Feedinfo Review - Spring 2022

Spring 2022 Issue EXCLUSIVE INTERVIEW How industry and consumer misunderstand each other Pages 9-11 UKRAINE WAR Impacts on feed phosphates, grains, and other inputs Pages 18-19, 36-37, & more POWER OF MEAT SURVEY Understanding changing consumer tastes Pages 26-27 DOWNSTREAMVIEWSHowtheopinions of consumers are influencing animal production YOUR CONNECTION TO THE GLOBAL ANIMAL NUTRITION AND FEED INDUSTRY

One of the areas of meat production most fraught with miscommunication is animal welfare; the general public often distrusts that the industry intends to take their concerns seriously, and the industry does not believe that the public is informed enough about the technical constraints to make good policy. This can be seen in the debate over California’s restrictions on the use of gestation crates for sows, cages for layers, and confinement for veal calves, a measure known as Proposition 12. To explore this angle, this magazine starts by explaining how Prop 12 goes further than previous state-level measures, and talks with an agricultural economist to learn how similar animal welfare ballot initiatives to promote cage-free eggs have influenced the shape of the industry. Of course, the direction of the magazine took a surprise turn in the middle of the quarter upon Russia’s invasion of Ukraine. Our hearts are with the people whose lives have been upended by the military action, and our eyes are on the long-term implications on the food security of large parts of the world. Because of this, even in a magazine focused on demand-side trends, an analysis of supply-side impacts became inevitable. This issue talks about the uncertainty in feed-grade minerals, the projected impacts on global stocks of grains, and what this and other events have meant for the world’s most important feed additives production market, China. These concerns are important — even existential — and should certainly command much attention. Still, we urge that the consumer side of things not be tuned out. Do not assume that any call for change is a call for the end of meat as we know it. As purchasing data shows, consumers are not abandoning meat, but are demanding meat that corresponds to their values. While the impacts of these choices are less immediate than other emergencies facing your business, in the long term, they are also vitally important.

SPRING 2022 www.feedinfo.com FROM THE EDITOR

When industry leaders get together at events such as the Feedinfo Summit, one idea that comes up again and again is: ‘we must get better at telling our story’. There is, indeed, a preoccupationwidespreadwithhowthe final consumer perceives the meat production process and how this can beHowever,improved.the animal protein value chain has an uneven record of success when it comes to constructively engaging with the final consumer. Some parts of the industry have a bit of a siege mentality; bracing for attacks from hostile parties such as animal rights activists, they are sealed off and impossible to get in touch with, offering only the most polished and distant of corporate communications. Others, often further upstream, might be aware of the need to improve how they communicate with the wider public, but may struggle to do so: they often don’t have the habit of conversing directly with the final consumer and may not understand what they need to beThissaying.issue of Feedinfo Review is meant to help bridge that gap. In the lead story, Professor Jayson Lusk of Purdue University identifies some misconceptions that consumers have about the meat industry and that the industry has about the consumer, and offers some solutions which might help improve that mutual understanding. We also dig into the findings of the FMI Food Industry Association’s “Power of Meat” survey to help understand what characteristics consumers want from their meat, and highlight opportunities for producers to participate in the provision of healthy, sustainable, and even socially responsible meat.

Review Senior editor:

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Shannon Behary, editor, Feedinfo Downstream views: how the opinions of consumers are influencing animal production Spring 2022

Welcome to the SPRING 2022 edition Feedinfo Shannon Behary Glenn +44 7 780 47 47 63

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COMPANIES APPEARING IN THIS ISSUE Bold listings are clickable www.feedinfo.com2 | SPRING 2022 210 Analytics 26 AB Agri 32 AB Neo 1, 20, 21 ABZ De Samenwerking 6 Adisseo France S.A.S. ................................ 13 ADM 6 Agrarmarkt Informations (AMI) 22 AgriBriefing 30 Ajinomoto 5, 32 Anitox ...................................................... 25 Anpario 32 Arvesta 23 Avivagen 32 BASF 5, 32 Beijing Dabeinong Technology 6 Benchmark Genetics .......................................32 BIO-CAT Microbials, LLC 5 Bosgoed Diervoeders B.V 6 Cargill 6, 28, 32 Center for Food Demand Analysis and Sustainability | Purdue University 9 Cermaq 32 China National Health Commission 29 China Youran Dairy Group Limited 5 Chr. Hansen 32 CJ Group 5 Community Blenders LLC ................................32 Cornell University 34 Dalian Commodity Exchange 28 Danisco Animal Nutrition | IFF 31 Danish Crown 22 Darling Ingredients 32 Datacor ........................................................... 6 De Heus 6 Devenish 5 DSM 16, 17 DuPont 24 Eastman Animal Nutrition 7, 31 ECO Animal Health Group plc 32 EnviroFlight®, LLC 8, 31 EuroChem 18 Euromonitor 24 Evonik Animal Nutrition 3, 5 FAMI QS ................................................... 23 Feijen Diervoeders 6 Feedinfo Summit ....................................... 29 Food Marketing Institute 26 Format Solutions 6 Foundation for Meat and Poultry Research and Education | NAMI 26 Fransen Gerrits BV 6 Gavilon 6 Global Trade Tracker 18, 19 Great Northern Agriculture 28 HaGe .............................................................32 Haida 28 IFFO 32 IOSCO – the International Organization of Securities Commissions 30 IRI 26 JBS 4 Jiangxi Tianxin 5 Jiangxi Zhengbang Technology 6 Kerry Food Group 24 Kroger 4 Lagerhaus ....................................................... 2 Lantmännen 32 Lesaffre 5 Lifosa 18 Mars Petcare 5 Marubeni 6 McDonald’s ..................................................... 4 Mowi 6 Multiexport Foods S.A. 6 Nanda Feeds Private Limited 5 Natural Biologics 32 Nestlé 5 New Hope 28 NHU 5 Ningxia Eppen Biotech Co 6 NTS 6 NUQO 32 Nutreco  Micronutrients 5  Trouw Nutrition 32 OCP 19 Olam Group 6 Perstorp PhosAgro.........................................................3218 PROSOL SPA ............................................ 14 Raiffeisen Ware Austria AG (RWA) 6 Royal Agrifirm Group 32 SalMar 6 Salmones Multiexport S.A. (Multi X) 6 Sanders 23 Sojalim 23 Saudi Agricultural and Livestock Investment Co 6 Shanghai Steel Union 28 Sichuan Hebang Biotechnology Co 5 Star Lake Bioscience Co, Inc. 6 Stratégie Grains 36, 37 Sumitomo Chemical Company 5 Symrise 6 Synbio Tech Inc. .............................................. 5 Tequ 28 Theeuwes Mengvoeders 6 Tongwei 28 University of Arizona 22 Urner Barry 30 Vilofoss Group 32 Vion Food 22 Viterra 6 Westfleisch 22 Whole Foods 27 Wing Pet Food 6 Women in Food and Agriculture.................... 33 NEWS BITES Headline news affecting our industry .................... 4-6 EXCLUSIVE INTERVIEW Mutual misconceptions: the US consumer and the meat industry .. 9-11 IDEAS ON ANIMAL WELFARE Zoom on Proposition 12 ................. 12 EXCLUSIVE INTERVIEW Pricey welfare regulations may boost farm-level concentration ............ 14-15 INDUSTRY PERSPECTIVES Understanding antimicrobial resistance will advance reduction efforts .... 16-17 UKRAINE WAR: MINERALS Feed phosphates and other minerals destabilised by geopolitical situation .................. 18-19 INDUSTRY PERSPECTIVES Feed & nutrition’s importance often overlooked in poultry industry’s antibiotic reduction strategies .... 20-21 A LOOK AT EUROPE European organic meat demand continues to accelerate 22-23 MEAT ALTERNATIVES Consumers globally interested in plant-based meat alternatives ......... 24 POWER OF MEAT REPORT Meat should present as socially or environmentally conscious to woo young consumers 26-27 ANALYST’S CORNER High raw materials costs plague Chinese feed and amino acid production ................................. 28-29 NEW @ FEEDINFO Feed additives space gets IOSCO-compliant price reporting ..... 30 New rubric curates latest animal research of 20+ journals ............ 30-31 Partners’ Research Library boosts reach of company research and technical white paper ..................... 31 RECRUITMENT UPDATES Industry moves .............................. 32 NUTRITION INTERVIEW Sustainability gains in dairy nutrition deserve wider recognition .......... 34-35 UKRAINE WAR: RAW MATERIALS Feed ingredients in short supply following Ukraine invasion 36-37 CONTENTS SPRING 2022

