The Law of Supply and Demand in Action

The price of soybean meal has gone through the roof.  The last load we purchased was over $.20 per lb. which is 30% greater than  the price we paid in March.  We buy a 3 ton load every ten days to two weeks.  Our cost per load has increased $300.

Farmers gossip more than a murder of crows.  The latest “news” is that we’re going to run out of soybean meal this summer.  I panicked a little.  Our direct-market hogs are on an alfalfa pasture and would be ok if only fed corn.  The logistics of getting all of the rest of our hogs onto pasture scared and excited me.  I love a challenge.  Then I realized that I was reacting to gossip and didn’t need to get crazy just yet.

I did, however, call my feed salesman and determined that it would be cost effective to substitute lysine and threonine, the two most limiting amino acids in a corn/soy diet for hogs, for soybean meal.  So I did.

For hogs weighing 200 lbs. to market, I am substituting 3 lbs. of lysine and 1 lb. of threonine for 50 lbs. of soybean meal in every ton of feed.  3 lbs. of lysine costs $2.85.  1 lb. of threonine costs $1.38.  So the total extra cost is $3.93.  50 lbs. of soybean meal costs roughly $10.  So the savings is roughly $6 per ton of feed.  We use about 6 ton of this feed per week, so the savings is $36 per week.  If soybean meal stays high all summer until harvest, and the relative prices stay similar, we will save $432 over 12 weeks.

I realize this isn’t a huge savings.  But it felt good to take some action.  And the collective action by many soybean meal users will keep us from running out of soybean meal until harvest.  This is the Law of Supply and Demand in action.

2 Responses to The Law of Supply and Demand in Action

  1. Ulla says:

    This is fansinating. We are trying to pasture our pigs, we usually feed them corn. Are there benefits to feeding them soybeans? I know nothing about raising pigs but love pork!:)

  2. curiousfarmer says:

    Thanks Ulla for your comment. Protein is necessary for development. Soybean meal is the industry standard. Leguminous pasture, think alfalfa and clover, is high and protein and great for swine. If your swine feed is deficient in protein, less muscle will be developed.
    Corn is about 8% protein. Soybean meal is 47% protein. We blend the two along with vitamins and minerals to achieve the desired protein level which starts around 20% and ends around 13%. It’s all in my post, https://curiousfarmer.wordpress.com/2009/01/25/3/
    A rough guess is good quality legume pasture will be 20% protein or greater. So corn fed to hogs on this pasture would be great.

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