What's your ingredient IQ?

What's your ingredient IQ?

Upside profits may be hiding inside your ingredient bin.

THE statement "know your ingredients to save big bucks" should not be controversial. I mean, there is little argument over whether accurate ingredient data can have a positive financial impact when you apply this knowledge to your ingredient purchasing decisions.

Those "big bucks" typically are found in formula cost savings or ensuring that your feed meets its intended specifications.

Today's nutritionists work in a world that is controlled by the sometimes conflicting priorities of business and science. In both worlds, the concept of accurate data is crucial and universally accepted.

It is common practice to have some type of quality control program in place, with the degree of complexity ranging from all samples being sent to third-party laboratories to complete in-house testing. Regardless, the goal of ingredient testing is to capture accurate ingredient data.

Why, you ask? Because, with ingredient costs hovering at 66-75% of total operating expenses, it is hard not to understand how accurate ingredient data can generate big bucks. We see proof of this with the practice of over-formulation. We may over-formulate to ensure animal performance or make sure our feed meets its guarantee, but what is the cost implication?

We know that protein is one of the most expensive nutrients in a diet, but what is the cost of a 1% increase in the protein requirement?

Let's look at a standard broiler grower diet that has a 19% protein requirement using ingredient costs from the Chicago Board of Trade. This diet has a per ton cost of $311.16, and if the protein requirement is increased to 20%, the per ton cost increases to $314.43. So, a 1% over-formulation of protein represents an increase of $3.27 per ton.

To take this example one step further, when the protein is increased to 21%, the per ton cost jumps to $320.77. That's a total per ton increase of $9.61 that could have been avoided with more precise insight into the ingredient data.

There are different reasons why over-formulation is done, but the more closely you can formulate to your intended nutrient requirements, the lower your formula costs will be.

These scenarios were analyzed in a controlled manner, and depending on your circumstances, achieving all of the potential savings may not be realistic. What's important is the direct relationship between accurate nutrient data and the bottom line.

With ever-shrinking margins, you are always looking for ways to control costs. The important question to ask is how to take existing ingredient testing data and turn them into actionable information that will have a financial impact on your business. Here are some further questions to consider regarding your current ingredient testing:

* Where are the data I receive?

Is there a chance that it's sitting in your inbox or possibly in a pile with other reports? How accessible is the data to other parts of the business? Does it go into a LIMS (Laboratory Information Management System) program? Is Microsoft Excel your LIMS program?

* Am I using the data in the most effective way?

Do you use data only for rebates and keeping your suppliers in check? Do you have a protocol for updating your formulation system with quality control results? When your formulation system is updated, is it electronically updated or manually entered? If you are manually updating your system, how often are you catching typing errors?

Quality control data should be centrally stored to provide easy accessibility for team members while ensuring data integrity and systems integration.

The bottom line is that high-value data are coming in that must be treated as a strategic asset, not another useless report. Instead of viewing ingredient testing as an obligatory expense, treat it as an investment that can deliver top-line growth to your bottom line.

*Nicholas Dale is a formulation specialist at Feed Management Systems and has a degree in agricultural economics from the University of Georgia. Dale can be reached at [email protected].

Volume:85 Issue:49

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