pork (at $0.86 lean pork futures).  So we sell the corn to ourselves and sell the pork on the market to nearly double our money.  Rule #12 tells us:

Anything worth selling is worth selling twice.

Then he can sell it one more time by “selling” the manure either to himself by replacing his fertilizer bill or actually sell it to his neighbors.  Those friends I mentioned in the previous article have entirely cut out their fertilizer bill and they make a bit of cash on the side selling the manure to neighbors.  Not only is that enough to make any Ferengi tug his ears in jealous rage but also means their farm won’t be spilling Anhydrous Ammonia into nearby ponds.

Obviously there are ups and downs in commodity production, weather you are producing commodity coal or commodity pork.  Massive expansion following Rule #45 meant there were a number of lean years for pork producers.  The late ’90’s were particularly awful.  But some survived even by the skin of their teeth.  This proves Rule #162:

Even in the worst of times, someone makes a profit.

So, confinement commodity pork production is a tool used to add value to commodity grain production.  In its original form, it saved on transportation.  That’s not really true anymore.  Rather than haul the grain from your own field to your own hog house, growers are usually contracted through a vertically integrated operation and the feed is trucked in from a contracted source.  Believe it or not, that’s more efficient…somehow.  All of commodity production depends on cheap fuel prices.  As fuel prices go up, it costs more to fertilize, cultivate, plant, spray and harvest the field, then haul the grain away.  It costs more to build and heat the hog house.  It costs more to haul and grind the feed.  It costs more to haul the hogs to the slaughter plant.  It costs more to haul the bacon to the store.  Unfortunately, when you are in the commodity food paradigm there really is no alternative.  Once you have that huge building, all that concrete, tons of rebar…all that stuff, you’re married to it.  Even I have a Cargill floor as a relic of previous generations on our farm.  What do I do with it?  Right now it stores lumber and odd bits of things but, for most people, as Rule 217 says:

You can’t free a fish from water.

Commodity production, it appears, is here to stay.  You, as an individual, can choose to participate or you can opt out by finding a good steward raising pastured livestock.  Not only are our pigs raised in the sunshine and allowed to express their “pig-ness”, they are leaner and more flavorful than confinement hogs, not to mention various health benefits from pastured meat sources.  Having butchered from both sources I can tell you the pastured meat lacks that distinct confinement smell.  But, these decisions are always difficult for us as consumers because of Rule #23:

Nothing is more important than your health, except for your money.

Advertisements

9 thoughts on “Adding Value the Ferengi way.

  1. The January/February “Grit” magazine has a little bit about raising pigs. It is short and to the point. It is part of a bigger piece about getting the most out of your timber. Having grown up watching the evolution from ground raised pork to confinement raised pork, I need to add a point you seem to have missed. I small herd of pigs is easier on the blood pressure than a large herd. Pigs don’t ever want to stay where they are put. By watching a man care for the obstinate creatures you soon learn what kind of a man he is. Broom bristles drive a hog back into the pen better than a board. Food in the trough often works well, too. Funny correlation: The way to a man’s heart is through his stomach.

      • There are several relics of pork production on our farm. We can deal with the Cargill antique and we will…but I wonder if you are aware of where the Sow pasture was and the environmental damage they caused? Hogs on dirt, you can still see where they were for years and there haven’t been hogs there for at least twenty years. I am always wanting to plant tall prairie grass maybe we should try it there. Not caretaker

        • You need your own user name. Email accounts are free every day.

          I’m not sure what your point is. Yes, you can see where hogs were for years. Don’t leave them there for years. Use proper stewardship of land and animals. Keep things moving, allow long periods of rest and recovery after short bursts of intense disturbance and we’ll we’ll bring diversity and healing to the landscape. I don’t have it quite right yet but I’m getting close.

      • No. Grandpa might poke, but his style would demand he pick up an entire gate and push until the pig had no where else to go but where he wanted it to be. I don’t ever remember his losing his temper with an animal. When the cows got out and he needed help getting them back in the lot he would ask me to just stand there and turn them so they would go right instead of left. Of course they ran right past me, but he just went after them and tried again. My broom and I get along better with pigs than cows. Cows are stupid.

  2. It’s about scale isn’t it? And what you want out of farming. If you want trips to Disney or Vegas, and you want it paid for out of farming income, you’ll have to farm at a certain scale. If you want to farm because of the attractions of a rural lifestyle, you’ll farm at at a different scale. If you’re into land stewardship and earth sustainabliity, you’ll farm at a certain scale.

    I really appreciated both this post and the related one about differences, samerances etc. Very thought provoking. I have known and respected some of the conventional farmers around here for most of my life. Many of them have inherited their farming models from their parents – here that means that when the marketing boards were created 40 or 50 years ago, and the quotas were first bought, these were families who got in on the ground floor. Now those quotas are very valuable, and it would require insanity (so it is believed) to sell one if you have it, lose the ability to sell through the marketing board, and thus lose preferential processing and transport costs, as well as a market for your product, just so you could pasture your birds or pigs. It’s easy to see why those families have stuck with what works for them.

    I just finished an interesting book recently – Henry Tetlow “We Farm for a Hobby and Make it Pay” in which he recounts his experiences farming for self sufficiency during the Depression years. They grew all their own produce, kept hens, cattle, pigs, ducks, etc. He kept great records of his inputs, labour, and output, and was most enthusiastic about the quality of home produced food. He waxes lyrical about new ways to raise chickens (indoors, artificial light, individual cages, wire floors, etc) and can’t wait to get the money together to invest in building new chicken barn rigged up with all these new things. Given the farming culture I have immersed myself in, it felt weird to read his enthusiasm for this model – but he was speaking from a time when people kept pigs and hens in small smelly dirt yards, had significant parasite problems, etc. The new model promised cleanliness, efficiency, healthy birds, better egg production. Of course he was keen.

    • Julie’s grandpa says similar things. The only time his bedroom had heat was when there was a chick brooder in it. They kept lots and lots of chickens in a long confinement house. Wave of the future. Yes, economies of scale work for that operation but what really works is the location. Everything you need is right here. Just add chicken or pig. Then, with the raw ingredients in place, it’s just a matter of time before you start convincing yourself that just a few more pigs…just another house…and you could make some real money. Then we could go to Vegas! (since we aren’t having fun here anymore).

  3. It’s good to look at the confined pig raising model from the historical perspective like this. I don’t agree with it, but you do have to see how it integrated itself into the farming culture so completely, that many folks just can’t do anything else. Walk a mile in their shoes, I say. And so, I am grateful to have come to this honored occupation late, without inherited culture, so I may explore my own small-scale, stewardship-oriented course, without having to shake off the past.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s