Efficiency and profitability in pork production

Authors

• Olli Rantala Department of Agricultural Economics, University of Helsinki, SF-00710 HELSINKI 71

DOI: https://doi.org/10.23986/afsci.72216

Abstract

Under prevailing production restrictions the profitability of agricultural production increasingly depends not only on prices of products and inputs, but on how effectively and economically the existing capacity and animal breeds are utilized on farms. The technical efficiency of pork production in Finland is generally high. The average feed conversion rate on farms is only about 16 % lower and daily liveweight gain 20 % less than results from experimental stations. Variation between farms is, however, considerable. The means of technical results between the best and poorest farms differ by 20—30 %. Results also tend to deteriorate and relative deviations increase, especially in large piggeries. The average gross margin percentage was 12 %. Variation in the gross margin per pig was wider between farms than between years. The feed conversion efficiency proved to be the most significant factor contributing to profitability in pork production. Variation in the feed conversion rate accounted for 30 % of total variation in the gross margin. Cost variation was one third larger than the variation of total receipts per pig. The cost of feed varied twice as much as piglet cost. Since the genetic quality of animals in a given region is rather even, variations in productivity depend upon internal factors of piggeries. The large variation in efficiency and profitability over farms emphasizes the human factor i.e. the role of the farmer as the most important factor contributing to successful production.