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Small-scale Manufacture of Compound Animal Feed (NRI, 1988, 87 p.)

Appendices

Appendix 1: Nutrient specifications

Appendix 1, Table I - Typical nutrient specifications for higher density poultry feeds

Appendix 1, Table II - Typical nutrient specification for appropriate density poultry feeds

Appendix 1, Table III - Typical nutrient specifications for pig feeds

Appendix 1, Table IV - Typical nutrient specifications for ruminant feeds

Appendix 1, Table V - Typical nutrient specifications for duck and furkey feeds

Appendix 1, Table VI - Typical nutrient specifications for rabbit and fish feeds

Appendix 1, Table VII Trace mineral/vitamin specifications for poultry, duck and turkey feeds (per tonne)

Appendix 1, Table VIII - Trace mineral/vitamin specifications for pigs and ruminants (per tonne feed)

Appendix 1, Table IX - Trace mineral/vitamin specifications for rabbits and fish (per tonne of feed)

Appendix 2: Feed formulation

Scenario 1

Small feed mill in Asia

Assume the country has a highly organized intensive poultry industry with feed for this industry being manufactured at a number of large mills, each with a capacity of 50,000-100,000 tonnes per annum. Demand for feed continues to exceed supply however, and there is still room for the small feed producer in this rapidly expanding sector. The local pig industry operates on more traditional lines but some producers buy in feed on an irregular basis. Buffalo are used in the rice fields and dairy cows are kept on the plantations but there is little demand for ruminant feed. One growth area for the feed producer that is highly profitable is the manufacture of fish feed for the local government hatchery and surrounding producers. Ducks are also raised on the ponds.

The 2.5 tonne/hour mill works approximately 16 hours per day, 6 days per week so that annual output is 12,000 tonnes, 1,000 tonnes per month. The output of different feeds manufactured per month is given in Appendix 2, Table X together with the 29 ingredients available, their prices and the resulting formulations based on the information given in Appendix 1, Tables l-IX. A total of 16 feeds is manufactured. Five pre-mixes are purchased from an importation company, a poultry/duck starter/chick, a poultry/duck finisher/grower, a layer/duck breeder, a pig grower/finisher and a general fish pre-mix. All feeds are pelleted, in line with local requirements, except the pig feeds.

A few further adjustments might be made to the formulations in Table X before manufacture, for example, rather more cautious levels of mustard seed cake might be employed and small quantities of some ingredients, such as winged bean in chick and duck finisher, might be eliminated in favour of other ingredients in order to simplify the mixing process. Leucaena might be added to layer 11 in order to add a source of pigmenting agents if these are required.

Appendix 2, Table X - Formulation for a small feed mill in Asia

Appendix 2, Table X - Formulation for a small feed mill in Asia (continued)

Scenario 2

Small feed mill in Africa

The major demand for feed is for village poultry production, often as a supplement to feed scavenged by the flock from the environment. There is a government beef-fattening unit which uses animals raised on traditional tribal grazing areas. The animals are set to the export abattoir and the price received for the carcasses justifies the extra cost of feeding. The local mission school has a few dairy cows looked after by the students and rabbits are also kept.

The 0.5 tonne per hour mill works 8 hours a day, 6 days a week so that annual output is approximately 1,200 tonnes, 100 tonnes per month. The output of different feeds manufactured per month is given in Appendix 2, Table Xl together with the ingredients available their prices and the resulting formulations based on the information given in Appendix 1 Tables, I-IX. A total of ten feeds are manufactured. Six pre-mixes are imported through the agricultural cooperative: a poultry starter, poultry finisher, a layer pre-mix, beef minerals, dairy minerals and a rabbit pre-mix.

Appendix 2, Table XI - Formulation for a small feed mill in Africa

Appendix 2, Table XII - Normal maximum limits to ingredient inclusion (%)

Appendix 2, Table XII - Normal maximum limits to ingredient inclusion (%) (continued - 1)

Appendix 2, Table XII - Normal maximum limits to ingredient inclusion (%) (continued - 2)

Appendix 2, Table XII - Normal maximum limits to ingredient inclusion (%) (continued - 3)

Appendix 3: Composition of raw materials

Important note on Appendix 3 Table XIII

The figures presented in this table are 'typical' values for the ingredients listed. They are sometimes average values, especially in the case of major ingredients, but in the case of lesser-used or novel ingredients, the figure is simply the only one available in the literature. Figures will be affected by the origin of the sample, method of processing and analytical procedures. A number of figures are simply crude extrapolations or interpolations from data on similar ingredients. These approximations are necessary since use of zero values where precise data is not available would introduce greater errors into formulations than those resulting from approximations. Actual analytical values on the particular batch of raw material to be used are of course preferable where available. Usually where knowledge of the concentration of a nutrient is limited the ingredient is likely to be included at a very low level or would only normally be used for livestock for which the nutrient is perhaps unimportant, for example, amino acid values in relation to ingredients normally only used for ruminant feeding. Special problems occur in relation to ME and DE values as there are often enormous variations in values in the scientific literature. Mineral values are very dependent upon soil and environmental conditions.

