Feeding Broiler Chickens for Profit

Feeding Broiler Chickens for Profit

Rick Kleyn, SPESFEED (Pty) Ltd

Despite the fact that feed prices have softened and that broiler prices have firmed on the back of higher demands, the way in which we feed our birds must always be profit driven. The decision as to which feeding strategy is used has a huge impact on overall profitability of any broiler operation. The most important aspect of broiler production in terms of feed efficiency and growth is to ensure that the birds consume adequate amounts of feed. Feed specifications are important, but before any alterations are considered, beware that we may well risk a reduction in technical efficiency (particularly at high stocking densities). We also know that when the feed price ratio drops, the only way to continue to make a profit is by maximizing technical efficiency. Perhaps the correct approach is to improve technical efficiency (reducing stocking density will do this), while simultaneously reducing nutrient density.

Before entering into any discussion about the profitability of a broiler operation, it is important that we define what we mean by profit. For years we have relied on measures of technical efficiency such as FCR and PEF, but these measures tell us nothing about profit. Looking at input costs alone can be misleading as reducing feed costs for example, may well lead to a reduction in saleable product. Ideally we need to look at return (income minus fixed and variable costs). It is also important to appreciate that in broiler production the “production unit” is the broiler house and not the chicken per se. The impact of time on any business cannot be ignored, remembering that we pay taxes and interest based on time. Thus, it is proposed that the best measure of profitability in broiler production is to measure the return per unit of house space per unit time. I have termed this measure Unit Profitability (UP).

The question which then arises, is what is the correct feeding strategy that should be employed to maximize our returns? In the remainder of this article, we will look at three areas that should be addressed by both nutritionists and producers. We will then look at the way in which our decisions would impact on profit.

Feed Intake:

The single most important aspect of effective and efficient broiler production is achieving feed intake. There are two times when feed intake is of particular importance. The first of these is during the first week of life. Ross (2004) have published data (figure 1.) that illustrate very clearly that 7 days weight is directly correlated to feed intake. Feed intake is directly correlated to water intake, so if for any reason chicks are unable to drink, they will also stop eating. We also know that 7 days weight is closely correlated to final weight. As a rule of thumb, and additional 10 grams at 7 days of age, translates into 45 grams at 35 days of age. It is beyond the scope of this short article to delve into the steps that producers can take to increase feed intake during the first week of age, but it not something that should ever be ignored.

The second period during broiler production when feed intake becomes critical is towards the end of the production cycle. As the birds become larger so they find it more difficult to move around the house and access feed. It is hard to say when this occurs as it is dependent on the weight of the birds, the stocking density used and the environmental conditions in the house. From experience it normally starts to become an issue when 28 kg of chicken per meter squared is reached. The approach during this phase is to make sure that the birds have adequate feeder and drinker space, that the environment is comfortable for the birds and that the feed quality (in terms of pellets) is excellent. Ideally, the diet (in the feeder pans) should include between 70 and 75% pellets and 25 to 30% fines.

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Figure 1: The relationship between 7 days weights and feed intake during the same period (R0ss, 2004).

Recent research has shown that feed intake has a direct bearing on the efficiency of utilisation of the diet. As intakes drop, for whatever reason, so a greater proportion of the nutrients and energy consumed are used for simply maintaining the birds (keeping them alive), rather than for growth. Thus, if feed intake is restricted, it is realistic for us to expect not only a decrease in growth, but a worsening of FCR.

Feed Specifications:

The determination of the feed specifications to be used in any broiler operation is largely the function of the nutritionist. However, input is required from production staff and experts such as veterinarians if the nutritionist is to be successful.

The energy level to be used in a range of poultry diets, often referred to as the density of the diet, is perhaps the most important decision that any nutritionist is required to make. Energy contributes approximately 60 to 70% of the cost of the feed, making the selection of a density that will maximise profit, all- important. Saleh et al. (2004) derived functions of broiler response to energy density (Figure 2).

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Figure 2: Response in body weight gain (Pink) and FCR (Red) in male broilers to incremental levels of nutrient density, after Saleh et al. (2004).

By making use these data and a standard feed formulation program, standard ingredient costs and an estimated value for a live broiler, it is possible to calculate the return at the different dietary densities. The results of the exercise that I carried out in 2006, can be seen in the „Standard‟ line in (figure 3). In addition, I formulated diets using both ”cheap” Sunflower Oilcake (SOC) and Full Fat Soya (FFS). As cheap SOC becomes available, it pays to reduce the density of the diet, while the availability of cheap FFS should lead to an increase in nutrient density.

