An economic model for estimating batch finishing system profitability with an application in estimating the impact of preventive measures for porcine respiratory disease complex
Gay Y. Miller, DVM, MS, PhD; Yanghoon Song, MS, PhD; Peter B. Bahnson, DVM, PhD
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Objective: To develop a flexible economic model for estimating disease prevention profitability in batch swine finishing.
Methods: This spreadsheet model demonstrates relationships beyond basic production costs. Variation in weight gain drives variation in market weight and revenue. Mean weight and variation of weight, combined with the pricing matrix, drives revenue. User inputs may include costs, performance (feed conversion rate (FCR), mortality, ADG and its variability), and pricing matrix. The model calculates economic efficiency measures, and contrasts results for fixed time (DATE) and target market weight (WEIGHT) production systems. Default values are provided for all inputs, reflecting 1995 to 1998 US averages. Sensitivity analyses assess the influence of user-specified variables on profitability. The model estimates production improvements necessary to cover health intervention costs.
Results: Profitability is influenced by rate of gain and feed conversion; this relationship is strongest in the DATE system. Vaccine costing $1.00 per pig increased annual profits $3053 and $8007 per 1020-head barn, depending on the marketing focus and other assumptions. Also, to cover vaccination cost of $1.00, ADG must increase from 1.6887 to 1.7725 lb (WEIGHT) or 1.7100 lb (DATE ), or FCR must improve from 3.1200 to 3.0545 for either marketing strategy. Vaccination internal rate of return is 13.6 to 19.7% depending on the production system.
Implications: This model evaluates the economic impact of health interventions or production efficiency changes and can use farm-specific data. Understanding the economics of health interventions allows economically driven decision making by veterinarians and pig producers.
Keywords: economic, profitability, ADG, FCR
Cite as: Miller GY, Song Y, Bahnson PB. An economic model for estimating batch finishing system profitability with an application in estimating the impact of preventive measures for porcine respiratory disease complex. J Swine Health Prod 2001;9(4):169-177.
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