AN ANALYSIS OF FEEDER PIG MARKETING
IN MICHIGAN

Thesis Ior I'I'u Degree oI M. S.
MICHIGAN STATE UNIVERSITY

Harold F. Webster
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AN ANALYSIS OF FEEDER PIG MARKETING IN MICHIGAN

By

Harold F. Webster

AN ABSTRACT

Submitted to the College of Agriculture
Michigan State University of Agriculture and Applied
Science in partial fulfillment of the
requirements for the degree of

MASTER OF SCIENCE
Department of Agricultural Economics

1960

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ABSTRACT

The purpose of this study was to assemble and analyze information.
which will assist farmers and market agencies in the development of a
more efficient system of marketing feeder pigs in Michigan.

Information on present methods of feeder pig marketing was
obtained by corresponding with marketing agencies and extension person-
nel in Michigan and other North Central States.

Two mail surveys were used in the study as additional sources of
information. One survey was made of the participants of a special
feeder pig sale held at Hudsonville, Michigan, in 1959. The other survey
was made among buyers and sellers of feeder pigs at the Charlotte live-
stock auction market. This survey was used to find out their experiences
with this method of marketing feeder pigs, and also to find out their
attitudes toward the development of special feeder pig sales in Michigan.

Sanitation and disease are major problems and regulations restrict-
ing movement of feeder pigs through the regular facilities of livestock
auction markets are enforced by the State Department of Agriculture.
However, auctions circumvent these regulations by selling feeder pigs
from the farmers own trucks and trailers. The pigs are then transferred
to the buyers' vehicles without touching the ground.

Sellers at the Charlotte livestock auction felt that buyers would not
be willing to pay more for pigs graded by size and quality, however,
buyers responded by indicating they would pay more.

Uncertainty of supply at any one livestock auction was often a buyer
complaint, and some buyers found it necessary to attend several auctions

to purchase the quantity of pigs they desired.

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The participants in the special feeder pig sale held at Hudsonville,
Michigan, were generally satisfied with the sale, and indicated they
would like to have this kind of a marketing program in the future.

The results of the Charlotte survey indicated that the large buyers
were more favorable toward the development of special feeder pig sales
than the small buyers. However, small sellers were more favorable
toward this type of a marketing program than the large sellers.

This study indicated that with under-employrnent of labor on
northern Michigan farms and feed-grain surpluses in southern Michigan
areas, possibilities exist for expansion of hog production if these areas
are to utilize their labor and feed-grains.

Feeder pig cooperatives have become important in Wisconsin in
the marketing of feeder pigs. Farmers sign a three-year [contract and
are guaranteed a market for the feeder pigs. Quality standards are
high and pigs not meeting the requirements are rejected.

In southern Indiana, special feeder pigs sales have grown very
rapidly. The sales are Operated by non-profit market organizations
owned and Operated by farmers. There are no contracts involved, but
an entry sheet must be signed in advance. A small fee is collected at
the time the entry sheet is signed and is forfeited if the pigs are not
delivered.

In the future, it is anticipated that the Michigan feeder pig market-
ing structure will be one of small sellers and large buyers. Market
channels now used are primarily those which accommodate small sellers
and small buyers.

Special feeder pig sales similar to those in Indiana or cooperatives
similar to those in Wisconsin may be an answer to this need. These
methods of marketing feeder pigs might be developed through the use of

existing livestock marketing agencies.

 

 

AN ANALYSIS OF FEEDER PIG MARKETING IN MICHIGAN

 

BY
”“2,
Harold F. Webster E‘ F
A THESIS

Submitted to the College of Agriculture
Michigan State University of Agriculture and Applied
Science in partial fulfillment of the
requirements for the degree of

MASTER OF SCIENCE

Department of Agricultural Economics

 

1960

 

ACKNOWLEDGMENTS

The author wishes to express his gratitude and appreciation
to all those who helped with the completion of this study and the
preparation of the manuscript.

Special appreciation is expressed by the author to his major
professor Dr. Harold M. Riley for the guidance, inSpiration and
encouragement which he has provided throughout the course of
graduate work.

Thanks are expressed to all of the staff members of the
Department of Agricultural Economics, who have given freely of
their time and advice whenever it was requested.

Financial assistance provided by Dr. L. L. Boger, head of
the Agricultural Economics Department, made it possible for the
author to continue his graduate study.

Thanks are also expressed to Mrs. Judy Leach for typing
the first draft of this manuscript.

Finally, I wish to express appreciation to my wife and family.

They have provided encouragement and enjoyment which has helped
make my graduate work a pleasurable experience.

***********

 

 

        

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TABLE OF CONTENTS

CHAPTER Page
I. INTRODUCTION ................... 1
Objectives .................... 1

Method of Procedure . . . . ..........

II. PRESENT METHODS OF MARKETING FEEDER

PIGS ......... . ........ . . . . . 5
Marketing Channels. . . . . . . . . . . . . 5
Some Problems in Marketing Feeder Pigs . . . 12
Some New Developments in the Marketing of
FeederPigs ..... 19
Wisconsin Pig Fairs. . . . ........ 19
Wisconsin Feeder Pig Cooperatives. . . . 20
Wisconsin Marketing Associations. . . . . 23
Special Feeder Pig Sales in Southern
Indiana.... .. 24

Special Feeder Pig Sales in Michigan . . . 26

III. THE LOCATION OF FEEDER PIG PRODUCTION
IN MICHIGAN AND POSSIBILITIES FOR

EXPANSION ..... . ........ . . . . . 27
Present Location of Feeder Pig Production . . . 27
Feed and Labor Requirements . . . . . . . . . -29
Location of Feed Surplus Areas . . . . . . . . 31
Labor Utilization on Michigan Farms . . . . . .36
Large Scale Specialized Hog Operations . . . . 38
Summary..... ....... 40

IV. FARMERS' ATTITUDES AND EXPERIENCES IN
MARKETING FEEDER PIGS . . . . . . . . . . 42

Introduction................ .. 42
Survey of Farmers Using Special Feeder Pig
Sale at Hudsonville, Michigan . . . . . . . 42
Buyers................... 43
Sellers.............. ..... 45

 

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TABLE OF CONTENTS - Continued

CHAPTER Page
Survey of Farmers Using Regular Auction

Markets . . . . . .............. 47

Sellers ................... . 48

Buyers. . . . . . . . .......... 51

Attitudes and Size of Operation . . . . . . . . . 55

V. SUMMARY AND CONCLUSIONS . . . ........ 58
LIST OF REFERENCES . . . .............. . . . . 62
APPENDIX .................. . . . ..... . . 63

vii

 

 

TABLE

I.

III.

IV.

VI.

LIST OF TABLES

Feed and Labor Requirements for Producing Feeder
Pigs and Market Hogs Under Average Farm Conditions
in Michigan ........... . . . . . . . .....

Feed-Grain Production in Michigan, 1954-1958 . . . .

Livestock Numbers and Grain—Consuming Units on
Farms on January 1 of Each Year and Raised in
MiChigan During 1954‘ 1958 ooooooo o o o o

Productive Man Work Units Compared by Areas,
Michigan, 1958 ..... ......

Classification of Buyers of Feeder Pigs at Charlotte
Livestock Auction by Number of Pigs Purchased
During1959. ...... ......

Classification of Sellers of Feeder Pigs at Charlotte
Livestock Auction by Number of Sows Farrowing
During 1959 ....... . . . . . ...........

viii

Page

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LIST OF FIGURES

FIGURE Page
1. Number of Hogs Sold by Counties, Michigan, 1957 . . . 2
2. Percent of Feeder Pigs and Slaughter Hogs Sold by

Farmers in Michigan Through Various Types of .
Outlets, 1956 ......... . ..... . . ...... 7

 

 

3. Percent of Feeder Pigs Purchased by Farmers in , ,
Michigan Through Various Types of Outlets, 1940 and r . " '~
1956 000000000000000 O 000000 O O O O O O 8 I j

4. Percent of Feeder Pigs Sold by Farmers in Michigan
Through Various Outlets in 1956 as Compared to 1940 . 9

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5. Percent of Feeder Pigs Sold by Farmers Through
Various Outlets During 1956 in Michigan as Compared
to the North Central States . . . . . . . . . . . . . . ‘. 11

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6. Percent of Feeder Pigs Purchased by Farmers From gii
Various Sources During 1956 in Michigan as Compared ‘
to the North Central States ...... . . . . . . . . . 13

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7. Number of Feeder Pigs Sold Through Public Auctions
by Crop Reporting Districts 1958 ..... . . . . . p. . 28

8. Feed Surplus by Counties, Michigan, Annual Average
fOr 1954‘1958 o o o o o o o o o o o c o o o o o o o o o o o 35

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CHAPTER I

INTRODUCTION

Michigan, being located on the fringe of the Corn Belt, is
important in the production of slaughter hogs. Total sales of hogs in
Michigan amounted to $44, 681, 000 in 1958. This was about 6 percent
of the total farm marketings in the state. Figure 1 shows the location
of slaughter hogs by counties in Michigan during 1954. The production
closely follows the commercial corn area in Michigan with the largest
number being produced in the lower part of the state. Lenawee, Cass,
and Clinton counties were the leading counties in the production of
slaughter hogs. These three counties accounted for 16 percent of the
total production during 1954.

Increased specialization and mechanization in hog feeding has
led to many problems in the production and marketing of feeder pigs.
Other nearby states have taken measures to help alleviate some of these
problems. Recently Michigan farmers have shown increased interest
in trying some new arrangement for feeder pig marketing.

It is of primary importance to these farmers and marketing
agencies to have more pertinent information on feeder pig marketing

if they are to adequately solve their problems.

Objectives

The general objective of this study was to assemble and analyze
information which will assist farmers and marketing agencies in the
development of a more efficient system of marketing feeder pigs in

Michigan. The Specific objectives were as follows:

 

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1. Describe the existing marketing arrangements for the

marketing of feeder pigs in Michigan

2. Identify problems associated with the present market

arrangements .

3. To describe recent developments in marketing feeder

pigs in Michigan and other states.

4. Evaluate the potential for the production of feeder pigs

in Michigan.

5. To report the attitudes and experiences of farmers in

marketing feeder pigs .

6. To make recommendations for further develOpment of

feeder pig marketing in Michigan.

Method of Procedure

The information on present methods of marketing feeder pigs
was obtained by correSponding with marketing agencies and extension
personnel in Michigan and other North Central states. Part of the
information was obtained from previous studies in Wisconsin, Indiana,
and Kentucky.

Information on hog production possibilities in Michigan was
obtained by referring to a previous study. This information was
brought up to date through the use of data obtained from Michigan Agri-
cultural Statistics. Additional information was obtained from Michigan
Farm Account Project administered by the Department of Agricultural
Economics at Michigan State University.

Two mail surveys were used to obtain farmers' attitudes and

experiences in marketing feeder pigs in Michigan. One survey was

 

made among farmers participating in a special feeder pig saleand
the other survey was made among farmers who bought and sold feeder

pigs at a local livestock auction market.

CHAPTER II

PRESENT METHODS OF MARKETING FEEDER PIGS

Marketing Channels

 

Feeder pig producers in Michigan market most of their feeder
pigs through auctions, direct sale to other farmers, dealers and
local markets. Sometimes other methods of marketing feeder pigs
are used, but in 1956 they accounted for only 1. 2 percent of all the
feeder pigs sold by farmers. 1

A diagram shows how this movement of feeder pigs takes

place.

