What state is the feed industry in?

Respondents alert to potential feed price reduction demands in the dairy sector

We ran a reader survey earlier this year to find out what the major headaches are for the feed sector - a majority of respondents reported the Russian sanctions as detrimental for business. 

The participants also mentioned mycotoxin contamination as an issue last year.   

Looking ahead, some of those polled saw the need for greater traceability in the supply chain and they put sustainable raw material sourcing as high on their agenda. 

Also a large percentage of respondents — 73% — said animal welfare is one of the top priorities in their company, with 77% of respondents calling for heightened regulation in this regard.

All told, FeedNavigator collated over 175 survey responses from feed industry professionals - the topics covered in the survey included market and trading conditions, environmental management, animal welfare, investment and employment and NPD.

Toxins, sanctions, and TTIP

In response to our first question on external factors impacting business, the majority of respondents (17%) said the Russian import ban had the most impact on their operations in 2014. This was followed by mycotoxin contamination (14%) and the ongoing European Food Safety Authority (EFSA) feed additive re-evaluation (11%) process.

Graph1 | Create infographics

July saw the Russian ban on agri-food produce from Western nations extended until August 2016. The sanctions have put huge pressure on EU producers, especially pig and dairy farmers, with EU compound feed production contracting as a result.

And mycotoxins continue to be a major animal health and welfare concern in livestock husbandry.

Pedro Caramona, of the Alltech mycotoxin management team, last month told us that the above average temperatures and soil moisture deficits in certain parts of Europe have created concern for mould and mycotoxin issues for this year’s harvest.

“Across parts of Southern Spain, Eastern France and Southern Germany, summer crops have been impacted by very high temperatures,” he said. “Soil moisture is already critically low in parts of these regions. Farmers and producers need to be proactive rather than reactive when it comes to mycotoxins.”

However, early fears on the possibility of high mycotoxin levels in feed crops have not been realized in some Corn Belt states in the US, agricultural experts told this publication in October.

Volatility in commodity prices

With an eye on 2015 and beyond, some respondents said less volatility in commodity and feed prices would be welcomed. Others see antibiotic free feeding along with the implementation of the Veterinary Feed Directive (VFD) in the US as bringing opportunities along with major challenges.

Some of our survey participants said the outcome of the Transatlantic Trade and Investment Partnership (TTIP) deal will be critical for the industry.

The competence of new entrants in the sector was also highlighted as an issue: “Being a feed manufacturing company, [we believe] the lack of new milling skills coming into the industry is a concern,” said a business development manager. 

Optimism reigns

However, the majority of survey participants were positive about the future of their company, despite the various challenges they faced over the 12 months prior to July 2015.

Graph2 | Create infographics

Greening the industry

And environmental management seems to be high on the agenda this year as the majority of respondents express that they’re undertaking various initiatives in this regard.

Graph 3 | Create infographics

Interestingly, May 2015 saw the publication of the new LCA guidelines, developed under the LEAP project, a multi-stakeholder initiative coordinated by the UN’s Food and Agriculture Organization (FAO) to improve the sustainability of the livestock sector through better metrics and data.

The EU trade association, FEFAC, said the guidelines were ‘game changing’ as they synchronized the plethora of existing feed impact assessment methods and provided the feed sector with one set of rules to reduce its environmental footprint.

“It is said that if you can measure it you can manage it but feed producers need environmental footprint results that are comparable and understood by the whole supply chain.

The new harmonized and credible methodology derived under the Livestock Environmental Assessment and Performance (LEAP) partnership will enable, for the first time, such transparency and, as such, it is a milestone,” Nicolas Martin, policy adviser at FEFAC, told us back then.

Pricing perils

Results indicated that a large proportion of respondents (72%) believe raw material prices will cause bigger headaches for them in the coming year.

“I anticipate that the rock bottom prices for milk will prove to be unsustainable and [will] remove a number of the smaller farms from the production pool - this will give more power to the larger producers to negotiate higher prices meaning that raw material costs will increase again. However, that power will also be apparent on the feed side with demands on feed price reduction in the dairy sector at least,” said one respondent.

And some participants — 49% — reported that currency fluctuations had a negative impact on their business in the 12 months prior to July 2015.  

Graph 4
Create your own infographics

Animal well-being

A high percentage of survey participants (73%) stated that animal welfare is one of the top priorities for their company.

Graph 5 | Create infographics

Indeed, Cargill and Tyson have long been citing a concern over cattle mobility as the reason why they would refuse to take cattle fed the controversial beta-agonist, Zilmax, back into their supply chain.

“This is not a food safety issue,” Tyson officials said recently. “It’s about animal well-being and ensuring the proper treatment of the livestock we depend on to operate.”

The Merck produced drug is still off the market in the US. 

This time last year, Henrie Verwayen, marketing manager, ForFarmers, told FeedNavigator that on top of the unrelenting pressure on milk, meat and egg prices, the industry was seeing greater focus in several regions on criteria such as feed safety, animal welfare and sustainability.

