Every pork producer eventually faces the same set of questions:
Should I fix this barn? Tear it down? Build new? Rent someone else’s?
And with today’s construction prices, none of those decisions come easy. But there is a practical way to think through it — one that starts with understanding your financial footing, keeping your barns functional, and putting your dollars where they’ll actually earn something back.
Start With the Most Important Step: Know Where You Stand
Before considering any barn project, the first task is simply checking whether your operation is in a position to make an investment at all. A balance sheet can tell you a lot about that.
A helpful rule of thumb:
Your percentage of equity should be roughly equal to your age.
A 30‑year‑old operator can typically carry a higher percentage of debt than someone nearing retirement. As producers age, lenders expect a stronger equity position and less debt load as they have less time to pay it off.
Beyond that, two financial ratios paint the clearest picture:
- Current Ratio (current assets ÷ current liabilities):
Shows if you can comfortably cover the next 12 months. - Debt‑to‑Asset Ratio (total debt ÷ total assets):
Shows how leveraged the operation is overall.
Most bankers monitor these closely and producers are well‑served to keep an eye on them too. They set the boundaries for what’s realistically possible when the urge to upgrade or expand hits.
Keep the Core of Your Operation Running
After you understand your financial footing, the next step is deciding where to direct the dollars or capital you can spend. For operations with pigs, cattle, crops, or combinations of all three, deciding where to allocate the capital can be difficult. But one principle holds up across farm types: Maintain the assets that your core business depends on.
A pig farm needs functional barns. Repairs should happen before animal care and performance suffer. If the barn starts showing a decrease in production, possibly due to needed repairs, there have already been dollars lost.
When You Have Choices, Follow the Return on Equity
If the essential repairs are handled and there’s still capital to allocate, then it’s time to compare options.
Looking at the past five years of returns from each enterprise — pigs, crops, cattle, custom work, or any other activities the farm is participating in — helps show where the best return on equity has been and can help point to where it may be in the future.
It’s also worth considering that the best opportunity might not be in livestock or crops at all. If your balance sheet only consists of agricultural activity today, it may be time to explore what diversification opportunities are out there that will help you achieve your growth goals.
Market Cycles Matter — Even If You Can’t Predict Them
The hog industry is cyclical, and no one hits the perfect timing every round. But operators can prepare themselves to act when the cycle swings.
“Strong years give producers a chance to shore up balance sheets, build equity, and maintain some financial cushion — whether that comes as cash, borrowing capacity, or both. When the market turns downward (as it always does), opportunities show up: barns for rent, buildings for sale, farm partnerships becoming available.
Those opportunities are less likely to appear during profitable years. They show up when operations are being squeezed and need a way out. Strengthening the operation during good years can give a producer the ability to seize that opportunity when assets effectively go “on sale.”
Fix, Build, or Rent? A Practical Comparison
Once you’re ready to make a barn decision, a few practical comparisons help keep things clear.
- Fixing an Existing Barn
In today’s market, probably the most attractive option. If a moderate investment can extend useful life and keep pigs close to home with labor you already have, the return can be strong. The math comes down to total dollars invested, the extra years gained, and estimated income per pig over that span.
- Building New
Construction costs have climbed sharply and don’t appear to be falling anytime soon. Wood and steel may fluctuate, but concrete rarely does. In many cases, new construction doesn’t pencil out like it used to. However, there will absolutely be instances where it may make sense based on spaces available, performance at other sites, and access to capital, to name a few.
- Renting a Barn
This avoids the upfront capital investment, but can limit control. You don’t always get to choose the location, and performance depends on someone else’s labor and management. It can work well — but the tradeoffs need to be acknowledged in the math.
Ultimately, comparing all three options on return, cost per space, and labor efficiency will likely point to the option that fits the producer the best today.
The Bottom Line
Smart decisions start with a clear understanding of your operation’s financial health. Maintain what you rely on, analyze where your dollars earn the best return, and be ready to act when the market cycle presents opportunities. Whether the answer is fixing a barn, renting one, or waiting for a better time, the numbers — not sentiment — should lead the way.
