The energy content of the diet generally

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1 Peer reviewed Originl reserch Economics of incresing lysine:clorie rtio nd dding dietry ft for growing-finishing pigs rered in commercil environment Mnuel De L Llt, MS, PhD; Steve S. Dritz, DVM, PhD; Michel R. Lngemeier, MS, PhD; Mike D. Tokch, MS, PhD; Robert D. Goodbnd, MS, PhD; Jim L. Nelssen, MS, PhD Summry Objective: To evlute the economics of dding dietry ft nd incresing lysine:clorie rtios in growing-finishing pigs rered in commercil swine fcilities. Methods: Dt ws collected from 1200 gilts (initilly 27 kg) nd 1200 brrows (initilly 34 kg). Two levels of ft (0% nd 6% dded choice white grese) nd four lysine:clorie rtio regimens (LCR) rrnged in 2 4 fctoril were exmined. Monthly prices of corn, soyben mel, ft, nd hogs for 1989 to 1998 were used to clculte feed cost, feed cost per kg of gin, nd income over feed cost (IOFC) under two pcking-plnt pricing grids. Results: Adding ft nd incresing LCR incresed ADG, G:F, nd feed cost per pig. For gilts, feed cost per kg of gin ws lowest in 39.2, 15.0, nd 4.2% of months for,, nd without dded ft, respectively; nd in 41.6% of months for with dded ft. The IOFC ws highest in 98.3 nd 100% of months for with dded ft using Grids One nd Two, respectively. For brrows, feed cost per kg of gin ws lowest in 84.4% of months for without dded ft. Using Grid One, IOFC ws highest in 55 nd 45% of months for with or without dded ft, respectively. Using Grid Two, IOFC ws highest in 97.0% of months for with 6% dded ft. Impliction: For evlution of nutritionl progrms, IOFC is better indictor of economic performnce thn feed cost per pig or feed cost per unit of gin. Keywords: swine, lysine, energy, dded ft, economics Received: June 12, 2000 Accepted: April 6, 2001 The energy content of the diet generlly determines the mount of feed consumed by growingfinishing pigs. 1 Consequently, s energy content increses, the mino cid levels of the diet must increse proportiontely. Since lysine is the most common limiting mino cid, the proportion of mino cids to energy is commonly expressed s the lysine:clorie rtio. Severl studies hve shown tht incresing the lysine:clorie rtio in diets for growing-finishing pigs improves verge dily gin (ADG) nd feed efficiency (G:F). 2,3,4 Incresing energy content by dding ft to the diet lso increses ADG nd G:F, nd decreses verge dily feed intke. 5,6,7 Although dding ft nd dditionl mino cids to the diet improves growth performnce, feed cost lso increses. Therefore, economics should dictte the inclusion of ft nd dditionl mino cids in diets for growing-finishing pigs. The growth response to dded ft ppers to be different in controlled reserch settings compred to commercil frms 8 becuse of the 25 to 40% greter feed intkes of pigs housed under controlled environments. The objective of this study ws to evlute the economics of dding dietry ft nd incresing lysine:clorie rtios in growing-finishing pigs rered in commercil swine fcilities. MDLL, MDT, RDG, JLN: Deprtment of Animl Sciences nd Industry; MRL: Deprtment of Agriculturl Economics; SSD: Food Animl Helth nd Mngement Center, Knss Stte University, Mnhttn, Knss SSD: Food Animl Helth nd Mngement Center, Knss Stte University, College of Veterinry Medicine, 1800 Dennison Avenue, Mnhttn, Knss Tel: ; Fx: ; E-mil: dritz@vet.ksu.edu Contribution No J of the Knss Agric Exp Stt, Mnhttn, Knss Address correspondence to Dr Dritz. This rticle is vilble online t De L Llt M, Dritz SS, Lngemeier MR, et l. Economics of incresing lysine:clorie rtio nd dding dietry ft for growing-finishing pigs rered in commercil environment. J Swine Helth Prod. 2001;9(5): Mterils nd methods Animls This study included two experiments with totl of 2400 growing-finishing pigs (PIC C22 337). Experiment One ws