Channels for Marketing Feeder Pigs in Michigan

Auctions

Farmers/ I \rFarmers
\ Dealers and /

Local Market s

Feeder pigs are produced by farmers and then travel to other
farmers through auctions or dealers, or they might travel from
farmers to dealers and then through auctions before reaching other
farmers. They sometimes are sold at auctions and are purchased by
dealers who in turn sell them to other farmers. Of course, the other
main route is directly from the farmer who produced them to other

farmers.

 

1R. R. Newberg, Livestock Marketing in the North Central
Region, Part I. Where Farmers and Ranchers Buy and Sell, Ohio
Agricultural Experiment Station, Research Bulletin 846, North
'Central Regional Publication 104, December 1959. Table 6, p. 52.

 

 

5

Figures 2 and 3 show that auctions handled the largest share
of feeder pig sales in 1956 with 61 percent of the pigs sold by farmers
and 47 percent of the pigs purchased by farmers going through an
auction of one type or another.2 The difference between the number of
pigs sold and the number purchased by Michigan farmers is due
primarily to the interstate movement of feeder pigs. This pattern
compared quite closely with slaughter hog marketing in Michigan in
which auctions accounted for 58 percent of the total number sold.

However, the parallel comparison between feeder pig marketing
and slaughter hog marketing ends with the second most frequently used
method of buying and selling feeder pigs which is, direct sale to other
farmers. As would be expected, the number of slaughter hogs sold
by one farmer to another is insignificant whereas this outlet accounted
for 36 percent of the feeder pig transactions.

Dealers and local markets along with the over-all classification
of "others" were used for the small percentage of remaining feeder
pig sales.

The types of' marketing facilities most commonly used by feeder
pig growers have changed along with the growth of the feeder pig
industry. Figure 4 points out that local auctions have replaced direct
sale of pigs to other farmers as the leading method of buying and
selling.3

The 1940 data did not specifically indicate direct sale to other
farmers but included it under "others. " Therefore, it is difficult to
know if the substantial decrease in this classification was due to fewer

sales to other farmers or a reduction in some other type of marketing.

 

zIbid., pp. 52—53.
31bid., p. 52.

 

 

 

 

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Yet, it is a safe assumption that sale to other farmers was the largest
item in the 1940 figure. The 1956 figure can be broken down into 36
percent for other farmers and 1 percent for "other. "

It is clear that selling through auctions gained a great deal of
popularity and a decrease occurred in the other specified types of
feeder pig marketing.

Michigan ranks third among the states in the North Central
Region4 in the percentage of feeder pigs sold as compared to the total
number of swine sold. Wisconsin is first with 21 percent of its swine
sales being feeder pig transactions, Missouri second with 16 percent
and Michigan third with 14 percent. Feeder pig production is a rela-
tively more important segment of the swine industry in these states
and in the other fringe areas of the Corn Belt than in the Corn Belt
itself, although the volume of feeder pigs produced is greater within
the Corn Belt states.

In comparing the use of market channels in the North Central
states and Michigan, Figure 5 shows that auctions are used more
frequently in Michigan by farmers selling feeder pigs.5 Direct sale
from one farmer to another is the most important outlet in the North
Central states, while auctions are the most important in Michigan.
Farmers selling to dealers account for 28 percent of the total feeder
pigs sold in the North Central states. Dealers are relatively unim-
portant in Michigan as an outlet.

Local and terminal markets are not used frequently in Michigan

or the North Central states as an outlet for feeder pigs.

 

4North Central States: Illinois, Indiana, Kentucky, Michigan,
Ohio, Wisconsin, Iowa, Kansas, Minnesota, Missouri, Nebraska,
North Dakota, South Dakota.

5Newberg, pp. <_:_i_t_., p. 52.

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Figure 6 is a comparison of market channels used for purchas—
ing feeder pigs by farmers in Michigan and the North Central states.
Farmers buy 47 percent of their feeder pigs from auctions in Michigan
as compared to 31 percent in the North Central states. Direct sale
from one farmer to another is the most common method used in pur-
chasing feeder pigs in the North Central states. Farmers purchased
55 percent of their pigs in this manner as compared to 45 percent in
Michigan. The other three channels, terminal markets, dealers and
local markets make up only a small portion of the total purchases in

either Michigan or the North Central States...

Some Problems in Marketing Feeder Pigs

 

The health of the feeder pigs is of prime importance to both the
buyer and seller. The successful producer has to maintain a very
strict program of sanitation to keep pig losses at a minimum and so
must the buyer. This increases the complexity of most feeder pig
marketing channels. Feeder stock that is returning to the farm must
be handled with a great deal more care as far as exposure to commun-
icable diseases is concerned than livestock heading for the slaughter
house.

The Michigan Department of Agriculture's Regulation No. 109
entitled, "Governing the Intrastate Movement of Swine, " specified
the legal movement of swine from public stockyards.6 This regulation
is as follows:

Regulation No. 109, Governing the Intrastate Movement of Swine

 

(1) Sec. 1. Classes of swine prohibited intrastate movement.
Paragraph 1. Any person owning, in charge of, or having in

 

6Michigan Department of Agriculture, Livestock Disease Control
Division, Laws and Regulation, April 1959, Regulation No. 109,
p. 106.

 

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his possession swine affected with hog cholera, shall not
sell, move, or allow such infected or exposed swine to
drift, or be transported, trailed, driven, or otherwise
moved in this state for any purpose.

Paragraph 2... Public stockyards and slaughter house and
garbage feeding premises shall be considered infected
premises, and no swine shall be sold, or disposed of, or
allowed to move therefrom within this state (intrastate)
except for immediate slaughter, except as hereinafter
provided and upon a written permit from the state com-
missioner of agriculture, or his authorized representative.

(2) Sec. 2. Paragraph 1. Swine, to be used for purposes other
than immediate slaughter, may be shipped, transported, or
otherwise moved in this state from public stockyards where
state or federal inspection is regularly maintained, provided
the following conditions are complied with and permission
has been granted by the state commissioner of agriculture
to establish this practice at public stockyards.

(a) It shall be necessary, before exercising the pro-
visions of this regulation as hereinafter stated governing
the removal of swine from public stockyards for purposes
other than immediate slaughter, for those in charge of said
yards to make application to the state department of agri-
culture. Upon receipt of such application, the commissioner
will cause an inspection to be made of such stockyards to
ascertain whether or not pr0per facilities can be provided
under this regulation, and also to give such instructions as
will insure the strict observance of same.

(b) The swine, if found free from cholera or any other
contagious, infectious, or communicable disease, shall be
treated by a veterinarian authorized by the state commissioner
of agriculture in accordance with the following paragraph in
a portion of the stockyard set aside for that purpose, such
pen or portion of yard being at all times maintained in a clean
and sanitary condition.

Pa rag raph 2 .

(a) Swine may be treated either by the injection of anti-
hog cholera serum alone or the simultaneous injection of

 

15

anti-hog cholera serum and hog cholera virus. After
treatment, the swine shall be dipped in or Sprayed with a
2% solution of compound cresol U. S. P. , or other permitted
substitute, under the supervision of the veterinarian who
administers the treatment before being removed from the
stockyards.

(b) Swine removed from a public stockyard for purposes
other than immediate slaughter under the provisions of this
regulation shall be considered under quarantine for a period
of 21 days, during which time they must not be allowed to
come in contact with or endanger untreated hogs.

(c) The shipment or movement shall be accompanied by
a certificate issued by the veterinarian making the treatment,
1 copy of which shall be forwarded immediately to the State
Department of Agriculture, Lansing, Michigan. This certifi-
cate shall show that the provisions of this regulation have
been complied with, giving date, place of treatment, method
used, number of swine treated, and distination of shipment.

(d) Swine removed from public stockyards in compliance
with this regulation shall be tranSported in clean and disin-
fected cars or other vehicles and after Spraying or dipping
must not come in contact with yards, pens, chutes, or ground
not known to be free from hog cholera infection.

In effect, this regulation restricts the movement of swine in
public stockyards to slaughter only, unless a permit is granted by
the Michigan Department of Agriculture allowing the sale of feeding
and breeding stock.

To circumvent this ruling, public livestock auction operators
sell feeder pigs in the trucks, and load directly from the seller's
truck to the buyer's truck. This is generally easier than complying
with all the restrictions necessary to get permission from the
Department of Agriculture to sell through the permanent stockyard
facilities.

Newberg reports that the major single reason for choice of a

particular market channel in most classes of feeder livestock was

the desire to avoir.

centage of farmer

 

reasons for ChOlCt
desired kind and q

Specific cri'
widely between tyt:

were that prices \x

 

lack of buyer com;
unsanitary conditic
In the North
cated they chose a
chance for disease
The percent.
channels before b1
cattle. This grea
feeder pig market
cattle markets. 9
Even thong}
feeder PigS, unce
is a buyer compla
several Such auct
areas dealers an:
unreliable Source

fluctuation in hog

.\

Newberg,
81bid.
\a

16

the desire to avoid disease.7 Concern over disease led a large per-
centage of farmers to buy only directly from other farmers. Other
reasons for choice of particular channels included ease in finding
desired kind and quality, lower costs, and convenience.

Specific criticisms of market agencies by farmers varied
widely between types of agencies. The most frequently given criticisms
were that prices were too variable, marketing costs were too high,
lack of buyer competition, inadequate supervision of weight, and
unsanitary conditions . 8

In the North Central states study, 101 out of 710 farmers indi-
cated they chose a particular market channel because there was less
chance for disease.

The percentage of farmers selecting among two or more market
channels before buying was greater for feeder pigs than for feeder
cattle. This greater amount of shopping may be due to the fact that
feeder pig markets are not as common and well organized as feeder
cattle markets.9

Even though livestock auctions have gained in use for marketing
feeder pigs, uncertainty of supply at any one general livestock auction
is a buyer complaint. Sometimes buyers find it necessary to attend
several such auctions before they are satisfactorily supplied. In many
areas dealers and Special feeder auctions or fairs have also been
unreliable sources of pigs.

Uncertainty of price associated with seasonal and cyclical

fluctuation in hog production is a common problem of both buyers and

 

7Newberg, op. <_:_i_t_:_., p. 184.
8your, p. 184.
91bid., p. 116.

sellers of feeder pig

also the cyclical f1u<

 

during the four year
The study by 1
which is a derived (1
feed costs. Since f1
prices, the cyclical
greater percentage\
ation in slaughter h
risk involved in spe
The methods
ing to pay for pigs
Atkinson and Hardi
St. Paul, Minnesol
variation of feeder
The major factor 1'
01 medium-weight
chased, and not tr.
ready for slaughte
This PraCtic
Pigs is higher the
the Price is 10We
ations of feecier ‘
slaughter hog pr
\\

10 .
S . Orville
Penal Bufletin

1957: p. 52
11 '

 

17

sellers of feeder pigs. Krause’describes not only the seasonal but
also the cyclical fluctuation characteristic of the hog price movements
during the four year period, 1953-56. 10

The study by Krause indicates that the demand for feeder pigs,
which is a derived demand, is a function of slaughter hog prices and
feed costs. Since feed costs are less variable than slaughter hog
prices, the cyclical and seasonal fluctuations in feeder pig prices are
greater percentagewise than are slaughter hog prices. The wide vari-
ation in slaughter hog prices and feed costs indicates that there is high
risk involved in specialized feeder pig production.