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Figure 3: Return per broiler at incremental nutrient densities, for standard diets (- -), diets with sunflower meal, (_ _ _) and diets with FFS (___), using 2006 prices.

Using 2008 prices (which are a little higher than current prices), I have repeated the exercise that I conducted before. In figure 4, you will note that I have retained the “Standard” line (2006 data), in addition shown the returns using the current prices. In order to get the scale right, I increased the selling price of live broiler from R 7.00 (used in 2006) to R 9.00 for the 2008 exercise.

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Figure 4: Return per broiler at incremental nutrient densities, for standard 2006 diets (- -) and diets using 2008 diets prices (___).

I do not think that the actual numbers achieved for the above exercise are as important as the trends demonstrated. Clearly, under current price conditions, return over feed cost will be higher at lower nutrient densities.

Whilst the above results give us a fair indication as to the strategy we might follow, they do have a few major shortcomings. The first is that the data of Saleh was determined using very low bird stocking densities (10 birds/m2). We know that anything that influences feed intake, be it pellet quality or higher stocking densities, changes the manner in which a flock of birds will respond to nutrients. In broad terms, birds at higher stocking densities show a disproportionate negative response to low density diets. Secondly, in the exercise above, I was only able to look at the margin over feed cost, as the other data required were not available. As we shall see later, this is not the correct way to evaluate a problem of this nature. Thirdly, we have become aware that the manner in which the various strain of broilers respond to nutrients differs. Lastly, this model does not take the value of chicken through the processing plant into account.

Feeding Program

The feeding program used on each farm can and does have an impact on both the cost of feeding and the performance of a broiler flock. Young (small), fast growing broilers have a high requirement for protein and amino acids, relative to energy. As the birds grow, so their energy requirement increases because the birds have an ever increasing requirement for energy for maintenance. As the protein requirement for maintenance is relatively small, the ratio of amino acid energy to energy in the diet declines. Figure 5 shows in a stylised manner how the lysine (protein) requirement declines and the energy requirement increases with age. Also note the periods of over and under feeding of both lysine and energy that occur. The black lines represent both more (four) and less (two) phase feeding systems. Note here how large the periods of over and under feeding are on a two phase system.

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Time

Figure 5: A stylised representation of how a broiler nutrient requirements change with age and what the implications are of feeding different phases of feed.

In an ideal world, we would offer our birds a different diet on each day of the production cycle. Sadly, this is not practical and we are obliged to feed our birds in some sort of sensible manner. This has everything to do with the number of birds in the house, the feed bin size and even the delivery truck size. However, in the table 1, you can see that cost implications of feed 2 phases of feed versus 3 phases. I have also changed the feed allocation in the three phase system to realise a further saving. Note how little the nutrient intake changes when using the three different feeding programs.

Table 1: The cost implications of feeding two or three phases of feed to broilers.

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Experience has taught us that the more closely we meet the actual nutrient requirements of the birds, the better they grow and the more efficiently they use their feed. Thus, the saving using a three or four phase feeding system would be augmented by an improvement in efficiency.

The Impact of Feeding on Profit

In an attempt to show how both technical efficiency and the feed price ratio (the ratio between the costs of 1 kg of feed to 1 kg of poultry product) impact on profitability, I have carried out a simple exercise. As a starting point, performance results for two flocks of birds were created (see table 2). As can be seen, Flock A was more efficient than flock B and indeed the PEF figure was 17% higher

Table 2: Two typical flocks of broilers

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By applying standard prices, using a feed price of R 3000/ton and a broiler selling price of R 15.00/kg (giving us a feed ratio of 5) I was able to calculate the returns for the two flocks (table 3). Note how the profit per m2/day is 30.8% higher for flock A, which is more than twice the value we would have determined had we used PEF alone.

Table 3: Profit determination for two flocks of broilers at a feed ratio of 5

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By reducing the selling price of chicken to R 9.00/kg, it was possible to change the feed price ratio to 3, which is closer to the current situation (table 4). No other information was changed. Note how only flock A (the more efficient flock) made any money. Note also, relative return was 97% higher.

Table 4: Profit determination for two flocks of broilers at a feed ratio of 3

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Clearly, the more technically efficient a broiler operation is the more profit it will make in good times and the least money it will lose in bad times.

The burning question is therefore, what does all this tell us? If one looks simply at margin over feed cost, as we did in the discussion on feed specification, we are likely to make the wrong decision. A reduction in nutrient density may lead to a reduction in the cost of feeding an individual bird but the poorer growth rate will likely impact on overall profitability to a greater extent.

Contact: rick@spesfeed.co.za / +27 31 766 0016.