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ZERO-COVID POLICY THREATENS CHINA EXPORTS China continues to pursue a “dynamic zero-COVID” public health strategy, and has been using tools such as mass lockdowns which most other major economic powers have abandoned. As cases picked up in the quarter, authorities have locked down key Chinese export hubs such as Shanghai. This not only disrupts trade passing through those hubs, but also scares drivers off from delivering to other ports known to have cases. See pages 28-29 for the impacts of COVID and other current events on China’s animal nutrition sector.

BIRD FLU CONTINUES RAVAGE

NEWS BITES www.feedinfo.com4 | SPRING 2022

Global context

INVASION OF UKRAINE CREATES UNCERTAINTY FOR AGRI IMPORTERS

Beyond the shocking human impacts of Russia’s invasion of Ukraine which began on February 24, the impacts on agricultural markets have also caused concern. The absence of Ukrainian (and potentially Russian) corn, wheat, and oilseeds exports will create a supply gap for these products that other exporters will struggle to fill [see pages 36-37]. There are also concerns about the availability of Russian-sourced mineral phosphates, which are used as a phosphorus source in feed and in fertilizer [see pages 18-19].

DEVELOPMENTS IN US PRICE-FIXING AND ANTI-TRUST LAWSUITS In February, JBS agreed to settle with direct purchasers in a lawsuit accusing meatpacking companies of price-fixing in the beef market since 2015. The company continues to deny wrongdoing and claimed the decision to settle was to avoid excessive litigation costs. Other antitrust claims levied against the company by cattle ranchers continue. In related news, a retrial in a criminal case against individuals at major US poultry companies whom the government alleges were involved in price-fixing in the chicken industry began this quarter.

Meanwhile, the US Justice Department has reportedly begun a civil investigation of the employment practices of broiler companies to determine if violations of anti-trust laws have taken place.

ACTIVIST INVESTOR PRESSURES MCDONALD’S ON ANIMAL WELFARE

Shutterstock.com/Nick_p1cn1c©

The absence of Ukrainian corn, wheat, and oilseeds exports will create a supply gap for these products.

Activist investor Carl Icahn nominated two new individuals in February to the Board of Directors of McDonald’s as part of a move to push the company into meeting its pledges to end the use of gestation crates in its US pork supply. The fast-food giant pledged back in 2012 to work with suppliers on transition measures, and to no longer be sourcing pork from producers which use the controversial stalls for pregnant sows by the end of this year. It is understood that Icahn and his Humane Society allies are in disagreement with McDonald’s over whether the company is close to achieving this goal, or whether allowing sows not yet confirmed to be pregnant to be confined for weeks violates the spirit of the pledge. The company disputes Icahn’s interpretation and claims to be a leader on the issue. Of course, the pressure to move away from gestation crates in sow production is not just restricted to McDonald’s, which purchases a mere 1% of US pork by its own accounts. In late March, Icahn launched a similar push at US supermarket chain Kroger. Outside of the world of corporate governance, another major front in this battle includes California’s Prop 12, discussed on page 12 For more information on consumer perceptions regarding animal welfare, see pages 9-11; for information about the impacts of welfare-related legislation, see pages 14-15.

In mid-January, the H5N1 strain of highly pathogenic avian influenza (HPAI) which had been causing outbreaks across Europe and Asia this winter reached the US, the world’s largest poultry meat producer. It reached Canada shortly thereafter. Throughout the quarter, HPAI has gone on to infect wild birds, broilers, layers, and turkeys, and its spread has caused some countries to close their borders to products from certain states. Meanwhile, culls of AI-infected birds continue in the eastern hemisphere from the Netherlands to the Philippines. So far in 2022, HPAI has resulted in the deaths of over 40 million birds globally, including animals culled and disposed of, according to OIE-WAHIS data. February is understood to be the peak of the AI season.

SICHUAN HEBANG INCREASES LIQUID METHIONINE CAPACITY

Shanghai-listed Sichuan Hebang Biotechnology Co has increased its liquid methionine hydroxy analogue (MHA-FA) capacity from 50,000 tonnes/year to 70,000 tonnes/year. The company also claims to have increased the purity of its material following works carried out late last year.

