Newsletter No. 69

Included in this edition:
1. World Food Situation
2. Alternative Feed Ingredients: An opportunity to combat high feed prices?
3. Understanding Variables
4. Genetic Gains: FCR should be the Focus
5. MTF – Meat Per tonne of Food – is it a better Benchmark figure than FCR?

The past 12 months have seen unprecedented volatility in the financial markets, food supply and prices as well as fuel costs. Figures 1 and 2 illustrate the downward movement since the highs in the early part of 2008. More information on these figures can be found on the FAO web site at: http://www.fao.org/worldfoodsituation/FoodPricesIndex/en/.

Figure 2 demonstrates that meat prices have remained more stable than the other commodities. Figure 3 illustrates the individual meat species over a 5 year period. Interesting to note is that Ovine prices where high in 2004 and 2005, only marginally lower than the new highs of 2008. The full narrative for meat products can be found at: http://www.fao.org/docrep/011/ai474e/ai474e09.htm

From an Ostrich view point, this illustrates the important place Ostrich production can have as a red meat production species. Once we achieve volume production, economies of scale and genetic improvements, Ostrich can produce meat as efficiently as pigs and poultry. They can then provide red meat more competitively that the ruminant species.

Figure 3 - FAO Prices of selected Meat Products FAO Meat Price

Figure 4 - International Freight Rates

Another interesting statistic is the fall in Grain Freight Rates, figure 4. The full narrative can be viewed at http://www.fao.org/docrep/011/ai474e/ai474e12.htmThe IGC rates are supplied by the International Grains Council, http://www.igc.org.uk/.

One way some attempt to reduce costs is to seek alternative feed ingredients. This has been a very common practice with Ostrich production that we have witnessed over the years, even when the main feed ingredients were at reasonable prices. The reason Ostrich producers were choosing that route was the lack of volume production to achieve economies of scale, poor management practices, mixed genetics etc.

More recently mainstream livestock producers have been tempted to go down the route of seeking alternative, lower cost feed ingredients. An article recently published on the Poultry Site discusses this very topic. The article concludes:

Quote: Alternative ingredients should always receive full consideration for use in feed formulas, not only in times of elevated prices. However, new sources of any ingredient should be submitted for laboratory evaluation prior to purchase and use in formulation, and possible limitations considered. It is questionable whether significant savings will be realized from the use of alternative ingredients. Although special relationships can sometimes be developed between supplier and feed manufacturer, prices of ingredients of similar nutrient content almost always rise and fall in tandem. The unfortunate reality of alternative ingredients is quite simple: there are no inexpensive train-loads of either a new grain in Manitoba or an undiscovered oilseed in Mississippi. End Quote
	“It is questionable whether significant savings will be realized from the use of alternative ingredients.”

Quote: Exactly what constitutes an alternative ingredient is an open question. To some in the feed industry, any energy or protein source other than corn, soybean meal and fat is taken to be alternative. A better working definition of an alternative ingredient would be one:

that has not previously been used on a regular basis
whose nutrient composition has yet to be fully defined or
for which maximum level of inclusion is unclear.

Each of these points is deserving of comment. End quote

The following table is a guide to productive and non-productive ingredients for ostrich when reading the full article, which can be accessed here.

Figure 5 - Productive and non-productive ingredients for Ostrich [source: Blue Mountain Feeds]

Another very important section in the full article and may also help understand why feed ingredients are so critical to the success or failure of a livestock production enterprise:

Quote

Nutrient Content

There are very few alternative ingredients that are not already known to the feed industry. Their respective nutrient compositions are reported in standard tables of ingredient composition, and in the scientific literature.

However, such ingredients are often produced in relatively small facilities with variations in manufacturing procedures. A frequent result is that the same ingredient may vary markedly in nutrient composition when procured from different sources. A prime example is dried distillers grains plus solubles (DDGS), which is currently produced at more than one hundred and twenty locations in the US alone. The protein content of meals from these plants varies from less than 26 to over 29 per cent. If variation of this magnitude (about 10%) were to exist in soybean meal, the high and low protein samples would not even be sold as the same ingredient. End Quote

When evaluating the cost of feed, it is the cost per unit of production that is the important measure, not just the cost per tonne. This is one reason why production should be geared to the markets available with known slaughter dates. This aspect has been lacking in many ostrich production enterprises, especially when starting out.

