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October 15, 2014

United States

Pennsylvania—Dr. Tom Zeigler...“Feed Is an Investment, Not a Cost”

 

Feed is a key factor in aquaculture profit.  Making feed-purchasing decisions based on the lowest-cost feed is likely to marginalize profit opportunities.

 

In aquaculture, managing feed costs is a primary focus because feed normally is the largest single cost item when compared to all other inputs.  Frequently, the approach taken when managing this cost item is to reduce the total cost of the feed used and/or reduce the unit cost (price) of the feed.  In either case, the focus is on “cost”.

 

Is this the best business strategy?  Not likely, because it is a much better business practice to consider what we pay for feed as an investment and not as a cost.  Cost is an outlay of money required to get something, whereas an investment is an outlay of money with the expectation of gaining a profit.  In the latter case, the focus is on return on investment, not just cost or price.  Almost any additional cost may be justified if the return is increased.

 

The challenge thus becomes changing the paradigm so that feed is viewed as an investment and not as a cost.

 

Economic modeling using current economic data showed that a 15% improvement in growth rate could absorb a 25% increase in feed cost and still break even.  This clearly illustrates that making feed-purchasing decisions based on the lowest-cost feed is quite likely to marginalize profit opportunities.

 

The bottom line: Invest more wisely in feeds and watch your profits grow.

 

Information: Dr. Tom Zeigler, Zeigler Brothers, Inc., P.O. Box 95, Gardners, Pennsylvania 17324, USA (email tomzeigler@zeiglerfeed.com, webpage http://www.zeiglerfeed.com/html).

 

Source: The Global Aquaculture Advocate (The Global Magazine for Farmed Seafood).  Editor, Darryl Jory (dejry2525@aol.com).  Focus on Feed/Changing the Paradigm/Feed Is an Investment, Not a Cost.  Dr. Tom Zeigler.  Volume 17, Issue 5, Page 28, September/October 2014.

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