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Economic model for assessing the value added by PLF

EU-PLF’s Value Creation group has created a first draft of an economic model that aims to evaluate the value added by PLF technologies.

The model calculates the added value based on data compared from two sources: compartments of farm without installed PLF technologies and data obtained from the continuous monitoring and recording of animal performance and behaviour in the compartments where the PLF technologies are operational.

The model has three different versions, one for each group of animals: dairy, poultry and pigs. Technical parameters used to evaluate are: farm size, labour, labour hours, length of growth period, length of cleaning and disinfection, rounds per year, weight at purchase, weight at delivery, slaughtered rate, feed conversion rate, mortality, price of animals at start and at end, cost of feed, cost of labour, delivery costs, health costs, other costs, expected benefit, bonuses and penalties at delivery.

Thus far, it seems that the most promising margins to be expected from PLF technologies are related to the improvement of feed efficiency and optimization of the animal weight at slaughter. Other variables, like decrease in mortality rate, are also key indicators that sensors are helping farmer to manage the farm better and consequently to get higher revenues.

The model also includes information about investments: buildings, inventory and animals. The investment in PLF equipment will be also added to the PLF farm version to calculate the return of the investment to the owner. All this information will be used to calculate a total net revenue in order that the farm managers will have a decision support tool to evaluate the investment in Precision Livestock technologies.

Investigating how application of PLF technology can create value in the stakeholder chain will be another aspect of the model. Stakeholders include feed mills, farmers (as central element), slaughterhouses and retail, representing the customer. Values that are common for these stakeholders will be identified, and will be measured by suitable existing PLF technologies. The model will focus on detecting win-win values for two subsequent stakeholders – identified as supplier and user – and to get them monitored and steered by PLF technology. It is clear that Win-Win situations ensure a sustainable chain, and the rate of win-win situations can be translated in a “sustainability index”.

chain

“SH” stands for Stakeholder.

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