The Crucial Value of Nutrients in U.S. SBM
A Presentation at US Soy University 2020 by Peter Schott
In April, leaders in agriculture from around the world gathered for the US Soy University 2020 Education Program, where Genesis Feed Technologies CEO and Co-Founder Peter Schott gave a talk, “Demonstrating the Nutrient Value of U.S. SBM.” In his talk, Schott shared why the feed industry must shift its thinking to be more efficient, how the GFT platform fits into the solution, and how it is useful to ingredient buyers today.
“We’ve built a platform for the analysis of soybean meal from different sources, but why do we need to do that?” Schott asked the audience. “How does it change what we’re doing right now?”
A big part of that answer, he goes on, is to build a better bridge of communication between ingredient buyers and nutritionists.
“We want to combine the commercial methods of purchasing with the technical methods of nutritionists,” Schott said.
Having come from a feed industry background, Schott has seen how nutritionists and ingredient buyers come from very different worlds, with goals that often aren’t in alignment with each other. For instance, the nutritionists are aiming to meet certain specifications and nutrients, and a purchasing agent is looking for the lowest cost.
“We need to bring those two ways of thinking together to form an enterprise model for the business,” Schott said.
The first step, he says, is understanding the dynamics of formula cost. Heretofore, the only way to evaluate formula cost was to manually aggregate and compare prices and quality data of each formula ingredient from each origin location, in order to determine which combination gives you the best bang for its’ buck. This takes hours of time that ingredient buyers don’t have.
“There’s this whole swirl of data that needs to be put together so that a buyer can make a quick and accurate decision,” Schott said.
Instead, buyers usually default to choosing the lowest price tag, Schott explained. However, this does not always mean the formula cost is the best value, he said. Currently, the value of soybean meal is primarily based on the levels of crude protein. This doesn’t tell the whole picture of what nutritionists are looking for in formulas.
“What we really want to start looking for are the amino acids and the metabolizable energy of the soybean meal quality,” he said.
While the words “metabolizable energy” may cause some drooping eyes in the audience, Schott vowed to prove why this should be exciting. After all, this is the most important piece of the soybean meal that contributes value. A close second in long-exciting-words, as well as importance, is the digestibility of the amino acids, he added.
This is especially crucial given that soybeans are a pretty big deal within most formulas. Soybean meal accounts for 30% of the energy in diets, and energy accounts for 60% of the cost in monogastric diets.
This is the ‘why’ behind the Genesis Feed Technologies platform. By aggregating data on ingredient quality and price from various origins, the GFT platform gives ingredient buyers all the information they need for purchasing high-quality ingredients that meet the needs of the nutritionists at the lowest possible cost.
Using the platform, ingredient buyers can also see the exact nutritional contributions each soybean meal option brings to the formula. What users will find is that the feed cost can change dramatically from diet to diet based on their source. For instance, Argentinian soybean meal contributes different nutrients than the U.S. soybean meal. With the GFT platform, buyers can see the profit potential of using one source over another.
They’re also able to ensure they remain within the restriction costs of each formula. For instance, the synthetic nutrient Valine has a restriction cost of 152.255. Any small change in the amount of valine needed will have a significant impact on the total cost of your formula. With the platform, buyers can ensure that each ingredient in the formula meets the restriction costs in the most cost-efficient way possible.
“On an enterprise level, your team, from the general manager to the purchaser, can start to work with a nutritionist to identify, ‘What are the limiting amino acids or nutrients in the formulas, and what is that costing me?’” Schott said. “Then you can start sourcing ingredients more effectively.”
What’s most important here, Schott said, is a shift in the way the feed industry thinks about formula cost. Rather than thinking of formulas as ingredient cost x ingredient quantity, buyers must shift to seeing nutrient quality as the most important factor.
“We should be thinking of a formula as the nutrients you are delivering to the animals,” he said. “You want to make sure they are getting the right nutrients at the best cost. The question then becomes, ‘How do I source the best value for nutrient supplies?’”
Nutritionists use least-cost formulation data on a regular basis. With the GFT platform, enterprises are able to integrate this information on all levels of the business to achieve greater cost savings — as much as $3 per ton — as well as better goal alignment between the nutritionist and ingredient buyer.
“I believe this platform will allow a smart conversation to happen between nutritionists and buyers,” Schott said. “They will be able to see the economic benefit.”