The methods used by buyers to determine the price they are will-
ing to pay for pigs contributes greatly to the uncertainty of demand.
Atkinson and Hardin in their study of feeder pig sales at the South
St. Paul, Minnesota, market estimated that only 2 percent of the net
variation of feeder pig prices could be explained by the supply of pigs. 11
The major factor in determining the price of feeder pigs is the price
of medium-weight slaughter hogs at the time the feeder pigs are pur-
chased, and not the estimated price of hogs when the feeders would be
ready for slaughter.

This practice tends to create periods when the price of feeder
pigs is higher than outlook predictions would justify and periods when
the price is lower than predictions would call for. The seasonal vari-
ations of feeder pig prices is closely linked with the variation of

slaughter hog prices. 12

 

10Orville E. Krause, Wisconsin Feeder Pig Market and Prices,
Special Bulletin No. 68, Wisconsin Department of Agriculture, June
1957, p. 52.

“J. H. Atkinson and L. S. Hardin, Raising, Buyifl and Selling
Feeder Pijg_s_, Indiana Experiment Station Bulletin 587, March 1953,
pp. 16-17.

”Robert W. Rudd, An Analysis of Feeder Pig Prices in Central
Kentucky, Kentucky Agriculture Experiment Station, Bulletin 584, April
1952, pp. 18-24.

 

 

 

 

 

 

18

The analysis of the South St. Paul market indicated that a $1. 00
per hundred weight change in the price of medium weight hogs was
associated with a $. 75 change in the same direction of feeder pig prices.
June, July. and August are usually the months of higher feeder pig
prices and November, December and January the lower price months. 13

In estimating a breakeven price to pay for feeder pigs, buyers
are being urged to put more emphasis on the predicted price of hogs
at the time when the feeders would be ready for slaughter. Several
formulas have been derived to base the breakeven price a farmer could
afford to pay for a feeder pig on the expected price of slaughter hogs.
Eugene and Day, economists at University of Minnesota, suggested the
following: 14

First estimate the price the pigs will bring at market weight.
Then multiply that price by the number of pounds the pigs will
weigh when marketed. Then using current feed prices, figure
the total cost of feed. A thumb rule is to figure 350# of corn
and 50# of protein supplement for every 100# of gain. Total up
the feed costs and add 20% for labor, shelter and miscellaneous.
Subtract this cost from the estimated total return and multiply
the difference by the estimated survival rate--which should be
about 95%. The result will be an estimation of what a buyer

can afford to pay.

An example might illustrate the formula more clearly.

35# feeder pigs

Expected market weight, 225#

Expected price, $‘. 16 per cwt.

Expected income, 2254} times $. 16 gives $36 per pig

Total feed cost of $18. 80 plus $3. 76 (20% for labor, etc.) = $22. 50

Expected return per pig $36. 00
Minus expected cost per pig 22. 50
$13.44 x 95% (Mortality) - = $12.77

$12. 77 is the estimated breakeven price for a feeder pig under
these conditions.

l3Atkinson and Hardin, pp. ii}, p. 17.

l4A. Edwards and V. Schneider, "Little pigs become big business, "
S_uccessful Farming, 55:42-3-10, 1957.

 

 

 

19

Hughes described a few of the more popular methods of pricing
feeder pigs which are based primarily on the current price of Slaughter
hogs. 15 Some of the "pig hatcheries" charge a flat price per head;
others charged a flat rate per head up to 40 pounds and for additional

weight charged the current market price of slaughter hogs per pound.

Some New Developments in the Marketing
of Feeder Pigs

The movement and consequently the development of marketing
channels for feeder pigs are not as well defined or developed as the
feeder calf business although there is a definite flow of feeder pigs from
fringe areas toward the central Corn Belt. Buyers and sellers often
find it difficult to locate dependable marketing channels in these fringe
areas. Consequently, dealers play an increasingly important role in
feeder pig marketing as the distance from hog feeding areas increases.

Many new developments have taken place in the marketing of
feeder pigs. Michigan having considerable in common with Wisconsin
can benefit from some of the new developments in Wisconsin and other

nearby state s .

Wisconsin PigFairs

 

Krause describes in detail the system of Wisconsin feeder pig
fairs. These fairs are essentially unorganized, unsupervised meeting
areas for buyers and sellers. The bargaining for price is carried on
directly between the producer and buyer. No auctioneer, dealer or

other middleman is involved. 16

15C. E. Hughes, "What can pig hatcheries do for you?”
_Sgccessful Farming, 51:31, January 1953.

 

16Krause, 2p. SE." pp. 26-27.

20

The fairs are usually scheduled one day a month throughout the
year and normally only in areas where there is a relatively large supply
of feeder pigs. In Wisconsin, during 1956, there were 35 such fair
locations which accounted for 22 percent of the feeder pigs sold in the
state. Producers get the advantage of having a convenient, competitive
market and buyers have a definite time and place to look for pigs. ‘7

Krause points out that the operation of the fairs are not without
their drawbacks. Great variability of supply and number of buyers
cause the system to be less reliable than desired. The Wisconsin fairs
averaged 377 pigs per fair, but the range was from 30 pigs to 2, 500
pigs. Each fair shows a big variation in volume seasonally. This is
largely the result of both the seasonal farrowings as well as the
weather variation. 18

On the average, farmers brought in 15 to 20 pigs, but the number
ranged from 3 head, to a high of 60 head. For the whole state, only
one-third of the sales were to farmers and the remaining two-thirds to
dealers. However, Krause states that the number of sales to dealers
is directly related to the distance from the Corn Belt. Half of the pigs
were sold to farmers at the fairs in the southern part of the state
whereas farmers purchased only an eighth of the pigs in the northeastern
part of Wisconsin.

The strength of the pig fairs lie in their simplicity and absence

of marketing charges. The uncertainty of volume is their weakness.

Wisconsin Feeder Pig Cooperatives

 

Wisconsin has also set up a c00perative called the Wisconsin Feeder

Pig Marketing CooPerative. The purpose of which is, ”To buy and sell

 

l"Ibid., pp. 26-27.
lsIbid., p. 27.

21

feeder pigs, to promote a swine breeding program which will result in
the production of hogs that the market demands, to cooperate with

the State Department of Livestock Sanitation, to disseminate information
on swine management and economic production of swine which will
result in the betterment of the swine industry. "19

This c00perative was organized February 1, 1957 by farmers in
northeastern Wisconsin after a great deal of study by a 10 man farmer
committee, with the help of the University of Wisconsin, State Department
of Agriculture and County Agricultural Agents. The cooperative was
formed because farmers wanted weekly and organized markets. They also
wanted to be treated fairly and alike, and to secure top prices for their
feeder pigs. These farmers could see that other states through co-
operatives and quality programs, were starting to take the feeder pig
business away from Wisconsin.

Members sign a three—year marketing agreement and in doing so
agree to sell all of their feeder pigs to their c00perative.?‘0 There is a.
penalty clause in the agreement which penalizes them 30 percent of the
value of all pigs under 100 pounds, sold by other methods. They are
allowed, however, to feed their pigs out or sell for breeding stock.

They also sell a limited number to friends if they are to be used for
home consumption.

The cooperative agrees to buy and sell all of the pigs for their
members. A $10. 00 membership fee is the members investment for
his business. This is paid only once and is refunded when he discon-
tinues being a member of the cooperative. This helps the cooperative
have adequate operating capital so that members can be paid promptly

after pigs are delivered.

 

l"1pm., p. 30.

20Copy of marketing agreement in Appendix.

22

Members are provided with postcards and when they have pigs
ready to sell, they send the cards to the fieldman in their area. The
fielMan in each area picks up pigs one day each week and they are
taken to one of four assembly points. They are weighed and graded on
the farm by the fieldman. Pigs are taken from 38 pounds and up.

Base price is on a 40 pound pig and a differential is paid for every
pound over 40 pounds... Quality is stressed and if the pigs do not meet
this quality standard they are rejected and must be fed out on the farm.
The farmer receives a check from the cooperative in 2 to 3 days after
the pigs are delivered to the fieldman.

The cooperative is farmer owned, Operated and controlled.

A seven man board of directors is elected by the membership to govern
the business. They in turn hire a manager who runs the c00perative
under their direction.

The growth of the c00perative has been rapid. They started with
426 members in March 1957 and as of December 31, 1959, there were
3, 047 members. There have been very few farmers withdrawing their
contracts from the cooperative. Membership in the cooperative has
been stable or increasing each year.

The cooperative sells feeder pigs on order. They have sent pigs
as far west as Utah, south to Texas, and to the East Coast. Pigs are
fed in transit and they expect no death losses in transit. Any pig that
dies within 48 hours after delivery is replaced or the purchase price
is refunded. The c00perative furnishes a suggestion sheet on __how to
handle pigs and if the farmer follows these instructions and has any
losses within 10 days after delivery, and has a veterinarian sign a
statement giving reasons for loss alone with the ear tag numbers of
the pigs, the c00perative will make an adjustment.

Pigs may be ordered in any size of lot, but delivery will not be

made until they have sold 200 in the general area. The prices quoted

23

by the c00perative are delivered prices, however, pigs can be pur-
chased f. o. b. They are delivered by contract carriers who work for
the cooperative. The buyer has the right to reject any pigs on delivery.
They are castrated, treated for mange, lice and round worms before
leaving the seller's farm.

Pennsylvania has a similar organization, the Western Pennsyl-
vania Swine Producers Association, that holds two feeder pig sales
per year. Arkansas has a number of cooperative associations conducting
sales and undoubtedly there are many other states where feeder pig

producers have instigated cooperative marketing arrangements. 21

Wisconsin Ma rketing AS sociations

 

Krause also describes the Operation of organizations in Wisconsin
called marketing associations. The largest and most active one is a
private company in which member farmers do not own stock. The main
requirement for membership is a reputation of growing healthy pigs of
a reasonably good quality}2

The marketing association will announce through the normal channels
of mass communication that on a certain day, at a certain location they
will buy feeder pigs for a certain price. In the feeder pig production
area, a typical buying station will be at a crossroad one day every week.
A truck is the only equipment used, and a veterinarian will be there to
inSpect pigs delivered and to give innoculations. Most of the pigs are
then shipped out of the state to fulfill orders coming into the association.

The association maintains salesmen in the Corn Belt who sell
feeder pigs on a commission basis. All the pigs are tagged so that

any complaint can be traced back to the producer. Considerable buyer

 

21Edwards and Schneider, pp. cit., p. 125.

“Krause, qp: cit., p. 25.

 

24

confidence has been built up as a result of the emphasis on health,

quality and legal recourse by the buyer.

Special Feeder Pig Sales in Southern. Indiana

 

Special feeder pig sales were inaugurated in Indiana in 1954.23
In that year two sales were held and 1, 385 pigs were sold. The growth
in these sales can be pointed out by the increased number of sales held
since and the number of feeder pigs sold. In 1959, there were 25 sales
held and 44, 611 pigs sold.

The sales are operated by nonprofit marketing organizations that
are owned and operated by farmers. They have formed associations
and are subject to the cooperative laws of the State of Indiana.

There is no contract under which the pigs are produced for these
sales, however, the consignors must Sign an entry sheet several weeks
in advance of the sale date. At the time the consignors must pay 25
cents per pig consigned to the association to insure delivery of these
pigs to the sale. If pigs are not delivered, the fee is forfeited. The
pigs must be raised on the farm of the consignor, or be on the farm
at least 30 days before the sale. In thelndiana sales, 98 percent of
the pigs have been farrowed on the farms of the consignor. In most
cases the charges for the service have been 50 cents per pig sold. The
entry fee of 25 cents is paid in advance and the remaining 25 cents at
the time of sale. This allowed the association to about break even when
all expenses were considered. Another method of assessing charges
was to take 3 percent of gross sales. This method covers expenses
and will allow a small profit for the association.

