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Feed Tech
Thursday, June 07, 2007 2:41:57 PM
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Successful feed companies in the future 
 
Dr Jim Hedges

Vice President Swine Technical Group

Ralco Nutrition

 

 

Like everything else, the feed industry has changed. The feed company that succeeds must be as innovative and market-driven as the computer industry and a Wal-Mart superstore.

 

Research in food animal nutrition has always been driven toward maintaining performance while lowering costs. Unlike electronic companies, feed companies cannot control the commodity market and therefore have less control over input costs.

 

However, feed companies have gained control over feed ingredients costs in relation to the enzyme phytase and through use of synthetic amino acids.

 

Feed production capacity has nothing to do with sales success. In today's market, it could be argued that milling capacity might be a negative for a feed company. It is extremely difficult to be cost competitive and profitable while maintaining a lot of mills operating at 25 to 50 percent capacity.

 

As a normal rule, feed manufacturers cannot make feed as cheaply as a large livestock producer. A livestock producer with a modern mill can make significantly more tonnes of feed per hour than a feed manufacturer.

 

Also, most feed companies are multi-species, which increases production complexity. Being multi-species not only affects the number of formulas, but can significantly affect sequencing and even raw material inventory.

 

Given these constraints, how can feed companies grow and be successful? Most feed companies are trying to grow by acquisition. Definitely this can accomplish the goal, but is not without risk. When a company that has been a competitor for years is purchased, differing company cultures usually clash.

 

Customers also need time to adjust to a new company, because they make decisions for their own reasons, not the company's.

 

Statistically valid trials must be conducted in facilities and research results need to apply to the field. For example, a study showed that pigs housed in a commercial unit stocked at 45 pigs/pen consumed 5.1 lbs/day compared with 6.2 lbs/day for the research facility pigs stocked at 10 pigs/pen. Feed conversion is not greatly different, but data for the research-stocked pigs indicated these pigs needed only 0.49 percent available lysine (the lowest level fed) and the commercial-stocked pigs needed 0.65 percent available lysine. Hence, the diets must correspond to the circumstances in which they are fed.

 

There has always been a little disconnection between university recommendations and the feed industry. The university's role is to do the basic work. It is not advisable to rely on university tables for all nutrient recommendations, and the feed industry nutritionist should develop industry-leading diets for application in the commercial world.

 

Feed companies used to have huge bureaucracies, but they can no longer afford them. Excellent research, product quality (both the formula and the production of it), superior service, and acceptable pricing are all important.

 

Customers of feed companies are more than just a source of profit; they are partners and need to be thought of as such. The feed company's objective is to help make the customer profitable. If the customer fails, the feed company fails also.

  
 

For more of the article, please click here.

 

Article made possible through the contribution of Ralco Nutrition.

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