Bidding Your Feed Business

How do I go about bidding my feed business?

(Table of Contents)

Bids for the feed business of a swine operation can be conducted on complete feeds, supplements, base mixes, or premixes. The format for setting up a bidding system is simple, with the producer working with his nutritionist, veterinarian, or consultant to set up guidelines for nutrient specification. These guidelines are then submitted to interested feed manufacturers, who will submit a bid for the producer to consider, it is essential that the producer follow these few steps to ensure the fairness of the bidding procedure.

Write extremely clear and narrow nutrient specifications so that products cannot be misrepresented.

List all essential nutrients that must be included in the product to be bid on. Make sure you do not leave out any nutrients. This is a common mistake made by producers. Any additional nutrients or ingredients that a feed company includes in the product are extras with no nutritional or economic value.

List all nutrient levels per pound or ton that must be guaranteed in the product. These guaranteed levels (maximums or minimums) will be used in the quality control program. A common mistake is that producers will specify 500 grams of choline chloride when they want 500 grams of choline. In a bidding process, 500 grams of choline chloride (50 percent choline) would leave the final diet 50 percent short on meeting the pigs' choline requirement.

List the desired ingredient sources for each of the nutrients. This is essential to provide uniform product comparisons.

Include any desired mixing directions, nutrient carriers, or information that will help the feed company meet the customer's needs. This may also include medications and the desired levels.

What criteria are important?

Nutrient Specifications

Individual products are expected to meet minimum and not exceed maximum nutrient specifications.

Amino Acids

For amino acids, the per ton credit is established at $10 per 5% deviation below the recommended minimum.

Other Nutrients

For nutrients other than amino acids, the per ton credit will be $2.5 per 5% above or below recommended maximums and minimums, respectively.

Analytical Variation

A 5% analytical variation is allowed before compensation. Thus, if the analyzed content falls within 5% of the specified min. or max., then no credit is to be given.

Deviation Calculation

The credit will be computed by calculating the percentage unit deviation of the analyzed sample from the analytical min. or max. For example, if the specified maximum on Ca is .9% and if it analyzed 1.1%, the analytical max. is .95%. Thus there is .15% unit deviation or 3 credit units above analytical max., and the per ton credit is $7.5.

    Credit = (Analyzed - Analytically Allowed) Specified .05 Credit Value
      Where:
      Analyzed = Laboratory value in % unless specified otherwise
      Analytically Allowed:
      For maximums = (max.) + (max. .05)
      For minimums = (min.) + (min. .05)
      Specified = Nutrient specification min. or max.
      Credit Value = per ton $ credit for each 5% deviation
Should I specify certain ingredients?

Yes! Nursery diets should contain specifications on specfic ingredients. A suggested list of alternative ingredients is specified under each diet. These are only guidelines and ingredient quality will dramatically affect how ingredients are used in swine diets.

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