With a month to go until our first event in Asia, in Bangkok, Feed Additives Asia 2018, we spoke to Editor-in-Chief, Simon Duke, and Martijn de Cocq, Lead Analyst at Feedinfo News Service. Simon will be giving the opening speech and Martijn will be sharing Feedinfo’s outlook for the global vitamins and amino acids markets.
[Feed Additives] Simon, Martijn, what do you think are the biggest issues facing the feed additives industry?
[Martijn de Cocq] Although demand for feed additives in terms of volumes is expected to keep on growing in the coming decades, in line with global expected feed consumption, right now we face an oversupply situation for mainly amino acids which might bring challenges in manufacturers’ profitability and sustainable production going forward. For vitamins we have seen massive volatility and price increases over the last year, but in many cases prices are declining again and the question is: is it going to settle down? And if so, at what price levels and when? So one of the challenges is the ability to stay on top of those developments and see how supply and demand ratios are going to look like and what kind of evolution we will see potentially on the technical side, for example Vitamin E. These factors will have their effects on availability and price development.
[Simon Duke] Adding to the growth patterns mentioned by Martijn, it’s interesting to note that in 2017, the world produced a record 263 million tons of beef, pork and chicken. We can expect double the amount by 2050. But we all know that current approaches to animal protein production can be inadequate to meet tomorrow’s demands, and if we want to feed the world safely and sustainably. Obviously this is a global and cross-sectoral issue, but advanced production and feed systems can play a bigger part. And as we can see with the efforts in global animal production to reduce antibiotic usage, consumers have a very important influential role. The consumer is even more educated and powerful. He or she has never been so close to the animal nutrition sector. It is in our sector’s best interest to openly communicate to an increasingly global audience the pivotal role animal nutrition plays and the efforts we have undertaken. Transparency is required throughout the whole value chain.
[Feed Additives] Which developments in the Chinese and Asian amino acid and vitamin markets are worth highlighting?
[Martijn de Cocq] By now a big percentage of amino acids and vitamins are coming from China, or Asia in general. It will be interesting to see how end users and non-Asian manufacturers are going to react to this longer term, as the level of dependency on Asia as a source of feed additives is increasing. For many end users an ongoing development is the exposure to very volatile additive markets, and in parallel with that gaps in the availability of key vitamins. In general we see an ongoing impact of environmental regulations being implemented to make the production supply chain more sustainable and cleaner. As a very recent development, it will be important to follow the potential impact of the trade policies between the USA and several Asian countries, mainly China.
[Simon Duke] Martijn makes a good point here. Professor Qi Guang-Hai, Director General of the Chinese Academy of Agricultural Sciences’ Feed Research Institute, who will also be speaking at Feed Additives Asia 2018, estimates that China produces 70% of the world’s feed grade vitamins as well as 41% of feed grade amino acids. Thanks to heavy investment and the development of production technology, we will likely see the emergence of more competitively-priced feed additive manufacturers in China. There have also been a few toll amino acid toll manufacturing agreements between global firms and local Chinese companies. This goes to show that China is becoming an attractive low-cost production hub for amino acids.
[Feed Additives] Simon, is there another trend in the Asian animal nutrition market you are seeing at the moment that you would like to highlight?
[Simon Duke] We are seeing many examples of consolidation in the animal nutrition sector. This is expected to continue in 2018. We’ll see horizontal consolidation where premix or feed companies continue to expand globally, and vertical integration – premix or feed companies acquiring feed additive companies – continuing as well. Asia will be pretty much at the heart of these expansions. At Feed Additives Asia 2018 I will also have a look at the aqua feed investment opportunity. This is particularly relevant for Asian countries as the region is a dominant contributor to the world’s aquaculture production. Asian aquaculture farmers have become big consumers of feed commodities with higher profit margins compared to land animal farmers, and they are always interested in finding out more about the next transformative nutritional technology.
[Feed Additives] Thank you Martijn, thank you Simon. What other themes do you think you will be discussing at Feed Additives Asia 2018?
[Martijn de Cocq] You are welcome. As amino acid prices are low, it is very important for manufacturers to be as efficient as possible, so I would be interested to discuss and hear opinions on for example where raw material sources are going to be located in the next 5 – 10 years and if there are any shifts there. Topics like feed recipe evaluations (lower inclusion rates), new production techniques, potential alternatives for existing vitamins, would be interesting subjects to discuss.
[Simon Duke] My pleasure. I anticipate talking a bit about some of the feed ingredient technologies that we have come across in past year, which can offer novel solutions to the feed industry, as well as about the opportunities offered by digital technology and big data. I also expect to outline some of the animal nutrition industry’s concerns from our western European perspective. See you in Bangkok.