Quality of Life Team Assistance to Sow Unit

January - March 2003

Larry K. McMullen , swine field specialist

Situation
A swine producer with a 1000 sow unit that produces approximately 18,000 Segregated Early Weaning (SEW) pigs per year encountered financial difficulties due to the sagging market prices of hogs. The purchasers of this unit of pigs chose not to buy any and finding a market for SEW pigs become very difficult. As a result, the bank that financed this unit took it into receivership, thus taking control of the operation. The bank proceeded to sell the sows to cover their costs and to re-cover a portion of the prior debt.

Response
As a result of the bank's action on the swine unit, the operator asked for assistance from the Iowa State University Extension Quality of Life team. The team consisted of Larry McMullen, swine field specialist, and Jim Jensen, farm management specialist. The team initially visited with the operator and discussed some possible options and strategies to regain control and ownership of the sow unit. In order to get financing from other lending institutions, budgets and cash flows were developed.
With the assistance of Jim Dane, Iowa State farm financial planning associate, several Fin-Pack analyses were developed to facilitate the future plan for this operation. Also, additional production information was supplied as needed. The operator was then able to take this developed plan of action to lending intuitions to secure financing. The original bank offered a buy-out proposal at approximately one-fourth of the original debt, and the operator was able to secure financing from another banking institution.

Impact
Because the operator was now in position with another lending institution, he was able to accept the buy-out option from his original bank. All of the remaining sows were sold out of the unit for bio-security reasons. The operator is back in ownership and management of the operation and is making plans to re-populate the unit. Potential contracts for the upcoming SEW pig production are being negotiated. With some assistance and planning from the Quality of Life team, this operator was able to regain and continue his swine operation.

Page last updated: July 9, 2006
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