A sixth dryer at Nutreco’s Micronutrients trace minerals plant in Indianapolis has allowed the company to increase capacity by 20%. Construction is underway at a new Lesaffre Ibérica facility in Valladolid, Spain for selenium-enriched yeasts, expected online this summer.

PET FOOD EXPANSIONS IN THE QUARTER Nestlé has begun construction on a Purina petfood factory in Vargeão (SC) in which it will be investing BRL 2.5 billion ($496 million). Elsewhere in Latin America, Mars Petcare has broken ground on an expansion to its largest petfood plant, located in Querétaro, Mexico, where it will be investing MXP 2 billion (around USD 100 million) to build a further 12 production lines. Meanwhile, Mars-owned pet food producer Royal Canin announced plans to invest $185 million into expanding its North Sioux City, SD facility.

Three different Chinese vitamins or amino acids producers had news of expansions this quarter.

NHU SITE IN SHANDONG RECEIVES

BASF EXPANDS FEED ENZYME PRODUCTION

BASF brought online an expansion which “significantly increased the annual number of feasible fermentation runs” in its feed enzymes plant in Ludwigshafen, according to an announcement in late January. The company’s enzymes portfolio includes phytase, xylanase/glucanase, and mannanase.

In early March, Ajinomoto Group announced it had reached a settlement agreement with CJ Group to terminate a patent litigation in the US relating to processes for manufacturing tryptophan. The suit had been ongoing since 2016. A similar suit in Germany remains ongoing.

www.feedinfo.com NEWS BITES SPRING 2022 | 5

AJINOMOTO AND CJ SETTLE US PATENT LITIGATION

SUMITOMO RESTARTS DL-METHIONINE PRODUCTION LINE

Sumitomo Chemical Company restarted a DL-methionine production line at the end of March, following delays to its planned maintenance schedule, according to a market source. The line at the Niihama site was the site of an accident late last year.

PREMIX EXPANSIONS IN THE QUARTER

ENVIRONMENTAL GREEN-LIGHT NHU’s CNY 800 million ($126 million) nutraceuticals and specialty chemicals project in Shandong province received approval from the Weifang Ecological Environment Bureau on 16 February. It is understood the facility will produce D-calpan, β-alanine, and D-panthenol.

In January, it was revealed that China Youran Dairy Group Limited had opened a ruminant premix plant in Ulanqab City, Inner Mongolia, and Devenish opened a premix facility in Hermosillo, Mexico. Meanwhile, in March, Nanda Feeds Private Limited inaugurated a premix unit at its feed factory in Hiriyur, near Chitradurga in the state of Karnataka.

EVONIK TO MAKE METHIONINE INTERMEDIATE METHYL MERCAPTAN IN ALABAMA

Evonik has unveiled plans to invest €150 million to add methyl mercaptan production to its Mobile, Alabama site. The new plant is expected to come onstream in the second half of 2024, and to reach full operational capacity in early 2025.

TIANXIN PLANNING NEW VITAMIN CAPACITY

Chinese vitamin producer Jiangxi Tianxin was understood in late January to be raising funds to launch into vitamin A and D-calpan production. Tianxin’s current production line-up includes vitamins B1, B6, and D3, as well as biotin, and folic acid.

IN GERMANY

SPECIALTY FEED ADDITIVES EXPANSION IN THE QUARTER

Taiwan’s Synbio Tech Inc. has begun work on a plant making probiotics and postbiotics plant for various applications including animal nutrition. And BIO-CAT Microbials, LLC, has broken ground on an expansion to its plant in Troy, VA to scale up its microbial fermentation capacity.

Production Shutterstock.com/PavelDolgikh©

ZHENGBANG SELLS FEED OPERATIONS At the very end of February, Chinese swine giant Jiangxi Zhengbang Technology announced a deal with Beijing Dabeinong Technology worth at least 2 billion yuan ($317 million). According to a Reuters report, the assets concerned include three feed companies (Deyang Zhengbang, Danling Zhengbang and Chongqing Guanglian) which will be sold outright, and a majority stake in five others in China’s southwest.

In February, De Heus announced an agreement to acquire Feijen Diervoeders, a family-owned feed producer based in the east of the Netherlands. Feijen Diervoeders’ site in Dalfsen has an estimated production capacity of 85,000 tonnes/year. In January, ABZ De Samenwerking, born out of the merger of ABZ Diervoeding and De Samenwerking, acquired feed producer Bosgoed Diervoeders B.V., in a move expected to add sales of 50,000 tonnes/year. In March, it was revealed that Fransen Gerrits BV was planning to take over Theeuwes

CARGILL INVESTS IN CHILEAN SALMON FARMING COMPANY

Shutterstock.com/PhotosBillion©

OLAM AGRI STAKE SALE

In March, Cargill revealed it would be selling Format Solutions, which makes software for animal diet optimisation, ingredient allocation, operational efficiency and formulation solutions for animal nutrition. The unit was formed as a Cargill brand after the combination of Feed Management Systems and Format International in late 2015. Its buyer is Datacor, Inc., a provider of process manufacturing and chemical distribution software.

It was revealed in late March that Cargill plans to acquire a 24.5% stake in Salmones Multiexport S.A. (Multi X), a subsidiary of Multiexport Foods S.A. Meanwhile, Mitsui, another shareholder of Multi X since 2015, will increase its shareholding by 1.13%, to 24.5%. Multiexport Foods S.A. said it maintains control of Multi X with 51% of the total shares.

AMINO ACIDS PRODUCER EPPEN TO GET NEW OWNER

M&A Mengvoeders, a feed producer based in Ulicoten, North Brabant, in a transaction expected to complete this summer.

SALMAR TO ACQUIRE NTS NTS, the parent company of SalmoNor AS Norway Royal Salmon ASA and Frøy ASA will be acquired by fellow Norwegian salmon farmer SalMar, in exchange for cash and shares in a transaction which values it at NOK 15.1 billion ($1.7 billion). Mowi, yet another aquaculture giant, had also made an offer for NTS in the quarter, but was ultimately outbid.

GRAIN TRADER GAVILON CHANGES HANDS IN BILLION-DOLLAR DEAL

Singapore’s Olam Group announced the sale of a 35% stake in Olam Agri to Saudi Agricultural and Livestock Investment Co for $1.24 billion. Olam Group’s CEO says this sets a benchmark valuation for the future IPO and demerger of Olam Agri, the unit which includes the group’s grain, animal feed, and protein activities.

