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PRINCIPLES AND DECISION MAKING IN DIET FORMULATION

Once the principles of diet formulation are understood, there are multiple strategies that can be taken for diet formulation. Production systems around the world will typically decide between a combination of maximizing animal performance, minimize cost of production, and maximize profitability.

From a macro level, once growth and feed intake in the specific production system are known, the first step in diet formulation is to define the most economical net energy (NE) level. The second step is determining the standardized ileal digestible (SID) lysine (Lys) dietary concentration based on the SID Lys:NE ratio. Next, the other SID amino acids (AA) are defined as a ratio to SID Lys. Finally, the levels of macro minerals, trace minerals and vitamins are defined to achieve the requirement in amount of nutrients (i.e., grams, milligrams, or International Units) per pig per day.

THE ECONOMIC IMPLICATIONS OF FIXED TIME VS. FIXED WEIGHT THE ECONOMIC IMPLICATIONS OF FIXED TIME VS. FIXED WEIGHT
A key concept to consider when formulating diets for a specific production system is to understand if the system is marketing pigs on a fixed time or a fixed weight basis. Fixed time means that the system does not have extra or flexible space in the production flow. For example, when a finishing barn reaches 120 days of placement, the pigs are marketed and the barn is emptied for the next group of pigs. Fixed time can also be explained as being space short and fixed weight as space long. Fixed weight program, however, means that the system has some flexible amount of space available in the production flow and, thus, pigs can be left in the barn until they reach a target weight optimum for the given carcass value payment structure of the processing plant.

The difference between these two scenarios is important because it changes the relative value of growth rate. The value of weight gain in a fixed time system is more valuable given the fixed constraint on number of growing days available; however, in the fixed weight system, pigs can stay in the barn at a fixed space cost (i.e., $0.11/pig/day) and, therefore, the economic value of weight gain by a given nutritional or management strategy is smaller compared to a fixed time scenario. Production systems will often be on a fixed weight basis during winter when pigs are growing at a faster rate and on a fixed time basis during summer when pigs are growing at a slower rate. The important point is that these two scenarios represent the range of economic optimums and evaluating both scenarios can be an effective tool for evaluating economic sensitivity of dietary changes.

The concept of optimum nutrient levels to maximize profitability in a fixed time program relative to fixed weight scenario is illustrated in Figure 1A. Tryptophan (Trp) to Lys ratio can have a significant impact on growth rate. In this specific scenario, varying tryptophan to Lys ratio has a much larger economic impact on a fixed time system than a fixed weight system simply because weight gain offers a greater marginal economic return compared to the fixed weight scenario. For additional information on the value of alternative Trp to Lys ratios, please visit http://www.lysine.com/en/tech-info/TrpLys.aspx to download a free dynamic economic calculator for the most economic Trp to Lys ratio specific to a production system.

FIGURE A1. STANDARDIZED ILEAL DIGESTIBLE TRYPTOPHAN TO LYSINE RATIO, %
Standardized ileal digestible (SID) tryptophan:lysine ratio for maximum profit on a fixed time and fixed

FIGURE A1. STANDARDIZED ILEAL DIGESTIBLE TRYPTOPHAN TO LYSINE RATIO

weight basis (PIC 337 × 1050; Kansas State University and Ajinomoto Heartland, 2016).
STRATEGIES FOR DIET FORMULATION
There are multiple strategies, or targets, that are commonly used for diet formulation. Some of the commonly used approaches are:

  • Growth performance basis
    • Maximize average daily gain (ADG)
    • Minimize feed efficiency (F/G)
  • Cost reduction basis
    • Minimize cost per kg of diet
    • Minimize feed cost per kg of gain
  • Profit maximization basis
    • Maximize income over feed cost (IOFC)
    • Maximize income over feed and facility costs (IOFFC)
    • Maximize income over total cost (live or carcass)

A summary showing how these targets can impact formulation strategies and the resulting diets is shown in Figure 1B. These results show the levels of SID Lys to optimize the different strategies listed above. Note that the SID Lys level to maximize profit is greater than that to minimize cost. The economic optimum SID Lys level is dynamic and depends on the market prices. Each of these concepts, and some of the relative risks and rewards, are explained below in more detail.

FIGURE A2. EXAMPLE OF LEVELS OF STANDARDIZED ILEAL DIGESTIBLE (SID) LYSINE TO OPTIMIZE

FIGURE A2. EXAMPLE OF LEVELS OF STANDARDIZED ILEAL DIGESTIBLE (SID) LYSINE TO OPTIMIZE

DIFFERENT OUTCOMES FOR PIC PIGS (20- TO 25-KG PIG; PIC INTERNAL DATA).
FORMULATING FOR MAXIMUM PERFORMANCE
The SID Lysine level to improve F/G is generally greater than that to maximize ADG. However, formulation targeting maximum performance does not take into account any economic measurement but only considers the impact on the biological response.

FORMULATING FOR MINIMUM COST
To minimize the diet cost, the nutritionists set the nutrient levels needed and use a least cost formulation software to achieve the minimum diet cost possible but still meet the needed requirements.

Thus, diet cost is technically an economic variable; however, it does not account for any changes in performance. Feed cost per kg of gain is calculated by multiplying F/G by the cost per kg of feed and, therefore, feed cost per kg of gain takes into account F/G. However, this approach does not take into account any changes in ADG, pig price, or the cost of each extra day in the barn.

