Fixed Formula Versus Least Cost Formulation

When you buy a bag of feed, what are you hoping to find inside? 

Do you find what you are looking for?

When a feeds manufacturer chooses what will go into a feed there are two methods they might use.  Recipes whose ingredients stay the same all the time are known as fixed formula feeds.   At one time, this was the standard and that is what most people assume they are getting when they buy a bag of feed.  If it says “oats,” it means oats, and we all know what oats are.  Wheat is wheat.  Hay is hay.  If a formula is 50% oats, 25% corn, 10% beet pulp, 5% alfalfa, 5% molasses and 5% vitamins and minerals, its tag will list the ingredients like this: Oats, corn, beet pulp, alfalfa, molasses, and then a long list of the official chemical-sounding names for the vitamins and minerals. And that’s what you expect to find inside.  That formula will contain the same percentage of protein, fat, fiber, minerals and other measurements time after time.  The oats, the corn, the beet pulp, the alfalfa might vary a little bit from crop to crop, but not enough to make a difference.

When you look at a feed tag you may find the ingredients spelled out clearly like that.  That means the mill is in fact saying, “This is what is in here, no matter what.”  Even if the purchasing agent finds a great deal on a ‘processed grain byproduct’ that he’d like to use instead because it is cheaper, a fixed formula mill will not make that substitution. 

The feeds industry has changed a lot in the last fifty or so years.  What really changed was the computer, and the calculations it can perform.  Nowadays, mills often change their formulas frequently because the computer has made the calculations effortless and because we nutritionists are taught from our first classes in Animal Science 101 that the goal of a feed formulation is to provide feed as cheaply as possible that will meet a set of minimum requirements.

That’s least cost formulation.

It used to be that making up a formula involved not just an understanding of an animal’s requirements but also a lot of paper and pencil calculations.  The computer changed all that, so now the day-to-day costs of a formula can take the feed ingredients market into account and change the basic ingredients according to what is the cheapest. The language of the feeds industry has changed also to allow that flexibility.

Using collective terms like “processed grain byproducts” can mean all kinds of things that might be used to substitute for grains, for example.  This is standard practice and whole reason behind the language of collective terms.  There are lots of collective terms, including

  • Grain products

  • Forage by-products

  • Processed grain by-products

  • Plant protein products

  • Roughage products

·   Making up recipes for feed has evolved to make use of leftovers from the human foods industry.  By substituting whatever is cheapest but meets minimum numbers, a manufacturer can compete with other companies based on price.  If corn dust is cheaper than corn screenings, and they are both cheaper than corn, and they all have about the same percentage of protein, fat and fiber, which do you think will be used? Next week the screenings might be cheaper.  The week after, the mill might find a trainload of corn fines (broken off bits) that is a killer deal, and they’ll use that. The computer can tell them in a heartbeat which to use to make the cheapest feed, and by using collective terms on the label they can be more flexible in their recipes and more competitive in their pricing.  Sometimes it is called “variable formulas.”

How do you know if your feed is a fixed formula feed? 

The clarity of the label and that understanding of collective terms tells you a lot.  If the label says “oats” that feed will probably be more expensive than one that says, “processed grain by-products,” so that gives you a clear understanding of what ingredients you are buying, and you can decide if that matters to you or not.

Another way that sometimes works is to just look at it and smell it.  If it doesn’t smell good and look like the feed you are expecting, you probably don’t want it. (Molasses-based feeds don’t count.  They all smell good, whether they are or not, and molasses can cover lots of bad things. It’s notorious for causing and covering up mold.)

Least cost formulation feeds are the standard in the commercial feeds business but least cost is not a good marketing term. It’s not something you’d brag about though it is not considered unethical.  After all, the consumer is warned. It says right on the tag, “grain products,” so why would you expect oats? 

Union Point Custom Feeds does not use least cost formulation.  We use fixed formulas. When I make cookies, I use the flour, sugar, butter and the other ingredients that the recipe calls for even if I also have ingredients that are similar and cheaper in the pantry.  I could make cookies of leftover crackers and stale bread (flour) and corn syrup (sugar), vegetable oil (butter) and so on, and they could test out the same in a chemistry lab as my cookies.  They might even be as nutritious.  No, thanks.