He said these factors will see margins in the feed to food chain squeezed, especially in net exporting countries like the EU, with a knock-on impact on profitability at farm level: “For our farmer customers this means they need to further increase scale.”

Meanwhile, Dr Christianne Bruschke, chief veterinary officer in the Netherlands, told AgriVision 2015 delegates this year that good animal health management, especially where large numbers of animals and humans are in relatively close contact, is essential for the economic viability of each farmer and the overall sector.

She said scientists, through knowledge, governments through policies and the private sector, through commitment, must work together to achieve agribusiness economic viability and greater societal acceptance of livestock production.

Will least cost economics knock innovation on its head?

Looking at pipeline R&D projects, 58% of respondents strongly agreed that their companies were planning to invest more in new product development (NPD) this year. However, more than half of our respondents also pointed out their customers were more focused on price than innovation.

Graph 6 | Create infographics

Nevertheless, some of the major players in the feed industry have been reporting this year how traditional approaches will only get them so far. They are increasingly turning to cutting edge technology, looking to transform big data into information for research and development needs and relying on new avenues of study with the end goal of precision nutrition in mind.  

Epigenetics - the study of external or environmental factors that turn genes on and off and affect how cells read genes - could allow the feed sector to differentiate the pathways that are altered by nutrition early in life and that can impact later productivity, said Viggo Halseth, chief innovation officer, Nutreco, back in June.

“While epigenetics may seem remote today, it may well deliver the applications we need in 10 years’ time,” he said.

The FeedNavigator State of the Industry Report 2015 can be downloaded here.

Related News

2015 has been a very tough year for livestock farmers across Europe, says FEFAC president © istock.com/ymgerman

Bells (wedding), bans (Russian), bikes, balls and lots of regulation - it's the readers' year in review

'While contract feed production may offer some regional opportunities, it will limit the market share for other independent feed manufacturers. This will further drive consolidation,' says Nutreco © istock.com/shutter_m

2016 feed industry outlook

© iStock.com/grThirteen

US: Questions remain as VFD start date approaches

©iStock

NGFA, AFIA call for revision of VFD’s electronic records policy

© istock/devke

Time running out to enter our feed industry survey

© iStock/Thisisdavid88

US feed manufacturers look to Trump for 'regulatory revolution'

© istock.com/ermetico72

No clear indication when EU farm profitability will improve: ForFarmers (UPDATED)

© istock

What is the state of the feed industry in 2016?

Feed industry to help implement international animal health standards

Feed industry outlook for 2015

Feed industry outlook for 2015

Feed industry hails TPA passage in US Senate

Feed industry hails TPA passage in US Senate

EU wide recognition for UK’s feed industry reward scheme

EU wide recognition for UK’s feed industry reward scheme

AFIA welcomes staggered approach to FSMA feed rule execution

US feed lobbyists welcome staggered approach to FSMA feed rule execution

EFSA told to improve 'bilateral communication' with feed industry

EFSA told to improve 'bilateral communication' with feed industry

The IFIF says it chose Nigeria due to its growth potential, its existing legal framework for feed and food safety, and because it already has a sizeable feed industry.

IFIF rolls out feed safety pilot in Nigeria

US feed and poultry sectors welcome TTP deal

US feed and poultry sectors welcome TTP deal

Feed and meat sector mingles at EuroTier 2014

Farmers, feed makers, genetic geniuses: industry mingles in Hannover

Atlanta event addresses fraud, legislation and convergence of feed safety standards

Atlanta event addresses fraud, legislation and convergence of feed safety standards

The WWF says feed sector has a duty to source soy responsibly

The WWF says feed sector has a duty to source soy responsibly

EU feed industry on edge as it awaits approval of eight GM crops

EU feed industry on edge as it awaits approval of eight GM crops

Greening the industry - FEFAC wants sector help to measure environmental footprint of feed

Greening the industry - FEFAC wants sector help to measure environmental footprint of feed

US feed producers disappointed with transportation laws

US feed producers disappointed with transportation laws

Feed sector welcomes FDA guidance on nanoparticles

Feed sector welcomes FDA guidance on nanoparticles

System for life cycle assessment of feed hailed as 'milestone'

System for life cycle assessment of feed hailed as 'milestone'

Feed is seen as part of the solution to sustainable livestock production, says IFIF

FAO and IFIF 'on the same page' on how to enhance feed safety and boost sustainability

Industry views sought on aqua feed standard: IFFO queries lack of metrics on soy

Industry views sought on aqua feed standard: IFFO queries lack of metrics on soy

What is around the corner for feed production? We get a glimpse into the future at VICTAM 2015

What is around the corner for feed production? We get a glimpse into the future at VICTAM 2015

EU Commission reveals feed legislation roadmap

PAPs, nitrites, insect feed and mycotoxins: Commission reveals feed legislation roadmap

Submit a comment

Your comment has been saved

Post a comment

Please note that any information that you supply is protected by our Privacy and Cookie Policy. Access to all documents and request for further information are available to all users at no costs, In order to provide you with this free service, William Reed Business Media SAS does share your information with companies that have content on this site. When you access a document or request further information from this site, your information maybe shared with the owners of that document or information.