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What the textbooks don't tell you about…Farm-specific diets (part 3): Current costs

Consumer resistance from the farm-specific diets (FSD) concept outlined in the preceding columns comes from:

• Producers – who are already struggling with costs of production.
 
• Feed manufacturers – some of whom seem wary of a concept which they feel will involve them in extra work, both in the formulation department and out on the mill floor.
 
Producers – should they be worried about costs?
 
No, because as explained below they are not onerous. And no, because the paybacks have easily outweighed what costs there are.
 
So what are his costs?
Producers are mainly worried about the need to weigh some of their pigs. There is no need to be. FSD, properly managed and from the evidence so far, reduces, not increases the cost of production because FSD pigs finish sooner. As I have described in previous months, the manufacturer’s nutritionist needs to receive by e-mail either the input and output weights of the growing pigs shipped, or he may prefer the weights of a representative sample taken usually at the start and finish of their growth period, plus either one or two intermediate weighings.
 
The food consumed over the period(s) needs to be recorded, plus any culls or deaths. For the whole herd option the information is already in the office records – from the processor’s returns and from the feed invoices for the period of growth. No need to weigh anything. The data just needs assembling and transmission by email, say four times a year for the number of batches grown from 30 to 105 kg. The office cost has been 0.006% of COP – negligible, so forget it!
 
With the representational option it is necessary to go out and weigh a few pigs (three or four pens of 15 per pen) and keep a record of the food consumed. Assuming as many as four such pig weighings across the growth period (start and exit weights and perhaps two intermediate weighings – let your nutritionist advise you) with two men on the job and sending in the data, the average cost so far has been a 0.62% increase in COP.
 
If a group weigher is available (larger farms) then this cost is halved.
 
Paybacks
Working on the updated performance and far more useful measurement terms of MTF (saleable Meat produced Per Tonne of growing/finishing feed) and attaching to it the vital figure of PPTE (Price Per Tonne of food Equivalent), before-and-after figures have been an improvement average of 18 kg MTF (30-105 kg). At current pig price and feed price this is equal to an equivalent 16% reduction in cost per tonne, (PPTE 16% less, from 30-105 kg).
 
The feed manufacturer
By selling growout feed on the FSD principle rather than to a listed price (which has always had to be a nutritional compromise), his costs are higher in collating the information received from each customer, compiling different formulations, and more one-off mixes in the mill.
 
Quite understandably, information on these extra costs have not been easy to obtain, and those forthcoming have been variable between one company’s mills, let alone between different companies. I have had to base my calculations on the difference in costs over a period between what they were to the customer on the old system, and what they were when he transferred to a FSD concept. I have made allowances for ongoing changes in raw material and delivery costs across the period of change.
 
Thus a manufacturer’s typical cost increase per tonne using the FSD concept seems to be around 4%, all passed on to the customer. 4% equates to an increase in the producer’s COP of around 2.4%.
 
This is added to the farmer’s own extra costs of a fraction over 0.62%, so for a little over 3% added to his COP he seems to be achieving 18 more kg of saleable meat/ tonne of food, providing a PPTE advantage of 16%. This is an REO (Return on Extra Outlay) of 3.33:1 from food savings alone.
 
The FSD pigs also finished several days sooner, thus saving housing overheads – a very variable figure from farm to farm, so I have not added it to the figures above. But this could increase the REO to well over 4:1.
 
‘Before’ and ‘after’ data
Scientists dislike it and statisticians detest it. But sometimes no information yet exists on the economic benefits of a new system or concept. These are more difficult to assess accurately with what has gone before, compared to a new product or piece of equipment because of the variables of price, climate and markets across the time needed to form an opinion about a whole new idea.
How does a sharp-end adviser respond to the inevitable question from his clients? For instance: “Yes, interesting. But what might the new idea mean in terms of dollars and cents?”
 
Often there is nothing for it but to try to collect some information from before-and-after figures on the same farm. If you have enough of these and monitor variations over time carefully and compensate for them, then some guidance might be useful. So...1. There are sufficient examples to consider – say 10 to 15.
 
2. Careful corrections are made on each one to include price changes over time plus major differences in other areas.
 
3. ‘Time’ being (I suggest) one to two years’ records prior to the change and for growing/finishing pigs at least two complete batches (four is better) subsequent to the change. Two parities for sows/gilts. This I am doing with new concepts like Farm Specific Diets, rescue decks and parity segregation as I come across practitioners of the ideas. What do others think? The textbooks are silent on the subject.
 
 
 

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