By Dr. Martin Clunies
Grand Valley Fortifiers
It goes without saying that the past 18 months have been tumultuous in grain and feed commodity markets. With weekly gyrations in prices adjusting to supply issues, the economy showed just how connected we are from industry to industry.
Background: In past years, we have enjoyed a harvest with good grain yields and largely free of mycotoxins. While the corn and soybean harvests were close to expectations in Ontario and US, soybean harvest was lower than expected in Argentina and Brazil. This, combined with recent US exports to China, increased the demand for the soybeans to “crush,” driven by the demand for oil. Soybean meal prices responded, peaking at $690 a tonne in January 2020. Other inputs such as corn distillers dried grains with solubles (DDGS), regarded as a by-product, have become a staple of most livestock diets. As long as the economy gears up and demand for gasoline increases, availability and pricing should make DDGS economical for use in poultry diets. Canola meal, always on the cusp of pricing in or out of poultry diets, should be considered as a means of reducing the amount of soybean meal required. In late 2020, as challenges with cattle processing emerged and the price of soybean meal increased, meat meal prices followed suit to control the demand. Most recently, meat meal price has decreased and stabilized, once again becoming economical in poultry diets. Wheat shorts, ideal for use in poultry feeds where the requirements for energy are moderate, have since returned to more economical prices as well. The one outlier to this is the price of tallow, almost doubling in the 18-month period since the pandemic, showing very little sign of weakening. Assuming no unforeseen circumstances these grain price trends should remain much the same throughout the coming year.
So what does this all mean to poultry farmers making their feed on-farm? Faced with sound bites of commodity shortages, supply chain issues, overseas exports, good news/bad news amplified by brokerage houses trading commodities on volatility, what should farmers do? With regards to grains, we will assume the corn supply is secured with the on-farm harvest and already stored in grain bins. Of the harvested summer grains, wheat represents an alternative to corn. Soft wheat, an Ontario rotation crop is available in limited supplies, and typically needs to be discounted $6–8 relative to the price of corn for it be economical.
Securing protein commodities: The first priority then is to secure, where possible, your protein commodity supplies for the next 12 months. The real challenge is, what price should one pay to secure soybean meal through to fall 2022? Like corn, soybean meal prices have increased significantly over the period of the pandemic, with a present price of $571 compared to $490 prior to the beginning of the pandemic. Last year, China had returned to purchasing soybeans internationally and halted the purchase of Canadian canola meal. As a result, the price of beans increased. More recently, China resumed the purchase of US soybeans, increasing soybean meal prices because of demand. While prices could go higher if China continues to buy, the gravity of the lower 85th percentile could drag prices back to more normal levels. It may be advisable to buy on the dips, where you feel most comfortable.
Now to things that are more predictable.
Feed Wastage still remains the most overlooked means of decreasing feed costs and improving feed efficiency, on a poultry farm. As a nutritionist who travels and visits many barns, I remain amazed at the amount of feed presented around feeders. Most of this feed will never be consumed. It is said that if feed is visible around the feeder, the wastage is probably in the order of 5-10%. At a feed cost of $450/T an additional 5% feed wastage adds a cost of $22.50/tonne of feed.
Feed Formulation is another method of reducing feed costs, specifically the amount of nutrients the feed is formulated to. While it may be common thinking to reduce nutrients to save costs, our team of nutritionists working with nutrient growth models for poultry and pigs saw the opposite outcomes in our feed trials. Maximizing animal performance using more expensive feeds actually produced the lowest cost per kg of live animal or carcass. Geneticists have bred birds for fast and efficient outputs, with energy and protein-amino acids having the greatest impact on growth and feed efficiency of poultry and pigs. Which is most important in today`s market of high commodity prices?
First to energy, for each additional 1% of fat added to the diet feed conversion improves by 3%, which at a current feed cost of $450 per tonne represents a savings of $13.50 per tonne. Similarly, increasing the protein-lysine content of the feed by 0.08 % has the potential to improve feed efficiency by 6.2%, representing a savings of $27.50 per tonne. While both strategies pay, with the cost of today’s diets the addition of lysine/ amino acids costs $7.02 compared to $13.04 per tonne of feed for fat addition. Therefore, the addition of protein-lysine is a better return on investment compared to fat. The question is whether your birds will respond to the higher levels of lysine compared to the current levels in your feeds. Our new nutrition team colleague, Dr. Tanka Khanal, just completed an on-farm trial, whereby, through the manipulation of nutrients, he invested an additional $30.00/ tonne and delivered a better bottom line per bird and per kg liveweight. Additional experiments are now being carried out with different genetics to determine if the results will be consistent. Please contact Dr. Khanal at email@example.com to discuss these results.
Precision feeding, by definition, is an attempt to provide birds with the precise amount of nutrients for the genetic growth or production expectations. Precision feeding is the best strategy to meet the exact requirements of the bird, while minimizing the wastage of nutrient resources. Presently, Grand Valley Fortifiers is conducting trials with customers who are precision feeding 8 or 9 diets where we would normally feed 4 diets, in attempt to more closely meet the requirements of the growing birds. Stay tuned for results from these trials. For further information contact us.
Optimizing feed particle size has many impacts on production, affecting feed intake, feed conversion and cost of production. This topic has been discussed in articles in previous issues and so will not be discussed here. Suffice to say, please review those previous articles available at grandvalley.com.
Summary: These are the major strategies that can be used as a means of improving the efficiency of present high-cost grain rations. Higher grain prices force us to focus on those things that will improve the profitability of our operations long term, as we struggle for present margins of profit. High grain prices may justify some of the changes we have put off in the past due availability of cheaper grains. Often simple changes yield the greatest improvements in efficiencies compared to more sophisticated changes.
This article was written for the Winter 2021 Poultry Grist. To read the whole Poultry Grist, click the button below.