Impact of changing ingredient economics on diets and pig performance

By Mike Tokach, PhD; Bob Goodband, PhD; Steve Dritz, DVM, PhD; Joel DeRouchey, PhD; Jim Nelssen, PhD Kansas State University, Manhattan, Kansas

Introduction

The rapid increase in the cost of energy for transportation
and the growth of the biofuels industry has lead to tremendous change in the cost of ingredients for swine diets. It appears we are leaving a time of consistency and relative predictability in ingredient prices to an era of price volatility and unknown. Planting acreage and yield have always impacted ingredient prices. Ten years ago, we wouldn’t have dreamed that government energy policy and blending ratios for ethanol or adoption of biodiesel would be major players in our industry. With these changing ingredient economics, swine production companies have made short term changes to their diets which we will discuss in this paper. Long term, these ingredient changes will have production systems reevaluating whether the drive towards maximum ADG will continue to be the most economical option.

Impact of changes in ingredient prices on feed cost per pig

The changes in corn and soybean meal price in the last year have been significant. Understanding the impact of these ingredients on feed cost per pig helps to understand where focus needs to be placed in reducing the effects of the rise in ingredient prices. As an example, the ingredient prices for one feed mill are shown in Table 1. The average price paid from January, 2000 to the August 31, 2006 and the average price paid from August 31, 2006 to November 1, 2007 are shown along with the percentage increase in price. August 31 was chosen as the data for the comparison to account for the rapid rise in energy (corn and fat prices) that started with the corn harvest of 2006. The rise in soybean meal prices in late 2007 are not magnified in this comparison because soybean prices were relatively low until late 2007.

The data demonstrates that almost all ingredients increased in price with many ingredients increasing by over 150%. By multiplying the actual change in price times the amount of each ingredient used per pig produced, the impact of the ingredient price change on feed cost per pig can be determined. If no progress was made in reducing feed needs and the diets were not adjusted with the changes in ingredient prices, the changes in ingredient prices would have increased feed cost per pig marketed by over $20. The recent increase in soybean meal prices would have increased the cost by an additional $6 per pig.

Of course, energy and protein costs account for the greatest increase in feed cost. Corn, soybean meal, and fat account for all but $1.39 of the $20.85 increase in feed cost per pig. Other ingredients also had an impact with phosphorus ($0.49), vitamins and trace minerals ($0.47) and whey ($0.22) being significant. Although costs of all ingredients need to be monitored, the rise in ingredient prices for all other ingredients only accounted for a $0.21 increase in feed cost per pig.

Obviously, we are not able to make enough changes to the diets or production system to overcome all these increases in ingredient prices; however, improvements in feed efficiency and diet alterations allowed the production system in this example to limit the increase to less than $12/pig instead of the over $20 that would have occurred without the productivity improvements or diet changes.

Strategies to use to combat increases in ingredient prices

Although numerous options are available, we will review four main areas where diet or management strategies can be used to lower the impact of the change in ingredient prices.

Use of alternative ingredients

Of course, using alternative ingredients that are more economically priced than corn or soybean meal will lower diet cost. The challenge is to balance the lower cost with any other potential pitfalls that may come with the ingredients. In order to use any alternative ingredient, the nutrient composition must be understood and professional aid must be sought in diet formulation to minimize the negative effects and capture the potential value. For example, the use of dried distillers grains with solubles (DDGS) will lower diet cost in

most situations; however, it also reduces carcass yield and increases the softness of the fat deposited on the carcass. The economic impact of the change in carcass yield and fat firmness must be taken into account when determining the value of DDGS. A DDGS economic calculator is available at www.ksuswine.org to estimate the value of DDGS additions to corn-soybean meal diets for grow-finish pigs. Another excellent publication on DDGS by Dr. Hans Stein is available at www. distillersgrains. org/files/feedsource/swine_brochure. pdf.

Although DDGS is the most common alternative ingredient being used in corn-soybean meal based diets, other ingredients, such as bakery byproducts, canola meal, or alternative grains need to be evaluated for determining potential opportunities. With any of the byproducts, increased sampling and testing must occur to minimize variability in the ingredients delivered to minimize negative impacts that the variability will have on pig performance. Several good resources exist for determining quality standards and the value of byproduct
options. 1,2,3,4,5,6,

The increase in phosphorus price and availability of multiple sources of phytase has greatly increased the use of phytase in swine diets and decreased the cost for phosphorus additions. Differences between the phytase sources on the market must be understood to determine the optimal level of each source. Most common inclusion rates allow approximately 0.1% of the available phosphorus to be economically replaced with phytase in most swine diets.

