We’ve seen the trend of all major shrimp feed companies investing heavily in the technology that they can provide their customers in addition to feed.
From software, to autofeeders, to disease analysis, to video consutling, feed companies are doubling down on the services they can include.
In this quick post, we want to explore why we believe feed companies are making these investments and the pro’s and con’s of working with a feed company outside of just buying feed from them.
Why Feed Companies Are Investing in Technology
Feed is a high-volume, low-margin business and as much as the different feed companies say that their unique formulations can reduce FCR or improve mortality or growth rates, when comparing feeds of a similar quality (% high quality fishmeal, etc.), the differences from one feed company to another can be relatively neglible.
Additionally, it is a massive capital investment for a company to open up a feedmill in a given region that can compete at high volumes. Once its built, it instantly begins depreciating, so companies have every incentive to keep that feed mill operational 100% of the time so they can be generating that return on investment as quickly as possible.
Given these two realities, the most painful experience for a feed company is to lose a customer to another company. In the established shrimp farming regions, especially in more mature countries like Thailand or Ecuador, there are a finite number of farms to sell to, so losing one can have a major impact on the feed company’s bottom line.
Historically, feed companies have offerred perks such as free biology consultants or even gifts to the farm manager to close deals with a customer. Such efforts have been largely relationship based and depended on the quality of the sales person or biologist. With the advent of technology to increase farm efficiency, feed companies are looking to offer these suite of tools as further carrots to secure long term relationships with farmers and keep them as happy, paying customers.
Advantages to Working with Shrimp Feed Company Technology
In some regions, there is relatively little competition in feed, but in most of the world, a farmer has a number of companies to choose from and they can take advantage of how fierce the competition is amongst them.
First advantage is that the tools they are developing and have developed can and will legitimately improve how your farm operates. It is well proven now that autofeeders increase the growth rate of your animals (they also mean you use more feed). Additionally farm management software can be a valuable tool in decision making on the farm and can increase efficiency in feeding, PL selection, and the use of additives such a probiotics. Should you choose to work with a feed company, see what you can negotiate to get these technologies for free.
The second advantage is that if you are already working with a feed company, the fierce competition amongst feed companies can allow you to better negotiate. You can say to your feed company that you are looking at working with someone else because they have some technological capability and see what they say to keep you as a customer.
Disadvantages to Working with Shrimp Feed Company Technology
That said, feed companies are not stupid and they are making these investments in technology to their own favor.
The first disadvantage you can experience is that in using their technologies it brings you a lot closer to the given feed company. If you are using their software to manage your farm, it can be very difficult, expensive, and painful to switch away from using them should you have an issue with them.
Next, be wary of anything you are given for free. If you are looking to buy an autofeeder, test a number of them out. Talk to your friends and hear their experiences. Don’t just take one because it is included for buying feed from a company. That up front cost you save could cost you many times over in the long run for using a piece of shoddy equipment.
Overall we think it is a net positive to farmers to have feed companies making these large investments in the technology they can offer their customers. Just be wary and make decisions on which technologies to adopt cautiously and you should be fine.