conducted with gilts (n=1200; initilly 27 kg) from July to November Experiment Two ws conducted with brrows (n=1200; initilly 34 kg) from August to December Diets For both experiments, the corn-soyben mel-bsed diets were rrnged in 2 4 fctoril with two levels of dded ft (0 nd 6% choice white grese) nd four incresing lysine:clorie rtios in ech phse (Tble 1). Thus, the four lysine:clorie rtios with nd without dded ft cross four phses resulted in 32 diets fed cross the four lysine:clorie rtio regimens (LCR) for ech experiment. Other essentil mino cids, clcium, phosphorus, vitmins, nd minerls were formulted to meet or exceed recommendtions of NRC, Ech diet phse ws fed for 28-dy period. The verge pig weights for ech of the four phses were 27 to 45, 45 to 75, 75 to 100, nd 100 to 120 kg for Experiment Journl of Swine Helth nd Production Volume 9, Number 5 215

2 One nd 34 to 60, 60 to 80, 80 to 100, nd 100 to 120 kg for Experiment Two. A more detiled description of the diets is presented in De L Llt et l. 9,10 Housing nd feeding Pigs were housed in identicl, double curtin-sided, deep pit reserch brns constructed like commercil finishing fcilities, with forty-eight 3.05 m 5.50-m pens nd totlly sltted concrete floors. The brns were ventilted nturlly during wrm wether nd mechniclly during cold wether. Upon rrivl from the nursery, pigs were llotted rndomly to pens, with 25 pigs per pen, providing 0.67 m 2 per pig. There ws one four-hole self-feeder nd one cup wterer in ech pen. Pigs hd d libitum ccess to food nd wter throughout the experiments. Growth performnce In ech experiment, group weights of ll the pigs in ech pen were obtined every 14 dys. Feed ws weighed nd dded to the feeders using n uger crt equipped with scle. Feeders were vcuumed, nd the remining feed ws recorded t the diet phse chnges every 28 dys. Averge dily gin, feed disppernce, nd feed Tble 1: Diet lysine:clorie rtios in ech phse fed for ech of the four lysine:clorie rtio regimens (LCR) in growing-finishing pigs Lysine:clorie rtio (g lysine/mcl ME) Diet phseb ( weight rnge) LCR 1 LCR 2 LCR 3 LCR 4 Experiment 1 (gilts) 1 (27-45 kg) (45-75 kg) ( kg) ( kg) Experiment 2 (brrows) 1 (34-60 kg) (60-80 kg) ( kg) ( kg) All corn-soyben mel-bsed diets with choice white grese s the dded ft source. Other essentil mino cids, clcium, phosphorus, vitmins, nd minerls were formulted to meet or exceed recommendtions of NRC, b Ech diet phse ws fed for 28 dys. efficiency were clculted. At the end of the lst phse, ll pens were weighed before trnsport to USDA-inspected processing plnt. Prior to trnsport, the pigs in ech pen were mrked with distinctive tttoo to llow the individul crcss dt to be identified with the pen of origin. All pigs within ech gender were mrketed on single dy. Stndrd crcss criteri mesured included crcss weight, ft nd loin depths, nd len percentge. Economic dt collection Prices used in clcultions for corn, soy- Figure 1: Monthly corn, soyben mel, nd ft prices in the stte of Minnesot from 1989 to prices were obtined from the Agriculturl Sttistics Bord (USDA) ( nd soyben nd ft prices from Feedstuffs. 12 Prices ($US) re infltion djusted using the consumer price index from the US Deprtment of Lbor ( Price per kg ($US) mel Jn-1989 Jn-1990 Jn-1991 Jn-1992 Jn-1993 Jn-1994 Jn-1995 Jn-1996 Jn-1997 Jn-1998 Jn Journl of Swine Helth nd Production September nd October, 2001