SYMRISE ACQUIRES WING PET FOOD In February, Symrise agreed to acquire Wing Pet Food, a Chinese provider of pet food palatability enhancers. With recorded sales of €25 million in 2020 and two production sites, the move is seen as a way for Symrise to expand its footprint in the APAC region.

NEWS BITES www.feedinfo.com6 | SPRING 2022

RWA ACQUIRES PATENT CO

Serbian feed and feed additives company Patent Co. was purchased by RWA Raiffeisen Ware Austria AG in early February, becoming part of the wholesale and service company of the Lagerhaus cooperatives of Austria. RWA’s animal nutrition portfolio also includes Austrian compound feed producer Garant Tiernahrung and lignocellulose-based functional ingredients provider Agromed.

Japan’s Marubeni announced the sale of its Canadian grain trading company Gavilon for $1.13 billion in late January. It was acquired by Viterra, which will become the third largest exporter of Brazilian soybeans, ahead of ADM, according to reporting on the deal by Reuters. The deal is expected to close in H2.

Star Lake Bioscience Co, Inc. (Star Lake) has announced its intention to purchase 99.22% of the equity of amino acids manufacturer Ningxia Eppen Biotech Co. Star Lake is a fermentation and biochemical manufacturing company whose product range includes feed additives such as threonine.

CARGILL SELLS FORMAT SOLUTIONS

DUTCH FEED ACQUISITIONS

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www.feedinfo.com EXCLUSIVE INTERVIEW SPRING 2022 | 9

© Andrei Iakhniuk / Shutterstock.com

Insight from an expert in how Americans think about animal protein choices

Mutual misconceptions: the US consumer and the meat industry

Having spent much of his career studying how people think about their protein choices, Professor Lusk believes US consumers’ views of meat are less negative than many seem to believe. “Consumers, on average, have very positive views about

As animal husbandry has become professionalised, and larger operations have moved further away from major population centers, the general public has become increasingly distanced — physically, socially, and culturally — from those producing animal protein. That distance has begun to breed misconceptions. And, it is important to note, those misconceptions do not go in only one direction. Indeed, just as some consumer impressions of the meat industry are based in oversimplifications (“the cattle industry uses wasteful amounts of water”) or outright misunderstandings (“I don’t want hormones in my chicken”), some of the views which animal protein industry professionals have about the general public are flawed as well.

If you ask them which tastes better, which one’s more affordable, of course, they do put traditional [meat] above plant-based, but even on questions related to environmental sustainability issues [traditional meat performs tolerably well]. So, I think it’s a bit of a nuanced story out there.”

Professor Jayson Lusk, Head of the Department of Agricultural Economics at Purdue University and Director of the Center for Food Demand Analysis and Sustainability (CFDAS), pointed out one such misconception in a conversation with Feedinfo: “One thing that I think is surprising is that, despite a lot of negative publicity about meat consumption and production over the past five to 10 years — [for example] linking beef production and climate change, or the WHO announcements about red meat consumption and health outcomes… In spite of that, over the past five or 10 years, what we’ve seen is really strong meat demand,” he notes. “[We’ve seen that] consumers’ willingness to pay for meat has remained steady, and in fact, probably increased a bit over the course of the pandemic.” For him, this is a misconception primarily on the part of the media. “Any time per capita consumption ticks down just a bit, I’ll get calls from media saying, ‘are consumers finally turning to vegetarianism?’ And often when we see that happening, it’s [due to] something that’s happened on the supply side, not necessarily something that’s happened on the consumer/demand side.”

meatconventionalproduction.

EXCLUSIVE INTERVIEW www.feedinfo.com10 | SPRING 2022

[Feedinfo] Why did your team launch the survey?

Varying definitions of “natural” or “sustainable”

Welfare and the vote-buy gap

Of course, there are some points on which widespread consumer misconceptions are indeed problematic. For example, the meat industry and the consumer are talking past each other when it comes to nuanced or ambiguous terms like “sustainable” or “The“natural”.USDA defines the word ‘natural’. It has a definition,” observes Professor Lusk. “‘Minimally processed’ is the legal definition of ‘naturally processed’. But the vast majority of consumers, if you ask them on a survey, think it means something like ‘no added growth hormones’, ‘no feeding of grains that have been produced through genetic engineering’, or ‘no addedMeanwhile,antibiotics’.”asconsumers are left to deduce how sustainable their animal protein is based on labels like “grass-fed” or “organic”, several important aspects of sustainability are being ignored or under-valued by the market. “I’ve often been a big proponent of using metrics of productivity in the discussions around sustainability,” asserts Professor Lusk. “If we can produce more meat, more eggs, more dairy, with fewer animals, [using] less water, less land, less feed, that, to me, has got to be the definition, the cornerstone, of sustainability.” Unfortunately, he admits, the consumer does not tend to define productivity as an element of sustainability; instead, productivity is seen by consumers purely in terms of economics. He says he is “intrigued” by the idea of using objective labelling on outcomes to make these gains more explicit to consumers: “On many food products, at least in the US, we require nutrition facts panels. So, if you want to know the number of grams of protein, or number of calories, or carbs, you can look that up. It’s on the nutrition facts panel. But if you want to know the water use, or greenhouse gas emissions, or land use, you don’t know that… would it be useful to think about a sustainability facts panel, something like the nutrition facts panel, where you have more objective measures that convey information related to environmental, and perhaps even animal welfare, outcomes? “I think that would encourage the industry to focus on those outcomes. That measure would incentivise practices…to make progress on those metrics. And I think it would help consumers maybe not suffer quite as much from some of the misperceptions that surround a lot of these food labels.”

Food tray: © Mr.Ekkarat / Shutterstock.com Jason Lusk: Karen Lemley

Professor Jayson Lusk

At the beginning of 2022, Purdue University’s Center for Food Demand Analysis and Sustainability, headed by Professor Lusk, launched its “Consumer Food Insights” survey. With a sample size of 1,200 Americans, the survey is intended to “[take] a monthly pulse of what consumers are thinking, what they can afford and what food attributes are most important to them to help guide farmers and retailers along the supply chain.” Below, we hear in Professor Lusk’s own words what this work aims to reveal about consumer behaviour.

