Contract hogs: Crops and livestock go together

Contract hogs: Crops and livestock go together

Part three: Contract production has an increasingly valuable byproduct: nutrient-rich manure for crop farming

This is the third part of a three-part series. Follow the series using the links at the end of this story.

Earlier in this series we introduced you to young farmers Levi and Austin Greuel, who began contract hog feeding with TriOak Foods seven years ago near their family farm operation in Industry, Ill. Despite the financial risk, the cousins are learning that the hog business has important spinoff advantages that grain-only farmers may find interesting.

Related: A question for the next generation: Why farm?

Contract production has an increasingly valuable byproduct: nutrient-rich manure for crop farming (Shutterstock)

Their hog barns are built on 3-acre plots purchased from their family's crop farm corporation. This location is convenient, but the mutual business benefits aren't evident on the front end. Levi and Austin may not be able to channel their dads' harvests through their livestock, but they can offer the family farm a benefit on the tail end by selling nutrient-rich manure.

With the three barns in operation, Levi can fertilize 600 crop acres per year, or 200 acres per 2,480-head hog facility. "By the end of 2015, we will be supplying fertilizer to 50% of our dads' total acreage at about 50% of the cost of commercial application," he says.

Nic Anderson at the Illinois Livestock Development Group notes that if fertilizer is 30% to 40% of a grain farmer's crop budget, he gains a $15- to $20-per-acre advantage in nutrient management in a cash-rent competition.

"If I use commercial fertilizer side by side with livestock manure, I'm getting a 5- to 15-bushel boost in corn yield from the manure because of its added nutrient benefits," he explains. "Livestock manure is worth $100 to $150 per acre in fertilizer value based on N, P and K."

The family's crop operation is not the only farm to benefit. In 2010, after paying a custom applicator $30,000 to spread their own manure on their family's cropland, Austin and Levi crunched the numbers to develop their own application business. Neighboring customers liked the idea, so now the young farmers use drag-line manure systems to apply manure for others and charge an applicator fee.

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"Farmers who want to get into contract finishing worry about having enough ground for manure," says Levi. "You need a manure easement, which we have with our parents."

Be forewarned: EPA manure spreading laws can be difficult. Gaining permits takes time and patience.

"Our two houses going up this year were supposed to go up last fall," he says. "This permit process was the same as 2008. We had to start at square one instead of just filing for an expansion."

Contract production is slowly growing in states that had long ago given up on hogs, says Nick Biggs, with TriOak's marketing and relations team. And manure seems to be driving the interest.

"All it takes is one or two farmers in an area getting back into it," he says. "When they see side-by-side comparison fields where corn with pig manure out yields corn with conventional fertilizer by 15 bushels, people start taking it seriously. If they can get a little better yield and be more competitive, they're going to consider it."

Related: Access to land still the biggest concern for young farmers, ranchers

Greuel claims that about 75% of current expansion in the hog industry is from established hog farmers and only about 25% of expansion comes from newcomers. The cousins have persevered through the permitting process, worked with neighbors, diversified income, established a side business — and experienced success.

"There will always be people who are unhappy with what you do, but Austin and I are calculated risk-takers," says Levi. "The opportunities afforded to us by getting into hogs have amazed us."

Grace writes from eastern Tennessee. Read her blog at beefandsweettea.com.


Contract hogs, part I: Young farmers, risk and opportunity
Contract hogs, part II: Inflation, insurance and expenses
Contract hogs, part III: Crops and livestock go together


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