Income losses in the event of a short slaughter delay

Producers suffer income losses when the timing of slaughter is exogenously delayed beyond the opti-mum. The losses increase when the expected delay increases. The results suggest that the loss due to an additional day of delay is smaller when the ex-pected delay is short than when exex-pected delay is long. When expected duration of the restriction pe-riod is certain, information on restrictions is

ob-tained at 116 kg, and the timing of slaughter is de-layed by 3 days, the producer suffers €3.44 income loss due to decreased carcass quality and mainte-nance feeding. When the delay increases to 10 days, the loss increases to €9.76, and when the de-lay increases to 17 days, the loss increases to

€16.42 (Figure 30).

The timing of the arrival of information on de-lay is important. When restrictions on slaughter are imposed on young pigs, the producer has more time to minimise losses though feeding than when the restrictions are imposed on pigs that are ap-proaching slaughter maturity. Therefore, income losses increase when the pigs affected by the re-strictions become larger. When rere-strictions on slaughter are imposed for 10 days at 111 kg live weight, income losses due to delayed slaughter are

€4.21 per capacity unit. When the same restric-tions are imposed at 116 kg, the losses per capacity unit are €5.55 higher than in the 111 kg case. On the other hand, when the restrictions are imposed so that slaughter becomes feasible 3 days after the optimal slaughter date and the restrictions are im-posed at 111 kg live weight, the loss is €0.77 high-er than when the restrictions are imposed at 116 kg (Figure 30).

4.45

4.27 8.87

4.12 9.11 15.04

4.21 9.79 16.16 23.03

3.44 9.76 16.42 23.49 31.07

0

Expected duration of the delay

€/animal

Delay imposed at 93 kg Delay imposed at 99 kg Delay imposed at 105 kg Delay imposed at 111 kg Delay imposed at 116 kg

Fig. 30. Expected income losses when the timing of slaughter is delayed and expected duration of the delay is known in advance.

Information about the delay is re-ceived when the pig’s live weight is either 93 kg, 99 kg, 105 kg, 111 kg or 116 kg, and the slaughter is allowed 3–31 days after the pos-sibility of a delay is observed.

0.00 0.70 3.43 7.56 12.31

0.01 1.38 5.14 10.13 15.57

0.07 2.72 7.73 13.61 19.72

0.69 5.54 11.84 18.67 25.53

3.46 10.10 17.37 24.90 32.27

0

Expected duration of the delay

€/animal

Delay imposed at 93 kg Delay imposed at 99 kg Delay imposed at 105 kg Delay imposed at 111 kg Delay imposed at 116 kg

Fig. 31. Expected income losses when the timing of slaughter may be delayed and the expected du-ration of the delay is uncertain.

Information about the delay is re-ceived when the pig’s live weight is 93 kg, 99 kg, 105 kg, 111 kg or 116 kg, and the slaughter is ex-pected to become feasible 3–31 days after being notified of the possible delay.

When the exact timing of delayed slaughter is uncertain, i.e. when the expected duration of the restriction period is uncertain, producer income losses generally increase. This holds particularly for the cases where pigs are young and the expect-ed duration of the restriction period increases. Un-certainty implies that the pig can be delivered for slaughter before or after the expected duration of the restriction period expires. Thus, when restric-tions are imposed for 10 days for instance, the pro-ducer is expected to suffer income losses in all scenarios (Figure 31).

When expected duration of restrictions in-creases, or when pigs facing the restrictions be-come younger, the introduction of uncertainty over the expected duration of the restriction period creases the losses. For example, uncertainty in-creases losses by €0.69 per capacity unit when restrictions are imposed for 3 days at 111 kg live weight, and by €0.02 per capacity unit when the

restrictions are imposed at 116 kg (slaughter de-lays with certainty). If the expected duration of the restriction period increases to 10 days, for instance in the 111 kg scenario, then the losses increase by

€1.33 when uncertainty over expected duration is introduced. Thus, the cost of uncertainty increases when the probability of delayed slaughter increas-es (Figure 31).

Instead of taking the risk of delayed slaughter due to logistic problems, producer has an option to market the pigs for slaughter prematurely. Then producer allows certain losses due to premature slaughter in order to avoid losses due to delayed slaughter. When a pig is slaughtered at the optimal slaughter weight, producer receives €143.67 in-come from marketing the pig for slaughter. The figure includes income from the meat and slaugh-ter subsidy but excludes the cost of a replacement animal. In scenarios where the pig is slaughtered prematurely, returns from the slaughter are

€138.37 when the pig is slaughtered at 111 kg live weight (one week before the optimal slaughter date), €131.85 when the pig is slaughtered at 105 kg live weight (two weeks before the optimal slaughter date), €121.70 when the pig is slaugh-tered at 99 kg live weight (three weeks before the optimal slaughter date), and €108.94 when the pig is slaughtered at 93 kg live weight (four weeks be-fore the optimal slaughter date).

