Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial...
-
Upload
lenard-knight -
Category
Documents
-
view
214 -
download
0
Transcript of Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial...
![Page 1: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/1.jpg)
Ontario Swine Farms
Profitability versus Productivity
Presented to:
Federal, Provincial, Territorial Working Group
AAFC, Ottawa
October 26, 2012
Randy Duffy, Ken McEwan, Ken Poon
University of Guelph
![Page 2: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/2.jpg)
Outline
Industry Background Ontario Farm Income Database - Preliminary Results
Continuous Sample (370 farms) Average vs. Top 20% / Bottom 20%
Ontario Data Analysis Project (ODAP – UGRC) Average vs. Top 50%
Preliminary Key Learning Points (OFID)
![Page 3: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/3.jpg)
Industry Background
![Page 4: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/4.jpg)
Ontario Hog Price vs. Estimated Net Return
Source: OMAFRA Swine Budgets
$190 $188
$126 $125
$165
$178
$141 $140
$168
$150
$132$126 $127
$121
$143
$161$154
$9 $19
($23) ($16)
$20
$32
($10) ($14)
$18 $14
($2)
($26)
($39) ($40)
($4) ($4)($10)
($50)
($25)
$0
$25
$50
$75
$100
$125
$150
$175
$200
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Price ($/ckg, index 100) Net Return ($/head)
![Page 5: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/5.jpg)
Ontario Producers vs. Hogs Marketed
-
5,000
10,000
15,000
20,000
25,000
-
1
2
3
4
5
6
1980198219841986198819901992199419961998200020022004200620082010
# o
f Pro
du
cers
# H
ogs
Mkt
d
Millions
1-50 hogs 51-500 hogs 501-3000 hogs >3000 hogs # of Producers
Source: Ontario Pork
Producers that Market
Since 2005:20-25% reduction in sows / pigs50% reduction in producers
![Page 6: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/6.jpg)
Ontario Farm Income Database
Swine Farms
![Page 7: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/7.jpg)
OFID – Swine - Advantages
All Farms (1,000) Continuous Sample (370) Income Range / Gross Revenue (5 categories) Swine Production Type (5 categories) Link to Production / Inventory (swine, crops) Captures large share of total Ontario industry
![Page 8: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/8.jpg)
OFID – Swine - Limitations
Completeness of production / inventory schedules
Declining swine farm numbers
Estimated Debt proxy
![Page 9: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/9.jpg)
Estimated Share of Ontario Industry
Category All Farms Continuous Sample
Avg0310 2010 Avg0310 2010
Number of Farms 1,059 666 370 370
Sow Inventory 79% 85% 37% 44%
Market Hogs Sold 63% 74% 32% 45%
*Grow Corn for Feed 58% 66% 69% 75%
Source: OFID; University of Guelph, Ridgetown Campus calculations.
![Page 10: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/10.jpg)
Estimated Share of Total Ontario Swine, by Farm Size
Category Number of Farms
Total Operating Revenue
EstimatedTotal Debt
2003 2010 2003 2010 2003 2010
$0-$100,000 13% 6% 1% <1% 2% <1%
$100,000-$300,000 31% 15% 8% 2% 10% 4%
$300,000-$500,000 20% 18% 10% 6% 13% 8%
$500,000-$1,000,000 19% 27% 18% 15% 22% 25%
> $1,000,000 16% 34% 63% 77% 53% 62%
All Farms 1,330 666 $978 m $897 m $938 m $845 m
Source: OFID; University of Guelph, Ridgetown Campus calculations.
![Page 11: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/11.jpg)
Estimated Share of Total Ontario Swine, by Production Type
Category Number of Farms
Total Operating Revenue
EstimatedTotal Debt
2003 2010 2003 2010 2003 2010
Farrow to Finish 44% 49% 37% 49% 40% 53%
Finish 38% 27% 35% 30% 27% 23%
Farrow to Wean 8% 6% 12% 4% 18% 6%
Farrow to Feeder 7% 14% 8% 13% 10% 13%
Mixed 3% 4% 8% 4% 6% 4%
All Farms 1,330 666 $978 m $897 m $938 m $845 m
Source: OFID; University of Guelph, Ridgetown Campus calculations.
![Page 12: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/12.jpg)
OFIDPreliminary Results– All Swine Farms
• 2003-2010• Profitability Quintiles
• Operating Profit Margin = EBIT / TOR
![Page 13: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/13.jpg)
Total Operating RevenueAll Swine Farms
$0
$200,000,000
$400,000,000
$600,000,000
$800,000,000
$1,000,000,000
$1,200,000,000
2003 2004 2005 2006 2007 2008 2009 2010
Total Operating Revenue - cash Total Operating Revenue - accrual
Avg Diff: $14 millionRange: -$12 to +$44 mill.