In an article on Pig genetics entitled Genetic Gains – FCR should be the focus, the author, Jane Jordan, makes the following introductory statement to the article:

Quote: As feed costs continue to rise pig producers are trying to squeeze every scrap of growth and performance from their herds - which is not easy given the many variables involved in producing a quality carcases. End Quote

Understanding and eliminating the variables in livestock production is the key to success. This statement applies to scientific research to ensure meaningful results, as well as management issues. Comparative trials of any sort are only of benefit when as many variables as possible have been eliminated.

Talking to geneticists, to work with any specie, the first thing they wanted to know is the ability to get batches with exactly the same genetics. Pigs lay litters, poultry and ostrich lay eggs on a daily or bi-daily basis. This enables workable sized batches of the same genetics to be trialled together. In comparison cattle, sheep and goats produce at best twins and maybe triplets in a single year.

The ability to control variables such as listed below has enabled pigs and poultry to become so efficient:

To achieve the controls to enable these measurements requires volume production. That is the key element currently missing with ostrich, even in South Africa. When at the peak of ostrich production in South Africa, we met with pig producers in Zimbabwe on a pig farm of 200 hectares, who were just starting ostrich production there. From these 200 hectares they were producing the equivalent tonnage in pig meat as the whole of the Ostrich meat tonnage produced in South Africa. The political challenges in Zimbabwe have resulted in the managers of that farm now working outside Zimbabwe and unable to move forward with Ostrich. This does however put into perspective the importance of volume to enable elimination of as many variables as possible.

These comments below refer to Pigs, but the principles are exactly the same for ostrich and illustrate just how far we have to go yet with ostrich.

Quote: "Processors want to ensure they have the best pigs to suit their system and retail customers. It surprises me that producers change their genetics without consulting their customer - the processor." says Dr Walling.

JSR has spoken to a number of processors on this issue and has found that of the three major UK processors they only knew of three producers that had contacted them prior to changing the boar lines.

"Can you imagine a company like Heinz deciding to change the type of beans in their cans without any customer research? Those keeping pigs should keep one eye on their customers' requirements," he advises.

End Quote

The above is a quote from the article from the Pig Site. That statement provides further clues on just how much work we still have to accomplish to establish ostrich as a viable industry. That statement also provides clues to recognise just how much untapped potential there is....to date there has been no genetic development in ostrich, not for performance or customer requirements.

Another little quote from the article that highlights the opportunities ahead for ostrich production with the right approach:

Quote:

Two decades of production proof

Dr Walling agrees that for the past couple of years producers have quite rightly focused on lines that would minimise levels of mortality. However, now that farms have a better control of PMWS producers are beginning to look at other aspects, especially given the situation with feed prices.

"Many with Hampshire lines will have seen an increase in appetite without an FCR benefit, but that is now starting to hurt financially, so they are now looking elsewhere," he adds.

End Quote

An article written by Sue Corning from PIC UK, a major pig genetic company highlights 8 points where genetics play a major role in improving efficiency. This final point emphases how tight costings are in meat production.

Value for money?

Look for a track record – establish what performance can be achieved, realistically. Genetics is perhaps three per cent of costs, of which perhaps up to a half will be sireline genetics. So, if the cost of production is say 120p/kg, then the sireline genetic cost per pig at 75kg deadweight is about £1.35p. An extra 50g growth per day is likely to be worth £1.50/pig and an improvement of 0.08 in FCE could be worth £1.30/pig.

When times are hard make the genetics work - it may not be one of the largest costs, but producers should ensure that they are earning the most value from it. The cost of genetics is unlikely to make the difference between a business sinking or swimming, but the right genetics certainly can. Think carefully before making a change.

It is not possible within a genetic selection programme to make changes instantaneously. So if you want it all... and you want it now... then look for established sirelines with a proven record that are delivering now, yet have further potential for the future.

The majority of ostrich breeder stock traded over the years have no records and more often sold because the original farmer is leaving the industry. The condition of the breeders and the long history of variable and often substandard management is a major variable our industry needs to address to achieve meaningful data to progress.

5. MTF – Meat Per tonne of Food – is it a better Benchmark figure than FCR?

This article published this week on the Pigsite and provides another perspective on benchmark performance figures that maybe easier to monitor and a very effective benchmark measurement of profitability profitability in the commercial environment. It highlights the importance of measuring the value of saleable product per tonne of feed instead of the cost simply the cost per tonne of feed. I strongly recommend that you read the article. We will discuss it in more detail in next month’s newsletter.

Publication of the January newsletter will be January 2nd as I am travelling on New Year’s Day.