Disease Economics:Pig Care and Production

John Deen

What is the objective function?

• Health and well-being

• Productivity

• Cost control

• Profit maximization

• The technology treadmill

• Utility maximization

• Robustness

Place of the veterinarian

• Historically determined by aesthetic indicators, augmented by welfare concerns.

• Placed success determinants in the caregivers hands.

• Increases in scale and removal of direct contact with pigs has diminished the value of veterinarians.

• Often treated as a cost of production rather than a throughput enhancement.

Aims or constraints?

• Pig comfort

• Worker health

• Return on equity

• Cost of gain

• Return on equity

• Risk minimization

• Community viability

• Environmental stability

Effects are in production and demand• Industry

- Exports

- Demand

- Competition

• Farm

- Disease introduction

- Regulation

- Input costs and quality

• Pig

- death

- poor quality

- well-being

The Other White Meat?

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Loin Vs Belly

What are relative values of species?

Norwood and Lusk survey:

• Survey responses reveal that people are willing to allow up to 11,500 farm animals to suffer if the suffering of one human could be eliminated.

Attrition

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Parity

Each leg of Eduardo Donato's Dehesa Maladúa costs about €4,100 in shops

Major messages

• Disease economics is important

• We need to measure it

• Financial accounting is not set up to measure it

• Therefore underestimated

• Disease economic effects are getting bigger

• Disease economics involves capital and variable costs

Benefits of disease control

• Welfare: pig well-being

• Protection of other pigs

• Direct control costs: Meds, vaccines, feed additives

• Compensatory behaviors: farm placement, showers

• Increased input costs: feed, labor, heat ….

• Value of output: weight, price, throughput

• Aesthetics: employee enjoyment

• Environment: waste load

• Demand: consistency, aesthetics

• Public perception: not euthanizing/euthanizing

• Risk: efficacy, price

• Noise: inhibits analysis

Disease control

• Driven to increase value of output

• not a cost of production

• An essential aspect of profit maximization

• Valuable

• Costly

Components of variation of profits

0%

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CDL's ADG FCR

Alternative

less effective

and more costlyE

Alternative

cheaper but less

effective

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more effective

and less costly

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COST

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Alternative

more effective

but more costly

A

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The dead pig question

• How much did you lose?

• Invested costs?

• Potential income – reduction in costs?

• How much do you lose if a pig is culled instead of dying?

• Where in a farms records do you find these costs?

• What do you do if the answer is nowhere?

The salesman question

• There is a warehouse full of product that needs to be sold

• If the company is losing money, should the marketing people be eliminated, or should it hire more?

• Why? Most of the costs are already spent on the product, the potential marginal profit of marketing is large

Marginal Revenue-

Marginal costs=

Marginal Profits

Profit = #Kg (Rev/Kg – Costs/Kg)

• Which variable is most important in profitability?

• Costs

• Revenue

• #Kg

• Answer:

• Profit = #Kg (Revenue/Kg – Costs/Kg)

- Throughput

The Flaw of Averages

Effect of birth weight and birth order on mortality

Birth weight < 1 kg ≥ 1 kg

Number of piglets 29 173

Mortality, per cent 45 5

Birth order 1-7 > 7 1-7 > 7

Number of piglets 13 16 101 72

Mortality, per cent 8 75 3 8

Example of barrows <8 lbs at entry vs < 35 lbs or dead at exit

Lightweight/dead rates: < 8 lbs: 45% >8 lbs: 12%

Overall Rate: 18%

OR: 3.6

PAF = 18% - 12% = 6%

Entry/Exit Wts <35 lbs >35 lbs Totals

< 8 lbs 85 110 195

> 8 lbs 118 828 946

Totals 203 938 1141

Survival given the gender

Classes of pigs for treatment

Pigs Atomistic Ecologic Financial

Unsustain-able

Euthanize

Likelihood of success is

too low to maintain

Damage to population

is too high to maintain

Negative value pig

MR-MC<0

Marginal

Euthanize or

treat

Unsustainable unless

treated

High damage unless

treated

Low value pig

MR-MC<0,

MR-MC-TC>0

Needy

Treat

Low value unless

treated

Damage potential

affected by treatment

Higher value –

treatment

MR-MC <

MR-MC-TC

Tough

Enjoy

Not affected by

treatment

Not affected by

treatment

High value pig

MR-MC = max

Would you bet on this horse?

Four Biological Functions to Flourish

• Feed – take in adequate nutrition

• Fight – compete and adapt in difficult conditions

(disease, heat etc)

• Flight – avoid difficult adverse conditions

• Reproduction – replacement

- Is there a hierarchy?

- How do we detect problems?

Failure to Flourish

• Feed intake/absorption inadequate

• Inability to adapt to adverse conditions

• Inability to avoid adverse conditions

• Inability to reproduce

• Inhibitions:• Physical• Environmental• Infectious• Social

Risk post farrowing

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Coopetition

“Sometimes the best way to stay

competitive is not to compete.

It may be less risky than you think.”

Example: Swine Health Monitoring Program

Aims for the veterinarian

• Claim throughput as expertise

• Who else?

• Measure proportions of full value pigs

• Avoid averages

• Use management accounting

• Throughput accounting

• Manage inputs by specifications

• Define throughput success

• Identify constraints

• Attitudes, capabilities

• Report successes

• Documentation for progression

Problem: Complexity Averseness

• Reliance on historical norms

• Division of responsibilities

• Bias towards standardization

• Reductionist approaches

• Math illiteracy

• Assumptions of normality

• Media, politics

• Risk management

The fifth discipline

• SYSTEMS THINKING

The ability and practice of consistently examining the whole system, rather than just trying to fix isolated problems. Using the conceptual framework and tools of systems thinking to clarify the full patterns and to understand how to change them most effectively.

TakeHomes

• Need records to make decisions

• Increased productivity does not always equal increased profits

• Decreasing costs usually has costs

• Change is inevitable

• What is your absorptive capacity?

• deenx003@umn.edu