3 Figure 2: Monthly hog crcss prices in the stte of Minnesot from 1989 to Prices were obtined from the Agriculturl Sttistics Bord (USDA) ( Prices ($US) re infltion djusted using the consumer price index from the US Deprtment of Lbor ( Crcss price per kg ($US) Jn-1989 Jn-1990 Jn-1991 Jn-1992 Jn-1993 Jn-1994 Jn-1995 Jn-1996 Jn-1997 Jn-1998 Jn-1999 ben mel, ft, nd hogs (Figures 1 nd 2) were collected monthly in the stte of Minnesot for ten-yer period (1989 to 1998). nd hog prices were obtined from the Ntionl Agriculturl Sttistics Service, 11 nd ft (Minnepolis choice white grese) nd soyben mel (Minnepolis high protein) prices from Feedstuffs. 12 All prices were djusted for infltion using the consumer price index from the US Deprtment of Lbor, Bureu of Lbor Sttistics. 13 Economic clcultions Totl feed cost per pig, feed cost per kg of gin, nd income over feed cost (IOFC) per pig were clculted monthly for ech tretment for ech month of the ten-yer dt collection period. Totl feed cost per pig ws clculted using the monthly ingredient prices nd the mount of feed consumed by phse for ech of the dietry tretments. Feed cost per kg of gin ws clculted by dividing the totl feed cost per pig by the totl kg of body weight gined. Income over feed cost per pig ws determined by subtrcting the feed cost per pig from the gross income per pig for ech tretment. Gross income per pig ws determined using monthly hog prices collected for the ten-yer period plus premiums nd discounts using the crcss mesurements nd two pcking-plnt grids. The sme bse price (bsed on monthly hog price) ws used for both grids. Grid One used fixed premiums nd weight discounts, which were independent of the bse price (Tble 2). Grid Two used n index of premiums nd discounts, which represented percentge of the bse crcss price (Tble 3). Sttisticl nlysis Averge dily gin, G:F, crcss weight, crcss len, totl feed cost, feed cost per kg of gin, nd IOFC were nlyzed s completely rndomized design using GLM procedures. 14 The dt were nlyzed s 2 4 fctoril rrngement with min effects of dded dietry ft (0 or 6%) nd with liner nd qudrtic polynomil contrsts 15 to determine the effect of incresing the lysine:clorie rtio. Pen ws the experimentl unit for ll clcultions. Regression nlysis A multiple regression nlysis for ech of the dietry tretments ws performed using the dt nlysis regression tool of Excel described by Rgsdle. 16 The following regression model ws fitted to the dt: IOFC = b o + b 1 + b 2 SBM + b 3 + b 4 price Income over feed cost per pig for ech month during the ten-yer dt collection period ws used s the dependent vrible. Prices of corn, soyben mel, ft, nd hog crcsses for the sme ten-yer period were used s the independent vribles. Elsticity Regression results re esier to interpret if the reltionship between independent nd dependent vribles is expressed in percentge terms. An elsticity mesures the effect on the dependent vrible of 1% chnge in n independent vrible. The elsticity of Y with respect to X 2, for exmple, is the percentge chnge in Y divided by the percentge chnge in X 2. For ech of the dietry tretments, the elsticities of the independent vribles were clculted ccording to Pindyck nd Rubinfeld 17 using the following eqution: X E j = ˆb j j Y where E is the elsticity for the jth vrible, ˆβ is the regression coefficient of the independent vrible (ingredient or hog price), is the verge price of the independent vrible, nd Y is the verge vlue of the dependent vrible (IOFC). The impct of elsticity on the dependent vrible increses with incresing bsolute vlues of Journl of Swine Helth nd Production Volume 9, Number 5 217

4 elsticity. Results Growth nd economic performnce Experiment One (gilts) A more detiled description of the growth performnce dt is presented in De L Llt et l. 9 Briefly, dding 6% dietry ft (P<.05) nd incresing the lysine:clorie rtio (P<.05 liner) incresed ADG, G:F, crcss weight, totl feed cost per pig, nd IOFC (Tble 4). Crcss len decresed with 6% dded dietry ft (P<.05), nd incresed when the LCR incresed (P<.05 liner). Feed cost per kg of gin incresed (P<.10) when 6% dded ft ws included in the diet. No significnt interctions between ft nd LCR were observed (P>.41). The fourth LCR with 6% dded ft resulted in the highest IOFC in 98.3% (Grid