Historically high, and going up! Karen asked what the price of soybeans is, and that got me to thinking, I haven’t calculated the price of hog feed lately. I sat down and did some figurin’, and was shocked at the price.
Our basic hog feed mix is corn, soybean meal, and a vitamin/mineral/amino acid premix. Corn is $7.17 for a 56 lb. bushel. Soybeans are $14.16 for a 60 lb. bushel. Dividing the cost by the lbs. gives us the price per lb. Corn is $.128/lb., and soybeans is $.236/lb.
We buy soybean meal, which is soybeans with the oil removed and sold. Our last bill for soybean meal was $.20/lb. Our premix is around $.40/lb. And we will use the $.128 market price for corn.
What is the breakdown of our hog feed? 80% is corn, 16.5% is soybean meal, and 3.5% is premix. Let’s figure out what 100 lbs. of feed costs.
80 lbs. of corn multiplied by $.125 equals $10.24. 16.5 lbs. of soybean meal multiplied by $.20 equals $3.30. 3.5 lbs. of premix multiplied by $.40 equals $1.40. Adding the three together totals $14.94 per 100 lbs. So that gives us a price of almost $.15 per lb.
Our whole herd feed conversion is 4. This means that it takes 4 lbs. of hog feed to produce 1 lb. of pork. So if we multiply 4 lbs. times the $.15/lb gives us the cost of feed to produce 1 lb. of pork, $.60/lb.!!!!! I remember when the whole herd feed cost was $.30/lb., and all costs were $.40/lb.
The commodity hog market price is around $.60/lb. We used to think we were making great money at $.60/lb. Now…?
Don’t cry for Curiousfarmer, it’s not as bad as it seems. While we buy the soybean meal and premix, and these are the actual prices we are paying, we grow our own corn, so it costs us whatever it costs us to grow it. The $7.17 per bushel is the opportunity cost to feed corn to hogs. I haven’t figured lately, what it actually costs us to grow corn, but it’s probably less than half of the $7.17 market price.
So why are we still raising hogs, when it’s a break-even business this year? Consistency. Pa always said, “farmers who jump in and out of things never catch up.” We feel it’s better to choose what we do, and work to do it well. We make major changes based on our needs, and the longer-term fundamentals.
That doesn’t mean we won’t modify our operation. We are selling all of our less productive sows and our older boars. We will still have plenty of pork for our direct-market customers, but we won’t have as many hogs to sell on the commodity market.
Longer-term, what are these markets going to do? How long will it take for the livestock markets to catch up to the grain markets, so livestock farmers can make some money? How much will food prices increase?
Thank you Karen, for a great question, which led to more questions.