Nutritional Bundle vs. and Component Pricing
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1 Nutritional Bundle vs. and Component Pricing Nick Bajjalieh, PhD SMIntegrative Nutrition, Inc.
2 Current Commodity Market Descriptors for Soybean Meal (SBM) Composition Protein Fat Fiber Moisture
3 User: NICK INTEGRATIVE NUTRITION INC. Date : 11/1/2012 Ingredient Report Time : 17:09 As Fed Page : 1 Plant: USBGV -USB Meal Trait GAV Matrix Ingredient 48% Soybean Meal Nutrient Code Description Units Level 1 Weight Lbs 1 3 Moisture % 10 4 Dry Matter % 90 6 Met Energy Poultry kcal/lb 1,109 9 Digest Energy Swine kcal/lb 1, ME Swine kcal/lb 1, Net Energy Swine kcal/lb ME Swine Mcal/lb Mcal/lb Crude Protein % Dig Lys Swine % Dig Thr Swine % Dig Met Swine % Dig TSAA Swine % Dig Try Swine % Dig Val Swine % Lysine % Threonine % Tryptophan % Methionine % Meth + Cys % Arginine % Histidine % Leucine % Isoleucine % Phenylalanine % Phenylala + Tyrosine % Valine % Dig Lys Poultry % Dig Thr Poultry % Dig Met Poultry % Dig TSAA Poultry % Dig VaL Poultry % Crude Fat % :2 Linoleic Acid % Crude Fiber % Calcium % Phosphorus-Total % Phosphorus-Available % Sodium % Chloride % Potassium % Magnesium % Sulfur % Copper mg/lb Iron mg/lb Manganese mg/lb Selenium mg/lb Zinc mg/lb Vitamin E IU/lb Choline mg/lb 1,251 Nutritionist s View of SBM Example of Nutritional Characteristics Attributed to Soybean Meal for Use in Feed Formulation Not all characteristics add value in a given application
4 Focus is on Amino Acids SBM is used primarily as a source of supplemental amino acids in poultry and swine feeds Growing poultry and swine need specific amino acids, not crude protein. Crude protein is an inadequate descriptor of nutritional value With the evolution of improved measurement tools, nutritionists have moved away from using Crude Protein to Amino Acids Digestible Amino Acids is preferable to Total Amino Acids However, must make the best use of what is available SMIntegrative Nutrition, Inc.
5 Tag-Along Value While amino acids are the primary driver of SBM usage, other characteristics represent tag-along value such as: Nutritionally available energy Minerals Vitamins The combination of all nutritional characteristics represents SBM s Nutritional Bundle SMIntegrative Nutrition, Inc.
6 Nutritional Bundle Focus Opportunities Focusing on characteristics valued by end users: Enables: A truer description of SBM s applied value Greater capture of inherent value Encourages meaningful improvement Multiple characteristics represent multiple options for improvement The value of small improvements in multiple characteristics Taken together can represent substantial value Less likely to overly stress soybean plant biology
7 Challenges Nutritional Bundle Focus Momentum of the present market Ability to reliably measure end-user value characteristics Managing increased complexity Complexity is the enemy of utility
8 Reliable Measurement System USB Funded Projects focused on: Describing NIR Capabilities and Limitations Ability to manage a value-chain network of NIR instruments
9 Reliable Measurement is Not Enough Information has Value Only to the Extent that it is Beneficially Used Each value component adds another level of complexity and lessens the probability of wide use Must Facilitate the Use of NIR Results in Decision Making Need tools to translate multiple soybean characteristics into simple estimates of value for: Trading within the value chain Variety selection Plant breeders Growers Must be able to estimate commercial value in changing markets Multiple compositional characteristics Different feed applications Changing market prices Incorporate process similar to that used by nutritionists: Least Cost Feed Formulation
10 Simple Decision Making Tools Different Approaches Relative Index Scale based on composition only Relative Value tied to current market prices Need current pricing and ability to input Least Cost formulation based Differentiate between different meal end use applications? Must identify basis for comparison Book value? Running averages? National? Local? Must test and validate within different audience groups
11 Simple Decision Making Tools Different audiences have different needs Traders Price discovery within context of selling/buying within the value chain Soybean traders and processors need total soybean value Meal traders focused on meal value Need to focus on $/unit Plant Breeders/Seed Companies/Growers Relative index for use in variety selection Also need to be able to consider specific characteristics Feed End-Users Procurement: $/unit Nutritionists: Relative Index may be a starting point Will also want to see complete composition profile at some point
12 Simple Decision Making Tool Modules, Inputs and Outputs Model for Estimating SBM Composition Least Cost Formulation Meal Value NIR Composition Profile Prices Relative Value Index Soybean Meal Model for Estimating Soybean Product Yields Total Soybean Value
13 Simple Decision Making Tool Inputs and Outputs Model for Estimating SBM Composition Least Cost Formulation Meal Value NIR Composition Profile Relative Value Index Soybean Meal Other Desired Output Model for Estimating Soybean Product Yields Total Soybean Value Prices
14 Potential Information in Report Sample Description NIR Performance Check Score Prices used Type of Feed for SBM RV Swine Broiler Relative Value Estimate(s) Meal Soybean Composition Profile (Optional) Soybean Sample ID SBM Amino Acid Nutritional Relative Value Index: Swine Total Soybean Relative Value Index % % Designated Base TBD (To Illustrate Used Set Average Here) 100.0% 100.0% % 99.8% % 99.9% % 100.6% % 100.4% % 99.1% % 99.6% % 99.4% % 100.9% % 99.5% % 99.3% % 100.0% % 100.5% % 100.8% % 98.0% % 102.4% % 100.0% % 101.3% % 99.9% % 101.2% % 98.6% % 98.4% % 99.9% % 100.5%
15 Value Chain Network of NIR Platforms Monitor & Manage NIR Performance Relative Value Estimator (RVE)? RVE RVE NIR 1 NIR 50 NIR 8 S NIR 8 M RVE NIR 77 Elevator Soybeans Terminal Soybeans Processor Soybeans Processor Meal Feed Mill Meal Note: Each color denotes a different NIR instrument and calibration combination.
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