One) nd 100% (Grid Two) of the months during the ten-yer dt collection period. The fourth LCR without dded ft resulted in the highest IOFC in only 2 months for Grid One (1.7%). When no ft ws dded to the diet, feed cost per kg of gin ws lowest in 39.2% of months for the second LCR, 15.0% of months for the third LCR, nd 4.2% for the fourth LCR. When 6% ft ws dded to the diet with the fourth Tble 2: Adjustments to bse price for hogs ($US) used to clculte revenue per pig for Grid One Len Premium Weight Discount $ US/cwt $US/cwt Len % crcss Weight, kg Weight, lb crcss < < < > > > Clcultion of revenue per pig: (bse price + len premium + weight discount) crcss weight. Tble 3: Adjustments to bse price for hogs ($US) used to clculte revenue per pig for Grid Two Len, % Weight, kg Weight, lb < >54. 5 < 70.2 < > > Clcultion of revenue per pig: bse price index vlue crcss weight LCR, feed cost per kg of gin ws lowest in 41.6% of months. Experiment Two (brrows) Adding 6% dietry ft (P<.05) nd incresing the LCR (P<.05 liner) incresed ADG, G:F, crcss weight, nd totl feed cost per pig (Tble 4). Crcss len decresed with 6% dded dietry ft (P<.05), nd incresed when the LCR incresed (P<.05 liner). Adding 6% ft to the diet did not ffect IOFC for Grid One (P>.56), but tended to increse IOFC for Grid Two (P<.10). Incresing the LCR incresed IOFC for both grids (P<.05 liner). Feed cost per kg of gin incresed (P<.05) when 6% ft ws included in the diet. Incresing the LCR decresed feed cost per kg of gin (P<.05 liner). No significnt interctions between ft nd LCR were observed (P>.41). For Grid One, the fourth LCR with 6% dded ft resulted in the highest IOFC in 46.7% of the months, nd the fourth LCR with no dded ft resulted in the highest IOFC in 53.3% of the months. For Grid Two, the fourth LCR with 6% dded ft resulted in the highest IOFC in 97.0% of the months. The fourth LCR without dded ft resulted in the highest IOFC in only 4 months (3.0%). Feed cost per kg of gin ws lowest in 84.4% of months for the third LCR with no dded ft nd in 15.6% of months for the fourth LCR with 6% dded ft. Regression nd elsticity In both experiments, regression coefficients were negtive for corn, soyben mel, nd ft prices, nd the gretest bsolute vlue ws observed for the corn price coefficient (Tble 5). The regression coefficient for hog price ws positive, nd it hd the gretest elsticity vlue for ech tretment in both experiments (Tble 6). price hd the lowest elsticity vlue, followed by soyben mel nd corn prices. When the lysine:clorie rtio of the diet ws incresed, elsticities decresed for corn, ft, nd hog prices, nd incresed for soyben mel price. Discussion Swine producers use vrious economic prmeters to evlute nutritionl progrms; totl feed cost per pig is one of 218 Journl of Swine Helth nd Production September nd October, 2001

5 them. In this study, feed cost per pig ws incresed pproximtely 13.5% for the highest LCR with 6% dded ft compred to the lowest LCR with no dded ft. However, dding ft or incresing the LCR resulted in incresed growth performnce. Feed cost per unit of gin is nother economic prmeter widely used to evlute nutritionl progrms. We observed tht feed cost per unit of gin ws lower for the diets without dded ft. Feed cost per unit of gin ws lowest for diets contining no dded ft in pproximtely 60% of months in the ten-yer period for gilts, nd in pproximtely 80% of months for brrows. For gilts, the diet with the second lowest LCR nd no dded ft ccounted for lmost 40% of the months when feed cost per unit gin ws lowest. These results suggest tht feeding diets without dded dietry ft nd with lysine levels below the pig s requirement for mximum growth result in the lowest feed cost per unit gin during lrge percentge of the ten-yer dt collection period. In ddition to exmintion of costs, nutritionl