Written March, 1995
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What is Swine Production Networking?

Scott Burroughs, Director, Producer Networking, National Pork Producers Council


Today the swine industry is growing and changing faster than ever before. The consumer is not only demanding leaner pork but also higher quality, more consistent pork products. The pork industry is gradually transforming itself from a commodity- to a product-oriented industry. This shift will require producers to change to meet the requirements set by the rest of the pork chain.

These changes should not be feared by producers but rather looked upon as new opportunities. Opportunities abound for producers who are willing to change to meet consumer needs. Advanced management strategies are required for producers to take advantage of these opportunities. Producer networking is one management strategy a producer can use to address the changes that are taking place in the pork industry.

The networking concept

Networking is not a new idea. It has been used successfully for years by pork producers and other producer organizations to achieve greater profitability. The first documented cooperative began in 1820 with a group of producers marketing their pigs together. Producers are taking a “second look” at the networking idea because of the sheer competitiveness of the pork industry. Producer networking is one way a pork producer may retain or regain their competitive advantage.

Networking is a means to gain access to a set of advantages that by yourself, or with your own resources, you would not be able to acquire. It is another name for interdependence. Networking is about exchange, association, mutuality and working together to achieve things impossible to the individual. There are all kinds of opportunities for pork producers to work together to accomplish their goals.

Producers recognize there is much to gain from pooling resources. More producers are looking ahead and incorporating nontraditional ways of doing business. With the competitive nature of the pork industry today, many producers have realized that their time is too valuable or they do not have the expertise to manage all areas of their hog business. Many are faced with limited access to capital, local markets, the latest technology or all three.

Networking means interdependence

Networks offer a way for producers to be competitive. Some producers argue that by joining a network they give up part of their independence. This is true. In a network a producer will have to compromise. There will be times that a producer will have to agree with decisions that benefit the group more than they benefit the individual producer. The idea that producers are totally independent and their own boss may be comforting, but is it really accurate? Lets really look at pork production; the consumer decides whether products sell; packers determine the price; lenders control whether producers expand.

By joining a network, producers become interdependent. Interdependence and independence are not opposites. Networking may offer producers ways to achieve goals they could never attempt on their own. Success of a network is realized when the ultimate value exceeds the sum of everyone’s contribution. The other option is to cling steadfastly to independence at all costs. That’s all right as long as producers understand what the costs might be.

Benefits of networking

Increasing income
As producers look at networking, they need to be aware of costs involved in their operation. By forming networks they must concentrate on how to reduce costs and/or increase income. Either way the result is more net income and a more competitive position. If belonging to a network allows a producer to decrease their feed costs by 15 percent or improve the market price received for their hogs resulting in more net income, then these are real advantages.

Market access
An important factor for producers to consider is market access. A uniform, high quality product that meets specific criteria in sufficient volume to be processed efficiently will be necessary for future market access.

Provide a better product
Networking allows producers to provide processors and the end consumer with a better product. Producers with similar genetics, nutrition, and health programs and facilities can pool their hogs to fit the needs of the processor and generate real value to the pork sector. The network must provide the processor something of value and not available otherwise.

Focus their operation
Networking,allows the producer to concentrate on specific phases of an operation. In a group marketing network, the producer does not have to worry about calling to receive the best price for pigs. Someone is already doing that. In a purchasing network, someone else is pricing your feed inputs. If the group is producing their own replacement gilts, time is no longer required in selecting females, breeding for maternal lines, etc. This frees up producers’ time allowing them to concentrate on other phases of their operation.

Acquiring information
Networking can open up avenues for acquiring information that would not be available to many independent producers. When producers share information within the group, additional knowledge will give competitive advantages to the members. According to many group members, networks make it easier to adopt new technology. Regardless of the type of network a producer is considering, they should not underestimate the benefits of sharing information. Tips on nutrition, herd health, facilities and other management techniques can be exchanged. A producer can gain access to records, computer programs and consultants that otherwise might not be available.

Limitations of networking

Despite the many advantages, networks do have limitations. It’s not easy to ensure all members are committed equally to the same goal. Formal business procedures are important and these may intimidate some people. Most groups rely on joint responsibilities, which can be a problem. After joining a group, producers may lose access to some markets and suppliers that they have used in the past. There will be times that a producer’s obligation to a group may be a burden. In most groups, a financial commitment is required by its members, and each producer member must be sure they can handle the commitment. A producer must be aware that the financial status of other members may affect individual profits.

What networking isn’t

Part of understanding an idea is to know what it is not.