MANAGING FEED COSTU.S. PRODUCER PERSPECTIVE

Chad Hagen, PhD

Feed Cost Represents 70% of Total Cost of Production

Mar/0

9

Apr/0

9

May/0

9

Jun/

09

Jul/0

9

Aug/0

9

Sep/

09

Oct/0

9

Nov/0

9

Dec/0

9

Jan/

10

Feb/

10

Mar/1

0

Apr/1

0

May/1

0

Jun/

10

Jul/1

0

Aug/1

0

Sep/

10

Oct/1

0

Nov/1

0

Dec/1

0

Jan/

11

Feb/

11

Mar/1

1

Apr/1

1

May/1

1

Jun/

11

Jul/1

1

Aug/1

150

55

60

65

70

75

Feed a

s %

of

Tota

l C

ost

Source: Agristats 2011

Presentation Outline

What is Best Cost Nutrition? Importance of Feed Conversion Importance of Throughput Herd Health Effects Genetic Effects Feed Processing Effects Feed Additives Diet Design Right Feed/Right Time Risk Management

What is Best Cost Nutrition?

Best Cost ≠ Cheapest Diet

Best Cost ≠ Lowest Cost/kg Gain

Best Cost ≠ Highest Margin Over Feed Cost

Best Cost = Nutrition Solution that Maximizes Profit

Importance of Feed Conversion

Feed Conversion Ratio = Feed/Gain Measure of efficiency of feed utilization It is common to improve F/G while

making feed cost worse F/G improvements must be cost effective Interpreting F/G results is not always

clear cut

Finishing Closeout Comparison

Group 1 2

Weight In, lbs 26 20

Weight Out, lbs 123 120

Mortality, % 4.9 3.7

ADG, lbs/day 0.85 0.85

F/G 2.84 2.86

Gaines, 2011

Finishing Closeout ComparisonAdjusted for In and Out Weight

Group 1 2

Weight In, lbs 26 20

Weight Out, lbs 123 120

Mortality, % 4.9 3.7

ADG, lbs/day 0.85 0.85

F/G 2.66 2.80

Gaines, 2011

Sow Herd Productivity

Best Cost nutrition in the sow herd is affected not only by F/G and feed cost, but also productivity

Sow Herd Throughput and Efficiency

Sow herd productivity (Pigs/Sow/Year) Pigs weaned/litter

Born alive Pre-weaning mortality

Litters/sow/year Farrowing rate Non-productive days

Sow herd feed cost Sow herd F/G Sow diet costs

Importance of Throughput in Best Cost Nutrition

F/G is a measure of efficiency only

Cost/kg gain is a measure of efficiency only

Profitability is driven by efficiency AND throughput

Key is to optimize throughput at the lowest possible diet cost

What is the Best Way to Measure Feed Efficiency in the Sow Herd? When examining whole herd feed efficiency the

productivity of the sow herd directly determines the number of pigs that sow feed use and costs can be spread over

Whole herd feed efficiency for the sow can be measured using sow feed per pig marketed

Common practice for sow farms to measure sow feed per year or sow feed per weaned pig produced

Alternatively can measure sow feed per unit of market weight produced

Gilt Age at Mating is a Driver of Feed Cost and Throughput

Mating too soon adversely affects gilt performance

Waiting to mate is costly with high feed costs

Optimum timing of mating maximizes throughput at the best cost

Wean to Market Productivity

Best Cost nutrition is affected not only by F/G and feed cost, but also by throughput (ADG, livability)

What is the Value of ADG?

Depends on availability of space in a system

Space short = pigs pushed out by the next group resulting in market weight below optimum

Space long = adequate space to achieve optimum market weight

Technologies that increase ADG have more value in space short situations

Effects of Stafac in Space Long vs. Space Short

Go to Excel

Effects of Disease on F/G and Productivity

Direct Effect of Mortality Dead pigs that eat feed but do not produce

weight gain

Growth and Performance Effects Impact on affected survivors Chronic vs. acute

Chronic Immune Stimulation

Affects feed intake Reduced ADG

Lowers lysine requirement

Affects efficiency of gain Mediated through changing composition of

gain – reducing protein deposition in relation to lipid Lean about 75% water Lean more efficient to deposit than lipid

Maintenance requirement increased relative to overall requirements

Dritz, 2011

Major Pathogens Have Changed with the Move to Multi-Site

Production Viral and Mycoplasma

PRRS PCV-2 SIV

H1N1 H3N2

Mycoplasma Hyopneumonia

Environmental Lawsonia Intracellularis Salmonella

Emerging/Reemerging Swine Dysentary TGE

Pathogens that have placental transfer, poorly protective passive immunity, or can live for extended periods of time in the environment.

