As feed costs increase, what strategies are you using to offset the impact on profitability?
Published: January 26, 2021
By: David Nelson, Sales Manager at AlzChem
After several years of relatively low corn and soybean meal prices, recent increases have commercial nutritionists and livestock producers looking at various methods to offset the impact of rising feed prices. If finished product prices stay constant and you are getting full benefit from your least cost formulation software, what other strategies are available? At Alzchem we are seeing an increase in the number of customers using the energy sparing effect of Creamino® to lower feed costs. Of course, this is only part of a successful strategy-what has worked for you?
- Decrease the margin of safety in feed formulas. Most nutritionists have a margin of safety built into their feed formulas to account for things such as ingredient variability, variable housing conditions and management practices and health challenges. Are the risks involved with lowering the safety margin acceptable in order to lower overall feed costs?
- Reduce/eliminate the use of certain feed additives. Often times, feed formulas contain certain ingredients that while beneficial under some conditions may not be completely necessary. Would you remove them from some or all of your diets in order to reduce costs?
- Implement strategies to maximize production efficiency. Let us consider a feed additive you tested some months back that showed a reduction in FCR of 3 points. Based on the cost of the additive and the expected return on investment, the decision was made not to incorporate it into your diets. Is it time to revisit that decision considering the value of a 1 point improvement in FCR is different now than it was then? Remember as feed costs increase, the value of improvements FCR increase as well and increases in FCR become more costly.
- Reevaluate the ingredients you are currently using. As an example, standard feeding recommendations for Creamino® (guanidinoacetic acid) are to add it on top of broiler diets at a 0.06% inclusion rate. If we consider its arginine sparing effect and energy value, however, it is possible to include these values in your ingredient matrix allowing for a reduction in protein and energy supplying ingredients while still maintaining most of the benefits of Creamino® addition. Keep the ingredient but assign it a different value.
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University of Alberta
15 de febrero de 2021
Great topic! In addition to what people have talked about the possible strategies, I would like to add using appropriate feed formulation models to offset the effect of ingredients cost on profitability. It means that in addition to ingredients cost (mainly energy and protein cost), product price (income) should be allowed to play a role in the feed formula. This can happen by using non-linear programming models that incorporate product price in determining the economically optimum level of energy and nutrients in the diet.
I have explained the idea fully in the following links:
https://youtu.be/33sjsiy_6ck
https://youtu.be/oXQaMWv6OiY
Alzchem Group AG
11 de febrero de 2021
Hi Ewa. Thank you for your comments and you are correct. As feed prices increase, now would be an excellent time to look at those additives that increase efficiency, ingredient bioavailability or have a sparing effect on costly ingredients such as energy or protein sources.
Elanco
11 de febrero de 2021
In the current raw material cost scenario a concept of feed efficiency is an interesting strategy. It is not only the cost of the feed formulae that matters but also how it will perform. The industry has a broad portfolio of additives focused on increasing bioavailability of fats, some aminoacids and proteins. Bioemulsifiers and aminoacids adjuvants can serve as interesting devices in this strategy.
Insta-Pro International
26 de enero de 2021
Interesting. How does this work with higher-fat diets (more beta-oxidation vs. glucose-ATP)?
15 de febrero de 2021
Cost and performance of feed should be critically looked into in order to know which one really outweigh the other. I am saying this because when feed formula is offsetted because of price increase in raw materials the feed will end up losing its quality and performance.This poor feed performance will affect the farmer in question negatively.High feed performance does not much affect profitability and trying to offset it can be more dangerous in our poultry farming business.
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