Producer Margins, FCR and Feed Energy Costs: a Genetic Perspective30 April 2013
Genetic improvement needs to consider all the economically important traits since many traits affect profitability, according to Bob Kemp, PhD PAg, Vice President Genetic Programs and R&D with Genesus Inc. Too much focus on fed conversion may result in unintended changes that could negatively affect commercial producer margins.
Dr Kemp says he has been reviewing some of the articles presented at a couple of recent pork industry seminars. There were some interesting papers and take-aways that he believes are tied together and would like to share some thoughts on them.
The first was a comparison of average and high profit producers presented by Brian Melody at the Manitoba Swine Seminar (Melody, 2013). He showed a 2010-2012 wean-to-finish database summary in which he contrasted average with the top 25 per cent of producers based on profit ($ per head).
The first thing Dr Kemp noted was a margin difference of $16.02 in favour of the top 25 per cent profit producers. That is significant but what he found very interesting was the make-up of that margin difference. Of the $16.02 the highest component was increased average revenue per head at $6.51, a full 40.6 per cent of the margin difference, in second place was weaned pig cost at $5.26 (32.8 per cent) and finally all other costs at $4.25 (26.5 per cent).
"It makes sense to express feed efficiency on an energy basis such as Mcal of energy per unit of gain "
Looking a little more closely at some of the revenue differences, the top 25 per cent had a 5-lb higher average selling weight at the same marketing age, higher top marketing revenue and average selling price and fewer pounds of cull animals.
Switching to the cost side, there were some interesting components to consider. The top 25 per cent had a poorer feed conversion ratio 2.67 versus 2.64 but a better calorie conversion 3,951 versus 3,975. Finally, the top 25 per cent had a better average daily gain of 1.72 versus 1.67. So growth rate and energy conversion were critical, which started Dr Kemp thinking about the value of the feed conversion ratio (FCR) (kg feed/kg gain) measurement tool and its impact on producer margins and genetic programmes in this age of lower energy diets.
In this year's Banff Pork Seminar Proceedings, there was a paper by John Patience entitled 'Managing energy intake and costs in grow-finish pigs'. Patience (2013) noted that energy cost from basal ingredients has increased more than four times from 2007 to 2012 and using 2012 ingredient costs, that meet the energy specifications of the diet represented over 87 per cent of the final cost of the diet.
Energy intake - the main driver of pig performance - is a function of dietary energy concentration and feed intake of the pig. As energy becomes more expensive, the industry has moved towards lower energy concentration in the diet, thereby increasing the importance of feed intake to maintain a consistent level of energy intake. To quote Patience (2013) "Pigs that have a high level of daily feed intake are most likely to perform well on lower energy diets, because they can maintain daily energy intake by simply eating more feed. Lower energy diets are usually less expensive, and if growth rate is not compromised, result in the greatest net income."
Clearly, focusing on the traditional FCR measurement tool will create a situation whereby poor decisions can be made when lower energy diets are being utilised.
This led Dr Kemp to an article by John Patience in the proceedings of an international conference on feed efficiency in swine. The topic of his presentation was the influence of dietary energy on feed efficiency in swine. He, along with others at the conference, discussed alternative measures of feed conversion that would more appropriately reflect the important components of feed use. Efficiency of feed utilisation is clearly an important metric in pig production. Energy intake is an important driver of pig performance and energy is the most expensive component of the diet. Thus it makes sense to express feed efficiency on an energy basis such as Mcal of energy per unit of gain (Patience 2012).
"Genetic improvement needs to consider all the economically important traits since many traits affect profitability"
So what does this mean for genetic selection and trait emphasis in this time of high feed energy costs? As demonstrated by Melody (2013) heavy, high yielding carcasses that drive more income, energy (calorie) conversion and growth rate are critical factors for high-margin producers. Many selection programmes currently focus on keeping feed intake constant as a component to improve FCR. However, going forward, this may need to be reconsidered if lower energy diets become the standard in the industry.
Expressing intake on an energy basis may be a more informative trait. As well, testing programmes may need to fully integrate diets that are reflective of the commercial industry.
In closing, Dr Kemp says that genetic improvement needs to consider all the economically important traits since many traits affect profitability. Too much focus - or a single focus - on FCR may result in unintended changes that could negatively affect commercial producer margins.
Patience, J.F. 2012. The influence of dietary energy on feed efficiency in grow-finish swine. Feed efficiency of swine. J.F. Patience, ed. Wageningen Academic Publishers, Wageningen, Netherlands. p101–129.
Patience, J.F. 2013. Managing energy intake and costs of grow-finish pigs. Advances or pork production. Volume 24. R.T Zijlstra Ed. University of Alberta, Department of Agricultural, Food and Nutritional Science, Edmonton, Alberta. p29–36.
Melody, B. 2013. Optimize wean-to-finish performance to maximize profits. Proceedings of the Manitoba Swine Seminar 2013. p117–126.