Just as consumers’ ideas about “sustainable” meat can be fuzzy, their ideas about “animal welfare” can also be ill-informed — think of the idea that chicken should be fed vegetarian diets, that they are happier when kept outdoors, or that farmers use antibiotics to compensate for routine ill treatment or bad farm management. And the stakes are even higher on questions of welfare, because consumers are not only influencing the industry through their purchasing power, but also through the voting booth.

[Professor Lusk] People are often rightfully sceptical of surveys. [Respondents] often tell us they’re willing to do things and buy things in a survey that they won’t actually do in the grocery store. It’s a phenomenon that we refer to as hypothetical bias. And we have techniques that we use to try to avoid that hypothetical bias. But we’re always worried that that it, or other biases like social desirability bias, can creep in. So, as a result, I think this is a real argument for not just taking snapshots but looking at longer longitudinal data. Yeah, maybe people are overestimating how many cage-free eggs they want to buy, or the importance of sustainability attributes in the food system. But even if that’s true, if we can look at trends over time, that can give us perhaps a more reliable indicator of what consumers are thinking, at least today compared to the past. The other reason is the recent experience of COVID. There was a real demand and hunger for information, in closer to real time than was being generated. There were a lot of questions about what was happening, what consumers were thinking about the supply chain, what was happening regarding food insecurity, and so forth… We wanted to launch the survey in an effort to provide more timely information about what was happening on the consumer end of the supply chain.

At the heart of discussions about animal welfare and consumer perceptions is a conundrum known as the “vote-buy gap”, one which Professor Lusk has studied. “Consumers appear willing to vote to ban products that they routinely buy in the marketplace. To give an example, almost two thirds of Californians voted to ban the

Lusk counsels that those making decisions for the meat industry keep that fact in mind. “There’s a relatively small group [driving the discussion around these issues] but they’re loud. They care a lot, and they’re willing to pay a lot. And I think sometimes the retailer can get fooled a bit by that, anticipating that [this small group] is representative of a much larger market.”

Finally, Lusk offers up one last takeaway: when it comes to issues of welfare, the problem is not only perceptions or misconceptions at the consumer level; it is also the many layers of intermediaries, particularly the shareholders and investors pushing supermarkets to commit to cage-free-only eggs or fast-food restaurants to use only pork raised without gestation crates, whose decisions are the most influential. “At the end of the day, I’ve done a lot of consumer research. I do think that consumer research matters. But it seems to be less the individual consumer choices in the grocery store [that are] driving this issue; what’s driving the issue is big retailers, big restaurant chains or supermarkets… I think that this interaction [with] the large intermediaries is something that is important for the industry to work through in the future.”

By Shannon Behary, senior editor

[Feedinfo] How can the survey help businesses make decisions about their supply chains?

SPRING

[Feedinfo] Any surprises among the first month’s data? [Professor Lusk] Between 80% and 90% of consumers said they were either very happy or somewhat happy with their overall food system environment. I think that’s really positive news. I didn’t expect an answer that high, didn’t predict that people were that pleased with their food system. And I think that’s something that folks working in the food industry can take some pride in.

[Professor Lusk] Well, we have a variety of measures in the survey. One is a Sustainability Index, and we break that down into six different sub-components. It helps us understand how consumers perceive the sustainability of their own purchases, and understand which of those they perceive as being an important component of sustainability. So if you’re a business thinking about adopting sustainability metrics, [it can help inform] which components are the ones you should focus on: what do consumers think are the important metrics in terms of sustainability? …[Next], the data can be used to group different kinds of consumers. We know all consumers are not the same, and different people want different things out of their food system, and these data can help us understand those consumer segments and what their characteristics are. …[Finally], we’ve got real time tracking data on what consumers are saying in terms of their food spending, whether they find items missing from the grocery stories, what they wish was there if it wasn’t available. So hopefully the survey can help to get a sense of early trends that could exist in the data.”

2022 | 11

[Feedinfo] How long will it be running? [Professor Lusk] Well, as long as we can afford to do so…It depends on what kind of partnerships [the project secures]. If any of your readers want to partner with us, we would love to engage with them and keep this effort going. But our plan is to keep it going indefinitely as long as we can.”

www.feedinfo.com

EXCLUSIVE INTERVIEW

sale of eggs from chickens that are [not from] cage free facilities. But at the same time they [voted for that ban], the market share of cage free eggs was probably less than 30% in California. So, a big chunk of people were voting to get rid of a product they routinely buy,” he notes. “Why would they do that?... We don’t have strong evidence that supports any of the hypotheses for why people might behave in this inconsistent manner.”

Welfare is a much-discussed topic in US meat circles right now because of the entry into force of parts of California’s Proposition 12. Passed in 2018 as a ballot measure (that is, an initiative of regular voters rather than of the lawmakers in the state’s legislature), Prop 12 establishes minimum requirements for the confinement of layer hens, veal calves, and breeding sows which produce food for the Californian market.

In Professor Lusk’s words, because of the vote-buy gap, laws like these end up creating an unfunded mandate: “producers are being asked to adopt costlier production practices that consumers have revealed through their own behavior at grocery stories that they’re not fully willing to pay for.” Moreover, what is particularly controversial in the case of Prop 12 is the fact that the cost burden of the higher welfare standards is falling not only on producers within California, but also on anyone else who wants access to the state’s nearly 40 million consumers; unlike previous state-level action, it is not about practices within California, but instead, it sets minimum welfare standards for animals and regulates the sale of specific products derived from them. So, what does the data say that consumers will pay for? According to Professor Lusk, consumers are willing to pay something for higher animal welfare (or at least higher perceptions of animal welfare). “The question is, is it enough to cover the costs [incurred by producers in delivering the higher welfare product]?” Referring to a study he was involved with around 3-4 years ago about consumer willingness to pay for cagefree eggs, he recalls: “Roughly 25-30% were willing to pay quite a lot, quite a large premium for cage-free versus conventional eggs, whereas the vast majority of consumers were willing to pay a little something, but not [enough] to cover the extra costs in production.”

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By ShannonseniorBehary,editor

“Industry estimates for converting sow barns or building new ones to meet the Prop 12 standards are in the billions of dollars. Even with farmers bearing most of the costs, consumers in California and across the nation will eventually see higher pork prices,” it asserts. Indeed, some think that this is the whole point. A spokesperson from the Animal Agriculture Alliance told Feedinfo that initiatives such as Proposition 12 are “being employed and pushed for by animal rights extremist organisations… as part of their mission to end animal agriculture, they want to drive up costs, they want to make production less efficient… ultimately consumers will be able to purchase fewer animal proteins because costs are higher.”