A prematurely slaughtered carcass is lighter than a carcass slaughtered at the optimal slaughter weight. In addition, the producer obtains more in-come from subsequent pigs when a new piglet is obtained immediately after the slaughter than when a new piglet is obtained after lifting the re-strictions. When the producer slaughters the pig prematurely at 111 kg live weight and obtains a new piglet immediately, his/her income loss is

€0.36 per capacity unit. Similarly, slaughter at 105 kg live weight results in €1.11 income loss.

The quality-adjusted price of pig meat decreases rapidly when the weight of a slaughtered pig falls below the target weight range. Therefore, estimat-ed income loss from slaughter at 99 kg is €5.55 and at 93 kg it is €12.59.

When a producer slaughters a pig prematurely and the capacity unit remains idle until the restric-tions imposed on slaughter are lifted (i.e. piglet supply is fixed), his/her income loss is the higher the longer the expected duration of the restriction period is. Since additional losses depend only on

discounted future returns, each additional day of the restriction period increases the losses almost linearly in the very short run. An additional week of idle production capacity increases the losses by

€2.89–€2.92 in all scenarios where the expected duration is certain (Figure 32).

When uncertainty about the expected duration of idle production capacity is introduced (Figure 33), the capacity unit can remain idle for a shorter, a longer or for exactly the same time than when expected duration is certain (Figure 32). Introduc-ing uncertainty over the expected duration of the idle production capacity decreases producer’s ex-pected income losses because he/she can then ben-efit from a possibility to restock the capacity unit before the expected duration expires. When ex-pected duration is 17 days or fewer, the difference between deterministic and stochastic scenarios is less than €0.10 per capacity unit. Introducing un-certainty over the expected duration of idle capac-ity decreases expected losses in the 24 days sce-nario by €0.45 per capacity unit, and in the 31 days scenario by €1.45 per capacity unit. Increas-ing the expected duration of idle production capac-ity from 3 days to 10 days increases the losses by

€2.91 per capacity unit. Thereafter, the value of each additional week decreases so that increasing expected duration for instance from 24 to 31 days increases the losses only by €1.89 per capacity unit.

13.42 16.33 19.25 22.15 25.05

6.38 9.29 12.21 15.11 18.01

1.93 4.85 7.76 10.67 13.57

1.18 4.10 7.01 9.92 12.82

0.81 3.73 6.64 9.55 12.45

0 10 20 30 40 50 60

3 10 17 24 31

Expected duration of idle capacity

€/animal

Slaughter at 93 kg Slaughter at 99 kg Slaughter at 105 kg Slaughter at 111 kg Slaughter at 116 kg

Fig. 32. Expected income losses when a pig is slaughtered prema-turely and a replacement piglet is acquired only after a delay. The expected duration of the idle pro-duction capacity is known in ad-vance. Live weight upon prema-ture slaughter is 93 kg, 99 kg, 105 kg, 111 kg or 116 kg, and the ex-pected duration of idle produc-tion capacity is 3–31 days.

13.42 16.33 19.19 21.70 23.60

6.38 9.29 12.15 14.66 16.56

1.93 4.85 7.70 10.22 12.11

1.18 4.09 6.95 9.47 11.36

0.81 3.72 6.58 9.10 10.99

0

Expected duration of idle capacity

€/animal when the pig is slaughtered pre-maturely and the replacement piglet is acquired only after a de-lay. The expected duration of the idle production capacity is uncer-tain. Live weight upon premature slaughter is 93 kg, 99 kg, 105 kg, 111 kg or 116 kg, and the expect-ed duration of idle production

Expected duration of the delay

€/animal

Delay imposed at 93 kg Delay imposed at 99 kg Delay imposed at 105 kg Delay imposed at 111 kg Delay imposed at 116 kg

Fig. 34. Expected income losses when the timing of culling can be delayed and the expected dura-tion of the delay is uncertain, but at least 45 days. Information about the delay is observed when the pig’s live weight is 93 kg, 99 kg, 105 kg, 111 kg or 116 kg, and slaughter is expected to become feasible 45–66 days after the ob-serving the potential for delay.

7.2.3 Income losses in the event of a