Appendix 3, Table XIII - Composition of a number of feed ingredients

Appendix 3, Table XIII - Composition of a number of feed ingredients (continued - 1)

Appendix 3, Table XIII - Composition of a number of feed ingredients (continued - 2)

Appendix 3, Table XIII - Composition of a number of feed ingredients (continued - 3)

Appendix 3, Table XIV - Typical fatty acid composition (%) of some common feed fats and oilz

Appendix 3, Table XV - Toxic or undesirable factors in feed ingredients

Appendix 3, Table XV - Toxic or undesirable factors in feed ingredients (continued - 1)

Appendix 3, Table XV - Toxic or undesirable factors in feed ingredients (continued - 2)

Appendix 3, Table XV - Toxic or undesirable factors in feed ingredients (continued - 3)

Appendix 4: Feed processing

Figure 5 - Flow diagram: typical 1 tonne/hour feedmill

Figure 6 - Flow diagram: typical 2 tonne/hour feedmill - industrial scale

Appendix 4, Table XVII - Proportional motor sizes and capital costs for feed milling unit operations - as percentages of totals

Appendix 4, Table XVIII - Typical bulk densities of raw materials

Appendix 4, Table XIX - Floor area and bag requirement for raw material according to bulk density

Appendix 5: Appraisal of small-scale production projects

As mentioned in Chapter 5, a preliminary assessment of a small-scale feed project should give a good indication of its likely feasibility. If the results of this appear favourable the next step would be to carry out a full financial analysis.

A check list of preliminary information required is given in the first part of this appendix, followed by detailed working tables for full financial analysis. The list is fairly comprehensive, but there may occasionally be other considerations in some local circumstances. It should be noted that a lot of this information will also be required by equipment manufacturers and suppliers in order that they can advise on, and quote for, the most suitable models.

Check list for preliminary assessment Schedule 1: Outlets

1. For which animals are the feedstuffs to be made: poultry (broilers or layers), pigs, cattle (dairy cows, beef cattle, calves), fish, rabbits, etc?

2. What numbers of each type of animal will receive compound feed and what amounts of feed are estimated to be required?

3. What proportion of planned production is to be sold? From what source do the prospective buyers obtain their supplies?

4. Are other companies active in your area manufacturing animal feeds? What are the sizes of these companies (estimated output of feed in tonnes/day). Would you consider them to be competitors for a limited market or is the demand for feed greater than the ability to supply? Is the market likely to increase? At what rate?

5. Is demand constant throughout the year or seasonal?

6. Are the buyers concentrated in one geographical area or widely dispersed?

7. Are sales likely to be subject to government price controls?

8. Is the demand for meal or pelleted feed?

9. Will manufactured feed be delivered to the user in bulk or bags?

10. If bags are used, what type will they be: paper, cotton, jute, etc?

Schedule 2: Raw materials and raw material supply

1. What are the proposed feed formulations? Have these been calculated on a least-cost basis to meet animal nutrient requirements and local feed standards?

2. What are the main ingredients to be used (including minerals and vitamins) and the source of supply for each of the raw materials? The total quantity of raw materials available must be equivalent to the proposed output of finished feed: the proportions will of course depend on the formulations.

3. Are there any problems in obtaining sufficient supplies of any of the ingredients listed? Special attention should be given to imported ingredients, particularly in countries with foreign exchange controls.

4. Will raw materials be delivered to the mill or will transport vehicles be required? If transport is required, will it be rented or purchased? If purchased, what type of vehicle?

5. Will the bulky ingredients be delivered in bulk or in bags? If in bags, will they be supplied by the seller? If not, what type (jute, cotton, paper) and what size (25 kg, 50 kg, other) will be required? Is there any problem in obtaining bags?

6. What are the storage requirements for each of the ingredients to be used?

Schedule 3: Site and energy supply

1. Has a site been selected for the mill? If yes, does the location pose any major problems of access to markets? access to supplies of bulky raw materials? access to energy supply? Would the location of the site give rise to serious humidity problems, be subject to flooding or be affected by other climate problems?

2. Are buildings already available at the site for the milling equipment and for storing both raw materials and feedstuffs? If yes, are they appropriate? If not, are there major problems concerning the construction of buildings, including problems in the supply of building materials?

3. What is the source of energy? If electricity from a national system, is it dependable? If not, is a generator or direct diesel drive engine required?

4. What are your electricity supply characteristics, i.e. phase, voltage, Hz?

Schedule 4: Operational considerations

1. Is labour readily available? Would there be any problems in operating more than one shift, if necessary, at certain times?

