Returns and Costs of Niche Pork Production in 2008
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Information is provided on the return, cost and financial efficiency for niche pork production. Information from 18 niche pork producers is included in the analysis. Return levels showed that the average return to capital, unpaid labor and management return to capital, unpaid labor and management for the top 6 producers was $5.23 per hundred pounds of pork produced, while this average was -$10.68 for the bottom 6 producers and -$3.80 for all 18 producers. The average margin over all costs on a per head sold basis showed a large loss ($-52.89 for the average producer). The average return per hour of labor after all costs was -$12.36 for all 18 producers, but $9.23 per hour for the top 6 producers and -$9.82 for the bottom 6 producers.
The average total cost per hundred pounds of pork produced for all producers was $81.40, while the top third (6) had average total costs that were $32.43 less than the bottom 6 producers ($66.52 vs $98.75). Production costs increased by about 21 percent over the 2007 level. The main contributor to cost differences between the top third and bottom third producers was operating costs, which included feed and other operating expenses and labor costs. These costs represented the majority of the total cost difference and were about equally split between the two; operating costs (feed and other) and labor costs.
The information summarized here shows striking differences in many areas between the top 6 and bottom 6 producers. The areas with the largest differences are places with the most potential to help producers improve. Educational programming that targets these areas is being developed to help these producers make changes to improve their operations, which in turn will improve the position of this sector of the industry.