The pigs that are consigned must be inspected by a veterinarian

upon arrival and any pigs that are unthrifty or have disease symptoms

 

23This information was obtained through a telephone conversation
with Russell Brower, Department of Animal Husbandry, Purdue
University.

25

are returned to the farm. If inspection shows they are healthy, they
are unloaded and graded according to size and quality. They are
grouped into lots of 50 and 100 as it has been found that most buyers
want a truck load and not just a few pigs.

Weighing is done by a bonded member of the association and the
scales used, are inspected by the state weighmaster. The pigs are
sold by auction and the whole lot must be taken by the buyer.

Advertising is handled through the cooperation of all the feeder
pig and feeder calf sales. Sales cards are mailed in the Spring for all
of the early sales and additional cards are mailed that cover the fall
sales. The cards tell date and place of sale and also the number of
pigs that are to be consigned. Radio, newsPaper and farm magazines
are also used in advertising these sales. The total cost of advertising
has been very small and has amounted to about 3 cents per pig sold.

After the pigs are sold they must be vaccinated for cholera and
erysipelas. The buyer pays for this and has his choice of vaccine to
be used for cholera. The exception to this is when pigs have been
vaccinated and ear tagged, and accompanied by a signed affidavit from
a veterinarian. In this case it meets state health requirements and it
is not necessary to vaccinate these pigs again.

The labor necessary to handle these pigs is paid for by the
association. This has proven far more satisfactory than volunteer
labor by association members. The grading is done by a disinterested
party and has been mainly done by animal husbandry extension men
from Purdue University and some help has been provided by the
Indiana Farm Bureau.

The Cooperative Extension Service of Purdue University has been
instrumental in getting these sales started. Their main interest has
been to use the program as a way to provide educational assistance to

the farmers .

26

In 1960, the association plans to expand from 25 to 40 sales dur-
ing the year and sell from 65, 000 to 75,000 pigs. This Shows that
there has been great interest on the part of feeder pig buyers and
sellers. Indiana imported approximately 500, 000 feeder pigs in 1959.
The main source of their imported feeder pigs were from Tennessee

and Missouri, although some came from other eastern states.

Special Feeder Pig Sales in Michigan

 

In October 1959, a special feeder pig sale was held at Hudsonville,
Michigan. This was the first sale of its kind in Michigan.

In order for this sale to be held, permission was obtained from
the State Department of Agriculture. The County Agricultural Agents
and Michigan State University extension workers were instrumental in
the organization of the sale.

The sale was held at a local packing company and the facilities
were donated free of charge. Also aiding this first sale were the
donated services of an auctioneer.

The pigs were vaccinated for hog cholera and erysipelas. They
were weighed and graded according to size and quality. They were then
co-mingled in lots and were auctioned off in this manner.

This sale had a total consignment of 508 pigs from 22 consignors.
More detailed information will be presented on this feeder pig sale in

Chapter IV.

CHAPTER III

THE LOCATION OF FEEDER PIG PRODUCTION IN MICHIGAN
AND POSSIBILITIES FOR EXPANSION

The purpose of this chapter is: (1) to locate the present areas of
feeder pig production in Michigan, (2) to compare the feed and labor
requirements in the production of feeder pigs and in the feeding of
weanling pigs to market weight, and (3) to locate the areas in Michigan
for possible expansion of feeder pig production and the feeding of market

hogs.
Present Location of Feeder Pig Production

Starting in 1958, the Michigan Department of Agriculture required
all livestock auctions to report the number of feeder pigs and slaughter
hogs sold through their facilities. As mentioned in Chapter II, 60 per-
cent of the feeder pigs in Michigan are marketed through livestock
auctions. Figure 7 locates these pig sales by Crop Reporting Districts.
It must be pointed out, however, that it is impossible to locate the
remaining 40 percent of the feeder pigs sold from one farmer to another
and by dealers and ”others" as no record is available on these
transactions.

The largest number of feeder pigs moving through auctions, as
shown in Figure 7, are in the southeastern part of the state. One
auction sold as many as 25, 000 feeder pigs in 1958. The southern and
lower central counties had the bulk of feeder pigs moving through
auctions. This can be compared with the location of slaughter hogs

sold as shown in Chapter I, Figure 1, page 2.

27

mun;

RAND MQNALLY

 

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r-

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80 30 ‘0 30

L 0910

HIDE m U. s. A.

(w' sauna}.
NUMBER OF FEEDER PIGS SOLD THROUG

MENOMINEE

MICHIGAN 28 '

 

FIGURE 7

PUBLIC AUCTIONS BY CROP REPORTIN
DISTRICTS, 1958

Total Number Sold - 187, 353

 

   

 

 

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29

Feed and Labor Requirements

Feed and labor are two major inputs needed in the production of
feeder pigs and in feeding the weanling pigs to market weight.

Table 1 Shows the differences in the feed and labor requirements
in producing a sow and two litters to market weight, a sow and two
litters of pigs to weaning weight, and the inputs required to take feeder
pigs from weaning to market weight. The Significant point is that it
requires only 1/3 as much feed-grain to produce feeder. pigs as it does
to support a complete breeding and feeding Operation. Recent data
suggests that the amount of feed necessary to feed a sow can (be cut
considerably by the use of roughage in the pre-gestation and the gesta-
tion period. By the use of pasture or forage during the summer and
silage or hay in the winter during the abOve mentioned period, the cost
of producing feeder pigs can be cut 50 to 80 cents per pig according
to research data at Iowa.1

Table 1 indicates that it takes approximately 25 hours of labor
to produce a sow and two litters of pigs to weaning weight. 7' This applies
to a small enterprise of about 10 to 12 sows. It is expected that many
producers could do this job more efficiently with less time involved.

The amount of labor necessary to feed the same two litters of weanling
pigs to market weights is also 25 hours. However, the table does not
Show the distribution of labor in these two periods. The amount of

labor required at farrowing time is quite high, while in feeding operations

labor is evenly distributed throughout the feeding period.

 

‘Damon Catron, "A Coming Way to Raise Hogs, " Successful
Farming, 53:45-52 Spring 1955.

 

2E. C. Miller, "A Hog Production Program for Michigan Farmers, "
Animal Husbandry Department, Michigan State‘University, mimeographed,

1959.

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31

It takes approximately 1. 6 hours of labor per pig in feeding a lot
of 50 to 75 pigs to market weight. In feeding Operations, capital can
be substituted for labor and highly mechanized Operations can cut this
labor figure by one-half or more providing that the size of the operation

is large enough to make efficient use of the labor saving equipment.3
Location of Feed Surplus Areas

Table II Shows the relative importance of the major feed-grains
produced in Michigan. During the five-year period 1954-58, corn,
which is the major feed used in producing pork, has accounted for 76
percent of the total production of feed grains. Michigan has produced
an average of 3, 426, 000 tons of feed-grains annually for this selected
period.

The United States Department of Agriculture has developed a
procedure for converting the numbers of various kinds of livestock into
what is called a "grain-consuming unit of livestock. "4 This is a milk
cow or her equivalent in other livestock from the standpoint of feed-
grain needs. The conversion factors used for the different kinds of
livestock are shown in Table 111.5 Also, the average number of live-
stock and grain—consuming units in Michigan for the years 1954-58

are given.

 

3Taken from talk given by Charles Beer, Assistant Professor,
Department Of Agricultural Economics, Michigan State University,
Farmer's Week, Feb. 1960.

4K. T. Wright, "Changes in Feed-Grain Production and Livestock
Numbers in Michigan, " Michigan State University Agr. Expt. Sta. ,
Department of Agricultural Economics, Special Bulletin 407, April
1956, pp. 9-10.

51bid., p. 10.

32

TABLE II

FEED-GRAIN PRODUCTION IN MICHIGAN, 1954-1958a

 

1954-1958 Annual Average
Item Productionb Percent
(thousand tons)

 

All corn 2,614 76.3
Oats 738 21. 5
Barley 74 2. 2

Total 3, 426 100. 0

 

a’From data in Michigan Agriculture Statistics, July 1959 and
earlier issues, published by the Michigan Cooperative Crop
Reporting Service.

bWheat fed amounted to less than 6 percent of total feed-grain
production during 1949-1953.

TABLE III

33

LIVESTOCK NUMBERS AND GRAIN-CONSUMING UNITS ON FARMS
ON JANUARY 1 OF EACH YEAR AND RAISED IN MICHIGAN

DURING 1954-19583“

 

 

 

 

Grain-
Consuming
Numbers UnitsC _
1954-58 Conversion 1954-58 Relative
Specieb Average Factor Average Weights
Number on farms Thousands Thousands Percent
January 1
Milk cows 813.8 1.00 813.8 25.4
Other cattle 1755.1 .52 912.9 28.4
Sheep 320.3 .05 16.0 .5
Hens 9570.9 .06 574.3 17.9
Raised during 1370. 5 .659 890.8 27. 8
year - pigs
Total 3207. 8 100. 0

 

a'From data reported in Michigan Agriculture Statistics, July 1959
and earlier, published by the Michigan C00perative Crop Reporting

service.

Turkeys, broilers and horses amounted to less than 6 percent of
total grain-consuming units during 1950-1954.

cUsed by the USDA for Michigan. Each grain-consurning unit is
estimated to use about 1, 500 pounds of feed-grain annually.

This makes allowances for feed needed for the maintenance of sows

and boars.

34

According to Wright's study of feed-grain production and live-
stock numbers in Michigan, each grain-consuming unit of livestock
requires about . 75 tons of feed per year.6 This study indicates that
Michigan has been a surplus grain-producing state since about 1948.
During the period 1954—58, there were 1. 07 tons of feed produced for
each grain-consuming unit of livestock. This indicates that Michigan
has produced more feed than necessary to provide for the livestock
population.

Figure 8 shows the average number of tons of feed (1954-1958)
that each county had in surplus based upon grain-consuming units of
livestock and feed-grain produced. Lenawee had the largest total
tonnage of feed in excess of its needs for livestock with an average of
132. 8 thousand tons per year. This compared with 119.4 thousand
tons in Monroe county. Newaygo had the greatest deficit of feed-grains
with a shortage of 54. 5 thousand tons of feed for the number of grain-
consuming units that they have had during the 1954- 1958 period.

In general, all of the counties below a line from Ottawa to Bay county
have surplus feed, while all of the counties north of this line are deficit
areas in the production of feed-grains.

Figure 8 shows that the southern half of Michigan has a large
surplus of feed, which could support an expansion in livestock production
if other inputs, especially labor, could be profitably shifted from other
alternatives. Using data from Table II and Table III, Michigan produced
about one million tons of feed-grains during 1954-1958 that was in
excess Of its annual livestock needs. This amounts to over 36 million
bushels of corn-equivalent. Michigan could produce over three million

more hogs by using this excess feed in hog production.

 

61bid. , p. 38.

 

 

I-

 

 

 

 

 

 

 

 

 

 

 

 
  

 

 

RAPID M9NALLY LOOSE Lur OUTLINE MAP MICHIGAN 35
[I . 7 I 60
FIGURE 8
fl FEED SURPLUS BY COUNTIES, MICHIGAN
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. i (Per thousand tons)
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36

Labor Utilization on Michigan Farms

Labor is a very important input in feeder pig production.
Therefore, it would be helpful to know where there is underemployment
of labor on Michigan farms.

