Why aren’t you using AIV?

01-03-2012 | |
John Gadd Topic: Pig Management

AIV (Annual Investment Value) is a very underused measurement term by pig farmers the world over. Pig producers have a vast range of options in how best to spend their hard-earned capital. There are at least 100 feed additives to choose from, over 120 medicinal products and double that number of pieces of pig equipment, all of these from the very cheap to the extremely expensive. AIV (I invented the term 25 years ago) narrows the choice to a considerable extent.

 A simple AIV calculation measures how many times your investment is turned over in a year, the usual timescale banks and other lenders use. The more times it is turned over, with each use hopefully bringing in a return, the more efficiently your money is being used.
 Example: Take a product or idea (A) which, from the published evidence returns 4 times its outlay each time it is used in a pigs growth cycle. This REO (Return on Extra Outlay) of 4 to 1 looks to be good value. Maybe it is, but that is not the end of the story.
Supposing another option or idea in the same area of pig rearing, product (B), which is used only during  the pre-weaning stage (a creep feed, an additive, or a vaccine, or extra heating etc) gives an REO of 2 to 1. A no-brainer – (A) still looks to be twice as good.
Wait a minute – an AIV on both options needs to be established.  Product (A) used in a growing finishing feed, is turned over 2.5 times a year – the time it takes for a growing pig to be shipped. Its AIV is 4 x 2.5= 10.
Product (B), used only in the farrowing barn, is turned over 10.4 times a year (28day weaning with the usual `down days`). Its AIV is 2 x 10.4 = 20 8, thus it promises to be twice as good a way of investing money than product (A). 
Not only is product (B) likely to be a better use of money over a year with its much higher AIV, but a further investigation into the relative physical performance the two options  often reveal a better financial benefit at slaughter. This is because money invested in the pig when it is (very) young – feed,  comfort,  cleanliness,  immune stimulation/health, freedom from stress/competition – and especially  stockmanship and the time to do it well – all really pay off at slaughter.
 A quick AIV check really brings this home and can be done on any investment option. Investment in the several options in the gilt introduction sphere is another area where AIV checks can help to make wise business decisions. Ventilation and genetic improvements are others.

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