IT HAS NEVER BEEN SO HIGH
In the past months, we saw a sharp increase of all ingredients driving the animal feed costs to its highest. More than ever, the reformulation of diets is essential to absorb a part of these increases and minimize margin reduction. The nutritionists who validated in the past months the use of multiple ingredients will have today much more options for optimization their diets cost. The formulators who are concentrated their recipes on few ingredients will have less possibilities.
The table below is illustrating the evolution of the main ingredients. Following the increase of demands from China, all raw materials saw their price increase from Q3 last year to reach this February their peak. The situation seems to have reach its maximum and prices in march looks to be on down trend. Sunflower meal price rose by 39% on the last 12 months whereas Canola meal and Soybean meal increased “only” by respectively 20 and 22%. For cereals, the most inflated is barley with a +32% while Wheat price went up by 24%. This situation obliged us to adjust our diets by replacing as much as possible the barley and sunflower meal.
As results, our diets costs reach a peak in February. These are the highest level we reached since we started this reformulation exercise 6 years ago. We are going through historical times and the role of nutritionists and formulators is more than ever at the center of the animal production value chain. The last difficulty period was at the beginning of the year 2019 but this time, but this year, we reached new highest.
The Poultry sector is the most impacted by the situation. The broiler grower diet gained an extra cost of 68.7 Euros in the last 6 months for a +61.8 Euros for the Duck Grower diet. Through reformulation, we absorb a minor part of these increase (savings of 4.1 Euros in Broiler Grower and 3.6 Euros in Duck Grower) by replacing Sunflower meal by Soybean meal. In the Duck Grower, we went one step further and added two new ingredients, the Corn Gluten and Palm meal to compensate the reduction of Sunflower meal and Cereals byproducts.
For the Swine sector, we have been more effective in optimizing the diets. We saved 7.6 Euros in the Pig Fattener diet as we have more options than for Poultry where Corn is difficult to replace. We significantly reduced the weight of wheat and replace it by corn. The soybean meal has been partially substituted by canola meal.
For the Gestating sow, despite sharp increase, Barley stay an ingredient of choice for that diet. There is therefore not much space left for optimization which explains why we saved only 3.8 Euros. It is interesting to notice that a new ingredient, the pea, entered into our Gestating sow diet to a 4.4% contribution.
The Dairy cost diet has been the less impacted by the ingredients price increase with an extra cost of 42.3 Euros on the last 6 months. That is mainly explained by the importance of Corn gluten in our recipe. Contrarily to all other ingredients, Corn gluten price went down by 2% on the last 6 months. That partly compensated the price increase of the other ingredients. Nevertheless, we had to remove the DDGS Corn and the Cereals by products and reduce Wheat bran and Soybean Meal. We compensated them by increasing the contribution of Canola meal, Corn and Palm meal. These changes enabled us to create a saving of 3.6 Euros.
Some other ingredients did not enter yet in our new recipes but that could change in the coming months if prices start to reduce again. Barley stays an ingredient of choice for the Broiler and Duck grower and the Dairy cow. For Pig Fattener, Gestating sow and Broiler grower, we will monitor carefully the price of sunflower meal. These ingredients could enable us to reduce further the diets costs if the market price ends up below their price of interest.
More than ever, the study of new ingredients is important to offer options to our reformulation strategy. The other option is the use of dietary enzymes. The use of protease in the recipe enables to reduce the cost of protein. That is a particularly relevant solution in the current situation. Dietary lysophospholipid is as well a solution recommended to reduce the cost of energy when the price of oil reach the level of today. Both technologies need to be used with their matrix in order for the formulation software to understand the quantity of ingredients to spare. But take some precautions when using matrix for additives. Ask the supplier to confirm the methodology used to develop that document (cf – Can we sump up matrices?).