In considering the labor situation, only fragmentary information
exists. If we compare the productive man-work units7 of an area in
the northern part of the lower peninsula with an area in the southern
part of the lower peninsula, we can get a rough estimate of this situ-
ation.8 Table IV compares the average productive man-work units per
man and per farm. It also gives the range per man and per farm for
Area 1 compared to Areas 9, 12, and 14.9

The average “work units" per man in Area 1 were 327 compared
with 279 in Area 9, 12, and 14. The average work units per farm were
595 and 464 reSpectively.

'.Another way toricompare the two areas previously mentioned would
be on the basis of gross income per man and per farm. In each area
the farms are listed by the amount of gross income earned. Hereinafter
the top 1/3 of the list will be known as the High Income 1/3, while the
lower 1/3 of the list will be known as the Low Income 1/3.

'In 1958, the average gross income in Area 9, 12, and 14 of the
High Income 1/3 farms was $15, 892 while the gross income of the Low
Income 1/3 was $9, 895. This compares with $35, 423 and $13, 701 in
Area 1.

 

7A work unit is defined in this study as the equivalent of a 10 hour
day. ' '

8Farm Account Records by Type of Farming Areas in Michigan,
Agricultural Economics Department, Michigan State University.

9Area 1 consists of all or part of the following counties: Branch,
Hillsdale, Lenawee, Monroe and Washtenaw. Area 9, 12, and 14,
combined consist of all or parts of the following: Isabella, Midland, Bay,
Clare, Gladwin, Arenac, Ogernaw, Iosco, Alcona, Oscola, Alpena,
Montrnorency, Presque Isle, Cheboygan, Emmet, Charlevoix, Otsego,
Antrim, Kalkaska, Grand Traverse, Benzie, Manistee, Wexford,
Leelanaw and Missaukee.

37

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38

If we look at Area 9, 12, and 14 and compare the High Income
1/3 with the Low Income 1/3 we find the following significant points--
the High Income has only 18 more tillable acres per farm and both the
High and Low Income groups have the same number of workers on each
farm. The High Income 1/3 has about $3000 more invested per farm.
The High Income 1/3 has $3548 more income from livestock than the
Low Income 1/3. The other big difference is in crop income where
the High Income 1/3 has $1861 more income than the Low Income 1/3.

The production of feeder pigs would be one alternative to make
use of the underemployed labor, and to raise the income of farmers in
Area 9, 12, and 14. It should be pointed out that this may not be the

only alternative available to make fuller utilization of labor.
Large Scale Specialized Hog Operations

In the North Central Region, specialization in feeding Operations
is becoming more important. At the present time, manure handling is
a big problem. To handle this problem, many things are being tried
such as conveyors, elevators, gutter cleaners and augers. By the use
of water systems, some farmers are using lagoons to handle manure.

Mechanization is very important in Specialized hog feeding
operations. The movement of feed and water should be kept to a minimum.
Gravity filling of self-feeders from overhead feed- storage could be used
to a. great advantage and, of course, automatic waterers are important.

Mechanization has enabled one Indiana farmer to feed 225 hogs
infour minutes a day. By the use of augers, this farmer feeds high
moisture corn from an airtight silo. -Concentrates, which are stored
in bins, are moved by augers in varying amounts according to the size

of the hogs. 1°

_m

loGeorge Laycock, “Feeds 225 Hogs in 4 Minutes, " Successful
Earming, 57:141, Spring 1959.

 

39

In large specialized feeding operations, fixed costs can be spread
over a large number of hogs thereby reducing unit costs. Variable
feed costs are nearly the same per unit in large and small feeding
operations.

The risks in farming are increased as one specializes in a single
enterprise, but Specialization is necessary to make efficient use of
increased capital investments in mechanization. Better management
will help offset some of these risks.

Large scale feeding operations could be developed in the feed
surplus areas of Michigan. Mechanization of large scale feeding
operations can help overcome the labor shortage in these areas.

Professor C. R. Hoglund, on a visit to Sweden during the summer
of 1959, visited a very unusual and efficient pig feeding setup near Dalby,
Sweden. 11 This new hog setup, which had been in operation for one
year, consisted of a central feed storage, grinding and mixing building,
and two 48' x 225' feeding buildings. Each of the feeding buildings has
four rows of pens with a depressed gutter~cleaner arrangement between
each two rows of pens. Except during extremely hot weather, which
is rare in Sweden, the pigs make use of the depressed area for dung
and urine and thus keep the pens clean. Feed, which is largely ground
barley and protein supplement, is fed into metal troughs along the
edge of the pens from a mechanical side-unloading cart. Pigs are
purchased weighing 45 pounds and sold weighing 200 pounds. The
Operator with the help of a full-time man purchases the feeder pigs and
feed, feeds and cares for the pigs and grades and sells three batches
of 2, 000 pigs or a total of 6, 000 pigs each year. All grain is purchased.
Mechanization of large scale feeding operations has enabled this farmer
to reduce his labor input to 1. 6 hours per 100 pounds of pork produced.

m

11C. R. Hoglund, Associate Professor, Department of Agricultural
Economics, Michigan State University.

40

In the early 1950's, pig hatcheries were becoming very popular
in the Corn Belt states, These were Specialized operations where one
producer kept a large number of sows and concentrated his efforts in
feeder pig production. These hatcheries lasted only a very few years
as disease, poor management and fluctuating prices forced them out of
business. Large numbers of sows and pigs confined in a small area

apparently increases the probability of disease.
Summary

AS indicated in this chapter, the present production of feeder pigs
is mainly in the southern part of the lower peninsula. However, the
areas which seem to have underemployment of labor are located in the
northern part of the state. The labor requirements for the production
of feeder pigs are of a seasonal nature, assuming farrowings are two
times per year, while the labor requirements for the feeding of market
hogs are quite stable.

Michigan has produced about one million tons of feed-grain in
excess of its livestock needs from 1954-1958. The largest areas of
surplus feed-grain are located in the southern part of the state.
Lenawee county has the largest surplus of feed-grain, while Newaygo
had the largest deficit. .

A major difference in gross income in Area 1 and Area 9, 12, and
14 was livestock income. The large difference in average man—work
units between the two areas would suggest that farmers in the northern
part of the lower peninsula might use their underemployed labor to
advantage in the production of feeder pigs, however, this may be only
one economic alternative.

Figures in Table I of this chapter indicate that it would take 150
bushels leSS corn in producing two litters of feeder pigs (8 pigs to a

litter) than it would to feed out these same pigs to market weight.

41

This would imply that farmers in the northern areas of lower Michigan
might be better able to produce feeder pigs with their limited supply
of feed—grains.

Because of the high risks involved, Specialization lends itself
more to the feeding of hogs than to the producing of feeder pigs.
However, if the sanitation and disease problems can be eradicated,
specialization in feeder pigs might be. more practical.

In the next few years, the producers of feeder pigs will probably
be small producers, those farrowing from 5 to 15 sows per year.

The buyers, however, will probably be those Specializing in feeding
hogs and will want to buy large numbers of pigs provided that a good

source of supply is available.

CHAPTER IV

FARMERS‘ ATTITUDES AND EXPERIENCES IN
MARKETING FEEDER PIGS

Introduction

This chapter summarizes information obtained from two mail-in-
type questionnaires. The survey data was taken from two groups of
farmers. One group consisted of buyers and sellers of feeder pigs
participating in a Special feeder pig sale held at Hudsonville, Michigan,
and the other group consisted of farmers who used the Charlotte live-
stock auction market to buy and sell feeder pigs.

An attempt was made to find out reactions of buyers and sellers
to their present methods of buying and selling feeder pigs and their

ideas regarding special feeder pig sales.

Survey of Farmers Using Special Feeder Pig Sale
at Hudsonville, Michigan

AS reported in Chapter II, a new method of marketing feeder pigs
is being tried in Michigan. It is patterned after the feeder pig sales
that have been very successful in southern Indiana.

A list of participants was obtained along with other details of the
sale through the cooperation of Richard Machiele, County Extension
Director in Ottawa County, and Ed Miller, Department of Animal

Husbandry, Michigan State University.

42

43

An attempt was made to bring out the experiences of buyers and
sellers participating in this sale. This was developed from the answers

and comments they gave to a mail-in-type questionnaire. 1

Buyers

There were 13 buyers participating in the sale. ~ Questionnaires
were mailed to 12 as the address of one buyer was insufficient.
Completed questionnaires were received from 11.

In reporting the comments of the buyers in the special sale, the
first question was, "Do you favor buying pigs that have been divided
into lots by weight and grade? " Ten favored buying pigs that are divided
into lots, while one reported he would rather keep pigs from one producer
in a single lot.

The comments were as follows:

"Sometimes undesirable pigs are included in the lot. "

"Pigs are more uniform."

"Buyers have a chance to buy all pigs of one grade. "

"Buyer gets just what he pays for, and what he wants. "

"Better grading means better feeding results. "

In response to the question, "Would you like to see these special
feeder pig sales continued?" Nine reported "yes, '.' 1 reported "no"
and 1 did not comment.

General comments were as follows:

"A buyer can get all the pigs he wants in one afternoon. "

"We have a larger selection. "

"It is a place to sell pigs with no arguments about price. "

Ten buyers out of eleven reported that they would rather purchase

feeder pigs than raise them. When asked whether they thought the pigs

 

1A copy of the mail-in-type questionnaire is located in the
Appendix.

44

in the Special feeder pig sale were of the same, higher, or lower quality
than those available from other sources, Six reported they thought the
quality was higher, 14 said it was the same, and one buyer did not
comment.

General comments were:

"Quality of the whole group was better aS poor pigs were rejected. "

"Quality was higher as good sale manager won't allow poor pigs
to be accepted. " ‘

Buyers were also asked whether they would prefer to buy feeder
pigs in a truck or trailer, or in the sale ring at a local livestock auction.
Six reported they would rather buy from a truck or trailer and five
reported they would rather purchase in a sale ring.

Comments for buying in a truck or trailer were:

"Always had good luck buying from truck or trailer. "

"Sale ring gives more chance for disease. "

"Have always received a healthy bunch of pigs. "

"I prefer to buy from the farmers own truck. ”

The general comment for buying in a sale ring was, "It was easier
to see the pigs. "

All eleven buyers reported they had purchased feeder pigs previous
to the Special feeder pig sale. Six reported they had purchased direct
from other farmers, ten reported they had purchased pigs at a local
livestock auction, and two reported they had purchased from dealers.
Six buyers reported they were satisfied with previous methods of pur-
chasing, three reported they were dissatisfied, while two reported they
were partially satisfied.

Buyers were then questioned about their experiences in purchasing
pigs in the special feeder pig sale. Six reported they were very well
satisfied, three reported they were not completely satisfied, and two

reported they were dissatisfied.

45

General comments about the Special feeder pig sale were:
"Vaccination of pigs makes the price high. " (livestock dealer)

"The pigs were not given enough serum. I lost two of 22 pigs
purchased within 10 days of the sale and wondered about
vaccination as the cause. " (garbage feeder)

"The size of the pigs was all right, but there was too many
grades in the 17 head I purchased. "

"Sale was quite well conducted being the first sale of this kind. "
These comments tend to be quite favorable, although the
experience of a few more sales would help to eliminate many small

problems and Shortcomings of this first sale.

