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Specifications Model No. Last name Looks good! Company Name Looks good! Zip Looks good! Phone Looks good! Email Looks good! Learn More Sign up to learn more and stay connected with the latest product news, promotions, and event information regarding the Cleco Production Tools. Submit form. Contact Us Growers costs typically include facility costs, repairs, utilities, insurance, and property taxes. Potential contractors include investors, feed companies and farmers.

The two major risks involved in hog production are the need to invest in specialized facilities and fluctuating returns. Both contract and independent hog producers face the risks associated with investing in specialized facilities. Quite often hog buildings will bring less on the market than they are worth to the seller. They are not easily liquidated. Investment risk is the largest risk contract hog producers face. A grower needs to factor this added risk into the decision to produce hogs under contract, and needs to determine what will happen if the contract is terminated.

Contract producers do not face the risks associated with fluctuations in input and output prices. Unless performance or costs change from one period to the next, contract returns are flat.

Hog finishing contracts are more prevalent than contracts for feeder pig and farrow-to-finish production, or nursery production. Many hog finishing contracts guarantee a producer a fixed payment, and add or subtract bonuses and penalties from this payment. Bonuses are typically paid for keeping death losses low and feed efficiency high.

Penalties are sometimes imposed for high death losses, unmarketable animals, and low feed efficiency. Table 1 outlines a worksheet that can be used to calculate the costs and returns per pig space for contract hog finishing. Variable costs include utilities, fuel, oil, hired labor, and miscellaneous costs such as dues in professional organizations, pickup expenses, minor repairs, and interest on variable costs.

Fixed costs include depreciation and interest on buildings and equipment, insurance, and property taxes. Fixed costs are typically about 12 to 18 percent of investment costs. Contract payments can be on a per head basis, a per pound of gain basis, a per day basis, or a per square foot of pig space basis. In the example presented, the grower is responsible for facility costs, labor, utilities, fuel, oil, repairs, insurance, and property taxes.

Buildings are assumed to have a useful life of 15 years and equipment is assumed to have a useful life of 10 years. The calculations in the example assume that a grower will get 2.

Notice that the example in Table 1 does not include any bonuses or penalties. Bonuses are commonly paid if feed conversion and death loss are kept lower than a prearranged standard. Penalties may be incurred if death loss is higher than a pre-arranged standard. The expected return generated from contract production should be compared to expected returns that could be obtained from independent production. Potential contract payments are typically lower than potential returns from independent production.

However, risk is also lower for contract production. The contract producer must decide whether the stability in returns associated with contract finishing is worth the sacrifice in the level of expected returns. Specific terms of broiler contracts vary from company to company, with most contracts specifying the provision of inputs and the compensation to farmers. The farmer usually provides land and housing facilities, labor, and other operating expenses such as repairs and maintenance, manure disposal, and chicken house cleaning.

Expenses for fuel and litter disposal can be shared or paid by either party, depending on the specifications of the contract. App Imco ToolBot. Tooling Systems. Power Tools. Hand Tools. Raw Materials. Power Transmission. Check out our latest product catalogs and learn more about our newest tooling solutions.

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