Strategic and economic planning on pig farms

This paper presents a strategic planning tool to assess and analyse the economic performance of a farrow-to-finish pig farm. The study is focused on providing financial insight to pig farmers. In particular, the aim is to support the decision making concerning the investment on the creation of a new family farm and assessing the convenience or not of contracting the production to a vertically integrated company by integration contracts. The proposed strategic planning tool evaluates alternatives by calculating the net present value (NPV) of a farrow-to-finish pig farm over a ten-year time horizon under different financial scenarios. Real world case study of a typical farrow-to-finish farm in Spain was used to test the model. Results show than when the sale price is less than 1.08 €/kg of live-weight the project becomes unprofitable in all the scenarios. The results suggest that it is advisable for family farmers to enter into integration contracts.