Sellers

Of the 22 consignors, two addresses were not available. Out of
the remaining 20 consignors, 11 returned a completed questionnaire.

Of the 11 reporting, their size of swine enterprise varied from Six
sows to 50 sows. Nine reported that the largest source of farm income
was livestock sales while one reported cash-crops and one reported
cash-crops and livestock as his major source of farm income. Six con-
signors worked off the farm more than 100 days per year.

When asked whether they had produced feeder pigs for sale
previous to the Special sale, they all reported doing so. Their previous
outlets were through local livestock sales or "direct" to neighboring
farmers. Two reported selling to dealers previous to this sale.

, Consignors gave the following comments on whether they were
satisfied with previous methods of marketing feeder pigs:

"Not enough buyers at livestock auction markets. "

"If buyers were not there in sufficiently large numbers, pigs
were purchased by 'pig jockeys'. "

"I was satisfied previously, but I am still interested in
establishing a cooperative. ”

"Buyers come to my farm and this is the most satisfactory method. "

46

"I never had any trouble selling my pigs as I sold them to a
buyer who buys 300-400 pigs per week. "

"Fees at the auction market are too high- for the services
received and in addition to this, there is no room to unload

pigs. "

In comparing their previous experiences of selling feeder pigs
with their experiences in selling feeder pigs at the Special sale, the
results Show that six out of 11 were very well satisfied, three were
not completely satisfied and two were dissatisfied.

Comments of consignors on their experiences in the Special feeder
pig sale and suggestions for improvements were:

"Sale went good, but needs more experience. "

"Vaccinating is unnecessary when auctions don't have to
vaccinate and pigs are mingled after purchasing. "

"If feeder pigs moving into the state were required by law
to be vaccinated it would help feeder pig sales in Michigan. "

"Grading was poor and each buyer should have the right to bid
his own pigs in. "

"Need a permanent place to sell pigs. "

"Pigs were sold in lots that were too large, Should sell 12-15
pigs per lot. "

"Received leSS money than I was offered at home before the sale. "

"Need more and better advertising. "

All of the consignors reported that the costs of selling were
reasonable considering services rendered. It Should be pointed out,
however, that one of the consignors volunteered his services as
auctioneer for this pilot sale. Four consignors reported they felt they
received more for their pigs in the Special sale while two reported
they received less. The other five reported they received the same
amount as they would have by selling in some other manner.

When asked a question on whether they felt they would increase

their net returns in the next 5 years by participating in the Special

47

feeder pig sales, seven reported that they thought they would receive
more, one reported he would receive less and three had no comment.
Consignors comments on this question were as follows:

"If it is necessary to vaccinate pigs at special sales, then all
pigs sold in livestock sales should be vaccinated. "

"If we didn't have to vaccinate we would net more. "
"If sale gets larger, both buyer and seller will benefit. "

"We will net more if something fair can be worked out on
vaccinating. "

Survey of Farmers Using Regular Auction Markets

An attempt was made to find out the reactions of buyers and sellers
of feeder pigs who did not participate in the Special feeder pig sale at
Hudsonville. Through the c00pe ration of the Charlotte livestock auction,
a list of buyers and sellers of feeder pigs was obtained for the year 1959.
A decision was made to use a sample of 50 percent of this list. The
sample was obtained in the following manner: A list of names was ob-
tained from the sales records of the Charlotte livestock auction market.
By taking every other week's sales record for one year, 50 percent or
more of the population was included in the sample. It was expected
that some of the names that were used in the sample would be included
in the list of the sales that were not used in the sample.

A mail-in—type questionnaire was drawn up, a copy of which is
included in the Appendix. The questionnaire was mailed out along with
a letter of explanation. After a two week period had elapsed a follows-up
letter and another questionnaire was mailed to the non- respondents.

This increased the rate of return considerably.

Following this an attempt was made to take a random sample of

25 non-reSpondents to see if their answers would be the same as the

respondents. An attempt was made to complete these questionnaires

48

by use of the telephone. Out of the first 18 names selected only one
questionnaire was completed. It was then decided that even if an attempt
was made to call all of the non-mail respondents, the results would not
prove whether the mail-in sample was a true representative sample.
Therefore, it must be pointed out that the respondents may not constitute

a repre S entative sample .

Sellers

. A list of 92 sellers of feeder pigs was obtained. Questionnaires
were mailed to these 92 sellers and returns were received from 43.
Eight questionnaires were returned because of insufficient addresses.
Of the 43 questionnaires returned 10 were unusable because they were
not complete. The most common reason for incompletion was because
they either did not have feeder pigs at. the time, were no longer raising
feeders, or were quitting farming.

Thirty-three completed questionnaires are the basis for this
analysis. This constitutes 35. 8 percent of the original list of sellers.

The size of the swine enterprises varied from one to 30 sows and
the number of feeder pigs sold varied from eight to 400. This was the
production during the calendar year 1959. When asked a question on
whether they planned to expand feeder pig production, six reported
"yes, " 23 reported "no, " and four sellers did not comment. ' Sellers
were also asked, "Do you work off this farm more than 100 days per
year?" Eighteen reported ”yes, " 14 reported "no, " and one did not
answer.

Sellers were asked to check their largest source of farm income
and 12 reported dairy, 11 reported cash-crops, and 17 reported live-
stock. Some checked more than one source as their largest source
of income. Sellers were also asked a question on where they sold

their feeder pigs in 1959. Eleven reported they sold all of their pigs

49

at a local livestock auction while 17 reported selling part through an
auction, part to other farmers and three reported selling part of their
pigs to a feeder pig dealer.

Sellers' comments on these methods of selling are as follows:

"It is haphazard selling out of trucks and trailers, people
expect too much price cut when buying at our farm. "

"Local livestock auctions don't attract buyers, the good
thrifty pigs don't bring enough premium. "

"Would rather sell direct to farmers if a base price could
be set according to the price of fat hogs. "

“A farmer takes what he can get for his product, he has no
other choice. "

"It depends on how many buyers are at the sale. "

Five farmers reported they were satisfied.

A Statement was presented in the questionnaire which read as
follows:

In other states Special feeder pig sales have been organized.
Feeder pigs are vaccinated, graded and weighed and placed in
groups of uniform Sized pigs. These groups may contain more
than one seller's pigs. The facilities used, if this were adopted
in Michigan, would have to be separate from the regular live-
stock auction facilities. The costS of the services have been
paid for by the seller.

Sellers were then asked whether they would like to see this kind
of system for marketing feeder pigs in Michigan. Eleven reported
"yes, " 15 reported "no, " and seven did not answer the question.

Unfavorable comments were as follows:

"Why should the seller pay for the grading and weighing as well
as the commission to the auction?"

“The seller would have to pay for the vaccinating and thereby
earn less. "

"Seems like I always hit a day when there are only dealers. "

"I think farmers will pay more right at your farm. "

50

"I don't know whether the added cost would offset the probable
gain. "

"Too many big feeders. "

"I wish to sell my own pigs in my own way. "

"No more pigs than I have, it wouldn't matter to me. "

"I am just a small operator trying to make a living. "

"It would make your profit even smaller than it is now. "

"The buyer would be getting better pigs at a lower price. "

Five other sellers stated they were satisfied with present con-
ditions.

The last question asked of the sellers was, "Would you be willing
to sell your feeder pigs at a local livestock auction if separate facilities
were provided and the above regulations were followed?" Fourteen
answered "yes, " nine answered "no, " and 10 did not answer. Sellers
commented on this question in the following manner.

Favorable comments were:

"Yes, if we could attract the buyer that would pay the premium
price. "

"I don't raise enough feeder pigs to make any difference. It
would not be important to me either way. "

"This sounds like a good idea to me. "
"I don't know as I haven't tried this method. "

"If more buyers could be attracted. Under present conditions
when the hog market is down you can't hardly give them away,
but when the market is up the buyers knock each other down
to bid on them. "

Unfavorable comments were:
”I'm afraid the cost would be too much. "
"Not until I have more information. "

“The profit in feeder pigs is quite small and I can't see putting
more money into something than I can get out of it. We prefer
direct selling to farmer, we consider the above method
advantageous to buyer only. "

51

"Not sure what we would do. "

"It would be cheaper to do my own grading at home than pay
$3. 00 per man hour to have it done for me. "

"If a farmer wants to vaccinate pigs, let him do so on his own,
why force him. "

Buyers

Using the same sampling procedure as described for sellers, a
list of 61 feeder pig buyers was obtained. Thirteen schedules were
returned because of insufficient addresses, 26 were returned by buyers
and of these 22 were usable. Three of the questionnaires were un-
usable because they reported they did not buy feeder pigs and the fourth
was unusable as it was not complete.

A few questions were asked of the buyers to determine their farm
situation. The first question asked, "Do you work off the farm more
than 100 days per year? " Five reported "yes, " and 17 reported "no. "
The second question asked, "What is your largest source of farm
income?" Six reported dairy as their largest source of farm income,
six reported cash-crops as their largest sources, while eight reported
livestock and three reported a combination of the categories as their
largest source of farm income.

Buyers were also asked to check previous methods of purchasing
feeder pigs. Sixteen reported buying through livestock auctions,

13 reported buying from other farmers, while five reported they had
bought some feeder pigs from "dealers. " Buyers were then asked,
"What were your experiences in purchasing pigs by these methods?"
Thirteen reported they were very well satisfied, seven reported they
were not completely satisfied, one reported he was dissatisfied and
one buyer did not reply.

Favorable comments by buyers on the above question were:

52

"l have been satisfied because I have been a little particular
in selecting. "

"I have purchased pigs at an auction in the past and have been
satisfied. "

"I never buy anything but the best. "
Unfavorable comments were:

"I think. when you buy young pigs to feed, you are more sure of
what you are getting by buying from a private farmer. "

"Pick up too many scrubs. "

"You have a better choice buying from a farmer. "
"Can't always tell what they are for breed and style. "
"Feeder pigs were poor last year. "

"Have got some diseased pigs, and they also lack uniform
gaining ability. "

In order to determine the Size of the buyers' feeding enterprise,
they were asked how many pigs were purchased. This varied from a low
of 10 pigs to a high of 650 pigs. The buyers were then asked how many
pigs they raised during the year. This ranged from none to 2000. The
volume of butcher hogs sold during this same year ranged from 10 to
1000 head. Buyers were then asked whether they would rather purchase
feeder pigs or raise their own. Eighteen reported they would rather
purchase feeder pigs, two reported they would rather raise their own,
and two reported they favored doing both.

Comments in favor of raising their own feeder pigs were:

"In case of bad luck in losing a lot of pigs, it is not such a
big cash loss to raise our own feeder pigs. "

"When feeder pig prices are too high in comparison to the sale
price of Shoats, we can't buy feeder pigs. "

Buyers preferring to buy feeder pigs made these comments:
"Our dairy set-up doesn't leave enough room to care for sows. "

"If the price is in line and the pigs are healthy, I would rather
purchase feeder pigs. "

53

"I don't have the facilities to care for brood sows. "
"I would rather purchase if quality could be found. "

"If you are marketing less than 100 per year, it doesn't
pay to equip to raise feeder pigs in Michigan climate. "

"I'm too old to raise many feeder pigs. "

"I like to do both. "

After these questions were asked of the buyers, the statement
about Special feeder pig sales was given and questions pertaining to
these sales were asked. The first question was, "Would you like to
see this kind of system for marketing feeder pigs in Michigan?"
Fifteen reported "yes" and seven reported "no. "

Favorable comments were:

"If it wouldn't raise the price of feeder pigs, we couldn't
stand much of a price increase. "

"Would make a better grade of pigs. "

"Pigs in trucks and trailers are sometimes packed in so tightly
that you can't see how much they weigh. "

"I believe this would be an incentative for farmers to do a
better job. "

"If it would not add substantially to the cost of a pig. "
Other comments were:

"If they would sell by the age of a feeder pig, you would feel
sure of getting good feeders. "

"Locally our own set-up I believe has been satisfactory, as it
is the seller can grade his pigs as he chooses. "

"This would make feeder pigs too much money to finish for a
profit. "

"Would rather vaccinate our own pigs. "

Buyers were then asked, "Would you be willing to buy your feeder
pigs at a local livestock auction if separate facilities were provided and
the above regulations were followed?" Seventeen reported ”yes, "

three reported "no, " and two did not answer.