Technology for the production of synthetic amino acids also continues to improve. Rather than the common inclusion of 0.15% L-lysine HCl in corn-soybean meal diets, reduced cost of synthetic threonine and methionine sources allows much higher levels of synthetic lysine to be used in the grow-finish diet. When soybean meal is high priced, synthetic threonine, methionine, and lysine can be used to lower diet cost. A relatively simple calculator is available at www.ksuswine.org to determine the potential value of synthetic amino acids to lower the soybean meal use in grow-finish swine diets. Use of DDGS in the diet also allows increased use of synthetic lysine. Recent additions of lower priced isoleucine and valine have further increased the potential for amino acids to be used to replace some of the high priced protein sources in nursery diets.

Formulate with lower margins of safety

Most swine nutritionists formulate diet with some level of margin of safety to account for variability in nutrient levels and differences in requirements of individual pigs. We have long used relatively low margins for the more expensive nutrients, such as energy or amino acids. Recent rises in the cost of phosphorus, vitamins, and trace minerals have lead many nutritionists to reevaluate the inclusion rates for all of the nutrients in the diet. The lack of recent data on the vitamin and trace mineral requirements of modern genetics makes this a difficult process. We have little information to determine the vitamin and trace mineral requirements of healthy pigs, much less have an understanding of the impact that disease or other stressors may have on these requirements. Caution must be used to lower the margin of safety too greatly; however, it has become increasingly apparent that the 3 to 5 × margins that these nutrients are normally supplemented above NRC (1998)7 recommendations are becoming more difficult to justify.

Formulate for lower ADG to increase margin

The mantra for most diet formulation strategies has been to formulate for maximum growth performance. In most areas of the United States, the greatest margin over feed has almost always coincided with diet that provided the greatest ADG. The reason for this is that diet cost was relatively low and most production systems are tight on space, such that any improvement in growth performance increased market weight and gross value enough to offset any small increase in diet cost. Changes in dietary energy or starter diet complexity have a greater impact on diet cost in the past leading to a reevaluation of this area. We believe that in many situations, we will lower ADG in the future to increase net margin.

Two examples that demonstrate this concept are lactose and energy (fat) use. We know that lowering the lactose level in diets for young pigs will reduce pig performance. In recent trials8 at K-State with 15 to 25 lb pigs, removing the 10% dried whey from the diet lowered pig weight by 0.5 to 1 lb/pig. The savings achieved by lowering feed cost was greater than the value of weight that was lost by using the more simple diet without a lactose source. Obviously, if a more economical lactose source could be found or the diets reformulated with another strategy to achieve the higher final weight without the increased feed cost, it would be beneficial. If an alternative is not found; however, the most economic recommendation would be to feed the simpler diets and accept the lower ADG resulting from the decision.

Pigs with high muscle deposition potential typically respond to increased energy inclusion in the diet in a linear fashion under on-farm conditions. When this is the case, lowering the energy level of the diet will lower ADG and either increase the days to market or lower final market weight if they are housed in a fixed time system. Because almost all of our production systems are fixed time systems with inadequate space to achieve the desired final market weight for a good portion of the year, increasing energy intake has usually resulted in increased net margin. Because energy costs have risen greatly, incremental changes in dietary energy have become more expensive. Thus, formulating to dietary energy levels that lower ADG will be more economical in many more situations in the future than in the past.

Other management strategies

Besides changes in diet formulation or ingredient selection, some management strategies can be done to reduce the impact of the rise in ingredient cost. One of the most important of these is steady continued improvement in feed efficiency to lower the total quantity of feed required.9 All potential areas that impact feed efficiency need to be explored in this process with one of the most important being genetic selection (Figure 1). Great differences exist in the ability of different genetic lines to convert feed into gain. Genetic selection must included increased pressure on feed efficiency and ability to achieve high growth rate on lower energy diets.

The impact of weaning age on lifetime growth performance has been well documented10,11 with the results of this research having a profound impact on weaning age in the United States. The rapid rise in cost of ingredients used in nursery diets, such as dried whey, fish meal, and blood products, further enhances the value of increased weaning age. Increases in weaning age reduce the amount of these expensive ingredients that must be used in the nursery diet.

For swine operations located close to manufacturers that have liquid byproducts that can be used in the swine diet, liquid feeding has become a more attractive prospect.

