How I Utilize Benchmarking
FEED COSTS HAVE OBVIOUSLY SKYROCKETED IN THE LAST SEVERAL YEARS, THESE COSTS CAN ACCOUNT FOR A SIGNIFICANT AMOUNT OF THE DIFFERENCES IN BREAKEVEN COSTS BETWEEN PRODUCERS.
By Larry Himmelberg
Benchmarking is an extremely useful and important tool to measure a producer’s competitiveness in today’s pork industry. There remains significant variation in production and economic parameters between producers. Accurate benchmarking helps producers verify competitiveness and/or prioritize efforts to become more competitive.
Feed costs have obviously skyrocketed in the last several years; they remain one of the largest influences on producers’ bottom line costs of production and still account for a significant amount of the differences in breakeven costs between producers. As a nutritionist, these increased costs and the increased availability and emphasis on alternative ingredients, traditionally not as important or widely utilized in swine diets, served as a huge incentive to enhance my ability to benchmark not only production numbers, but an expanded range of feed productivity and economic parameters as well.
In the Midwest, no ingredient has had more influence on changes in swine ration formulation in the last several years than the explosion of Distiller Dried Grains (DDG) availability. The use of DDGS, brought with it a whole host of questions, such as; how much can we use in various stages of production, what is the nutritional value of the product, what influence does it have on production, etc. In addition to those general questions, we know that continuing changes in ethanol plant production practices changes the nutrient value of the product not only within a plant, but from plant to plant.
Several years ago my initial incentive to expand ‘feed’ benchmarking in sow units was to simply measure overall feed usage differences and help establish usage targets. Benchmarking these numbers was very helpful in early identification of potential sow condition issues, whether caused by over or under feeding. For example, if a monthly feed usage benchmark report, comparing units, revealed either a significantly lower or higher usage rate than expected, it would serve as a red flag to question the manager and/or make a visit to the unit to visually appraise the sows.
Later, as DDGS became more available and represented a larger and larger potential savings in sow diets, I expanded my feed benchmarking capabilities to include a more comprehensive review of additional feed usage and nutritional efficiency measurements. Many of these benchmark measurements were designed to help answer two basic questions regarding DDG usage in both sow gestation and lactation diets; those being, how much could be added to the diets and verification of nutritional values being utilized in formulation.
The goal of most producers is to balance the desire for excellent production with the desire for decreased cost of the feed program.
As additional customers started using more and more DDGS in gestation and lactation, benchmarking was used for both production numbers and economic costs to answer those questions. As an individual customer would increase their DDG usage we would compare these numbers both before and after, to verify if higher inclusion rates were truly production neutral and economically advantageous. In addition to looking at individual producer results, benchmarking was used to compare across other producers in the data base. Probably nothing worked better to incentivize producers to keep increasing DDG usage when it was cost advantageous, than being able to benchmark with other producers who were adding the same or higher levels of DDGS than they were.
Some of the feed benchmark numbers I watch closest in sow herds, in addition to the production numbers we are used to in the industry include: feed usage per sow per year, per pig weaned and per pound of weaned pig. I like to look at the feed usage per pig weaned because I believe benchmarking would support that feed usage per sow tends to gravitate higher as productivity increases. Because of this, I would not necessarily target the same overall sow feed usage in a herd with 20 pigs/sow/year as I would with a herd with 30 pigs/sow/year. Assuming the weaning age and weight are similar however, I would target a similar amount of feed per pig weaned.
The feed usage number I personally pay most attention to when benchmarking sow herds, is per pound weaned. I believe this takes the feed efficiency of a sow herd one step further in benchmarking, to account for, and measure differences between producer’s feed management, weaning ages and success of the sows milking ability. For example, I would generally not look negatively at a sow herd having a higher feed usage per pig, in a benchmark comparison, if that herd had a lower feed usage per pound of weaning weight.
To help with standardization between herds, in sow feed efficiency benchmarking, I try to include only feed eaten by ‘inventoried sows’; i.e. not feed eaten by gilts in the gilt pool. I then use the sow inventory only to divide into that feed usage. The feed usage targets per sow, I would have for herds measuring those numbers would be 2200 or less for herds with lower than 24 PSY and 2,300 or less for herds with greater than 24 PSY. The general target for feed per pig would be 80 pounds or less and the most emphasized target would be less than 6 pounds of feed for every pound of viable weaning weight.
The nursery phase is arguably where you will find the widest discrepancy regarding feed costs, between high and low cost producers.
