Strategize Swine Feed as Part of Risk Management

By Jorge Estrada, director of nutrition for Carthage Veterinary Service

Although it’s certainly not easy for swine producers to balance the competing interests of saving on costs where they can, against spending wisely to earn a livable income, it is worth noting that challenging times in the market offer valuable opportunities to reexamine risk management strategies for feed inputs.

I recently sat down with two colleagues — Casey Neill, Carthage Veterinary Service nutritionist, and Kim King, Carthage System Risk/Merchandising manager — to review key factors to keep in mind for producers eager to go down this path.

When the swine market is financially tight, it’s worth identifying every opportunity to trim costs. This includes what you pay for feed, including the minor ingredients such as amino acids, vitamins, minerals, enzymes, and feed medication, and comparing what you currently pay against what savings competing suppliers may be able to offer. King estimated the average cost of feeding a pig from feeder to finish stages is $66 at present, of which $7.29 is tied up in these additives. The other $58.71, or 89%, is major grains (corn, SBM, DDGs), and fat.

Market competition for savings

Many producers are already acquainted with the importance of periodically reassessing their grain contracts to seek the best price on this 89% of feed cost. King noted producers should use their local elevators and mills to their advantage for this, and look into hedging for these more expensive ingredients.

“Find a marketing advisor to assist you with the hedging,” she said, explaining that Carthage works with such an advisor to help control some of the production costs on its swine farms. Independent producers benefit from this, as well. “You have options to find an advisor to help you navigate — and if you don’t use one, you’ll be left behind these days.”

As for the 11% of minor ingredients cost, King said feed mills vary what they charge by approximately 10% to 15% depending on the ingredient. For instance, costs for lysine right now can vary as much as 13% from one supplier to another, whereas tryptophan is seeing a 10% variation.

Neill said more producers are participating in risk management activities with corn and SBM than just five to 10 years ago. “That has helped on the cost of them,” he explained. “It’s also improved feed efficiency in pigs, with producers reexamining their supplies more often, not to mention mills reducing feed particle size and improving quality assurance.”

You can apply a similar strategy to cut down on waste in use and the cost of feed additives. This includes benchmarking the cost of what you pay against other feed mills/suppliers. Break down your cost per pig, and think about where you might be able to prioritize changes if you determine they are worth making. This includes evaluating not just the cost of these inputs, but your need for them — for instance, are you still feeding performance-boosting additives that made sense when you started, but you no longer need them?

In the same vein, it’s important to know how the various additives you want to use work in the animal and with one another. If you understand how to use enzymes, probiotics, therapeutic antibiotics, and minerals to improve your animals’ performance, for instance, you can better compare costs for what you decide to keep in their diet.

Right now, efficient feed conversion is your pig's most important job, next to staying alive and well. It is critical to evaluate your return on investment, not just the feed cost itself.

Being biosecure

Something else to keep in mind is the importance of product safety and quality. If you are an independent producer trying to stay on budget, it’s easy to get caught up in cost alone. You may find some cheaper products because they are close to expiration, but how will that affect pig performance? Amino acids remain stable for a long time, but vitamins, minerals, and enzymes tend to lose activity over time.

Having more suppliers is usually good for price competition — but it’s recommended that you still employ basic biosecurity measures, including doing your homework about a product’s country of origin and if there have been reported issues with ingredients or safety. While a domestically manufactured additive may carry a higher cost, it could be worth paying if the end result is healthy, well-developed market hogs that fetch a price justifying the price tag.

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