However, in spite of its apparent resonance with the public (it obtained 62.66% of votes cast, and followed in the footsteps of laws concerning production animal housing which California passed in 2008 and 2010), Proposition 12 proved enormously controversial, particularly the standards for pork. Questions remain over the legality of Californian voters essentially regulating production methods in other states, and the implications for the industry and consumers. Why should Californians dictate to out-of-state producers? Although it accounts for roughly 13% of the US pork market, California breeds next to no swine itself. Therefore, the requirements it has set for pork producers will fall primarily on out-of-state operators. The National Pork Producers Council (the NPPC) argues that this is a violation of the Commerce Clause of the US Constitution, which places the power to regulate interstate commerce with the United States Congress, rather than with individual states. On March 28, the US Supreme Court agreed to hear the NPPC’s challenge to Proposition 12. This will take place during the court’s next term, which begins in October and runs until June of 2023. For the moment, the pork portion of the act is unenforceable for other reasons; California’s Department of Food and Agriculture and Department of Public Health are over two years late in promulgating the final regulations implementing it, and a judge

Zoom on Proposition 12

Understanding the controversy around the California ballot initiative ruled that enforcement could not happen until 6 months after those rules become available.

IDEAS ON ANIMAL WELFARE www.feedinfo.com12 | SPRING W2022

Both the lateness of the Californian authorities’ rulemaking and the lack of clarity around its legality have dissuaded the swine industry from preparing for the change. Pig breeders are quite reasonably reluctant to spend millions to overhaul their sows’ housing before they have clarity over whether the law will stand and how it will be enacted. Industry warns costs will prove heavy

Of course, industry objections to the law go beyond the issues of its implementation or even its constitutionality.

The NPPC complains that the housing standards set by Proposition 12 are “highly prescriptive,” “arbitrary”, and “lack any scientific, technical or agricultural basis.”

ith just under 40 million people and an economy bigger than that of the United Kingdom, the state of California is an influential market. On election day in 2018, 7.5 million Californians voted for Proposition 12, to establish minimum space requirements for calves raised for veal, breeding pigs, and egg-laying hens, and to ban the sale of veal, pork, or eggs from animals whose confinement did not meet these standards (i.e. pigs borne by sows raised in gestation crates).

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At the heart of this is a fairly simple, easy-to-understand economic principle: new welfare laws are increasingly requiring that producers dedicate more space to housing and invest in new equipment. These requirements raise overhead costs per animal, and thus increase the minimum efficient scale, which can be thought of as the minimum size that firms can be in order to survive in that higher-cost market. “That creates a situation where

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Unexpected consequences of grassroots-led ballot initiatives

Pricey welfare regulations could increase farm-level concentration

Although California is not the first to pass a state-level ban of caged layers or gestation crates, the framing of its Proposition 12 means that the measure will have quite a lot of impact outside of its own borders. Therefore, it appears inevitable that the grassroots push for greater welfare standards will continue to influence the shape of the livestock industry in the United States. This made Dan Scheitrum, assistant professor of agricultural and resource economics at the University of Arizona, start to ask questions about the consequences this would have, questions which eventually led to an original research article.1 “There was a presumption that if we could get the industry less concentrated, then we’d have higher animal welfare standards,” he tells Feedinfo. “And as I was thinking about it, it seemed to me that it could go in the other direction just as easily: if we have higher animal welfare requirements for production practices, that could lead to a more concentrated industry.”

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Scheitrum explains, it is not a given that the effects of this phenomenon would be negative. On the contrary, increasing the concentration at the farm level could be a way of helping farmers tip the balance of power back in their direction a bit, given that the buyers of their products — the meatpackers — are highly concentrated and therefore powerful actors. In his words, “this increase in market concentration may not necessarily be a bad thing because it’ll level the playing field between these two levels of the supply chain.”

As he explains, it was clear from the outset that egg prices would increase in the state of California because of such a measure. However, the impact it would have on the rest of the country was less clear: would it create a glut of non-Californiacompliant eggs which would lower the price for the rest of the country? Or would it incentivize producers outside the state to change their production practices to a housing system that meets these stricter welfare requirements but produces more expensive eggs?

“We detected that after the policy implementation, prices in California went up considerably, and prices in the rest of the country also rose significantly,” he concludes.

In other words, there is empirical evidence for similar measures having a financial impact on consumers who did not vote for the welfare legislation, and theoretical reasons to believe the effect will lead to a more concentrated animal protein sector. Could this be an argument against levying similar measures on the industry going forward?

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Effects on consumers Beyond this paper detailing the economic theory connecting animal welfare legislation to an increasingly concentrated industry, Professor Scheitrum has also studied the influence that previous restrictions — in this case, a narrower 2015 law about housing for layer hens in California — have had on the shape of the market.

“I think part of the reason why ballot initiatives have come up as a vehicle to enact these polices is because people in these states that have these preferences haven’t seen the change that they’ve been requesting. And so I don’t know that I’d go so far as to say we shouldn’t have ballot initiatives for citizens of these states to have their voice heard,” opines Professor Scheitrum.

By Shannon Behary, senior editor 1 Scheitrum DP and Schaefer KA (2021) Farm Animal Enclosure Requirements, Industry Concentration, and Supply Chain Dynamics. Front. Anim. Sci. 2:709359. doi: 10.3389/ fanim.2021.709359

www.feedinfo.com EXCLUSIVE INTERVIEW SPRING 2022 | 15 you’re going to have fewer firms, but larger firms, after that [new higher welfare] standard is introduced,” says Professor Scheitrum. “Prices will go up somewhat, which could accommodate a little bit of an expansion of those fewer, larger firms, but would not be large enough to sustain the same number of firms as were in the industry before.”

The question is a complex one, as the economic effect is only one part of it; there are also legal and social aspects. One aspect that maybe should be given greater consideration is why voters seem to think they need to take rulemaking about animal welfare into their own hands, rather than leaving it with lawmakers.

