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New Zealand’s Tegel Poultry achieves world’s best feed conversion

Bill-Williams-1210USAtegel1
Aiming to bring average FCR down to 1.38: Bill Williams, general manager agriculture, Tegel Poultry, at a poultry farm on New Zealand’s North Island
Written August 27, 2012
Broilers & Layers

With an ideal growing climate and comparative freedom from poultry disease, Tegel Poultry focuses on the five pillars of agriculture performance to achieve the world’s best broiler feed conversion.

What does the broiler company with the world’s best feed conversion say about its live production performance? “We can do better!” So says the manager in charge of live production at New Zealand’s largest broiler company, Tegel Poultry.

The manager was speaking at the Alltech International Animal Health and Nutrition Symposium, where poultry producers and allied industry experts from all over the world listened to learn how the company achieves the exceptional performance.

Tegel Poultry’s Bill Williams shared performance data that showed a company-wide average feed conversion ratio of 1.55. And it’s no fluke! Tegel has steadfastly improved FCR by 1.5 points a year over the last 10 years. During the same period, the company’s live weights have increased by 50 grams per year. (See Chart 1: “Tegel Poultry’s long-term broiler performance.”)

Goal is to continue improvements in feed conversion ratio

“At Tegel Poultry we do well in live production performance, but we could do so much better,” said Williams, the veterinarian who is general manager of agriculture operations from feed milling and hatcheries to breeding and broiler grow-out operations. “We are averaging broiler FCR of 1.5 with a range on farms of between 1.4 and 1.6 and some sheds as low as 1.38.”

Williams said the company’s goal is to drive FCR down to 1.38. “If flocks could tolerate a higher spec diet without litter problems then we could get another 4 points on top of the results that you see in the data.” The FCR being achieved is cost effective in New Zealand; however, the economics may be different in different countries. “Increasing the energy and/or protein levels in the feed could result in a better FCR, but we are only able to feed economically at about 2.95 of kilocalories and 1.1 percent available lysine due to the current cost of feed ingredients,” he said.

Tegel’s poultry operations

Tegel Poultry, which is a fully integrated poultry producer with a staff of 1,900 people, processes over 40 million birds or 70,000 tons of dressed poultry annually. The company’s operations are in three regions of New Zealand – Auckland, New Plymouth and Christchurch – to allow delivery of fresh chilled and frozen chicken to more than 3,000 customers six days a week. (See “Live production techniques fit New Zealand market.”)

Five pillars of agricultural performance

Williams identified five agricultural pillars that drive Tegel’s world-beating broiler performance:

  1. Genetic selection
  2. Animal nutrition and lowest-cost modeling
  3. Strategic feed procurement and manufacturing 
  4. Disease control
  5. Animal husbandry and planning

 

“While our broiler performance continues to improve over time, there are a lot of bumps along the way,” he said. “For us, every one of these bumps represents a time when we haven’t optimized the five pillars. Each one of them needs to be fine-tuned for us to continue to achieve performance improvements in the future.”

Genetic progress continues but is difficult to realize

“The next five years’ genetic potential is likely to be better than that of the last 10 years,” Williams said. “However, it is becoming more difficult to realize those gains commercially.”

Early nutrition and hatchery management will play increasingly important roles in flock performance, he said. “Our youngest processing weight of 1.7 kilos is being achieved as early as 27 days from males now. So if that weight continues to be reached half a day earlier every year, it will soon be achieved at 25 days. This makes the starter diet very important nowadays. Managing the chick’s development in the egg is also becoming a critical thing in the hatchery.”

Animal nutrition: Modeling and testing play important role

Technical in-house and scientific expertise has enabled ongoing FCR enhancement for a given feed specification, Williams said.

“EFG modeling tools, laboratory and veterinary support, sophisticated trial facilities and animal husbandry knowledge of our livestock team are used continuously to improve nutrition to optimize cost, welfare and environmental performance outcomes,” he said.

