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Feed manufacturing costs inIreland
IGFA feed Forum 2007 1
Brendan Lynch and Michael Martin,Teagasc
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Feed cost per kg pigmeat, cFeed cost per kg pigmeat, c
80
80
90
IGFA feed Forum 2007 2
72
6466
6365
40
50
60
70
DK NETH FRA GER UK IRL
DK
NETH
FRA
GERUK
IRL
FEFAC
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Composite feed price,Composite feed price,/tonne/tonne
212200
220
IGFA feed Forum 2007 3
187
164169
177173
120
140
160
180
DK NETH FRA GER UK IRL
DK
NETH
FRA
GERUK
IRL
FEFAC
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Feed price increase past 12 months,Feed price increase past 12 months,
/tonne/tonne
8780
100
Price inc
IGFA feed Forum 2007 4
71676863
32
50
38
3336
0
20
40
60
DK NETH FRA GER IRL
% increase
FEFAC
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Why are Irish feed costs so high ?
Ingredient costs
Scale of mills Location of mills
IGFA feed Forum 2007 5
Delivery cost Labour
Energy Diet specification
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The Irish feed industry (1)The Irish feed industry (1)Seasonal 30 to 35% in Q1
17-20% in Q3
Pig (17%) and poultry (14%) only 31%
o ou puLow density of feed use
High transport costs
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The Irish feed industry (2)The Irish feed industry (2)High import content
Ingredients dearer than Europe
Direct shi ment v. trans-shi ed
Small market limits ship size
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Density of animal feed production, tonnesDensity of animal feed production, tonnes
519
772
600
700800
IGFA feed Forum 2007 8
225
102
50
80
56
345
365
142
0
100
200
300
400
500
Per km2 Per km2 UAA
UK
Brittany
NE
DK
FEFAC
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Pig and poultry feed as % of total (2004)Pig and poultry feed as % of total (2004)
71
64 6363
75
60
80
IGFA feed Forum 2007 9
30
4138
26
39
24
12
31
18
13
57
46
12
0
20
40
Pigs Poultry P + PFEFAC
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Feed production by quarter, Ireland
2005-2006
2023
IGFA feed Forum 2007 10
2828
Q2
Q3
Q4
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P+P as % of total by quarter, Ireland
2005-2006
40
41
IGFA feed Forum 2007 11
28
23
Q2
Q3
Q4
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Diet as % of total pig feed, Ireland (2006)Diet as % of total pig feed, Ireland (2006)
62
56
50
60
70
IGFA feed Forum 2007 12
5
13
2018
1311
0
10
20
30
40
Quantity Cost
Start-LinkWeaner
Sow
Finisher
FEFAC
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Finisher feed as % total feed
Country Finisher Feed %
Denmark 67
France 70
IGFA feed Forum 2007 13
Germany 72
Great Britain 60
Ireland 62
Netherlands 75
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Percentage of each diet fed
FR IRE Ire 2
Starter / Link 5 2
Weaner 11 9
Grower - 29
IGFA feed Forum 2007 14
n s er
Finisher 2 - 18
Sow 20 20
Composite price,/t 169 212 203
PigSys 2005
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Feed manufacturing costs in Ireland
Little information in public domain
Anecdotal evidence Need to benchmark the individual
IGFA feed Forum 2007 15
company aga ns r s an p an s
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Elements of costElements of costIngredients
TransportSales / admin / debt collection
DepreciationPower
MiscellaneousProfit
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Manufacturing margins in Ireland
2002
Euro/tSow
IGFA feed Forum 2007 17
eanerFinisher
PigSys 2005
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Estimating delivery costs
Truck depreciation
Tax, insurance Labour
IGFA feed Forum 2007 18
Fuel Tyres / repairs / service
Tonnage per vehicle per year
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Annual cost of a truck (2)
110,000 - 150,000
Delivers 8 - 12,000t
Cost er tonne10 - 18
Occasionally over 20
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Factors affecting delivery costs
Load size
No feeds in consignment Loading time
IGFA feed Forum 2007 20
Time per delivery No drops
Discharge time
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Effect of distance and no feeds on deliveryEffect of distance and no feeds on delivery
cost per tonnecost per tonne
20.920
25
IGFA feed Forum 2007 21
11.5
7.2 9
14.5
12.1
10.2
17.9
15.4
13.6
.
