DEFINITION of 'Feed Ratio'

Feed ratios measure the efficiency with which animal feed, like corn, is turned into a unit of livestock at market weight. It takes the market price of the animal at sale and divides it by the market price of the feed that the animal has consumed.

BREAKING DOWN 'Feed Ratio'

Feed ratios, or feed efficiency, help farmers determine how much feed to produce and whether it is more profitable to use feed — like grain — to feed livestock, or to sell it directly as a commodity. If livestock is relatively more valuable than feed, the farmer will use more of their grain crop toward feeding animals. While many livestock farmers do not grow their own corn, feed ratios are still a reliable way of determining whether livestock will be profitable for the year.

The feed ratio is also known as the feed conversion ratio (FCR). This is expressed as the mass of the input divided by the output, whether it be pounds of beef, gallons of milk, etc. For example, in modern beef farms, feed conversion ratios of 6:1 (6 lbs of feed per pound of gain) are common, while chicken feed conversion ratios are 2:1 and pigs have feed ratios of 3:1

Two examples of feed ratios are the hog/corn ratio and the steer/corn ratio, which divide the hundredweight price of the animal by the bushel price of corn. If hogs are selling for $70 per cwt and corn is $3.50 per bushel, the hog-corn price ratio is 20. Historically, a hog-corn price ratio of 20 or greater suggested that pork production would exceed year-earlier levels 12 to 18 months later, while a hog-corn price ratio of 16 or less suggested that pork production would fall below year-earlier levels in 12 to 18 months.

Example of hog-corn ratio.

Feed ratios are also used to gauge the performance of fish farms. However, while the formula for feed ratios is simple, the mortality rate of the fish also has to be taken into account.

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