54

Comments on this question were:

"I don't believe so, although we are mostly dairy, so probably
won't buy pigs. "

"The main thing is some sort of health standards. "
"We are undecided. "

"In the past, my experience was, pigs started too slowly and
were set back by vaccinating. "

"If the price isn't too high. "
The last question asked of the buyers was, "Would you be willing
to pay more per pig if they were graded and sorted by weight and quality,
and were vaccinated? If "yes, " how much more, one, two, or three
dollars? " Eight reported they would pay $1. 00 more per pig while
eight reported they would pay $2. 00 more and six did not answer.
Comments on this question were:
"We would pay more for better and uniform pigs. "
"Two dollars more would be the limit at the present price of pigs. "

"I don't think it would cost over 50 cents to a dollar to sort
pigs, but buyers would come more freely. "

"Right type and grade would be worth $2 more. "
"I would pay more according to market prices. "
"Just the exact cost of the services."

"Based on present narrow margins, if costs were much more than
one dollar higher per pig, I would rather use my own judgment. "

Other comments were:

"I buy all grades and Size, therefore, to grade and sort would not
be to any advantage to me. "

"I would rather keep litters together and know where pigs come
from. "

"Too much socializing of farmers, we like to be free to buy
anywhere anytime. "

55

Attitudes and Size of Operation

In Table V a classification of buyers of feeder pigs at the Charlotte
livestock auction during 1959 is given according to the number of feeder
pigs purchased. This classification was made to determine whether
there was any relationship between volume of operation and attitudes
toward the establishment of Special feeder pig sales in Michigan.

The small buyers, those purchasing 1 to 25 pigs, are evenly divided
in their attitudes toward Special feeder pig sales. Of the large buyers,
those purchasing 26 or more pigs during the year, 75 percent have
favorable attitudes toward establishing this type of sale.

Table VI gives the classification of sellers of feeder pigs at the
Charlotte livestock auction during 1959 according to the number of sows
farrowed.

Fifty- Six percent of the small sellers, those farrowing 10 sows or
less, had favorable attitudes toward the special feeder pig sales, while
33 percent of the large sellers, those farrowing ll sows or more, had
favorable attitudes toward this type of sale.

There was no relationship between volume of operation and attitudes
of participants at the Special feeder pig sale at Hudsonville. Small
operators as well as large operators had favorable attitudes toward the
establishment of Special feeder pig sales in Michigan.

A very high percentage of the participants in the Special feeder
pig sale prefer to see these sales continue. All of the sellers were
satisfied with the charges for the services performed.

Ten out of eleven buyers at the Special feeder pig sale preferred
buying pigs that had been co-mingled by weight and grade.

A very large percentage of the buyers of feeder pigs at the
special feeder pig sale and the regular auction market preferred to

purchase feeder pigs than raise their own.

56

TABLE V

' CLASSIFICATION OF BUYERS OF FEEDER PIGS AT CHARLOTTE
' LIVESTOCK AUCTION BY NUMBER OF PIGS PURCHASED
DURING 1959

 

 

Number of Pigs Number of
Purchased in 1959 Buyers

1 to 25 8
26 to 50 5
51 to 75 1
76 to 100 l
100 or more 6

TABLE VI

CLASSIFICATION OF SELLERS OF FEEDER PIGS AT CHARLOTTE
LIVESTOCK AUCTION BY NUMBER OF SOWS FARROWING
DURING 1959

 

 

 

Number of Sows Number of
Farrowing in 1959 Sellers

1 to 5 9

6 to 10 8

11 to 15 8

16 to 20 2
21 to 25 3
26 to 30 ~ 2

31 or more 1

 

57

Even though both groups preferred not to vaccinate their pigs,
there was much concern about sanitation and disease.

Buyers at the auction market indicated they would be willing to
pay from $1. 00 to $2. 00 more per pig if the pigs were sorted according
to grade and weight and were of good quality. This was in contrast to
the sellers' attitudes as they did not believe buyers would be willing
to pay a premium for top quality pigs.

The majority of buyers and sellers indicated that the auction
market was their main channel for buying and selling feeder pigs.

Although sellers indicated they were not completely satisfied with
the present system of selling feeder pigs through the livestock auction,
buyers seemed to be satisfied with this method of marketing feeder pigs.
Large buyers, however, seemed to have a greater interest in establish-
ing special feeder pig sales.

While the buyers expressed a preference of buying feeder pigs
over raising them, 23 out of 29 sellers at the regular auction market

indicated they were not planning to expand feeder pig production.

CHAPTER V
SUMMARY AND CONCLUSIONS

The purpose of this study was to assemble and analyze information
which will assist farmers and marketing agencies in the development of
a more efficient system of marketing feeder pigs in Michigan.

Feeder pig marketing channels are not as well developed as the
channels for feeder cattle and sheep. ~ Even though feeder pigs tend to
move from fringe areas towards the Central Corn Belt, buyers and
sellers in the fringe areas, including Michigan, often find it difficult to
locate dependable marketing channels.

In Michigan, feeder pig producers market mo st of their feeder
pigs through auctions, direct sale to other farmers, dealers and local
markets. Auctions were the largest single channel used in 1956,
accounting for 61 percent of feeder pigs sold in Michigan.

Auctions were also the most important channel used by farmers
in purchasing feeder pigs in Michigan. In 1956, farmers bought 47
percent of their feeder pigs through this source.

' Sanitation and disease are major problems in marketing feeder
pigs and are very important to both the buyer and seller. - Regulations
restricting the movement of feeder pigs through local livestock auctions
in Michigan are enforced by the State Department of Agriculture.
Auctions have circumvented these regulations by selling feeder pigs
in trucks and trailers.

A great deal of emphasis has been placed on vaccination for

cholera, but it should be pointed out that there are many more diseases

58

59

to which feeder pigs are susceptible. More research needs to be done
on whether it would be desirable to set up a vaccination program in
feeder pig marketing.

Uncertainty of supply at any one general livestock auction was a
buyer complaint, therefore, some buyers found it necessary to attend
several auctions to purchase the quantity of feeder pigs they desired.

Price uncertainty associated with seasonal and cyclical fluctu-
ations in hog production is a common problem of both buyers and
sellers of feeder pigs. The major factor in establishing the price of
feeder pigs is the. current price of slaughter hogs. This tends to create
periods when prices of feeder pigs are higher than outlook predictions
would justify and periods when prices are lower than justified. There
is no set pattern for pricing feeder pigs and several plans have been
advanced, but none seem to have become firmly established.

The production of feeder pigs in Michigan has not developed ex-
tensively on a large scale basis. Risk of price fluctuations, disease
and sanitation problems have been major factors in farmers not pro-
ducing feeder pigs on a large scale. Also as pointed out earlier in
the study, buyers of feeder pigs have not been able to obtain the quantity
and quality of feeder pigs in the present marketing channels. However,
many farmers indicated a preference to buy feeder pigs rather than
raise them when they were able to obtain the kind and quality preferred.

3 In 1959, only 29 percent of the pork consumed by the peOple in
Michigan was produced on Michigan farms. However, Michigan has
been a feed surplus state Since about 1948. Each year Since .1954,
Michigan has produced about one million tons of feed-grain in excess
of livestock needs.

Labor required to produce feeder pigs is of a seasonal nature,

while'labor requirements are very stable in feeding operations.

6O

Mechanization and labor saving devices lend themselves to feeding
operations and it is believed that the trend is toward larger Sized units.
Farmers who are located in the feed surplus areas are in a very good
position to market their feed-grains through hogs to an advantage.

The results of this study indicate that feeder pig production might
be expanded in the northern areas of the state as a secondary enter-
prise on those farms where underemployment of labor exists.

However, feeding operations would likely expand in the southern feed-
grain surplus areas of the state.

In Wisconsin, feeder pig cooperatives have become important in
recent years in the marketing of feeder pigs. Even though farmers
who are under a three-year contract are penalized for selling feeder
pigs by other methods, they are allowed to feed out their pigs to market
weight if they so desire. Quality is very important and buyers buy
their pigs by phoning in orders to the cooperative.

Special feeder pig sales have become very popular in southern
Indiana. The sales are operated by non-profit market organizations
owned and Operated by farmers. The pigs are not produced under
contract, however, an entry Sheet must be Signed in advance of the
sale. A small fee is charged to insure delivery of the pigs to the sale
and is forfeited if the pigs are not delivered. Advertising is handled
cooperatively and thereby keeps the advertising costs at a minimum.

The survey of farmers participating in the Special feeder pig
sale at Hudsonville, Michigan, indicated that they were satisfied with
this method of marketing feeder pigs. There was concern on the
necessity of vaccinating pigs when feeder pigs are shipped into Michigan
without vaccination.

The survey of farmers at the Charlotte, Michigan, livestock

auction indicated that the large buyers favored the adoption of special

61

feeder pig sales in Michigan. Most of the small sellers also expressed
a desire for this type of a marketing program.
In the near future, it is anticipated that the Michigan feeder pig
market structure will be one of small sellers and large buyers.
Market channels now used are primarily those which accommodate
small sellers and small buyers. Special feeder pig sales similar to
those in Indiana or cqoperatives Similar to those in Wisconsin might be
an answer to this need. This method of marketing feeder pigs might
be developed through the use of existing livestock marketing agencies.
AS feeder pig marketing channels become more developed there

will be a need for research to evaluate these programs.

LIST OF REFERENCES

Atkinson, J. H. and L. S. Hardin, Raising, Buying and Selling Feeder
Pigs, Indiana Experiment Station Bulletin 587, March 1953.

 

Catron, Damon, "A Coming Way to Raise Hogs, " Successful Farming,
53:45-52 Spring 1955.

 

Edwards, A. and V. Schneider, "Little Pigs Become Big Business, "
Successful Farming, 55:42-3-«10,1957.

 

Hughes, C. E. "What Can Pig Hatcheries Do For You?" Successful
Farming, 51:31, January 1953.

 

Krause, Orville E. , Wisconsin Feeder Pig Market and Prices,
Special Bulletin No. 68, Wisconsin Department of Agriculture,
June 1957.

 

Laycock, George, "Feeds 225 Hogs in 4 Minutes, " Successful Farmi_ng,
57:141, Spring 1959.

 

Michigan Department of Agriculture, Livestock Disease Control
Division, Laws and Regulation, Regulation No. 109, April 1959.

 

Miller, E. C. , "A Hog Production Program for Michigan Farmers, "
Animal Husbandry Department, Michigan State University,
mimeographed, 1959.