Concentration as potentially virtuous

It must be noted that the effect of this phenomenon of increased concentration would be felt at the farm level. This is important, because there is quite a lot of concern at the moment about concentration at a different level — that is to say, amongTherefore,meatpackers.asProfessor

Of course, not all animal protein markets are characterised by this high level of concentration at the processor level. The egg market, for example, has shorter supply chains, and there is no processor or packer whose overwhelming power needs to be balanced out by stronger and bigger producers. However, observes Professor Scheitrum, “I don’t know that the level of concentration induced by these animal welfare laws in a market like eggs would alarm me immediately.” Still, he acknowledges, “there are those who view concentration in agricultural and animal product production as being strictly a bad thing, and that would be a cause of concern for them.”

In other words, the industry will become more concentrated not only because higher fixed costs push towards a structure made up of bigger farms with bigger output, but also because it will make the final product slightly more expensive and thus lower demand for it.

[Feedinfo] Now, as you’ve explained, antibiotic use has fallen in animal nutrition globally. But what is the case with critically important therapies? [Nataliya Roth] Critically important antibiotics are crucial for use in human medicine. In many countries, special restrictions for highest priority, critically important antimicrobials have been implemented or are planned. Restrictions on the use of medically important antimicrobials in the US nearly 20 years ago was an important achievement. The results can be observed in the very low prevalence of resistance

Year Ban Countries 2006 All AGPs EU 2007 Most AGPs Mexico 2017 Colistin China 2017 AGPs USA 2020 All AGPs

However, she added, calls by consumers, regulators and health bodies suggest that there is more work to be Heredone.Dr.Roth dives a little deeper into what exactly this work might entail and shares how DSM, as part of its We Make It Possible sustainability initiative, is helping to advance AMR efforts in animal agriculture. [Feedinfo] Dr. Roth, in your opinion, what AMR approaches have worked and what approaches do you believe need to be re-evaluated? [Nataliya Roth] It’s not simply about decreasing antimicrobial use alone, which can have unwanted consequences on animal health, welfare and productivity. A holistic One Health strategy that uses a full set of tools including nutrition, feed additives and production management has proven most promising to ensure animal productivity, health and sustainability. I do not see the need for re-evaluation of this approach, but rather the need for global harmonisation of standards and monitoring. Many countries and regions have established or are in the process of establishing monitoring of antimicrobial use and resistance for animals. It would be very reasonable to use the same harmonised methodologies to detect antimicrobial resistance and use of antimicrobials per animal species. Additionally, the classification of antimicrobials sometimes differs. For example, ionophores are considered antibiotics in the US but as feed additives in the EU. While reduction of antimicrobial use can be further improved, there is another strategy that deserves more attention: focus on the transmission of antimicrobial resistance. One challenge is that AMR genes and AMR bacteria can be exchanged between other bacteria, animals, humans and the environment. Cutting that connection through improved sanitation, infection control and prevention could help us to make further progress against antimicrobial resistance. [Feedinfo] So, in terms of helping the industry cut that connection, where is DSM placing its focus? [Nataliya Roth] Working with the public, global and national authorities, research organisations and AMR network groups cooperating with WHO, FAO and OIE, DSM has put advanced scientific knowledge to work for the benefit of our customers. We offer services for detection of AMR and health issues as well as innovative products. On the detection side, we are advocating for two distinct technological applications. The first involves using novel methodologies to evaluate the gut microbiome, the total population of antimicrobial resistant genes (the resistome) and gut health biomarkers. The second uses blood testing, biomarker analysis and machine learning to identify disease outbreaks before they occur, providing valuable insight to customers who can take preventive action and avoid the need for application of antimicrobials.Ourproducts include tailored premix solutions and one of the industry’s best-in-class portfolio of innovative additives that promote gut health and efficiency. Because health and nutrition are inextricably linked, we think there’s incredible value for our clients in having the full picture and all the necessary tools to improve their operations.

Since Sweden banned antimicrobial growth promotors in 1986, many countries have continued to restrict the widespread application of antimicrobials, thereby reducing the main driver of antimicrobial resistance (AMR).

In fact, according to Dr. Nataliya Roth, DSM Animal Nutrition & Health’s Global Portfolio Lead for Microbiome Modulation, the successful reduction of antimicrobial consumption and AMR can clearly be seen in national and international monitoring statistics.

Modified

Proper understanding of antimicrobial resistance crucial to advancing industry’s reduction efforts China after Feiyang et al, 2021 Regulatory restrictions on the use of antimicrobials globally.

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“Total antimicrobial sales decreased by 38% from 2015 to 2020 in the US and a decline of 43.2% in sales was reported in 25 European countries between 2011 and 2020,” she explained to Feedinfo during an Industry Perspectives chat. “The reduction in antimicrobial use leads to lower prevalence of antimicrobial resistance, which is clearly shown in the monitoring reports.”

[Feedinfo] Talking about the future, what are the technologies or solutions to potentially help the industry meet its AMR ambitions which DSM is most excited about? What do you have in the pipeline? [Nataliya Roth] The development of new sequencing technologies to detect AMR in recent years is impressive. Strong internal research enables us to use the newest available technologies combined with machine learning to collect high quality data to understand AMR dynamics. The use is possible not only for research purposes but also on farms in different countries supporting animal producers to identify the problem, reduce antimicrobial use and resistance and reduce the transmission of AMR to other ecosystems. We offer services that can predict certain diseases or evaluate microbiome, pathobiome and resistome in the animal’s gut which supports animal producers globally in preventing disease outbreaks, reducing both antimicrobial use and antimicrobial resistance. Looking ahead, we see the potential to expand the adoption of these tools and introduce further developments in the gut health space, including enzymes and microbiome modulation technology, within our holistic species solutions designed to add value for our customers. Published in association with DSM Animal Nutrition and Health “While reduction of antimicrobial use can be further improved, there is another strategy that deserves more attention: focus on the transmission of NATALIYAresistance.”antimicrobialROTH

www.feedinfo.com Sponsored | INDUSTRY PERSPECTIVES SPRING 2022 | 17 to fluroquinolones in comparison to other countries. In Europe the sales of polymyxins and quinolones in the EU between 2015 and 2020 were reduced by 70% and 74%, respectively. Since January 2022, new European legislation bans the use of antimicrobials reserved for human medicine for routine antibiotic use in farming, including preventative group treatments of animals before clinical signs of disease. The use of colistin has been banned in China since 2017 for both growth promotion and treatment of animals.