Liquid feed has been used in other countries to maintain higher levels of growth performance when increased levels of byproduct ingredients were used in the diet. As our diets lower in energy density, use of liquid feed needs to be further analyzed. Similarly, because of the impact on feed efficiency and ability to maintain feed flow ability when higher levels of byproducts are used, pelleted diets will be considered further by production systems that are not currently using pelleted diets. Finally, factors that are known to impact feed efficiency and, thus, feed cost will be further emphasized, including feeder adjustment and particle size. Reducing particle size improves F/G by 1.2% for every 100 micron reduction in particle size. Another way to value particle size is that the ME of corn increases by approximately 25 to 30 kcal/lb (55 to 66 kcal/kg) for each 100 micron reduction.

Potential consequence of adopting these strategies

Although some of the strategies discussed in this paper can be done without greatly impacting performance, most of them have the potential to lower ADG and increased the variability in gain. If we formulate diets to be lower in energy or lower in the margin of safety, we will be below the requirement in an increasing number of situations. Certainly, this increases the variability in growth performance within groups and among groups. Adopting strategies that are known to lower ADG (lower energy diets or simpler nursery diets) will increase facility space requirements in production systems.

Production systems will need to make choices on the direction that they choose to take with this new challenge. At one end of the spectrum, some systems will choose to take a relatively simple approach and not use as many alternative ingredients or push the envelope as far on margins of safety on nutrients. These systems will accept a little higher feed cost for the improvement in consistency of performance and reduced need for vigilance over the diet formulation and ingredient procurement process. At the other end of the spectrum, some systems will explore every opportunity changing diets and ingredients frequently and employ increased nutrient analysis and nutritionist oversight to lower feed input cost as much as possible. These systems may accept higher variability in gain and have to be more flexible in their space use to account for these variations. Of course, other systems will choose strategies all along this continuum. Certainly the challenges provide more opportunities for nutritionists and veterinarians in helping clients choose the best strategy for their situation and in helping them implement the strategy.

References

1	Stein, H., and K. de Lange. 2007. Alternative feed ingredients for swine. Proceedings of London Swine Conference. pp.103–117. Available at: http://www.londonswineconference.ca/proceedings/2007/LSC2007_SteindeLange.pdf. Accessed on November 14, 2007.
2	Chiba, L.I. 2001. Protein supplements. Pages 803 to 837 in Swine Nutrition. A.J. Lewis and L.L. Southern, eds. CRC Press.
3	Myer, R.O., and J.H. Brendemuhl. 2001. Miscellaneous feedstuffs. Pages 839 to 864 in Swine Nutrition. A.J. Lewis and L.L. Southern, eds. CRC press
4	Thacker, P.A, and R.N. Kirkwood, ed. 1990. Nontraditional Feed Sources for Use in Swine Production. Butterworths.
5	Harper, A., and D. Forsyth. 2006. Relative value of feedstuffs for swine. Pork Information Gateway factsheet. Available at: www.porkgateway. org. Accessed on November 14, 2007.
6	Thaler, B., and P.J. Holden. 2006. By-products in swine diets. Pork Information Gateway factsheet. Available at: www.porkgateway.org. Accessed on November 14, 2007,
7	NRC. 1998. Nutrient Requirements of Swine. Tenth Edition. National Academy Press, Washington, DC.
8	Bergstrom, J.R., C.N. Groesbeck, J.M. Benz, M.D. Tokach, J.L. Nelssen, S.S. Dritz, J.M. DeRouchey, and R.D. Goodband. 2007. An evaluation of dextrose, lactose, and whey sources in Phase 2 starter diets for weanling pigs. Kansas Swine Industry Day Report of Progress 985.
9	Dritz, S.S., M.D. Tokach, R.D. Goodband, J.M. DeRouchey, and J.L. Nelssen. 2007. The science of pig production: Past, present, and future. Proceedings of Al Leman Swine Conference. St. Paul, MN.
10	Main, R.G., S.S. Dritz, M.D. Tokach, R.D. Goodband, and J.L. Nelssen. 2004. Increasing weaning age improves pig performance in a multi-site production system. J. Anim. Sci. 82: 1499-1507.
11	Main, R. G., S. S. Dritz, M. D. Tokach, R. D. Goodband, and J. L. Nelssen. 2005. Effects of weaning age on growing pig costs and revenue in a multi-site production system. J. Swine Health Prod. 13: 189-197.

---

Editor’s Note: The lead author of this paper is Dr. Tokach, professor of swine nutrition at Kansas State University. This article was first presented at the 2008 American Association of Swine Veterinarians’ Annual Meeting. For a copy of the full article with charts and references, go to: http:// farms.com

---

---