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As feed costs increase, what strategies are you using to offset the impact on profitability?

Published on: 01/26/2021
Author/s : 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 increa...

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Dave Albin, Ph.D. Dave Albin, Ph.D.
VP, Nutrition & Extrusion Technologies
January 26, 2021
Interesting. How does this work with higher-fat diets (more beta-oxidation vs. glucose-ATP)?
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AlzChem AlzChem
Trostberg, Traunstein, Germany
February 4, 2021
Dave Albin, Ph.D. Hi Dave, Interesting question...since Creamino increases muscle creatine levels allowing for direct replenishment of ADP to ATP I am not sure what effect a higher fat diet would have. Does a high fat diet have an influence on muscle glucose levels? Or would a low glucose diet lead to lower glucose levels in the muscle?
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Ewa Sujka Ewa Sujka
Commercial Manager
LIPTOSA LIPTOSA
Madrid, Madrid, Spain
February 11, 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.

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AlzChem AlzChem
Trostberg, Traunstein, Germany
February 11, 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.
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February 15, 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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Felix Klose Felix Klose
Sales Manager
AlzChem AlzChem
Trostberg, Traunstein, Germany
February 18, 2021
Muabecho idrisu You are absolutely right, that a careful assessment is required to determine perfomance or cost saving benefits. Our aim is to help in this assessment and bring our technical experience to the table and reduce the risks for the customers while increasing the benefits.
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February 15, 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
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AlzChem AlzChem
Trostberg, Traunstein, Germany
February 19, 2021
Mohammad Afrouziyeh Excellent point. We are seeing evidence of this now in the U.S. market. As prices for breast meat have fallen, we are seeing less focus or emphasis on breast meat yield when formulating diets or considering feed additives.
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February 19, 2021
David Nelson Thank you so much for your comment. That's where yield prediction models (breast, leg, wing) come to play in evaluating sample partial budget for either whole or cut-up chicken. These models can be also used to evaluate feed additives from an economical standpoint as you mentioned.
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