The Rural Voice, 2001-01, Page 23T
when the cost of land, permits and
installing utilities are included. One
5000 -sow unit has barns on six sites:
-a breeding, gestation and farrowing
site, one nursery site with four barns
with 4,800 pigs per barn, two
finishing sites with units containing
9,600 places and two others
containing 12,000 places. One 5,000 -
sow unit requires two Tess barn sites
than two 2,500 -sow sites or a saving
of more than a half -million dollars.
There are other construction
efficiencies. You get get better prices
when you are buying materials and
equipment for larger units, Possberg
said. With such large projects, for
instance, batch concrete plants can be
set up right on the site.
n the same vein, Targe units bring
market power when it comes time
to sell pigs, he said. A 5000 -head
unit produces 10-12 semi -trailer
loads of pigs a week and it's worth
$2-3 per hog difference to a
processor to have a large quantity of
similar quality hogs, he said. Packers
want similar genetics and guaranteed
quality. "If we don't provide it,
Smithfields of Maple Leaf will," he
warned.
He estimated there is a $14 per
hog difference between what a 600 -
sow and a 5,000 -sow -operation can
return.
And those returns are part of the
attraction of the large units,
especially when you're trying to raise
$60 million at a time. He estimated a
600 -sow unit would return 10 per
cent on equity, a 2,500 -sow unit, 12-
15 per cent on equity and a 5,000 -
sow unit, 20 per cent. This is on the
edge of what is required by most
investors, he said. Venture capitalists
want to see 30 per cent return.
"We have to do it in a way that
attracts capital that allows us to do
what we want to do," Possberg said.
The large units allow
specialization of labour. Different
personalities have different aptitudes.
In the large units, for instance,
someone can specialize in gilt
stimulation.
"We can identify employees with
real skills, particularly with people
skills," Possberg said. "On our bigger
units we can offer better pay, up to
$4000 a month for the 5,000 -head
units."
Deployment of labour was part of
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