16.7
0
5
10
15
1F / 1D 3F / 1D 3F / 3D
20 km50 km
80 km
110 km
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Effect of distance and load size on deliveryEffect of distance and load size on delivery
cost per tonne (1 feed)cost per tonne (1 feed)
20
25
IGFA feed Forum 2007 22
7.37.2 7.2
9.61010.2
12.813.513.6
1516.216.7
0
5
10
15
18 T 22 T 28 T
20 km50 km
80 km
110 km
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Effect of under load on delivery cost per tonneEffect of under load on delivery cost per tonne
(1 feed)(1 feed)
20
25
IGFA feed Forum 2007 23
9.6
11.210.7 9.61010.2 9.69.9
9.8
12.212.914
0
5
10
15
20 T 24 T 30 T
-4-2
0
**
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Reducing delivery costs ?Reducing delivery costs ?Full loads / bigger deliveries
Planned schedulesOrders well ahead
ore s orage o g ar sEasy access for larger vehicles
Round the clock delivery ?
Show cost of delivery ?
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Feed use on 400 sow unit, t
T/yr. T/mth
Pregnant sow 318 26
1 1
IGFA feed Forum 2007 25
Weaner 227 19
Finisher 1428 119
PigSys 2005
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Sales / office costsSales / office costs
Financing of stocksIngredient storage
Sa es e t co ectionTechnical advice
Office admin
Credit 7, 30, 60, 90 day
Total = 8.00 to ??
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High cost of sales in Ireland
Salesperson
Salary Car
IGFA feed Forum 2007 27
How many tonnes / year ? Do you need to collect cheque ?
Other countries direct debit ? Discount for direct debit
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What does feed medication cost ?
Cost of medication
Extra administration Reduced output
IGFA feed Forum 2007 28
Handling of flushing material Storage of medicated feed
Risk of cross contamination
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How many formulations ?
Fewer formulations will improve plant
throughput including storage bin utilisation Specials blends disrupt flow in mill
IGFA feed Forum 2007 29
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How many pig feed formulations ?
Pregnant sow
Lactating sow / GP sow Weaner
IGFA feed Forum 2007 30
Finisher Medium Density
Finisher stage 2 (60kg +)
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Energy useEnergy useUK survey - average 81 kwh/t
Irish figures ?Grinding
PelletingSteam
LightConveyers
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GrindingHammers and screens0.25
1.75
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PelletingDies and rolls 1
Power 3
Total 6Reduced throughput ?
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Miscellaneous costs (1)Miscellaneous costs (1)Shrinkage0.75% to 1.25%
8,000 t/man
40,000 /yr
5.00/t
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Shrinkage in the feed mill
Ingredients damaged or destroyed
Feed DM over spec Vitamin-mineral mixes out of date
IGFA feed Forum 2007 35
Spillages Rodent/insect damage
Errors in metering Write-off of faulty feed
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Miscellaneous costs (2)Miscellaneous costs (2)Repairs and maintenance
2.00
InsuranceFire, product liability, employee
1.00
Quality control0.80
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Role of QC
QC programme protects the mill
against disputes NIRS is fast and cheap for estimation
IGFA feed Forum 2007 37
Allows more precise formulation withsmaller safety margins
Requires identification and segregationof consignments
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R & D in the Irish feed industry (1)
Minimal investment
Teagasc sow project 2004 Farm trials usually a waste of time
IGFA feed Forum 2007 38
an money Bad information is worse than noinformation !
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R & D in the Irish feed industry (2)
Serious lack of information on
ingredients Diet specifications are high compared
IGFA feed Forum 2007 39
.
A fund of 20c per tonne is needed
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Magic potions in feed !
Feed formulation should be stripped
to the proven nutrient levels
IGFA feed Forum 2007 40
additives
Magic ingredients and additives must
be backed up with solid proof
T l f f iT l f f i
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Total cost of manufacturingTotal cost of manufacturing
pelleted feedpelleted feedHaulage inwards 6.00
Grinding 2.00Pelleting 6.00Labour 5.00
Sales and admin 8.00Misc. 6.00Total 33.00
Add depreciation, delivery, profit
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Can we lower diet specs at present timeCan we lower diet specs at present time
??Animal performance will be poorer on low
nutrient dietsMJ energy per unit gain is constant
higherLittle savings from low spec pig feeds
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C ill t ith hC ill t ith h
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Can mills compete with homeCan mills compete with home
compounding (2)compounding (2)
Supply balancers ?
Contract milling
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Conclusions (1)Conclusions (1)Pig industry needs a strong and
efficient feed sectorFeed industry needs profitable pig
roduction
Pig feed manufacture is not a veryprofitable businessCompetition is keenPig industry struggles with high feedprices
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Conclusions (2)
Irish pig industry cannot sustain
present difference betweencontinental and Irish prices
IGFA feed Forum 2007 47
service to improve efficiencies
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