progrms should be evluted in terms of mrgin nd volume produced. When we evluted the dt in terms of IOFC, we observed tht the LCR resulting in the best performnce ws ssocited with the highest IOFC estimte, even though feed cost ws incresed. We hve observed similr results in severl swine production systems. Systems tht focus lmost solely on cost control tend to feed diets tht re slightly lysine deficient nd lower in dded ft, which results in slightly submximl growth performnce. Conversely, systems tht lso focus on evluting prmeters influenced by income tend to feed slightly higher lysine nd dded ft Tble 4: Influence of four incresing lysine:clorie rtio regimens (LCR 1 to 4) nd dded dietry ft (0% or 6%) on growth nd economic performnce of growing-finishing pigs. Without dded dietry ft With 6% dded dietry ftg Vrible Gilts ADG, Feed g bde 57 efficiency, G:F bde.30 SEM Crcss weight, kgbd Crcss len, % d Totl Feed feed cost/pig cost/kg gin ( c, d $US) Income over feed cost Grid Grid One Two Brrows ADG, Feed g Crcss Crcss Totl Feed ( ( ( bdf 45 efficiency, G:F weight, kg len, % d feed cost/pig cost /kg gin bdf.28 bd 8.03 c ( Income over feed cost Grid Grid One Two d f $US) ( ( c df $US) ( h Growing pigs (PIC) were used to obtin growth performnce dt (verge initil weight 27 kg for 1200 gilts, 34 kg for 1200 brrows). The LCRs re described in Tble 1. Averge prices for the ten-yer dt collection period ( ) were used for corn (0.10 $/kg), soyben mel (0.245 $/kg), ft (0.335$/kg), nd crcss bse price (1.156 $/kg). Revenue ws clculted using fixed mount over bse price depending on weight nd len percent (Grid One) or using percentge of bse price depending on weight nd len percent (Grid Two). b min effect (P<.05); c min effect (P<.13); d LCR min effect (P<.05 liner); e LCR min effect (P<.05 qudrtic); f LCR min effect (P<.14 qudrtic); g No ft by LCR interction detected; h Stndrd error of the men Journl of Swine Helth nd Production Volume 9, Number 5 219

6 levels to mximize growth performnce. Income over feed cost ws highest in both experiments in lmost 100% of the months when the fourth LCR ws fed with dded ft, except for Experiment Two (brrows) under Grid One. We exmined the price conditions for the periods where the fourth LCR with or without dded ft showed higher IOFC for Experiment Two (Figure 3). We observed tht when ddition of dietry ft incresed IOFC (pproximtely 53% of the months), crcss price ws 28% higher nd ft price ws 7% lower thn during the period when the fourth LCR without dded ft resulted in higher IOFC (pproximtely 47% of the months). Percent len decresed for both brrows nd gilts when ft ws dded to the diet. However, IOFC incresed for brrows nd Tble 5: Ingredient nd hog price regression coefficients to predict income over feed cost (IOFC) for 2400 growingfinishing pigs fed diets with incresing lysine:clorie rtio regimens (LCR 1 to 4) b with or without dded dietry ft c Without Added Dietry With 6% Added Dietry Item GILTS Intercept mel d R 2 Intercept mel R BARROWS Intercept mel R 2 Intercept mel R 2 Growing pigs (PIC) were used to obtin growth performnce dt (verge initil weight 27 kg for 1200 gilts, 34 kg for 1200 brrows). b Tble 1 c To estimte IOFC use the eqution y = + b 1 x 1 + b 2 x 2 + b 3 x 3 + b 4 x 4, where y is IOFC in $US per pig; is the intercept; b 1, b 2, b 3, nd b 4 re the regression coefficients for corn, soyben mel, ft, nd hog price, respectively; x 1, x 2, x 3, nd x 4 re the prices in $US per kg of corn, soyben mel, ft, nd hog bse crcss, respectively. d =not pplicble 220 Journl of Swine Helth nd Production September nd October, 2001