Newberg, R. R. Livestock Marketing in the North Central Region,
Part I. Where Farmers and Ranchers Buy and Sell, Ohio Agri-
cultural Experiment Station, Research Bulletin 846, North Central
Regional Publication 104, December 1959.

 

 

Rudd, Robert W. , An Analysis of Feeder Pig Prices in Central
Kentucky, Kentucky Agricultural Experiment Station, Bulletin
584, April 1952.

 

Wright, K. T. , "Changes in Feed- Grain Production and Livestock
Numbers in Michigan, " Michigan State University Agricultural
Experiment Station, Department of Agricultural Economics,
Special Bulletin 407, April 1956.

62

APPENDIX

63

PIG MARKETING AGREEMENT

1. The following agreement is hereby made this day of

 

19 , at , Wisconsin, between

 

 

the Wisconsin Feeder Pig Marketing Cooperative, a cooperative associ-
ation incorporated and doing business under the laws of the State of

Wisconsin (hereinafter called the "Association"), and ,

 

a pig producer, (hereinafter called the "Member-Producer"), the
promises of each party being in consideration of the promises of the other.

2. This contract shall be in effect for a term ending 3 years after
date hereof and Shall continue in effect for successive terms of one year
each after the expiration of the original term, subject to the right of
either party to terminate the contract by giving written notice by registered
mail to the other party not less than thirty (30) days prior to the expiration
of any term. I

3. The member-producer agrees that he will market through the
association all of the pigs sold by him under one hundred (100) pounds in
weight with the exception of breeding stock sold for breeding purposes;
also that he will prepare such pigs for market in accordance with the law-
ful rules and regulations of this association.

4. The member-producer agrees that this contract shall be binding
upon him as long as he produces pigs directly or indirectly, or has a
legal right to exercise control of any pigs or any interest therein during
the term of this contract.

5. The member-producer agrees that the association may pool or
mingle any pigs delivered by him to it with pigs delivered by other pro-
ducers.

6. The member-producer agrees that, in the event he violates any
provision of paragraph 3, he will pay to the association as liquidated
damages thirty per cent (30%) of the value of the pigs not delivered by him
under the provisions hereof and that any such liquidated damages may be
offset against and deducted from any money due from the association to
the producer.

7. The association agrees that it will engage a manager to receive,
yard, secure market outlets, sell and pay for all pigs furnished by the
member-producer.

64

65

8. The association agrees that. it will market all the pigs produced
by the membermproducer and described in paragraph 3, subject to the
right of the association to reject any pigs which are not in fit condition
for marketing. The association agrees to pay the member-producer the
amount of money received for such member—producer's pigs, less the
expenses of marketing, maintaining, and capitalizing the cooperative,
which expenses are to be fixed by the board of directors of the association

and which the member-producer expressly authorizes the association to
deduct.

9. As member-producer becomes a member of the Wisconsin
Feeder Pig Marketing Co—operative upon acceptance of this contract by
the Board of Directors of such cowoperative and thenceforth Shall be sub-
ject to its Bylaws, rules and regulations.

10. There are no other conditions, promises, covenants, repre-
sentations or inducements in addition to or at variance with any terms
hereof; this agreement represents the voluntary and clear understanding
of both parties fully and completely.

No. of Sows Presently owned by Wisconsin Feeder Pig Marketing Cooperative
(Name of Association)

 

 

 

 

 

 

 

Producer
President
Secretary
Witness: Producer
Solicitor Address
MEMBERSHIP RECEIPT
Please arrange for the retention Received of

 

of my ten dollars ($10. 00) member-
ship fee from the proceeds of the
sale of my pigs. membership fee in Wisconsin Feeder

the sum of ten dollars ($10.00), his

Pig Marketing Co-operative.

 

(Member- Producer)

 

(Solicitor)

 

 

66

Sellers CHARLOTTE

Study of Feeder Pig Marketing in Michigan
Department of Agricultural Economics
Michigan State University

Size of Hog Enterprise

 

 

 

 

 

 

 

1959
Number of sows farrowing Number of sows to farrow in 1960
Number of pigs saved —— How many will farrow in each quam
Number of pigs sold as Jan-Mar Apr-June July-Sppt Oct-Dec
feeders 1 j
Do you plan to expand feeder pig pro- '
duction Yes D[ No

 

 

Farm Situation

1. Do you work off the farm more than 100 days per year? DYes I INO

 

2. Please check your largest source of farm income. C] dairy

[:I cash crops
E] livestock

 

Sale of Feeder Pigs in 1959

 

Please fill in figures to tell what per cent of your feeder pigs were sold in the
following ways during 1959 % livestock auction, % to farmers, % other.

Were you satisfied with these methods of selling? Comments

 

New Things in Feeder Pig Marketing

 

In other states Special feeder pig sales have been organized. Feeder pigs are
vaccinated, graded and weighed and placed into groups of uniform sized pigs.
These groups may contain more than one seller's pigs. The facilities used. if
this were adopted in Michigan would have to be separate from the regular
livestock auction facilities. The costs of the services have been paid for by
the seller.

Would you like to see this kind of a system for marketing feeder pigs in

 

 

Michigan? [:[Yes I [No — Comments

 

 

Would you be willing to sell your feeder pigs at a local livestock auction if

separate facilities were provided and the above regulations were followed?

DYes (ENO - Comments

 

 

RETURN TO: HAROLD WEBSTER
Dept. of Agricultural Economics
Michigran State Universitv

Buyers
Study of Feeder Pig Marketing in Michigan
Department of Agricultural Economics
Michigan State University

Fa rm Situation

 

1. Do you work off the farm more than 100 days per year? | I Yes D No

 

 

 

2. Please check your largest source of farm income. dairy
C] cash. crops
1-..] livestock

 

 

Experiences in Feeder Pig Purchases

 

1. Please check methods that you have used in purchasing feeder pigs.

E. thru livestock auction, Dfrom other farmer, 1:] dealer,
El other

2. What were your experiences in purchasing pigs in these methods?

 

 

 

 

very well satisfied not completely satisfied [:jdissatisfied -

 

 

 

 

 

 

C omm ent S

 

Please indicate number of feeder pigs purchased in 1.959

 

Please indicate number of feeder pigs raised in 1959

 

Please indicate number of slaughter hogs sold in 1959

 

0‘1!!th

Would you rather purchase feeder pigs or raise your own? [:qurchase

(D raise own -— Comments

 

 

 

New Things in Feeder Pig Marketing

 

In other states Special feeder pig sales have been organized. Feeder pigs
are vaccinated, graded and weighed and placed into groups of uniform sized
pigs. These-groups may contain more than one seller's pigs. The facilities
used if this were adopted in Michigan would have to be separate from the
regular live-stock auction facilities. The costs of the services have been
paid for by the seller.

Would you like to see this kind of a system for marketing feeder pigs in
Michigan?

.3 Yes D No - Comments

 

 

 

68

Would you be willing to buy your feeder pigs at a local livestock auction if

separate facilities were provided and the above regulations were followed?

 

 

 

 

Yes D No - Comments

 

 

Would you be willing to pay more per pig if they were graded and sorted by

 

 

weight and quality, and were vaccinated? If yes how much more one dollar

E] two dollars

 

 

 

 

3 dollars - Comments

 

 

RETURN TO: HAROLD WEBSTER
Dept. of Agricultural Economics
Michigan State University
East Lansing, Michigan

69

Study of Feeder Pig Marketing in Michigan
Department of Agricultural Economics
Michigan State University

Previous Feeder Pig Purchases

 

Have you purchased feeder pigs before the special feeder pig sale was
organized?E]( Yes DNO If Yes, where did you purchase them?
(check those applying) 1. E] direct from neighboring farmer, 2. 1:]thru
local livestock auction, 3. mother, describe

 

 

 

Were you satisfied with this method of purchasing feeder pigs? [:3 Yes [3 No
If no, why not?

 

 

Experiences in Special Feeder Pig Sale

 

What were your experiences in purchasing through Special feeder pig sale?

1. Every well satisfied 2.1:] not completely satisfied 3. E1 dissatisfied

 

 

Comment S

 

 

Did you have a larger selection of feeder pigs at this sale than from previous

sources? [:3 Yes E] No - Comments

 

 

Specific Questions

 

1. Do you favor buying pigs that have been divided into lots by weight and grade?

DYGS BNO - Reasons

 

 

2. Would you like to see these Special feeder pig sales continued?

[:1 Yes DNO - Comments

 

 

 

3. Would you rather purchase feeder pigs to feed or raise your own?

Ipurchase I (raise own - Comments

 

 

70

4. Do you feel that feeder pigs purchased in the feeder pig sale are of higher,
same, or lower quality than those available from other Sources?

[:3 higher quality, E same quality, [1| lower quality.

 

 

- Comments

 

5. Would you prefer to purchase feeder pigs in a local auction ring'if they
were vaccinated and this was permissable? [Yes I: No -'Comments

 

 

=_

6. Would you prefer to buy feeder igs in a truck or trailer or in the sale ring
at a local livestock auction? truck or trailer, sale ring

Comments

 

RETURN TO: HAROLD WEBSTER
Dept. of Agricultural Economics
Michigan State University
East Lansing, Michigan

71

' Study of Feeder Pig Marketing in Michigan
Department of Agricultural Economics
Michigan State University

 

 

Size of HogEnterprise 1959

Number of sows farrowing Number of Slows to farrow in 1960 .

Number of pigs saved ' How many will farrow in each quarter?

Number of pigs sold as ban-MarlApr-June lJuly‘-Sept Oct-Dec]
feeders l 1 1 1 I

 

 

. ‘Do you plan to exparid feeder pig pro-
duction? :1 Yes D No

 

Fa rm' Situation

1. Do you work off the farm more than 100 days per year? D Yes C] No

2. Please check your largest source of farm income. dairy I 1 cash crops

1 I live stock

Previous Sales of Feeder Pigs

 

 

 

 

 

 

 

Did you produce and sell feeder pigs before the Special feeder pig auction was
organized? [:1 Yes [:11 No If yes, where did you sell feeder pigs
before? (check the ones that apply) 1. . . direct to neighboring farmer

2. [31thru auction 3.1:]1‘other, describe

 

 

 

 

 

 

 

 

 

 

 

 

 

Were you satisfied with this method of selling feeder pigs? 1 Yes 1:] No

Comm ents L

A

What were your experiences in selling through Special feeder pig auctions?
(check one) 1.1 Ivery well satisfied 2. [:1 not completely satisfied
3. Edissatisfied - Reasons for dissatisfactions L

 

 

 

Sugge stions for improvements

 

 

72

Siecific Questions

 

1. Do you favor "pooling" and selling by lots sorted by size and quality?

Yes 1:) NoI::1No preference

2. Were the costs of selling satisfactory, considering the services rendered?

 

 

 

 

 

 

I Yes ENC How could services be improved?

 

 

 

 

 

3. Do you feel that you received more, less or the same for your pigs by

participating in this special sale? . more Bless [:3 same

4. Do you feel that your net return will be increased in the next 5 years by

 

 

 

 

 

 

 

 

participating in these Special sales? . I Yes No — Cements

 

 

 

5. Would you favor selling your feeder pigs through a local livestock sale

ring if this was permissable? D Yes 1 1 No - Comments

 

 

6. Would you be willing to vaccinate pigs for cholera if they could be sold in
the local livestock sale ring? 1 1 Yes 1 1 No - Comments

 

 

 

RETURN TO: HAROLD WEBSTER
Department of Agricultural Economics
Michigan State University
East Lansing, Michigan