Cost Savings through AgraStim

The high cost of fuel, with the resulting ethanol boom, continues to push corn and other animal feed prices higher. In 1990, the amount of U.S. grown corn used to produce ethanol was approximately 300 million bushels. By contrast, this year, some 2.3 billion bushels of corn will go to ethanol. In 2008, the figure is projected to climb to 3.8 billion, and by 2011, projections call for well over five billion bushels of corn to be made into ethanol.

Government incentives and higher fuel costs have caused U.S. grown corn to be diverted from animal feed to ethanol production, causing a rise in corn prices from $2.00/bushel in 2005 to a high of $3.50/bushel in 2007. This has caused a rise in other feed grain costs as they are substituted for corn. Feed costs account for approximately half of the expense related to poultry production. As feed costs increase, the cost of production continues to rise.

The addition of AGRASTIM® to poultry feed has been shown to improve feed conversion, allowing the producer to bring the bird to market weight in less time, and with a lower feed cost. In trials done with broilers, feed costs to bring the bird to market weight were reduced by an average of 2 cents per bird. This means that a producer that processes 181,000,000 pounds of chicken per week could potentially realize an average net feed conversion savings of as much as $1,054,186 per week, or approximately $54,818,000 in savings per year using AGRASTIM®.

The broiler industry in the United States processed an average of 174.8 million chickens per week in 2006. Broilers (chickens under 13 weeks old) constitute virtually all commercial chicken production. Based on the estimate (McDevitt et al, 2006) that necrotic enteritis costs the industry 5 cents per bird, the cost to the industry of this disease alone is approximately $8.75 million dollars per week. The cost to feed Agrastim® is approximately 2.4 cents for the lifetime of the bird. Feeding Agrastim® could result in a potential net savings of $4.55 million per week in current losses attributable to necrotic enteritis for the entire U.S. broiler industry.

Note to calculation method: In the absence of sufficient published data for the integrators ranked 11-38, an average number of units per pound was derived from the published data for the integrators ranked 1-10. (The top ten ranking integrators account for 76% of the market share.) The average number of pounds of ready to eat chicken per unit produced by integrators 1-10 was 4.2. This number was then multiplied by a factor of 1.25 to account for the difference between "live weight" and processed meat. (This allows for feet, feathers, entrails, etc). The resulting 5.25 pounds average live weight was used to calculate the number of units processed for integrators ranked 11-38. Agrastim® consumption calculations were based on the chart on page 22, and take losses into account.

Many of the producers listed above are in the process of conducting their own testing on Agrastim®. One of those producers recently completed a series of tests, the results of which have been detailed above (Table 3).

The total of all U.S. poultry integrators represent approximately $330,000,000 in potential annual sales of Agrastim®.

The chart on the following page shows calculations of potential savings, using an example of one of the integrators from the list above. The projected savings is based on data from completed testing. In this example, an integrator processing 67,600,000 broilers per week, raised on Agrastim®, could anticipate potential feed savings of approximately $.017 per broiler, resulting in projected weekly feed savings of $1,112,425. In addition, morbidity/mortality losses are projected to decline by over 800,000 units, and condemnations are projected to decline by 135,200 units, resulting in additional units sold of over 946,000. Combined savings from improved feed conversion, reduced deaths, and condemnations, are projected to be $2,821,691 per week, or $146,727,930, annually. These projected savings include the cost of Agrastim® in the calculations.

The U.S. broiler market, though the largest in the world, represents less than 35% of the worlds commercial broiler production. The USDA estimates that, in 2008, approximately 16,536,000 metric tons of broiler meat will be produced. The combined U.S. and international broiler markets alone, represent potential Agrastim® sales of nearly $1,546,000,000 annually.