Focus on Feed Conversion

One of the top pork producers in the US has found a new way to meet the challenge of rising feed prices. In his paper at the 2008 Australian Pan-Pacific Pork Expo, Dr Dean Boyd of The Hanor Family of Companies shows how removing some pigs from the pen (pen unloading) can improve overall margin.
calendar icon 30 October 2008
clock icon 5 minute read

"Our world has fundamentally changed. The cheap feed era is over for the foreseeable future and we must deal with the fact that ingredient prices are increasingly subject to global markets and global politics," said Dr Boyd, Technical Director and Nutrition Leader for The Hanor Company.

"At our company, key decisions have been made to improve our financial resilience over the next 10 years because what we are presently doing is not sufficient going forward."

He explained that the doubling of feed costs – to over $120/pig has led to expected average losses in 2008 of at least $34/pig. "We expect the red ink will continue to flow into next year due to the high feed cost and the oversupply of pigs. We also expect a loss of 250,000 sows from North American production, 90% from Canada. And we predict a new price record for pigs – over 90 cents/lb for carcass," he continued.

"Every 0.01 improvement in FCR will reduce feed cost by $0.28 to $0.30 per pig"

Virtually every feed ingredient has increased in price but corn and soybean meal increases account for 85% of it. The aggressive ethanol mandates are to blame for the corn increase. Within Hanor, Dr Boyd said, bid prices for corn went from an average of $82/ton between 1999 and 2006 to $138/ton in 2007 and an estimated $227/ton in 2008. Our finisher diet for 2008 will be around $317/ton, pushing our cost of live gain to $0.43/lb.

"The growing export market has certainly helped us," Dr Boyd said. "This year, one in five pigs produced in North America will be exported. But we cannot export our way out of the feed cost predicament. The US food-for-fuel energy policy is producing a demand shock in world agriculture and by the time policy makers recognize that the biofuels policy makes no sense, the entire world will have paid a significant price.

"To survive, pig producers must maximize their equity in land and facilities, lower debt, increase emergency funds in the bank, lower fixed costs, and establish a strategic grain reserve to ensure supply of grain.

"On the production side, a key area to be addressed is feed conversion. Every 0.01 improvement in feed conversion ratio (FCR) will reduce feed cost by $0.28 to $0.30 per pig. Conversion ratios must be improved by every possible means. Collective disciplines must both increase the rate of FCR change and maintain FCR despite elimination of protein or energy components in the diet."

Addressing FCR, Dr Boyd reminded the audience that the goal is to achieve the best feed cost per pound of gain. The best FCR will not always be the best cost of gain. Key areas which can impact FCR include:
  • Matching net energy levels to growth times
  • Amino acid curves matched to input costs
  • Grinding feed to the lowest particle size practical
  • Earlier and longer metabolism modification, e.g. Paylean use through step-up programs
  • Maximizing phytase enzyme use
  • Adding finishing feed phases
  • Timing first marketing cut to prevent FCR deterioration
  • Re-ranking AI sires to FCR alone for foreseeable future
  • Feeding pelleted diets to deliver fine particle size grain, where health can be adequately controlled.
The table below with data from our system illustrates the affect that pen unloading can have on FCR and on cost of gain.

Impact of Pen Unloading on Feed Conversion (FCR) and Average Daily Gain (ADG)
Pigs/Pen 24 24 24
Pigs Removed 0 6 12
Space/pig (square feet) 7.25 9.67 14.50
Pen Start Weight (lbs) 249 250 250
Residual Weight (lbs) 249 244 233
Final Weight (lbs) 278 280 270
Removed lbs 0 1,608 3.208
Removed Ave Weight 0 268 267
Marginal Days on Feed 20.0 19.7 20.1
Marginal ADG (lbs) 1.45 1.83 1.84
Marginal FCR 4.24 3.76 3.63
Feed cost $/30 lb of gain 12.72 11.28 10.89
Total lbs/pen 6,672 6,648 6,444
Marginal $/pen 2,707 2,748 2,739

Dr Boyd said that giving pigs more room for the last 30 pounds of growth clearly improved FCR, lowered cost per pound gained, and nets more marginal dollars per pen. He noted that the biggest impact comes from removing the first six pigs. Taking out double that did not double the benefits.

In summary, Dr Boyd said, "The feed crisis has forced Hanor to take some actions that it would not have taken otherwise. There is some attention to detail that may not have been quite as important under less extreme circumstances. To survive, we have to fast track chronic feed cost reduction steps."

R. Dean Boyd PhD is Technical Director and Nutrition Leader for The Hanor Company, one of the top 20 pork producers in the US with a multi-state production system. He presented this paper at the Australian Pan Pacific Pork Expo in June 2008.

October 2008

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