The company uses a 96-pen test facility, he said. “It allows us to perform feed trials to test the EFG model assumptions to validate the outcomes from a commercial point of view. We also have the use of a commercial broiler farm that we use for field-based trials that has four full sheds divided longitudinally down the middle which gives us very good controls between two different programs on each side of the shed.”

Strategic feed procurement and manufacturing

Feed costs are managed through commodity and foreign exchange hedging. Buying decisions are a trade-off between bird performance outcomes (from actual trends and scientific modeling) and commodity pricing and forward trend analysis.

Three feed mills manufacture feed tailored to the requirements of the livestock to optimize FCRs. Feed is produced to specification with minimum variability to take the variability out of the livestock performance. Feed texture is designed to maximize feed intake by the chickens.

“In order to achieve the growth rates we experience, it is important that flocks consume their daily feed intake quickly and without undue competition so the format of the feed is very important. We achieve very high durability of diets – 70 on a Holman test.

“Raw material variability is still one of our most important issues. We are testing and streaming more of our raw materials so that we can formulate a more uniform source of raw materials and then swap to another stream of the same raw material.”

Disease control crucial for achieving low FCR

New Zealand has the best poultry disease status in the world and is the only country in the world with no Infectious Bursal Disease, according to Williams. There is no Newcastle disease or Avian Influenza in the country, he said. “Our broiler birds don’t get any vaccination whatsoever,” he noted.

However, potential nutritional and metabolic diseases continue to be a challenge. These include coccidiosis, dysbacteriosis, rickets and leg problems. “These conditions can be problematic if our processes or diets are not quite fine-tuned right for those fast-growing birds,” he said.

Tegel is applying new techniques for promoting the gut health of flocks. “Recently, we had a visit from Dr. Steve Collett of the University of Georgia who promotes the seed, feed and weed program (gut health management program to cultivate good bacteria and displace harmful bacteria). And we have implemented that program to some extent with great results,” he said.

The company also maintains high internal standards of isolation and hygiene, including all-in, all-out farms. Its facilities are designed for cleaning (concrete floors and new litter every batch).

Animal husbandry includes move to management contracts

Smoothing out the bumps in performance between individual farms is one key to achieving future improvements in overall performance. “Our current best month for FCR is 1.5. Our current best farm is 1.4. And our current best shed is 1.38,” Williams said. “So the varying performance of individual growers is an opportunity for us.

“Management is a wide term covering the placement and kill planning, stocking density, in-shed management approach, grower attitude and shed facility. We can identify a spread in performance due just to the grower’s facility and their in-shed management approach of about 6 to 8 points of FCR.

“The contractual relationship between Tegel and its growers has changed over time. Sometime ago the payment system moved from the traditional owner-operator model, where the grower is paid a fee per bird processed, to a model where the grower is paid on a square meter basis, but now a further change is contemplated where the owner of the farm becomes a 'landlord' who leases his shed to Tegel on a rate per square meter basis, and then either operates the farm himself, under a management agreement with Tegel, or employs a manager to do this.

“As farms get larger in size this is opening up the options for a syndicate to own the farm as landlords (as the investment cost could be too large for a single investor) which may involve a separate entity operating the farm under a management agreement,” Williams said.

"Management contracts will be offered to existing growers in the first instance but options exist whereby these could be passed on to other qualified operators by the existing growers who may want to retain the farm facility and lease income but not actually operate the farm. In some cases, Tegel may be the operator, with Tegel employees actually managing a leased farm.

“It’s about peoples skills. An investor with the means to fund a farm purchase isn’t necessarily the right person to run a large farm. They can employ a manager but they still remain liable for performance. A management agreement allows them to separate risk on the facility contract from risk associated with running the farm. The contracts are separately incentivized.”

Challenge of achieving consistent flock performance

Williams offered this thought about the challenge of achieving consistently high flock performance: Wherever poultry are grown in the world, and however excellent the live-production programs, achieving high performance on a consistent basis is never easy.

Williams summed up: “As we know, chooks (New Zealand slang for chickens) are a constant challenge.”

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A Tegel poultry farm with Mount Taranaki in the background: New Zealand enjoys an ideal poultry-growing climate and freedom from many poultry diseases.
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