Ractopamine, a feed additive currently under review by the U.S. Food and Drug Administration, results in faster growth, better feed efficiency and greater lean pork production. Ractopamine affects swine growth by redirecting nutrients away from the production of fat tissue to the production of lean muscle. In ractopamine test trials the feeding of ractopamine increased average daily gain (pounds per day) by 8 to 13%, increased loin eye (square inches) by 15%, improved feed efficiency (pounds of feed per pound of weight gain) by 10 to 20%, and decreased backfat at the 10th rib (inches) by 12 to 20% (Millar, et al.).

Increases in pork production efficiency may improve the economic performance and profitability of pork production. Thus, hog producers will be interested in how much rac­topamine to feed and for how long in order to maximize profits.

The Summer 1990 issue of Purdue Agricultural Economics Report contained an article with results from a computerized swine growth simulation model for a high investment feeder pig finishing operation using ractopamine (Millar, et al.). Low, medium, and high genetic potential pigs fed with, and without, ractopamine were analyzed. This article reports the results of model modifications to allow for alternative ractopamine feeding levels and ractopamine response to days treated to determine the optimal dosage of ractopamine and how long it should be fed.

Ractopamine Response

A non-linear ractopamine response curve developed from a recent ractopamine trial (Williams, et al.) replaced the constant response curve used in the simulation model in the Millar, et al. study (Figure 1). In the previous study it was assumed that a constant 25 grams of protein per day of lean muscle growth were realized due to the feeding of ractopamine. The non-linear response to ractopamine used in this study reflects a pharmacological response or acclima­tion process, i.e., after an initial increase in lean muscle growth from feeding ractopamine, the lean growth reaches a peak and then declines over time. The lean growth response curve (height of the curve and rate of decline) is affected by the ractopamine dosage level. As a result, the optimal feeding period, production costs, and average daily profits also are affected by the dosage level and period of ractopamine feeding.

The objective of the study was to maximize average daily profits and determine the amount of ractopamine to feed and the length or duration of its use. Computer model simula­tions were based on medium genetic potential hogs. Ten different weights for starting ractopamine use and four dosages of ractopamine (0, 5, 10, and 20 ppm) were analyzed. The Elanco Division of the Eli Lilly Corporation, the developer of ractopamine, has conducted trials where ractopamine was fed for the last 90 pounds of live weight gain at a dosage of 20 ppm.

The actual cost of ractopamine is not known since the manufacturer has not yet established a price. Studies of similar biotechnology products such as bovine somatotropin (BST) in the dairy sector suggest that farmers will not adopt a new technology unless they can obtain a $2.00 net return for each $1.00 in cost. This same assumption was employed in this study.

Using the $2.00 net average return to $1.00 cost rule, the cost to farmers of ractopamine per pound of feed was calculated. Assuming $45 per hundred weight live weight pricing, the additional return for ractopamine averaged 3.5 cents per day during the entire feeding period for all genetic potentials. If one-third of this benefit represented the cost of ractopamine, this would be 1.17 cents per day over the entire feeding period. Assuming ractopamine is fed approximately the last half of the feeding period (last 90 pounds), the daily charge for ractopamine would average 2.34 cents. The average daily feed intake across all genetic potentials for the entire feeding period is 4.87 pounds. Therefore, the estimated cost of ractopamine to hog producers in this study is assumed to be 0.48 cents per pound of feed containing ractopamine, i.e., 2.34 cents divided by 4.87 pounds.

Lean Value Pricing

Many hog producers are interested in a lean value marketing system. This would involve paying producers different prices for the lean and fat in the hog carcass, rather than a single price per pound of live weight, thus rewarding producers of leaner animals with a higher carcass value.
This study examined a lean value pricing system which included a price for lean, a price for fat, and a fixed payment for byproducts. The lean and fat prices are on a per-pound basis but byproducts are a fixed dollar amount per pig. Lean to fat price ratios of 3: 1 and 4: 1 were analyzed, based on a live weight price of $0.45 per pound. The carcass merit pricing ratios were designed so that producers of non-ractopamine fed, medium genetic potential animals would remain indifferent between live weight and lean value pric­ing for animals sold at the weight which yields a maximum average daily profit. The average 1989 yellow sheet price for byproducts of $8.72 per pig was used (Whipker and Akridge).

Study Results

The results show that optimal slaughter weights are insensitive to the different pricing systems and ractopamine levels. The economically optimal slaughter weight of slight-1 y less than 235 pounds corresponds to the weight at which packers do not discount for light animals (Table 1). The number of days on feed decreased as the ractopamine dosage increased due to increased average daily gain with increased dosage. Maximum average daily profits changed significantly depending on the lean value price ratio selected and the ractopamine dosage.

