| dc.description.abstract | CALCULATING THE PAY OUT TIME OF THE TRANSITION TO HIGH HEALTH PIG FARMING IN THE NETHERLANDS
MAR Schyns1, H Hogeveen, LAMG van Leengoed, A van Nes1
1Department of Farm Animal Health, University of Utrecht, The Netherlands
Introduction
Livestock production is currently under discussion in the Netherlands. There is political pressure to reduce the use of antibiotics and social anxiety for the outbreak of zoonotic diseases. A high health production system will reduce the incidence of disease and hence the use of antibiotics. Moreover, the farmer has an economic reason to switch to a high health system, because piglets are sold for a higher price. On the other hand the farmer has to make a big investment and the cash flow will be negative for a considerable time. The aim of this study is to quantify the investments, the return on investment (ROI), the payback time and the cash flow during transition of a breeding farm.
Materials and Methods
A model was constructed to calculate the total costs of the transition and the extra profit that is made after the transition. For estimation of the input parameters KWIN, and several experts with knowledge of high health pigs and economics of livestock production were consulted.
After the model was built, it was internally validated. Afterwards, it was discussed with four farmers who made the transition to high health pig farming in the past.
Timeline
The calculation was performed for a period of four years. The first year was the “base” year used to calculate the standard. In the second and third year the actual transition took place. The fourth year was the new situation.
Transition
In order to make a good calculation it was necessary to describe exactly how the transition took place. We modelled a situation where first, the replacement rate of sows is reduced. Twenty weeks later, the insemination of sows and gilts is stopped and the sows are culled after weaning. When all the pigs are sold and the stable is completely empty, a period of five weeks is used to clean and disinfect the stable. After the five weeks the new (pregnant) gilts are introduced on the farm and farrowed 2 weeks later. In total, there is a production stop of seventeen weeks.
Model
In the model, sows are allocated to week groups. Therefore, it is possible to calculate the total costs every week in order to have insight into the cash flow during transition. Also, it is possible to calculate the total costs of the farm and the variable costs by the number of sows and pigs which changes week by week during the transition period. We calculated the total costs for the transition by comparing the results from year 2 and 3 with the base (year 1). The net profit of transition is the difference between year 4 and year 1.
Results
The model was used to calculate the cost of a transition of a 2,000 sow breeding farm. Table 1 presents the net profit during the four modelled years. The return on investment is in the fourth year € 202,473. The total investment was € 430,024, so the costs of transition will be paid back in 2.12 years (=430,024/202,473).
The liquid assets reached rock bottom at - € 351,707.
Using a sensitivity analysis, also in small farms the transition was paid back in 2.4 years.
Table 1. The net farm result of a sow farm around transition to a high health system.
First year -€ 963
Second year € 52,837
Third year -€ 484,788
Fourth year € 201,510
Conclusions and Discussion
The transition to high health pig farming is an interesting move in the Netherlands. It was estimated that in 2.12 years the total investment is reimbursed. | |
