AgDM newsletter article, June 1997

Hoops for swine: A good choice for beginning farmers? 

Mike DuffyBy Mike Duffy, Professor of Economics, 515/294-6160, mduffy@iastate.edu

Getting people started in farming is difficult.  In addition, beginning farmers need production systems that ensure their sustainability in the long run.  Although there are no magic formulas for success, selecting the proper production system can improve the beginner’s chances of success.

Capital intensive agriculture

Agriculture has become very capital intensive.  However, beginning farmers usually have sufficient labor, they often have limited access to capital. So beginning farmers are often at a disadvantage when considering technologies and systems that favor capital over labor.

For example, consider the changes taking place in the pork industry.  Pork production is shifting to large scale production units.  These require more capital and less labor than previous production systems.  This puts beginning farmers at a disadvantage for using these systems.

One size doesn’t fit all

Farmers often ask what is the best system for raising hogs.  However, each farming situation is unique and has a different mix of resources.  So what is best for one farmer may not be for another.  The key is to find the best system for each farmer’s unique situation. 

For example, a farmer may have less capital than his/her neighbor. So he/she may need a swine production system that requires less capital.  Also, farmers at different stages of their farming careers have different mixes of resources.  A beginning farmer may have more labor available while an older farmer may have more equity capital.

Hoop structures

Hoops or hoop structures are being used for growing and finishing swine.  The hoop is an arched facility with wooden sidewalls and a tarp stretched over a tubular steel frame.  Most hoops have dirt floors, except for concrete slabs used for feeding and watering.  The floor is covered with straw, corn stalks, or other suitable material. 

Hoop structures reverse the trend towards capital intensive production of pork.  They are relatively low investment but require more labor than traditional production systems.

Hoops are a relatively new phenomenon in Iowa pork production.  So, we have limited data on how pigs perform with these structures.  However, hoops have been used for some time in Canada.  Combining the Canadian data and existing Iowa data provides enough information for an initial cost and efficiency comparison between hoops and confinement.

An investment and cost comparison between hoop structures and confinement systems for growing and finishing pigs is shown in Table 1. 

Table 1. Comparison of hoop and confinement systems for finishing pigs (cost per pig).  

Facility investment

Hoop

Confinement

Advantage
to Hoops

Building

$55 per pig space *

$19.64

$180 per pig space *

$64.28

Feed & manure handling equip.

$36 per pig space *

12.86

12.86

Total

$32.50

$77.14

Fixed costs      

Interest, taxes, depreciation

& insurance on facility invest.

16.5% x $32.50

$5.36

13.2% x $77.14

$10.18

$4.82

Operating costs      

Feeder pig cost

Feeder pig (50 lbs.)

$42.00

$42.00

Interest on feeder pig

1.40

1.40

Feed costs

200 lb. gain x 3.3 x $.07 **

46.20

200 lb. gain x 3.1 x $.07 **

43.40

-$2.80

Other costs

Fuel, repair, utilities

.50

2.00

1.50

Bedding

1.50

-1.50

Vet. and medical

1.50

1.50

Marketing and misc.

2.00

2.00

Interest on fuel, feed, etc.

.86

.82

-.04

Labor

.40 hours x $7.50

3.00

.21 hours x $7.50

1.58

-1.42

Total

$98.96

$94.70

-$4.26

Total cost (per pig)

$104.32

$104.88

$.56

Cost per cwt. live (250 lbs)

Total cost (per cwt. Live)

$41.73

$41.95

$.22

Lean premium

.60

Net cost (per cwt. Live)

$41.73

$41.35

-$.38

* 2.8 turns per year
** 3.3 and 3.1 pounds of feed per pound of gain for hoops and confinement respectively.

SOURCE: The Midwest Plan Service

A comparison of this type illustrates some of the important differences between the costs and resource requirements of the two systems.  Below are some of these differences.

There are other considerations.  For example, a confinement unit is a single purpose building and has limited alternative uses.  Conversely, hoop structures have a variety of alternative uses such as machine storage, hay storage, calf finishing and so forth.  So, if you decide to quit raising hogs, the hoop structure may have more alternative uses.

Capital constraint

If capital is the constraining resource in your situation, more hogs can be finished by investing in hoop structures rather than confinement.  For example, assume you have $100,000 to invest in swine facilities.  If the money is invested in hoop structures, you can finish over 3,000 hogs per year ($100,000 / $32.50 = 3,077 hogs).  However, only 1,300 hogs can be finished per year under confinement ($100,000 / $77.14 = 1,296 hogs). 

Also, the hoop system will produce a higher return on your capital in spite of the higher cost of production.  Assuming a  $45 live hog price, $100,000 invested in the hoop system would return $25,154 per year ($45.00 - 41.73 = $3.27 profit) ($3.27 x 2.5 cwt. x 3,077 hogs = $25,154).  The confinement system would return only $11,826 per year ($45.00 - 41.35 = $3.65 profit) ($3.65 x 2.5 cwt. x 1,296 hogs = $11,826). 

Conclusion

There are advantages and disadvantages of the hoop system relative to other production systems.  No system is right for everyone.  Each farm has unique resources.  The key is to match the system with the individual situation.  The hoop system offers beginning farmers a system that fits their resources.

A more detailed discussion of hoops and their construction is available from ISU Extension.  For more information, contact you local county extension office and ask for AED 41, “Hoop Structures for Grow-Finish Swine”.

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