News and analysis on the global poultry
and animal feed industries.
on January 3, 2008

Brush up on least-cost basics to make balancing a breeze

Animal ration balancing has moved from tiresome pencil pushing to the ease of a few keystrokes, but a lot of the same principles apply when 'least-cost' is a top priority.

In the not-so-distant past, feed manufacturers used to balance their feeds using hand calculations and often relied on tedious trial and error methods. But the availability of commercial computers by the end of the 1960s meant that complex mathematical models could be solved much more easily and within a short duration of time. Twenty years later, the feed industry welcomed the arrival of the personal computer, which provided affordable feed formulation solutions. Advancements in computer technology, mathematical modeling and animal nutrition have resulted in vast improvements in the last 20 to 25 years in the way feeds are formulated.

Least-cost defined

At its core, least-cost feed formulation is combining an array of feed ingredients in certain proportions to provide the target animal with a balanced nutritional feed at the least possible cost. Though least-cost formulation is a mathematical solution based on linear programming, it requires the professional knowledge of animal nutritionists who take into consideration the nutrient requirements of the target animal and its capability to digest and assimilate nutrients from various available ingredients. Feed formulators also need to be aware of the variations of nutritional requirements for different species at various stages of their lifespan. The linear programming performs what it is designed to do mathematically and it is based on the information put in by the formulator. So, in essence, regardless of the available technology, the formulation program is only as good as the nutrient and ingredient parameters entered into it.

Choosing formulation software

There is a broad choice of feed formulation software packages on the market. The software ranges from simple, spreadsheet-based solutions to sophisticated and complex packages designed for large feed manufacturers that require multi-site, multi-server, and multi-blending capabilities. New and innovative add-on applications are being developed and introduced into the market every year, enabling feed formulators to perform their jobs more efficiently. The software packages may also provide modules for inventory control, production, and interfaces to accounting systems among other features. Some feed formulation software is specifically designed for a certain species and may provide tables of nutrient requirements or models of growth for those specific animals. Further, improvements in the look and feel of the software and seamless integration with other functionalities related to formulation are also becoming more common.

One of the most important uses of least-cost feed formulation is in choosing among the available ingredients to be used, based on their nutritional composition and cost. Many times one ingredient can be substituted by another with similar nutritional value. The software helps the user to achieve the highest profit margin when market conditions favor the use of one ingredient over the other. A number of tools are useful in the analysis of formulation results.

Table 1: Basic feed formulation function 

Formulation analysis tools

For those ingredients that were not included in the formula solution, the least-cost formulation software indicates how much the cost of these ingredients will have to fall before they can be included in the formula. This cost change is called the marginal price change of the ingredient.

Shadow price of an ingredient is calculated by subtracting the marginal cost change from the current ingredient cost. This amount represents the cost of the ingredient at which the ingredient can be included in the formula. Ingredients that are included in the formula results have a shadow price of zero.

Similarly, the change in formula cost with a change in a nutrient constraint is called the shadow price of the nutrient. The shadow price of a nutrient is zero if the level of nutrient use is not equal to the constraint level.

An important analytical use of least-cost feed formulation software is to observe the impact of changing ingredient prices in the formula solution. This allows the user to determine how much of an ingredient would be used if the ingredient were available at a different price. To accomplish this analysis, the user can change the ingredient price and re-solve as many times as necessary. Some feed formulation software allows the generation of summary graphs called price maps, which are the result of plotting the formula costs at different ingredient prices.

Advanced formulating features

The ability to specify that several nutrients must exist in the resulting formula in relation to one another is called nutrient factoring. Advanced least-cost feed formulation software solutions provide this capability which allows setting a ratio between two nutrients, for example calcium and phosphorus. The ability to specify nutrients in proportion to one another is another application of this function. For example, the user can specify that amino acids be proportional to the total amount of protein in the formula.

This is a function of least-cost feed formulation that attempts to formulate with specific proportions among nutrients by relaxing the weight constraint of the formula, based on the theory that animals will consume feed to maintain a constant energy intake regardless of the energy level of the feed.

Sometimes feed formulators are faced with the problem of having limited amounts of some ingredients. An advanced feature of some least-cost feed formulation packages is multi-blending, which allows more than one formula to be solved at once, taking into consideration the ingredients that are available in limited qualities. The software then optimizes the allocation of the scarce ingredients to different formulas in order to achieve a total least-cost solution.

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