When determining the level of ractopamine to feed and at what weight the ractopamine should be started for the three pricing systems, maximum average daily profits must be considered. With 20 ppm of ractopamine and a live weight pricing system, ractopamine use should start at 180 pounds (Table 1). The average daily profit would be 26.30 cents compared to 21.39, 24.86, and 25.48 cents per day with 0, 5, and 10 ppm of ractopamine, respectively.

With the lean value pricing system, average daily profits are the highest when ractopamine is fed at a rate of 20 ppm. For the 3: 1 pricing system and 20 ppm of ractopamine, feeding of ractopamine should start at 150 pounds (Table 1). Average daily profits would be 30.87 cents per day com­pared to 22.73, 27.19, and 28.85 cents per day for 0, 5, and 10 ppm ractopamine, respectively. For the 4:1 pricing sys­tem and 20 ppm, ractopamine should be fed starting at 150 pounds. The average daily profits would be 31.79 cents per day compared to 22.98, 27.71, and 29.52 cents per day for 0, 5, and 10 ppm ractopamine levels.

The results from this study indicate that ractopamine use can be profitable when fed for less than the last 90 pounds of live weight gain. The optimal starting weight is 180 pounds for live weight marketing. For both the 3:1 and 4:1 lean value pricing ratios the optimal starting weights are 150 pounds. Of course, these starting weights may be different for different ractopamine cost levels.

Summary

Feeding ractopamine increases the proportion of lean muscle in the carcass, decreases days on feed, increases feed efficiency, and increases maximum average daily profits. Profits are sensitive to the amount of ractopamine used and the pricing system for hogs, i.e., live weight versus lean value pricing. Also, profits will be affected by the cost of ractopamine.

A lean value pricing system, using two lean to fat price ratios (3: 1 and 4: 1), was analyzed. Optimal slaughter weights of about 235 pounds were found to be insensitive to the different price ratios and levels of ractopamine use (0, 5, 10, and 20 ppm). Slaughter weights are very sensitive to packers’ price discount schedules for lightweight animals, however.

Maximum average daily profits varied significantly, depending on the price ratio selected and the level of rac­topamine use. The number of days on feed decreased as much as 5 days as the amounts of ractopamine used increased from Oto 20 ppm. This would allow producers to feed more hogs per year with the same finishing facilities. Profits to producers of medium genetic potential hogs were highest with 20 ppm of ractopamine fed for approximately the last 84 pounds of live weight gain at the 3: 1 and 4: 1 lean value price ratios. Compared to non-ractopamine fed animals, an increase in average daily profits of 8.14 and 8.81 cents per day can be realized for the 3: 1 and 4: I lean value price ratios.

If the hogs are sold on a live weight basis (I: I), average daily profits would be highest with ractopamine fed at 20 ppm for the last 54 pounds of live weight gain. However, the hogs would still be fed 101 days and sold at about 235 pounds.

The additional daily profits from feeding ractopamine at 20 ppm when hogs are sold on a live weight basis are 4.91 cents. However, if ractopamine is fed at 20 ppm and the hogs are sold at a 4:1 lean value price ratio, average daily profits increase by an additional 5.49 cents. Thus, feeding ractopamine and shifting to a lean value pricing system both can contribute to increased profits from pork production. In fact, hog producers could pay slightly more for ractopamine than assumed in this study and still be profitable. Finally, it appears that, based on the prices used in this study, the optimal feeding period for ractopamine is quite sensitive to the responsiveness of the animal to the feed additive and to the dosage level. Also, the profitability will be sensitive to hog prices and the price of ractopamine. These factors will be of great importance in determining how ractopamine is ultimately used by hog producers.

 

 

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References

Millar, Todd W., Marshall A. Martin, Paul V. Preckel, and Allan P. Schinckel. Impact of Ractopamine Use on Hog Slaughter Weights, Feeding Period, and Returns with a Lean-Value Pricing System. Purdue Agricultural Economics Report, Summer 1990, pp. 5-8.

Whipker, Linda D., and Jay T. Akridge. Pricing Lean: A Lotus Template
for Determining the Price of Lean Pork. Ver. 2.0. February 25, 1990.

Williams, N., T. Cline, D. J. Jones, and A. P. Schinckel. Effects of Ractopamine as a Function of Time and Weight Gain on Test. Journal of Animal Science. 75(Abstract). 1991. (In Press).