7 Tble 6: Ingredient nd hog price elsticities for income over feed cost (IOFC) for growing-finishing pigs b fed diets with incresing lysine:clorie rtio regimens (LCR 1 to 4) c with or without dded dietry ft Elsticity Without Added Dietry With 6% Added Dietry Item GILTS mel price mel price BARROWS mel price mel price Ech number represents the percentge chnge in IOFC for 1% chnge in the indicted vrible. b Growing pigs (PIC) were used to obtin growth performnce dt (verge initil weight 27 kg for 1200 gilts, 34 kg for 1200 brrows). c Tble 1 not for gilts during lrge portion of the period evluted under Grid One when the fourth LCR ws fed without dded ft. One explntion for this might be tht gilts re lener thn brrows, 18 nd the decrese in percent len (which resulted in lower revenue) when ft ws dded to the diet ws greter for brrows thn for gilts. Grid One tended to hve lower tolernce for dietry ft thn Grid Two. For exmple, Figure 4 shows the highest ft brekeven price tht could be pid to mke IOFC the sme for brrows fed the fourth LCR with nd without dded ft t different hog prices. Although both pcking plnt grids show n increse in the price tht my be pid for ft s hog price increses, Grid One demonstrtes lower ft brekeven price cross the hog price rnge studied. Regression coefficients The regression coefficients obtined from monthly ingredient nd hog prices over ten-yer period represent wide rnge of mrket situtions. These regression coefficients cn be used to estimte IOFC for diets with the LCRs evluted in this study (with or without dded ft) by simply entering specific ingredient nd hog prices into the equtions. For exmple, using the regression eqution for gilts (Experiment One) under Grid One for the fourth LCR with 6% dded ft [IOFC = (corn price x ) + (SBM price x ) + (ft price x 15.01) + (hog price x 94.67)] nd the verge ingredient nd hog crcss prices ($US) for the tenyer dt collection period ($0.10 per kg of corn, $0.25 per kg of soyben mel, $0.33 per kg of ft, nd $1.16 per kg of hog crcss), we cn clculte n IOFC of $79.50 per pig. If producer, under similr conditions, pys n dditionl $0.09 per kg for ft due to differing delivery chrges, heting costs, volume purchsed, or ft source, the clculted IOFC for this producer is $78.20 per pig ( decrese of $1.20 per pig). If the producer in the previous exmple, in ddition to pying higher price for ft, lso sells pigs t bse crcss price $0.04 per kg below the verge, then the clculted IOFC will be $74.41 ( reduction of $5.00 per pig from the originl figure). Another exmple illustrtes sitution in which dding ft is less profitble thn not dding ft. Using the ten-yer verge prices, we lredy clculted tht producer feeding gilts with the fourth LCR with dded ft (under Grid One) will hve n IOFC of $ If nother producer is lso feeding gilts with the fourth LCR, but without dded ft, nd is selling pigs under Grid One t price $0.05 per kg higher thn the verge price, the IOFC using the corresponding regression eqution [IOFC = (corn price x ) + (SBM Journl of Swine Helth nd Production Volume 9, Number 5 221

8 Figure 3: Fitted smoothed regression line of income over feed cost ($US/kg) under Grid Two (Tble 3) for brrows fed the fourth lysine: clorie rtio (Tble 1) in diet without dded ft or with 6% dded ft. Growth performnce dt were obtined from 1200 growing brrows (PIC C22 337) with verge initil weight 34 kg. Averge prices for the ten-yer dt collection period ( ) were used for corn, soyben mel, ft, nd crcss bse price. All vlues in $US. 140 Income over feed cost ($US) % dded ft 2 R =0.791 Without dded ft 2 R = Jn-1989 Jn-1990 Jn-1991 Jn-1992 Jn-1993 Jn-1994 Jn-1995 Jn-1996 Jn-1997 price x ) + (hog price x 91.0)] will be $81.26 (n increse of $1.76 per pig). Elsticity coefficients Clcultion of elsticity coefficients is useful economic tool to determine the reltive importnce of independent vribles in regression nlysis. The gretest elsticity vlue for IOFC ws observed for hog price. This mens tht hog price hs the gretest impct on IOFC. The elsticity