The following factors should be considered in selecting a market for pigs.
The market or selling agency should:
1. Recognize and reward quality, uniformity and health status
2. Accurately assess (grade) quality
3. Provide a means to accurately determine a fair, competitive price
4. Provide an accurate, government-tested scale weight
5. Provide timely and accurate accounting and guaranteed payment
6. Provide a physical environment which preserves the quality of the pigs
7. Provide a means to inspect, or receive accurate information about the pigs
Pig Marketing Techniques
Currently, methods of marketing pigs vary by region. Techniques range from decentralized direct sales between individual feeder pig producers and finishers to more centralized, sophisticated electronic markets. Each method offers unique circumstances and challenges for pig producer and/or buyer. The most prevalent marketing methods include the following:
Direct feeder pig producer to feeder pig finisher. The producer may advertise feeder pigs locally to attract interested buyers, or the producer may develop long term supply relationships with one or more buyers.Price is generally negotiated and, in instances of longer-term contractual arrangements, may be established using an agreed upon formula price. These formulas often are based on a nearby or benchmark public price. Determining a fair formula can be difficult, especially if the quality of the pigs being sold differs substantially from the average at the public markets. Many public markets no longer report prices. Both sellers and buyers need to be informed of market conditions and have a means to determine the economic value of the pigs in order to settle upon a fair price.
(just like in goat market) A producer brings or consigns pigs to the livestock auction operated by a firm or farmer owned marketing cooperative. Pigs may be sold as delivered or graded and pooled for sale to buyers. Pigs graded into uniform-graded lots are attractive to buyers. Pigs are sold to the highest bidder and price depends upon buyer demand. Generally, once pigs enter the sale ring they are sold without opportunity for withdrawal by the seller.
Electronic auction selling has gained increased popularity in recent years with the opening of an electronic auction using social media and classified web site e.g olx.com.ng information along with the identification of the seller is made available to prospective buyers via the internet. Consigned pigs can be reviewed by potential buyers who then participate in an open auction as each pen is offered for sale. No commingling or central collection of the feeder pigs occurs. Pigs move directly from the seller to the buyer. For a consignment fee sellers reserve the right to withdraw. pig producers considering this type of market should closely investigate the process and clauses for the particular market they are investigating. This marketing method offers potential benefits to both buyers and sellers, if properly designed and operated.
Price, Demand, Supply Structure
Feeder pig prices are volatile, reacting to numerous economic factors. This price variability confers considerable risk to both feeder pig producers and buyers. The observed price fluctuations are a result of changes in demand for and/or supply of feeder pigs.Feeder pig supply is determined by sow farrowings and weaned litter size. The higher the farrowings, all else constant, the more feeder pigs that will be available and the lower the feeder pig price.
Pig supplies are essentially determined and price will be driven primarily by feeder pig demand factors. Primary determinants of feeder pig prices are shown in Figure 2. Feeder pig demand is influenced by numerous factors. Profit expectations of feeder pig buyers will be the major pricing factor. Expected market pig prices at the time the feeder pigs will be slaughtered are the most important consideration. The live pig futures price for contracts maturing near the expected slaughter hog marketing date serve as an expectation of future cash slaughter hog market price levels.
Thus, increases in deferred live hog futures prices generally signal increased cash feeder pig prices. Any economic factor that affects market hog prices, including pork production, production of competing meats, meat exports and imports, consumer income, and strength of economy exert indirect influences on feeder pig prices.
The second most important factor affecting feeder pig demand and prices is feeding costs. Feeding costs are affected both by the cost of the feed itself and the efficiency with which the animal can turn these inputs into sale-able pork. Increases in feeding costs reduce feeder pig demand driving prices down. As a result, weather affecting feed grain and soybean meal prices can have dramatic influences on feeder pig prices.
Characteristics of the pig itself, such as its genetics and health status plus the environment within which the pig will be finished, and also affect feeding costs and thereby feeder pig prices. Other costs of feeder pig finishing, including interest rates, labor costs, routine health costs, energy costs, and building and equipment costs also affect feeder pig prices. One method to project the expected influence of changes in feed costs and expected slaughter hog prices on feeder pig prices is to develop feeder pig finishing budgets to determine break-even feeder pig purchase prices for different feeding costs and slaughter hog prices. Actual feeder pig prices usually follow break-even prices (perhaps with a profit adjustment).