How are feed costs calculated? With cost control measures included
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The feed industry generally uses the process costing method to calculate costs. That is, the product manufacturing cost consists of direct materials, direct labor and manufacturing overhead.
Cost control is a management activity in which an enterprise, based on cost management targets established in advance for a certain period, and through the cost control body within its scope of authority, adopts a series of preventive and corrective measures against various factors and conditions affecting costs before production consumption occurs and during the cost control process, so as to ensure the realization of the cost management targets.
For the feed industry, reducing the total expenditure on feed costs, and not just the cost per kilogram or per pound, is a topic that will never go out of date.
Principle one: Reduce the profit margin on nutrients. Most general-purpose diets are formulated to adapt to various farm conditions
In themselves, these diets usually contain an overall safety margin for most nutrients (most likely amino acids). A qualified nutritionist will re-evaluate these diets and propose a challenge model that tests the impact of reducing nutrient concentrations on animal production performance, until the reduction of nutrients no longer generates profit. In some cases, if the overall feed cost can be substantially reduced, then a slight decrease in animal production performance is also acceptable. In most cases, a small decrease in the level of the first limiting amino acid (lysine for pigs and methionine for poultry) is a good start. Based on personal experience, reducing lysine and/or methionine in pig and poultry diets by 0.1 percentage points each is a good practice.
Principle two: Improve feed conversion rate. The best way to solve the problem is to rely on genetic methods, because nutritionists will always formulate the most effective plan for a specific genetic composition
Investing in hens that can breed chicks with higher feed conversion rates usually comes at the cost of reducing the reproductive performance of the hens. Such a strategy progresses very slowly, because it takes time for the hens to achieve "recycling." On the contrary, the genetic line of roosters that breed first-generation hybrid offspring is a powerful and rapid way to influence feed conversion rate. Since genetic lines have to go through a complex process, care must be taken not to alter carcass quality and other limiting factors.
Principle three: Reduce feed waste. The first step should be to determine the amount of feed wasted at the trough
If the waste rate exceeds 5%, it is unacceptable, but there are still many farms where 20%-30% of feed is wasted. To determine the amount of feed loss, an expert needs to be invited to inspect the farm (or provide digital photos of the trough and its surrounding environment). The second step usually involves setting, repairing, or installing such adjustable gates on the trough. Completely replacing feed troughs is not common, but when feed prices rise, this option cannot be ruled out either. Personally, I believe that investing in high-end feed troughs that can minimize losses is a wise choice for any new or renovated feed mill.