Contract livestock production seen as way to grow farms

Ben Hugenberg walks through his hog operation outside of Liberty. The Hugenberg family had a hog operation on his farm for as long as he can remember, but moved to the contract-based system in 2013 as they needed to upgrade equipment. He says it helps them with income on the farm, as grain prices have been lower the past couple of years. | H-W Photo/Jake Shane
By Herald-Whig
Posted: Mar. 6, 2018 9:00 am Updated: Mar. 6, 2018 9:12 am

LIBERTY, Ill. -- Hogs have been raised on Ben Hugenberg's family farm his entire life, so in 2013, when equipment upgrades were needed to continue, a contract operation was considered.

"The cost of these new buildings is substantial, so the contract offers a lot less risk than owning the swine, and it also offers a subsidy toward the grain operation," Hugenberg said.

The move to the contract wean-to-finish operation at the Liberty farm has provided more stability.

"(Contract livestock operations) offer a guaranteed source of income," Hugenberg said. "That really supplies a cash supply throughout the year, and with where the grain markets are, many farmers around this area are going to be into corn and soybeans and some wheat, and there's just not profit, if any. Most people are probably on the negative side this year and the past three to four years.

"So the swine operation for me has provided a secondary source of income to weather the storm, if you will."

Hog production is one option that area farmers can turn to to grow their operations.

Shawn Valter, manager for the Adams County Farm Bureau, said adding a hog operation has been a popular option locally in recent years.

"The idea with that is, it's all contract production, so they're hooked up with a larger company that owns the livestock, and they're just raising it for them," Valter said. "Then they get so much a head. Of course, they have the upfront cost, but it's a little more secure income as opposed back a long time ago when you raised livestock. It was more just on the open market, kind of like it is with grain where you grow it and hope the market is there."

He said farmers can also use the manure for their fields to help keep fertilizer costs down.

Adding livestock production is an option many consider when another family member joins the operation.

"Livestock can provide that income stream for them, especially when the farm may not be large enough on the grain side to provide for an additional person," Hugenberg said. "That really helps if they're wanting to continue that farm into the next generation but it's just simply not big enough to do so."

As yields increase, Valter said many farmers have added a semi-trailer to haul their harvest over the last 15 years. That can open up another source of income.

"Some of them have CDLs and maybe help out driving in the winter trucking for someone else," he said. "Most of them don't truck other than their own things, but some of them do."

Some farmers also look into other side ventures, such as starting a vineyard or a venue for gatherings.

"That's the thing with agriculture and when you talk about farms," Valter said. "There's no two that are identical because everyone has different family makeups."