Dritz, 2011

Effects of Bio-security and Sanitation on Finishing Performance and Cost

Pass Fail P-Value

PRRS+, % 48 73 0.001

ADG,g 831 804 0.001

F/G 2.88 2.97 0.001

Mortality, % 4.8 5.5 0.11

Top Markets, % 91.6 91.3 0.59

O.C. Total, $/pig $3.51 $7.41 0.02

Difference, $/pig $3.90

Dritz, 2011

Genetic Affects

Productivity and feed cost are significantly affected by genetics, both between genetic lines and within genetic lines

Feed Processing

Feed processing techniques have major effects on F/G, feed cost and animal performance

To Pellet or not to Pellet?

Pelleted Feeds Improve feed conversion Improve ADG Increase mortality Increase feed processing cost Improve profitability???

Pelleted Feed

Mortality Genotype Feed interruptions Health and bio-security

Bottom line

To Pellet or not to Pellet?

System-specific decision Ingredient cost Mortality risk

Genotype Herd health status Location disease pressure

If you are going to pellet, make good ones

DDGS is the Best Alternative Ingredient Opportunity

Market Price, $/ton Value, $/ton

Corn $121 $121

Soybean Meal $297 $297

Wheat Midds $80 $95

Pork Meat & Bone Meal

$410 $371

Dried Bakery Product $126 $133

DDGS $106 $140 - 220

Shadow Prices

DDGS in Animal Feeds

Use will typically reduce diet cost

Variable nutrient content Unpredictable animal performance Limits use and savings

Knowledge of nutrient content is key Consistent performance Minimize feed costs

DDGS Variation Overview

VALUE OF ILLUMINATE BETWEEN PLANTS - Swine

Top 50% vs Bottom 50% $318 vs $268 / ton DDGS

20% Inclusion = $ 2.97 / pig 30% Inclusion = $ 4.46/ pig 40% Inclusion = $ 5.94 / pig

Top 25% vs Bottom 25% $334 vs $257 / ton DDGS

20% Inclusion = $ 4.57 / pig 30% Inclusion = $ 6.86 / pig 40% Inclusion = $ 9.14 / pig

®

*Cost per pig is based on 100 kg gain and 2.7 Feed Conversion

DDGS Summary:

DDGS are a very good high quality feed ingredient for both pigs, poultry, and ruminants.

Variation is wide between plants, but understanding difference can be attained.

Changes in Ethanol plants will continue to drive variation of nutrient values.

Proper information can allow for accurate use and possible increased inclusion rates.

Feed Additives

Feed additives can be valuable tools in increasing productivity and reducing feed cost

Phytase

Widely used in U.S. swine diets Releases phytate-bound phosphorus Also releases energy and may improve

amino acid digestibility Not as valuable in high DDGS diets

Phosphorus bio-availability in DDGS is good Takes knowledge to use it properly

Seeing soft bones in many U.S. herds

NSP Enzymes

Not widely used in U.S. diets Ingredients used in U.S. not conducive

NSP enzyme effectiveness Response has been variable Still promoted by many feed companies Mannanase used in some systems to

improve soybean meal digestibility

Impact of Stafac (10 g/ton) on Heat Stressed Barrows

ADG (lbs.)

Heat stress significantly reduced ADG (P<.05)

Stafac improved ADG in both, thermoneutral and heat stress environments (P<.10)

2.51a2.67a

1.57b

1.76b

1.00

1.50

2.00

2.50

3.00

Thermoneutral Heat Stress

Controls Stafac 10

Within each period, treatment values with unlike superscripts differ at P<0.05

Impact of Stafac (10 g/ton) on Heat Stressed Barrows

Feed Efficiency (F/G)

Heat stress significantly increased F/G (P<.05) in both treatment groups

Stafac significantly improved F/G (P<.05) in both environments, dramatically more in the heat stress environment

3.03a

2.89b

3.66c

3.28d

2.00

2.50

3.00

3.50

4.00

Thermoneutral Heat Stress

Controls Stafac 10

Within each period, treatment values with unlike superscripts differ at P<0.05

Risk Management

With recent volatility in commodity markets, risk management has become an important task for profitable swine producers

Summary

Feed cost is 70% of total cost of production

Successful producers will carefully manage all aspects of feeding and nutrition to maximize profitability

This is a complex task!