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Slimmer Margins Require Expert ROI Focus

July 8, 2024
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Return on Investment (ROI) is the bane of every pork producer or pork production systems manager. And with increasing margin cuts and low markets to compete in, it’s more frustrating than ever.

Improving ROI is always a priority to pork producers, however, according to Daniel Gascho, DVM (Purdue, ’17), partner in Swine Health Care, Mexico, IN, it’s not always their top priority. “To improve ROI, you need to spend wisely. That doesn’t mean you have to know the perfect formula or your overall costs; it does mean you need to approach everything strategically. That’s where I as a pork-focused veterinarian can excel in helping my clients become more profitable.”

Dr. Gascho and business partner, Duane Long, DVM (Purdue, ’92), practice in the hog-dense area of Northcentral Indiana – ranking in the Top 5 highest pork numbers in the country. A self-professed “numbers geek,” Dr. Gascho utilizes his longtime love of production dynamics, data and metrics to help his swine clients navigate the complexities of ROI while maintaining a high health status.

“What drew me into swine was the production numbers,” outlines the Indiana native. “I realized quickly if I could save a producer as little as a penny to a nickel a head, I was really making a difference for his overall success. Pigs have always been a low-margin species to work with. Producers and their veterinarians need to work closely together to help make decisions based on logic vs. emotions. We can’t afford to make emotionally charged, economic decisions and stay relevant in this business. This has especially changed as the pork industry has become more specialized. Today’s pork producer must be the best of the best to even make any money in the industry.”

That fact, according to Dr. Gascho, makes swine veterinarians more valuable to their clients than ever before. “My swine clients may not have a health problem but want me to show up so I can help them be better,” he states. “While we often add something, sometimes that means we must remove a vaccine that may not be needed as it once was. Or we discuss specific disease challenges that we think we can ‘live with’ versus the cost of the water medication or treatment protocol. While it may be difficult to tell a producer to stop a practice he’s always done or feels he can’t do without, once we sit down and discuss other options that we can implement while ‘living’ with the disease, it can make a huge economic difference in the unit or farm’s bottom line.”

According to the swine practitioner, if you’re in the business after surviving the ‘90s and early 2000s, you’re probably a good pork producer. “Where I get called into a new pork system is because they want to take another step forward. Maybe their current veterinarian is not swine-specific or maybe they just need another opinion. Rarely do I get called to a farm because their health is terrible or are hemorrhaging money. My approach is ‘What is the best decision for you?’ We will sort through every minute detail until we come up with a plan that fits the owner’s business desires – either more pigs, less cost per pig, maximized pig flow, etc. I’m confident with the math and science behind my recommendations. I ask a client to trust the process and I personally help them every step of the way to manage the system to optimize production efficiencies. Pork producers care about decimal points. It’s usually an easy sale convincing them to move to something that works better.”

Dr. Gascho tells his new clients, “Before you move forward with any health or production plan, you need to know what your goal is and how you’re going to measure whether or not you achieved it,” offers Dr. Gascho. “Hence, choosing the right metrics is critical. That said, there are plenty of things to track – ADG, morbidity/mortality, pigs wean per sow, pigs weaned live, etc. However, not all will tell you what you really want to know. To make sure you’re measuring the right things, make sure your metrics are tied to your larger goal, are quantifiable and accurate.”

Dr. Gascho adds, “My new clients are usually caught off guard when I tell them that to improve their overall ROI, sometimes we’re going to do less. It’s not always easy to disrupt a program that has shown to be successful – even though it’s not cost beneficial – and tell the producer we’re not going to continue with the program. You better have your science and experience to back up the recommendation. That’s where I lean on my partners within the Four Star Veterinary System. To say they’ve dealt with it all and see it all is an understatement. They deal with the same issues I deal with, and they have years of tried-and-true advice and management under their belts. Again, all they do is herd health and I’m convinced they do it better than anyone else.”

According to Dr. Gascho, what sets the Four Star Veterinary group apart from a lot of other groups is their specialization in health. “All the Four Star veterinarians are veterinary consultants and thus we can help our clients find the right nutrition, genetics and even market positions, however, we focus solely on health,” asserts Dr. Gascho. “However,” he adds, “I will quickly tell my clients, It’s not always all about health.

“As a producer, you can easily chase a theoretically better thing and still lose money,” he outlines. “Using nutrition as an example, you might hear about this amino acid or this probiotic or yeast product that improves gut health, increase ADG, etc. The fact of the matter is it will probably do all that it promises, however, even if it does what it claims to do and it’s still a net loss, then we stop using it. Vaccine management is the same thing. There are core vaccines (i.e., circovirus) that we’re not going to pull, however, we are always analyzing various diseases and seeing if we can do less expensive management practices vs. incorporating the vaccine or water treatment. If we feel we can manage the disease, that’s what we’ll recommend. There is no such thing as status quo with my clients. Everything is a line item that needs to be reviewed and analyzed against the owner’s goals.”

In conclusion Dr. Gascho adds, “Our goal throughout the Four Star system is to be the best at veterinary medicine. That’s what we focus on with every one of our clients. All the Four Star partners are out in barns every day practicing veterinary medicine. That’s unusual in today’s business model. But it also sets us apart from many practice groups because all we do is veterinary medicine. At the end of the day, the goal of every Four Star veterinarian is to make their clients as sustainable and profitable as possible. I sleep well at night knowing I’m helping my clients reach their goals – even in the toughest markets in agriculture.”