Even on well-managed hog farms, some animals die before being marketed. For example, a 1,200-sow farm that produces 2.2 litters per sow per year and sells weanling pigs may need to dispose of 36 sow carcasses and 7,920 stillborn and other dead piglets annually. A finishing farm producing 10,000 market hogs annually should plan for the disposal of approximately 300 pigs each year (Table 1). These examples are based on a 3 percent annual mortality rate for breeding sows and market hogs and the loss of three stillborn and nursing piglets per litter produced. Farms with lower mortality rates will have lower disposal needs, and those with higher rates will have higher disposal needs. To meet this need, a practical, cost-effective, and environmentally sound means to dispose of routine death losses is essential on all hog farms.

As early as the 1970s there were some isolated hog production or marketing contracts in existence. During this era, such arrangements were limited and the overwhelming majority of hogs were produced and marketed by independent producers on open or "spot" markets. However, during the past 20 years the pork industry has evolved rapidly. Among the factors that have contributed to this rapid evolution are packer and large producer consolidation, the need to control pork supply and price volatility, and the need for pork to be of consistent high quality and competitive with other food protein sources. These conditions have led to the rapid expansion of contractual arrangements in hog production.

In the United States, the proportion of sows bred via artificial insemination (AI) increased from less than 8 percent in 1991 to nearly 70 percent in 2000. AI offers numerous advantages over natural mating. Once collected, a boar ejaculate can be diluted in a semen extender, creating multiple insemination doses that can be used to breed several sows and gilts. This allows more extensive use of genetically superior boars, increasing the rate of genetic improvement within a herd. Fewer boars are necessary on a farm employing AI, and as a consequence, feed, veterinary, and housing costs are reduced. With AI, new genetics can be introduced into a herd with decreased health risks. Finally, use of AI saves time and labor in the breeding barn.