Thursday, June 21, 2018

BIF 2018: Efficient Red Meat Production

Michael Genho
Elanco Animal Health

From the business dictionary, efficiency is "the comparison of what is actually produced or performed with what can be acheived with the same consumption of resources (money, time, labor, etc.)"

Production Metrics

  • Feed Conversion Ratio
  • Residual Feed Intake


What's missing?
Level of input and output.
What is the optimal within a given context?

These (FCR and RFI) fail to take economic situation into account.

Elanco has a calculator to measure the optimal days on feed.
In an example, feeding a set of cattle for 28 more days would have been more profitable because of increased margin profit from the gain of those cattle. This was true even though the feed conversion of this pen would have gotten worse over those 4 weeks.

Elanco is working to help customers move up the analytical ladder. Move from standard close outs to statistical analyses to predictive analyses.

Elanco looked at drivers of closeout profitability comparing lots to other lots in a region. The two leading drivers are in price and out price. These account for 50% of the profitability difference. The third highest was average feed conversion. It was even larger than ration price. Feed conversion is the largest production measure influencing profitability. Confounded with feed conversion is health.

Average feed conversion has stayed fairly flat over the last 17 years. However, in the last 17 years, days on feed has increased which can drive down feed conversion.
Even when breaking groups out by days of feed, feed conversion has gotten worse over the last 17 years. 

We can estimate empty body fat using back fat, carcass weight, quality grade and ribeye area. Empty body fat ranges from 24% to 34% on a lot basis. However, if we look within a lot, there is much variation within  lots of endpoint empty body fat.

So, what do conversions look like if we control for endpoint (empty body fat), sex and end weight?
We have cattle that are very good at feed conversion, quality grade and growth. Many of these lots of cattle are getting ahead of people. They are reaching their endpoint before managers realize.

Conclusions
Efficiency is best measured measured in context of what is optimal. Have to consider costs and output level.
Average feed conversion is the single largest performance driver of feedyard profit and loss (accounts for 10% of variation).
Feed conversion should be optimized within endpoint targets (empty body fat).


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