What is Least-Cost Formulation?

Least-cost formulated feed is a feed formula that is both technically nutritionally complete and with a minimum ingredient cost. This keeps the feed at a low cost, and since feed accounts for over 65% of total production costs, this can be a tempting purchase.

The ingredients in the feed change as the prices of the ingredients change and therefore, the consumer is not always getting the same product. Manufactures are able to get away with this by being vague on their ingredient lists; instead of specifically naming the ingredients, they will say “grain, grain meal” etc. so they can interchange ingredients at will. Although the initial feed costs will be lower, these feeds can affect production in a negative manner, and will cost you more in the long run.

A good friend and distributor of Hiland Naturals, Ginger Shields, performed a test comparing a standard non-GMO chicken grower against a non-GMO LCF equivalent. She wrote a great article explaining the project and her results, and published it in the APPPA Grit. Here it is, below:

 

 

Does Least Cost Formulation Save Farmers Any Money?

As distributors of Non-GMO project verified feeds we get quite a few requests for different feed formulations. Every farm has a different situation, so we understand the need for special formulations specific to their needs. When one of our feed manufacturers began offering “Least Cost Formulations” (LCF) for large scale producers who were trying to save on overall feed costs, as farmers ourselves we were definitely interested. The idea behind a LCF feed is you have target nutritional levels such as protein and energy but you use the lesser expensive grains where ever possible. Therefore, the formula may change throughout the year depending upon what is regionally available and what the commodities markets are doing.

On the outside, this concept seemed like a good idea. We promoted the LCF feed option to a number of our farm clients as a cost saving measure. The first couple of months went by without complaint, but as the end of the second month and beginning of the third month arrived we started receiving questions about poor performance issues and birds not gaining as they normally would. At the time, we were using the LCF feed on our own batches of broilers without any noticeable issues; however, like many family farms with children as part of the equation the reports from the field are not always accurate. As the concerns seem to climb we felt compelled to test this issue further. Nutritional analysis of the feed did indeed show the proper target levels so what was the difference and what was causing our issues?

Finally, being results driven farmers, we decided it was time to run a side-by-side test of the standard Non-GMO Chicken grower against the Non-GMO LCF equivalent. Taking into account the ages of our “field hands”, we made the test very straight forward and simple. Using the same 10×12 dome pasture pens and straight run Heritage Whites from S&G Hatchery we designated three separate pastured broiler pens with 50 chickens each. We labeled the pens with bright laminated cards according to the feed type they were to be fed with the intention there would be no confusion and consistency.

Initially, all of the chicks were brooded together and started on a standard 21% Non-GMO chick starter feed. We did this so all of the chickens would have the same base line and could start with a clean slate once we split them from the brooder after week two to their individual pastured pens.

Week three observations immediately began to display a difference between the feeds. The chickens in the LCF fed pen were more wasteful as if they were hunting and pecking through the feed being relatively selective of what they would consume. The other pen was fed with a standard Fertrell formulated Non-GMO ration with soy and had much cleaner eating habits with minimal waste. This observation also synced up with complaints from other farms using the LCF feed. Though early in the test, the first week in the pastured pens seemed to confirm at least that observation. Despite the waste, everyone was thriving, lively, and active.

Weeks four and five mirrored the same eating habits of week three. The chickens had not hit their growth curve that we normally see in the last two weeks but we were already seeing size differences amongst the pens with the LCF fed birds being smaller than the standard feed pen.

The differences begin to really show during week 6. There were noticeable difference in the size between the LCF and standard feed formulations. Again as in weeks three through five the feed waste continued in the LCF pen. Additionally, this was the beginning of their growth curve and feed consumption was climbing in all pens; however faster in the LCF pen due to the waste. At this point we decided to process the chickens at the end of the 7th week as the standard feed pens were reaching the desired size.

In the 7th week, the differences were becoming more and more significant. In general, the overall mortality at this point was the same. To be honest, we had 0% mortality in all pens once they hit the pasture. So the LCF feed at this point did not seem to impact mortality and merely the feed efficiency. This also paired up with other farm observations when using LCF feeds

Processing day finally arrived. The LCF batch first and then the standard feed formulation second. Upon observation the LCF fed chickens were typical, with no abnormalities present in the eviscera. With the noticeable difference in size, and disinterest in feed, we were expecting poor gizzard development and abnormal livers. We were surprised when they all appeared normal and weren’t surprised with a lower than normal average dress weight of 4.15 lbs across all 50 birds. Not terrible, but certainly not what we normally see at 7 weeks.

Next through the line, the standard formulation fed batch. Again, outward appearances of the chickens were good. Except that these birds were noticeably larger. The eviscera showed no abnormalities, and though we had a few birds with poor livers, and a few on the larger end of the spectrum had pleuracy, but this is our norm and only affected a handful of the larger birds. This group of 50 weighed in with an average of 5.25 lbs. Over a pound more than our LCF birds! This was a significant difference in size at a 21% difference.

In general, the LCF batch consumed approximately 10% more feed which again, was a significant number. Being that we have high shipping costs our feeds are quite a bit more than those with more local mill access. In this test batch the LCF feed cost $0.36/lb and the standard formulation was $0.39/lb and the 21% chicken starter was $0.42/lb. Naturally, with the $0.03/lb difference in price you can see why folks opted for the LCF option when we began offering it.

With the above stated, let’s break down the numbers so we have the per pound dressed weight yields. First the standard formulated batch. At 5.25 lbs dressed average with 12 lbs average of grower feed plus 1 lb average of starter for a total of 13 lb of feed per bird with a gain ratio was 2.48:1. The total cost of feed including the 21% starter was $0.98 per pound of gain. With the LCF fed birds at 10% greater feed consumption they consumed 13.2 lbs. average of LCF grower feed plus 1 lb average of starter for a total of 14.2 lbs. of feed per bird giving them a gain ratio of 3.42:1. The total cost of feed including the 21% starter was approximately $1.25 per pound of gain. Wow, that is significant!

 

Feed Type

Avg Dress

Weight

21% 

Starter

19% 

Grower

Final Feed 

Conversion

Cost per/lb

of gain

LCF Feed 4.15 1 lb 13.2 3.42:1 $1.25
Std Feed 5.25 1 lb 12 2.48:1 $0.98

 

With the total feed costs being approximately the same when taking into account the waste the real difference was in performance. On the end of the day, the feed to gain ratio says it all. There was a significant loss in feed efficiency using the LCF feed. The efficiency loss was so significant that it completely negated the benefits of the feed cost saving literally being eaten up in waste and poor performance.

Promptly, after this experiment we dropped the LCF line of poultry feeds all together. It is clear that not all grains are equal, or well suited for chickens for optimum performance. When using a LCF feed you certainly open yourself to these sorts of issues as they frequently change the formulations to take advantage of the least expensive grains. On the end of the day, trying to save money on your chickens by sacrificing quality really may not be saving you money when performance is what pays when your business is production. I would encourage you run similar tests if you are using Least Cost Formulated feeds. You may find the cost savings are truly not there. Feed the animals to make money – not to save money is our new motto.


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