By the end of 2018 A M Warkup will have completed more than 50,000 finisher places in less than a two year period. In an historical context this is a truly astonishing figure. More than half of these places have or will be built on arable farms currently without pigs. In addition there are several competitors who must be experiencing similar demand.
The following remarks and observations are specifically aimed at the intensive sector. Although a generalisation, the finishing of outdoor reared pigs in straw yards or ACNV curtain ventilated straw based buildings I regard as a separate, non mainstream, market.
Oddly the initial boost for the increase in building activity was Brexit and the rise in prices enjoyed over the period from the Referendum to now. Performance figures in new buildings are world class and would make us competitive in most traditional markets, but the fact is that the UK markets require most of our domestic product. Notwithstanding there is also an increasing demand for exports.
We could leave it there but this is only a part of the story; other factors are in play.
There has been a significant decrease in stand-alone pig units. Most businesses have land holdings to a greater or lesser degree which have effectively doubled in value over recent years. Such a hike has attracted the attention of the banks who in these nervous post crash years regard agricultural investment as a good thing.
Larger breeding operations, in most instances, have used third party finishing as a way of expanding. They have invested in increasing their breeding herds with finishing farmed out thus reducing costs and risks. Initially straw yards were in plentiful supply and relatively cheap to rent. Unfortunately this came at a price with resulting performance being unpredictable or downright poor. Nevertheless the principle was right. To the breeder the cost was no longer a capital item but a rent regarded as a production cost. To the owner of the yard the income from a previously unproductive facility was welcome.
The arrangement was workable if somewhat inefficient. It was apparent to the breeders that where their pigs were kept in environmentally controlled facilities the results were better and more consistent. They could afford to pay a little more in rent, sharing the improved performance. This principle was expanded, refined and has resulted in the extraordinary situation we are now experiencing.
The terms of contracts vary but typically are as follows. With five to ten year initial contract periods being offered both developers and banks are happy. Rents are based on numbers of places available, not those occupied or number of turns put through in any one year. Whilst terms vary returns of 12 to16% on capital employed are not unusual. In addition the slurry is valued at £7 per place per year. No wonder there is a queue out of the door; but there needs to be.
Based on the requirements for finishing places in the 60% of the national herd farmed intensively with a twenty year useful building life we need to be providing 100,000 new places annually. This figure assumes that all the current finishing buildings will last between one and twenty years and that the current activity levels will be maintained. We aren’t there yet but the outlook is a lot brighter than it was.
Added pressure has also been applied by the boost the industry has enjoyed in output. Coupled with an increase in numbers born is the trend towards higher carcase weights. Both factors, unless controlled in other ways, require more building space.
Given the compelling reasons to invest, what should the industry be building? Currently the Warkup order book for finisher places is 100% fully slatted. The market served by these buildings does not pay a premium for straw based production so why add several pence a kilo to the production costs.
If some other reason, planning or a need for FYM, means that straw based buildings are required then it is worth remembering that slatted or straw based perform identically when environmentally controlled identically. It is the buildings’ environmental control which drives performance, not its bedding type.
Warkup strongly recommend that environmental control should be the best available. Our default system is Skov manufactured in Denmark by the worldwide leaders in livestock ventilation. Working in combination with a sealed insulated building shell, and benefiting from a massive R&D department, the potential performance of the pigs is given free rein. No building design is ever finally finished. New materials and new technologies mean that designs and techniques are always being improved. Remember though that improvements are a function of time and buying the best and latest is the only way a building can be future proofed. It is a sobering thought that studies have shown that something like 35 to 40% of a finishing pigs’ genetic potential is still unrealised; some part of this will no doubt be accessed by improvements in designs and production techniques in our finishing buildings.
New finishing buildings are now easier to clean and therefore encourage operators to do so. Post batch computer controlled soaking systems actually halve the time needed to wash down. Penning is plastic planking and stainless steel with most truss posts also in stainless. Likewise access doors are fully insulated and stainless steel capped and framed. At Warkup we have also introduced insulated stainless steel kerbing to prevent cold bridging through the dwarf wall between insulated gable and wall panels and concrete slats. This also waterproofs a joint which has sometimes been problematic in the past.
There is a current initiative to make water delivery systems more effective and easier to clean. All building suppliers are being invited to sign up to the protocol now being developed which will cover this much neglected area.
Not all finishing buildings are for third party contractors. A significant minority are built on breeding farms and it is in these buildings that innovation tends to occur. This is unsurprising as the adoption of innovative equipment and techniques tends to fall outside the scope of the third party contractors’ responsibilities.
It is true that confidence drives the demand for new buildings. But it is by no means the full story. If making a case for replacing ageing houses was the motivating factor it would have happened years ago. The British Pig Project of 2004 and the more recent Finisher Pig Buildings Design and Build blueprint both from BPEX and a bulging file of articles from Simon Grey and later myself all failed to significantly kick start activity. Instead what we now have is a perfect storm of opportunity driving developments. Sustained realistic prices, the rise in popularity of on farm feed milling, the opportunity for arable farmers to return to traditional mixed farming, the high cost of chemical and therefore the attraction of natural fertilizers, the rise and influence of a younger generation of farmers and the willingness of the older generation to go along with them, and the successful exploitation of renewables seems in a remarkably short time to have created many new or rejuvenated farming entrepreneurs.
It will of course be interesting to see where we go from here. The performance boost from new builds may slow the search for extra profits for a time but there will always be a few who look at further refinements in the search for extra performance. It is for these individuals to trial and evaluate things like air cleaning with Electronic Particle Ionisation and real time performance monitoring with ProGrow. Watch this space.
This article originally appeared in the Building Supplement which accompanied the March 2018 issue of “Pig World” magazine.