The cost of diversity in livestock feed rations.

Abstract

This study investigates the financial cost of increasing the diversity of cereal grains in livestock feed rations. We first develop a nonlinear mathematical programming model that determines the least-cost composition of livestock feed rations of one metric ton that have at least the same energy and nutrient content as a reference feed ration. We then add into the model a diversity constraint using the Simpson Index of diversity to examine how changes in the diversity of the commodities in the ration affect the cost of the ration while maintaining the ration's energy and nutrient content at a reference ration value. We apply the model to cereal grain feed rations for livestock in 153 countries, using reference rations that depict the historical composition of cereal grain feed rations offered to livestock in each country. Results suggest that a one percent change in ration diversity changed the ration cost (i.e., the cost-diversity elasticity) from -0.67% to 1.41% (average = -0.02%) across all countries. Our results suggest that changes in ration diversity can come at a financial cost, but this financial cost appears negligible in many countries. This negligible cost could provide the feed sector more encouragement to diversify its feed supply and potentially become more resilient to price and production shocks.