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.

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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.

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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.

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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.

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