coefficients for corn, soyben mel, nd ft prices hve negtive signs, indicting tht n increse in the price of ny of the ingredients will result in reduction of IOFC. For exmple, using elsticity coefficients under Grid One for the fourth LCR with 6% dded ft in Experiment Two (brrows), we observe tht 1% increse in corn price will decrese IOFC by 0.24%. Similrly, IOFC will decrese by 0.16% with 1% increse in soyben mel price, nd 0.07% with 1% increse in ft price. Conversely, IOFC will increse by 1.44% with 1% increse in hog price. It is not surprising tht corn nd soyben mel prices hve greter impct on IOFC thn ft price, becuse they comprise the lrgest percentge of the feed cost. However, the opportunity mrgin, defined s the verge percentge of ech ingredient cost tht my be vilble for incresing profit, is greter for ft. 19 Although chnge in corn or soyben price will hve greter impct on IOFC thn comprble chnge in ft price, the likelihood nd the mgnitude of price chnge re greter for ft thn for corn or soyben mel. Similrly, lthough hog price hd the gretest elsticity coefficient, it might be more difficult for producer to increse the hog price per kg thn to decrese the price of corn, soyben mel, or ft. The high opportunity mrgin of ft price results from the lrge vribility in ft prices mong producers. This vribility is explined by the differences in price between ft sources, volume purchsed, delivery chrges, nd storge costs, s well s differences in negotiting bility mong producers. Summry In our study, we determined tht IOFC ws better economic evlutor thn feed Figure 4: brekeven price ($US/kg) t different hog prices ($US/kg) for growing-finishing brrows fed the fourth lysine:clorie rtio (Tble 1). Methods of clculting revenue per pig re shown in Tble 2 for Grid One, nd in Tble 3 for Grid Two. Growth performnce dt were obtined from 1200 growing brrows (PIC C22 337) with verge initil weight 34 kg. Averge prices ($US) for the ten-yer dt collection period ( ) were used for corn, soyben mel, ft, nd crcss bse price brekeven price per kg ($US) price per kg ($US) 222 Journl of Swine Helth nd Production September nd October, 2001

9 cost per kg of gin. This result pplies to situtions in which tretment differences influence revenue-ffected prmeters such s weight produced or crcss qulity. Revenue (income) nd expenses re the two min drivers of the net profit mrgin. 20 Income over feed cost tkes both revenue nd expenses into ccount, wheres feed cost per kg of gin focuses only on the expense side. The min fctors tht influence revenue re weight, len premium, sort discount, nd bse price. The most importnt fctors tht influence expenses re feed cost nd feed efficiency. Income over feed cost is mrginl return mesure; therefore, producers should focus either on fctors tht would decrese feed costs without ffecting productivity, or fctors tht would increse revenue. However, when producers try to increse revenue by dding components to the diet (eg, energy, growth promoting gent to increse crcss weight, or crcss modifier to increse len premium), the increse in revenue must be greter thn the increse in feed cost. In this experiment, ll pigs were mrketed t the sme time, llowing pigs with greter rtes of gin to chieve hevier weights t mrket nd, consequently, fewer sort discounts nd more revenue. Under this circumstnce, weight ws the most importnt driver to mximize return. The fourth LCR with dded ft mximized both growth nd IOFC. However, mrketing ll pigs t the sme time is lso potentil limittion of this study. More reserch is needed to evlute IOFC under conditions where slower growing finishing pigs re sold t weight similr to tht of fster growing pigs fed dietry ft. The extr gross income received by extending the feeding period to grow the pigs to hevier weights would hve to justify the extr