2. Will staff need training?

3. Considering labour costs and availability, what degree of automation is indicated: manual, semi-automatic or automatic?

4. If a more automated system were selected, is there access to trained engineers to service the machinery?

5. Can spare parts be obtained? Will foreign exchange regulations pose a problem in obtaining spares quickly?

6. Can you provide trained engineers to service the machinery or install the equipment using the suppliers manuals and drawings only? Are qualified electricians available for machinery wiring-up?

7. Is there ready access to facilities for chemical analysis of raw materials and manufactured feeds? If not, what provision is to be made for quality control?

8. If machinery is to be imported into your country, where is the nearest port of entry, and what is the distance from port to feed-mill site?

9. What is the condition of roads from port to feed-mill site?

10. Are cranes, fork-lift trucks, etc. and/or other lifting gear available at the port, and at the feed mill site for machinery erection and installation?

Schedule 5: General

1. Are there any other important problems influencing the success of an investment to produce and manufacture animal feedstuffs (e.g. changes in import licensing systems, price controls, irregular supply of day-old chicks to clients, affecting demand for feed)?

Estimation of capital and operating costs, and working capital requirements

Establishment costs (fixed capital)

Appendix 5, Table XX - Site costs

Note: Site areas include space for access. Site areas are small. Unless services, for example, electricity, have to be specially laid on for the livestock compound feed production enterprise, site costs are likely to be negligible, in which case they may be ignored. They have been included here in order to make this example comprehensive.

Appendix 5, Table XXI - Building costs

Appendix 5, Table XXII - Machinery and equipment costs

Appendix 5, Table XXIII - Summary of establishment costs (£)

Operating costs

Appendix 5, Table XXIV - Feed raw material costs

Appendix 5, Table XXV - Cost of bags

Appendix 5, Table XXVI - Labour costs

Appendix 5, Table XXVII - Fuel costs*

Appendix 5, Table XXVIII - Summary of operating costs (£)

Calculation of break-even costs per tonne

The following tables show how break-even costs per tonne of compound can be calculated using the discounting procedure. Table XXIX describes the method of calculation in detail for Model 1, by means of an annotated table, using a discount rate of 10% per year. The chosen rate should normally be the market rate for borrowed loan capital. Tables XXX-XXXII summarize the cost components and the break-even cost calculations, at a discount rate of 10% per year, for Models 2-4.

(i) add two extra columns to the Table, one for annual operating costs and the other for total costs, and calculate the PV of total costs for each year by discounting. Sum the products to give the PV of total costs over the life of the project;

(ii) for each year, multiply annual production, in units, by the appropriate discount factor for that year and sum the products; and

(iii) divide the PV of total costs from (i) by the sum of products from (ii) to estimate break-even cost per tonne.

The general case method will always give the correct answer, including cases where annual operating costs and annual output are constant. For example, using the data from Table 1 above:

(i) the PV of total costs over the life of the project is £28,532.14;

(ii) the sum of the products of annual production mulitplied by the discount factor is 228.183; and

(iii) £28,532.14 divided by 228.183=£125.04

Appendix 5, Table XXIX - Calculation of break-even costs per tonne, discount rate 10% Model 1

Appendix 5, Table XXX - Break-even costs per tonne, discount rate 10%, Model 2

Appendix 5, Table XXXI - Break-even costs per tonne, discount rate 10%, Model 3

Appendix 5, Table XXXII - Break-even costs per tonne, discount rate 10%, Model 4

Appendix 6: Further reading

CHURCH, D. C. and POND, W. G., (1974) Basic animal nutrition and feeding.

CORVALLIS, Oregon, United States: D. C. Church, vii+300pp.

COCKERELL, I., HALLIDAY, D., and MORGAN, D. J. (1975) Quality Control in the Animal Feedingstuffs Manufacturing Industry; Report of the Tropical Products Institute, G97, iv+39pp.

COKER, R. D., JONES, B. D., NAGLER, M. J., OILMAN, G. A., WALLBRIDGE, A. J. and PANIGRAHI, S. (1984). Mycotoxin training manual (Section A9), London, TDRI 25 pp.

COOKE, B. C. (1985) Prediction equations: their potential for estimating the energy content of compound animal feeds. Feed Compounder, November, PP. 7-9

GOHL, B. (1981) Tropical Feeds. Rome: Food and Agriculture Organization of the United Nations.

MCDONALD, P., EDWARDS, R. A. and GREENHALGH, J. F. D., (1981) Animal Nutrition, 3rd Edn. London: Longman.

PFOST, H. B. (Technical Editor) (1976) Feed Manufacturing Technology. Arlington, Virginia, United States: Feed Production Council, American Feed Manufacturers Association Inc.,

TYLER, C., (1964) Animal Nutrition, (2nd edn.) London: Chapman and Hall.