Feed cost per kg gain = (Feed:gain x $ per kg of feed)

FORMULATING FOR MAXIMUM PROFIT
Income over feed cost (IOFC), on the other hand, takes into account the market price and the value of weight gain under a fixed time scenario:

IOFC = (market price per kg live weight × weight gain) - (feed cost per kg gain × weight gain)

Income over feed and facility costs (IOFFC) is similar to IOFC, however it is suitable for a fixed weight scenario:

IOFFC = (market price per kg live weight × weight gain) - (feed cost per kg gain × weight gain) -(cost per pig space × days in the phase)

PUTTING IT ALL TOGETHER
The formulation concept of feed cost per kg of gain generally leads to the conclusion of cheaper diets; however, often that is not necessarily the optimum level to maximize net profit. Income over total cost (IOTC) takes into account the dilution effect of the extra gain over each kg of live or carcass produced. For example, let’s assume that the cost of the weaned pig was $40. Therefore, a production system with 121 kg of gain from weaning to market results in a cost of $0.3306 per kg that will be related to the cost from the weaned pig. However, if a given nutritional or management strategy increases the weight gain to 123 kg, the cost per kg related to that initial weaned pig cost will change to $0.325 or 1.7% reduction in cost.

To calculate income per kg of live weight produced:

IOTCL = [market price per kg - ((1/market weight) x (feed cost per pig + other costs per pig + feeder pig cost))]

Or to calculate income per kg of carcass weight produced:

IOTCC = [market price per kg - ((1/market weight/% yield) x (feed cost per pig + other costs per pig + feeder pig cost))]

The following examples use these principles for comparison of a few specific scenarios and the impact on income over feed cost and income over total cost on a carcass basis:

COMPARISON OF MINIMIZING COST VS. MAXIMIZING PROFIT PER PIG
TABLE A1. SCENARIOS AND ASSUMPTIONS.

TABLE A1. SCENARIOS AND ASSUMPTIONS

Diet cost should have manufacturing and delivery included and not just ingredient cost because this is a more accurate reflection of the total cost of the feed consumed and the value of the performance differences.

CALCULATIONS
SScenario 1 (no added fat): 112 days x 0.816 ADG = 91.4 kg gain in the finishing Feed cost per pig = 91.4 kg gain x 2.80 F/G x $0.229 feed cost/kg = $58.61

Scenario 2 (3% added fat): 112 days x 0.841 ADG = 94.2 kg gain in the finishing Feed cost per pig = 94.2 kg gain x 2.632 F/G x $0.245 feed cost/kg = $60.74

In conclusion, the feed cost per pig in scenario 2 is $2.13 greater than scenario 1. Thus, scenario 1 has the lowest feed per cost per pig;

However, in scenario 2 there are more kg produced per pig. Thus, this needs to be taken into consideration:

Considering the market pig price equal $1.21/kg and recalculating using IOFC:

Scenario 1:
IOFC (Sc1) = ($1.21 pig price/kg x 91.4 kg gain) – ($58.61 feed cost per pig) = $51.98 per pig
IOFC (Sc2) = ($1.21 pig price/kg x 94.2 kg gain) – ($60.74 feed cost per pig) = $53.24 per pig

In conclusion, the income over feed cost per pig in the scenario 2 is $1.26 better than scenario 1, thus, adding fat in this scenario is more profitable.

INCOME OVER TOTAL COST
Assumptions:

  • Carcass yield = 74%
  • Carcass price = $1.65/kg
  • Feeder pig cost (22.7 kg) = $55
  • Other costs (facilities/transport/medicines/vaccines/slaughter) = $14.56 per pig

Calculations on a live basis

IOTCL sc1 = [$1.21 - ((1/(22.7+91.4)) x ($58.61+$14.56+$55.0))] = $0.0867 per kg live weight produced

IOTCL sc2 = [$1.21 - ((1/(22.7+94.2)) x ($60.74+$14.56+$55.0))] = $0.0954 per kg live weight produced

Scenario 2 (3% added fat) is 10.0% ($8.7/ton of live weight) more profitable than 1 (no added fat) in this market situation on a live basis.

Calculations on a carcass basis
Thus, scenario 2 (3% added fat) is 8.9% ($11.7/ton of carcass weight) more profitable than 1 (no added fat) in this simulation.

IOTCC sc1 = [$1.65 - ((1/(22.7+91.4)/0.74) x ($58.61+$14.56+$55.0))] = $0.1320 per kg carcass weight produced

IOTCC sc2 = [$1.65 - ((1/(22.7+94.2)/0.74) x ($60.74+$14.56+$55.0))] = $0.1437 per kg carcass weight produced

A summary of absolute and relative economic differences between scenarios are presented in Table A2.

TABLE A2. ABSOLUTE AND RELATIVE ECONOMIC DIFFERENCES BETWEEN SCENARIOS 1 AND 2.

TABLE A2. ABSOLUTE AND RELATIVE ECONOMIC DIFFERENCES BETWEEN SCENARIOS 1 AND 2

In conclusion, there are multiple strategies and approaches for diet formulation. It is important to use an approach that takes into account the value of performance (i.e., ADG, F/G, yield) but also the fixed time or fixed weight nature of the system. Therefore, using approaches such as income over feed (and facility) costs or income over total cost on a carcass basis are suitable solutions to robustly maximize the profitability of swine operations.

Swine Management Resources - PIC

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