The next very important step is to benchmark the economics of any sow feeding program. The goal of most producers is to balance the desire for excellent production with the desire for decreased cost of the feed program. In nursery thru finishing the most common measurement we use for this is, of course, cost per pound of gain. I like to measure sow feed efficiency in the same manner; in the case of a sow herd I measure it as sow feed cost per pound of weaned pig. I also benchmark feed cost per sow per year and cost per pig weaned. It is helpful to measure these numbers both with standardized feed costs across the sow herds in the benchmark report as well as actual costs incurred by each individual producer. Being able to utilize and change standardized ingredient costs and then benchmark with those costs also helps determine the best ration strategies to utilize as actual ingredient costs change over time.
As with sow herd benchmarking, doing so in the nursery can be very important to determine an individual producer’s competitive status within the industry. The rising costs of feeding a pig in the nursery, was also my biggest incentive for enhancing my ability to benchmark both nursery performance numbers as well as feed numbers. The nursery phase is arguably where you will find the widest discrepancy regarding feed costs, between high and low cost producers. There are numerous different feed ingredients and feeding strategies utilized in today’s nursery programs.
Using benchmarking to compare producer results with varying inclusion rates of alternative ingredients for example, can be very helpful in keeping feed costs down. Where possible, I also like to benchmark the influence of nursery feeding programs, on the overall production and economic results of the entire feeding period from weaning to market; regardless of whether the pigs are fed in separate nursery and grow-finish facilities or a wean to finish facility.
Perhaps nowhere has benchmarking influenced what I do as a nutritionist more than the grow-finish phase of production. Without question, the biggest influence to more involvement in benchmarking, especially feed related benchmarking, is rising feed costs and the use of more alternative ingredients, especially DDGS.
For example, several years ago when DDG usage first started increasing significantly, the limited research we had available suggested that the energy value of DDGS was similar to or higher than corn. I began to doubt this, however, as weekly benchmark close out data indicated a consistent worsening in feed to gain ratios, even with relatively lower inclusion rates. Although feed costs were lower per ton, the cost per pound of gain was actually higher. The knowledge gained in benchmarking has obviously been very valuable both in terms of formulating rations and in determining the economic value of DDGS.
Benchmarking has also been very instrumental in determining the optimal level of DDG usage in rations and it’s expected influence on production and economic parameters. On-going benchmarking of grow-finish close out data continues to be helpful in verification of net energy and digestible amino acid calculations of ingredients used in formulation.
Today, I continue to use benchmarking extensively in grow-finish to monitor and compare everything from predicted vs actual production numbers based on ration formulation, to amino acid efficiency of a close out group. Numbers I use most to monitor and compare group close outs, include carcass ADG and carcass caloric feed efficiency, death loss, production and cost by ingredient usage (especially related to DDG usage), paylean usage, packer related results, amino acid efficiency related to carcass gain, standardized ingredient cost, etc.
Specific examples of how benchmarking can be utilized with different parameters include the following; with developed equations, I predict what carcass ADG and caloric performance on a specific group of grow-finish pigs is going to be based on ration formulation. These predictions are then benchmarked against what the group actually achieves via close-out data. Over time, verification of accuracy of predictions can be monitored. Target amino acid levels in formulation are determined via ratios to energy and ratios to each other. By monitoring amino acid and caloric efficiency related to carcass gain you can get a sense as to the accuracy of the values utilized in formulation. Benchmarking digestible amino acid and net energy caloric efficiencies also serves to help verify ongoing calculated nutrient values based on lab data, for ingredients as they change from crop year to crop year and in the case of DDGS, from different ethanol plants.
Although feed costs were lower per ton, the cost per pound of gain was actually higher. The knowledge gained in benchmarking has obviously been very valuable both in terms of formulating rations and in determining the economic value of DDGS.
We have a lot of ingredients and products available to the swine industry which are not well researched. Utilizing general benchmarking is one of the better ways we have to evaluate some of these products regarding production influence and economic effectiveness and value.
With benchmarking, having the capability to standardize and do ‘what-if’ analysis with varying ingredient costs across close outs, makes it possible to re-rank economic performance according to different formulations under differing ingredient costs scenarios.
Without the use of benchmarking it would be much more difficult to accurately formulate and predict economic influences of ingredients, etc.
LARRY HIMMELBERG After completing his degree in swine nutrition at the University of Nebraska, Larry Himmelberg has worked in the swine industry since 1982 performing swine nutrition and production services with Land O’ Lakes, Akey, Danbred Gentetics, Nebraska Pork Partners and UFC. Larry started HvlyMtn Consulting LLC based in Lincoln, Nebraska in 2004 where he provides producers independent nutrition and production consulting.