What Is the Corn-Hog Ratio?
The corn-hog ratio is a calculation for understanding the economic opportunity in raising livestock, used to determine the profitability of raising hogs versus growing and selling corn feed. It is a comparison that takes the price of a hog and divides it by the cost of the corn needed to sustain the hog.
- The corn-hog ratio is used to determine the profitability of raising livestock.
- The ratio is achieved by calculating the price of a hog divided by the cost of the corn needed to feed it.
- The corn-hog ratio is also used to help farmers determine the value of a crop of corn as compared to the value of a hog, which they would have to feed with the same crop of corn.
- If corn is determined to be more valuable than the hog, the farmer would sell the corn and reduce their livestock inventory.
- If hogs are more valuable than the corn, the farmer will use the corn as feed, thus selling less corn on the market.
Understanding the Corn-Hog Ratio
The corn-hog ratio is used to determine the profitability of raising livestock, hogs in particular. The calculation for the corn-hog ratio is the price of one hundredweight (cwt) of live, on-the-hoof hogs divided by the cost of a bushel of corn. The ratio is used to help farmers determine the value of a crop of corn as compared to the value of a hog, which they would have to feed with the same crop of corn.
For example, if the price of a hog is $50/cwt and the cost of a bushel of corn is $4, the corn-hog ratio would be $50 / $4 = 12.5.
Pigs have the highest feed conversion rate, meaning the amount required to bring them to harvest weight is less than any other livestock animal.
Corn is used in this feed ratio because it is a primary type of feed used in raising livestock. Estimations show feed corn makes up between 65% and 70% of hog's diet. Many farmers who grow feed corn could either sell the corn itself as a commodity or feed it to their hogs and then sell the hogs.
If corn is determined to be more valuable than the hog, the farmer would sell the corn and reduce their livestock inventory. If hogs are more valuable than the corn, the farmer will use the corn as feed, thus selling less corn on the market. The profitability ratio is determined to be profitable above 1:12. Anything below that is considered to be unprofitable.
Modern Application of the Corn-Hog Ratio
In the modern era, many farmers do not grow the feed corn required for their livestock. With advanced technology and the wide availability of shipping and delivery, most farmers now opt to have their feed delivered to the farm. The corn-hog ratio is still a reliable way to determine whether or not pork farming will be profitable for the year.
A mathematical ratio cannot account for some events. In 2014, an epidemic swept through the piglet population, causing massive loss of inventory. These numbers altered the pork predictions for that year due to the fear of a subsequent pork shortage. However, the ratio remains the benchmark for farmers trying to decide whether to increase their live hog inventories or to cull it.
What Is a Simple Definition of the Corn-Hog Ratio?
The corn-hog ratio is a ratio and is used to determine the profitability of raising livestock. It is most commonly used for pigs (hogs).
What Happens to Hog Prices if Corn Prices Go Up?
If corn prices go up, hog prices will rise as well. This follows general business practices where if the price of manufacturing increases, the price increases lockstep for the end consumer.
How Many Bushels of Corn Does It Take to Raise a Hog to Market Weight?
It takes slightly more than 10 bushels of corn to bring a hog to market weight. It is worth noting that the corn can sometimes be cut with other ingredients in order to drop the total cost.
The Bottom Line
The corn-hog ratio is not only used to determine the cost of raising a hog to market weight, but can be used to direct those raising livestock if they should sell the hogs, or sell the corn while reducing their amount of livestock. Certain events can affect this ratio, such as disease or rising corn costs. In the end of the day, the farmer will need to decide which product they will sell during that cycle.