Question-and-Answer Session
Operator
(Operator Instructions) The first question is from Bob Gibson – Octagon Capital.
Bob Gibson – Octagon Capital
66,000 hogs, was that as of the end of the quarter?
Michael Vels
I'm sorry, Bob. Can you just give me a little more context to that question?
Bob Gibson – Octagon Capital
You said you had effective ownership of 66,000 hogs.
Michael Vels
You're talking about the number of sows under management?
Bob Gibson – Octagon Capital
Yes.
Michael Vels
Yes. that was at the end of the quarter.
Bob Gibson – Octagon Capital
Just a conceptual question, how are these farmers going to make any money?
Michael McCain
A conceptual question. We have many cost adjustments and structural changes underway. The feed costs, we hope actually that the basis between wheat and corn will restore to more normal levels over the course of the next six months to a year.
We believe that the lower cost of the vertically-integrated model that we're in the process of implementing will significantly contribute to cost reduction. We have a number of elements of our operating costs which we're looking for improvement. Many of our inputs, as the currency is rising, we're working those costs down. Everything from veterinary supplies to capital costs. So we're hoping and optimistic that we can adjust, but it does take some time.
Bob Gibson – Octagon Capital
It sounded like you were going to be spending a lot of money in this current fourth quarter. Is this a new direction, or was this planned? Just give us some color.
Michael Vels
It was planned, Bob. The estimate of 260 for the total year is something we've held to all year. Many of the investments that we're making are back ended. We only recently started on the construction, for example, of our distribution warehouses out west and so we currently have the floors in place and the walls up in Vancouver and Saskatoon. A lot of that spending will be coming in the fourth quarter.
Secondly, much of the capacity investment in the UK began construction in the third quarter, it will be paid for in the fourth. A fairly significant amount of the first shift at Brandon will be finalized and paid in the fourth quarter as well.
So there are several back-ended projects, just in terms of payment flows, but that is what we planned and it is within our estimate we provided at the beginning of the year. And, I may add, no new projects over and above what we had anticipated at that point.
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