![Page 14: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/14.jpg)
Total Operating Revenue – Per Farmby Profitability Quintile
0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
1,750,000
2,000,000
2003 2004 2005 2006 2007 2008 2009 2010
Bottom 20% Average Top 20%
Based on:Operating Profit Margin= EBIT / TOR
![Page 15: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/15.jpg)
Total EBITAAll Swine Farms
$0
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$160,000,000
$180,000,000
$200,000,000
2003 2004 2005 2006 2007 2008 2009 2010
Total EBITA - cash Total EBITA - accrual
Avg Diff: $9 millionRange: -$24 to +$35 mill.
![Page 16: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/16.jpg)
EBITA – Per Farmby Profitability Quintile
(400,000)
(300,000)
(200,000)
(100,000)
0
100,000
200,000
300,000
400,000
2003 2004 2005 2006 2007 2008 2009 2010
Bottom 20% Average Top 20%
![Page 17: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/17.jpg)
Productivity vs. Profitability
Continuous Sample (370 farms)
![Page 18: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/18.jpg)
EBITA Per Pig Sold
Bottom 20%
Bottom 20-40%
Middle 40-60%
Top 20-40%
Top 20%
Avg0.0
10.0
20.0
30.0
40.0
50.0
60.0
13.5 12.5
22.2
31.7
50.2
25.8
Avg0310
![Page 19: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/19.jpg)
Pigs Sold Per Sow
Bottom 20%
Bottom 20-40%
Middle 40-60%
Top 20-40%
Top 20%
Avg18.018.519.019.520.020.521.021.522.022.523.0
20.4
22.5
19.9 19.6
20.5 20.6
Avg0310
![Page 20: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/20.jpg)
Health Expense / Swine Sales Ratio
1.5% difference x$150 market hog = $2.25 / head
2%
3%
4%
5%
6%
7%
8%
9%
2003 2004 2005 2006 2007 2008 2009 2010
Bottom 20% Average Top 20%
1.5% difference x$150 market hog = $2.25 / head
![Page 21: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/21.jpg)
Interest Expense / Swine Sales Ratio
1.5% difference x$150 market hog = $2.25 / head
2%
4%
6%
8%
10%
12%
14%
16%
18%
2003 2004 2005 2006 2007 2008 2009 2010
Bottom 20% Average Top 20%
2.5% difference x$150 market hog = $3.75 / head
![Page 22: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/22.jpg)
Total Feed Expense / Swine Sales Ratio
1.5% difference x$150 market hog = $2.25 / head
30%
40%
50%
60%
70%
80%
90%
100%
2003 2004 2005 2006 2007 2008 2009 2010
Bottom 20% Average Top 20%
21.5% difference x$150 market hog = $32.25 / head
Ratio = (Feed Expense + Crop Expense + Crop Purchase)/ Swine Sales
![Page 23: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/23.jpg)
ODAPProduction and Financial Data
Average vs. Top 50%
![Page 24: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/24.jpg)
Pigs Weaned Per Sow
2001-05 2006-0918.018.519.019.520.020.521.021.522.022.5 21.58
21.921.52
22.09
Avg Top 50%
![Page 25: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/25.jpg)
Feed Cost Per Pig
2001-05 2006-09$70
$75
$80
$85
$90
$95
$100
88
95
81
88
Avg Top 50%
![Page 26: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/26.jpg)
NFI Per Pig
2001-05 2006-09-$40-$30-$20-$10
$0$10$20$30$40$50$60
16
-23
36
-5
Avg Top 50%
![Page 27: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/27.jpg)
Preliminary Key Learning Points
Productivity vs. Cost Control Distribution of profitability
Variability Regardless of farm size, production type, debt level, year Top 20% very profitable, Bottom 20% not profitable** Ability to stay in the Top 20%** Top 60% okay, Bottom 40% struggle (depends on year)
Size doesn’t matter Debt not the deciding factor
![Page 28: Ontario Swine Farms Profitability versus Productivity Presented to: Federal, Provincial, Territorial Working Group AAFC, Ottawa October 26, 2012 Randy.](https://reader035.fdocuments.in/reader035/viewer/2022062517/56649ebe5503460f94bc7e6d/html5/thumbnails/28.jpg)
The End
Thank you.
Any questions?