fcility nd feed costs. Implictions Different diet recommendtions my result when different economic prmeters re used to evlute swine diets, for exmple, feed cost per unit of gin nd income over feed cost. When swine diets re evluted using income over feed costs, the selection of mrketing strtegy nd brn close out procedure my hve n impct on the results. Regression equtions bsed on growth performnce dt cn be developed to predict economic performnce under specific mrket situtions. Acknowledgements Apprecition expressed to Globl Ventures for the use of pigs nd fcilities; to Pipestone Reserch Prtners for prtil finncil support; nd to Mrty Heintz, Steve Rops, nd Robert Powell for technicl ssistnce. References refereed 1. Ntionl Reserch Council. Nutrient Requirements of Swine. 10th ed. Wshington, DC: Ntionl Acdemy Press; Ro DS, McCrcken KJ. Effect of protein intke on energy nd nitrogen blnce nd chemicl composition of gin in growing bors of high genetic potentil. Anim Prod. 1990;51: Chib LI, Lewis AJ, Peo ER Jr. Amino cid nd energy interreltionship in pigs weighing 20 to 50 kilogrms: I. Rte nd efficiency of weight gin. J Anim Sci. 1991;69: Cstell AG, Cliplef RL, Poste-Flynn LM, Butler G. Performnce, crcss nd pork chrcteristics of cstrtes nd gilts self-fed diets differing in protein content nd lysine:energy rtio. Cn J Anim Sci. 1994;74: Southern LL, Wtkins KL, Ojed AR, Hembry FG. Effect of seson of the yer nd energy density of the diet on growth, feed intke, nd feed efficiency of swine. Nutr Rep Int. 1989;40: Pettigrew JE, Moser RL. in swine nutrition. In: Miller ER, Ullrey DE, Lewis AJ, eds. Swine Nutrition. Stonehm, Msschusetts: Butterworth- Heinemnn; 1991: Smith JW II, Tokch MD, O Quinn PR, Nelssen JL, Goodbnd RD. Effects of dietry energy density nd lysine:clorie rtio on growth performnce nd crcss chrcteristics of growing-finishing pigs. J Anim Sci. 1999;77: De L Llt M., Dritz SS, Tokch MD, Goodbnd RD, Nelssen JL. Effects of dietry ft on growth performnce nd crcss chrcteristics of growing finishing pigs rered in commercil environment. J Anim Sci. In press. 14. SAS. SAS/STAT User s Guide (Relese 6.03). Cry, NC: SAS Inst. Inc; Peterson RG. Design nd Anlysis of Experiments. New York: Mrcel Dekker. 1985; Rgsdle CT. Spredsheet Modeling nd Decision Anlysis. 2 nd ed. Cincinnti: South-Western College; Pindyck RS, Rubinfeld DL. Econometric Models Economic Forecst. 4 th ed. New York: McGrwHill; Friesen KG, Nelssen JL, Unruh JA, Goodbnd RD, Tokch MD. Effects of the interreltionship between genotype, sex, nd dietry lysine on growth performnce nd crcss composition in finishing pigs fed to either 104 or 127 kilogrms. J Anim Sci. 1994;72: References non refereed 9. De L Llt, Dritz SS, Tokch MD, Goodbnd RD, Nelssen JL. Effects of incresing lysine:clorie rtio nd dietry ft ddition on growth performnce nd crcss chrcteristics of growingfinishing gilts. Knss Swine Industry Dy Report of Progress : De L Llt,, Dritz SS, Tokch MD, Goodbnd RD, Nelssen JL. Effects of incresing lysine: clorie rtio nd dietry ft ddition on growth performnce nd crcss chrcteristics of growingfinishing brrows. Knss Swine Industry Dy Report of Progress : Ntionl Agriculturl Sttistics Service. Agriculturl Prices Monthly (PAP-BB). Vrious issues reports/nssr/price/pp-bb/. Accessed July 13, Weekly Ingredient Price Column. Feedstuffs. Minnetonk, Minnesot United Sttes Deprtment of Lbor, Bureu of Lbor nd Sttistics. cpihome.htm. Accessed July 13, Dritz SS, Tokch MD, Goodbnd RD, Nelssen JL. Feeding progrms to increse mrgin nd mximize throughput. Proc Allen D Lemn Swine Conf. 1999;26: Fuchs L, Reeves D, Morrison B. Using the return on equity (ROE) tree to help mnge business. Proc Allen D Lemn Swine Conf. 1999;26: Journl of Swine Helth nd Production Volume 9, Number 5 223

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