[Feedinfo] How does the reduction of antibiotic use impact the prevalence of antibiotic resistant pathogens? What is important for the industry to understand here? [Nataliya Roth] Properly understanding the AMR problem provides a clear direction. Antimicrobial resistance is a natural phenomenon that dates back millions of years as an instrument for competition among microorganisms. Bacteria are able to develop mechanisms to protect themselves. The reason why AMR has the potential to become a silent pandemic is that antimicrobial use in high quantities in many areas including human and animal medicine puts added pressure on this evolutionary trait — steering microbial populations towards greater resistance. Data on antimicrobial use and resistance in human and animal health in Europe and in the US provides evidence that bacterial populations are not interested in keeping the AMR genes in the absence of selective pressure applied by antibiotic use. The important, positive message to the industry is that antimicrobial resistance is reversible. The reduction of antimicrobial use leads to the reduced prevalence of antimicrobial resistant microorganisms and genes. It is also clear that antimicrobials should not be replaced by other antimicrobials and the use of other AMRtriggering biocides should be restricted. The target is the reduction of AMR, because complete and total elimination of AMR will never be possible. Getting AMR levels down is key to ensuring that our medicines are effective when we need them. [Feedinfo] What are the proven feed additive solutions that can have an impact on the prevalence and transmissibility of antibiotic resistant bugs? And how effective are they? [Nataliya Roth] It is known that some feed additives like acids, phytogenics, probiotics and prebiotics, are able to reduce and to modify the bacterial load in the gastrointestinal tract of animals. We have evaluated the efficacy of several molecules and solutions on the prevalence of AMR bacteria and genes in the gut of animals. The reduction was confirmed by means of many scientific trials as well as large field trials. It was extremely interesting to observe that some molecules have the potential to significantly reduce the prevalence of so-called superbug Extended Spectrum Beta-Lactamase(ESBL-) producing E. coli in the gut significantly in comparison to the control groups. The use of 3rd and 4th generation of cephalosporins that leads to the development of ESBL-producing microorganisms is strictly regulated to prevent the formation of ESBL producers. The possibility to reduce the prevalence of ESBLs in the gut will surely be more important in the future.

DSMofcourtesyPhoto

After Russia’s invasion of Ukraine triggered sanctions and other retaliatory actions from the West, the feed industry found itself with questions over its ability to secure necessary volumes of essential minerals, particularly inorganic feed phosphates.

The European feed phosphate market has been snug for several months as demand for phosphoric acid is directed to fertilizer production and amid consolidation in the feed phosphates market over the last 2-3 years.

Russia’s invasion of Ukraine threatens global feed mineral supply

PhosAgro had previously been absent from the market since Q3 2021, because of logistical and supply problems. As one Serbian buyer said in mid-March, “We are [used to] living without them, so basically nothing changed in the last month.” The buyer said the Serbian domestic producer and the Lithuanians were supplying its factories. “We do have enough material for the first half of Q2 2022, but I am sure that it won’t be easy to negotiate and find a stable source [after that].”

“European producers are experiencing a lot more enquiries than usual as many customers seem to be fleeing to safety. Obviously the remaining producers cannot supply the shortfall that Russian producers might create .”

On 8 March, a buyer said, “European producers are experiencing a lot more enquiries than usual as many customers seem to be fleeing to safety. Obviously the remaining producers cannot supply the shortfall that Russian producers might create.”

shipments to and from Russia to comply with Western sanctions.

Nonetheless, PhosAgro is operational and shipping feed phosphate, a market source said on 11 April, and material continued to be booked for April and May departures, although securing vessel/cargo space for export was challenging. PhosAgro exports a little over 50% of the MCP it produces in Russia, and the rest is consumed within Russia.

Russia is a significant producer of phosphate rock and sulphur, important feedstocks for feed phosphate production. EuroChem and PhosAgro operate feed phosphate plants in Russia. Production of MCP (monocalcium phosphate) and DFP (defluorinated feed phosphate) at these facilities represents about 7% of global feed phosphate supply, one seller estimated. According to Global Trade Tracker, 389,505 tonnes of calcium feed phosphate were exported from Russia in 2021. Top export destinations by volume were Estonia, Finland, Poland, Germany, and the United States (some of which may be transit countries, at least in part). Moreover, it is Feedinfo’s understanding that all of the DFP consumed in the US comes from the Russian region. The US reportedly imported 26,700 tonnes of Russian MCP during 2021 and 165,000 tonnes of Russian DFP. April/Q2 prices moved up by more than 50% from Q1 levels amid supply concerns and the high cost of raw materials and production. As a result, the average April/Q2 contract price reported was €1,550/tonne delivered in northwest Europe, up from €1,010/tonne during Q1. However, some sellers have moved from a quarterly price to only offering a monthly contract price due to volatile feedstock costs. Many buyers of Russian-origin feed phosphate have begun to shop for product of alternative origin, while others continue to receive volume. Since early March, major international shipping groups, including container lines, have suspended almost all cargo Buyers searching for alternative sourcing or materials

On 9 March, the EU added 14 more Russian businesspeople with close links to the Kremlin and 146 lawmakers to its sanctions list, in measures which were approved in response to the invasion of Ukraine. Among them was Andrei A. Guryev Jr., chief executive of PhosAgro — Europe’s largest producer of phosphate-based fertilizers and a key MCP producer. He resigned after the sanctions were imposed. On 7 April, the UK imposed asset freeze sanctions on further prominent Russian oligarchs including Guryev’s father and Phosagro founder Andrey G. Guryev.

UKRAINE WAR: MINERALS  www.feedinfo.com18 | SPRING 2022

In addition, Lithuania’s feed and fertilizer phosphate producer Lifosa’s bank accounts were frozen after its indirect owner, Russian oligarch Andrey Melnichenko, was also put on the EU sanctions list. The Lifosa operation in Lithuania is a subsidiary of EuroChemEuroChem has not responded to requests for comment. According to buyers, the feed phosphate plant in Lithuania continued to produce with the available raw materials on hand up until early April. However, local press reports suggested the plant stopped operating in mid-April in connection with the sanctions.

www.feedinfo.com UKRAINE WAR: MINERALS SPRING 2022 | 19 Meanwhile, across the Atlantic, some North American importers said they had booked MCP and DCP on a FOB China basis in February when it became apparent the Russia-Ukraine conflict was escalating. In the US, the average price indication for bulk MCP was $910/ short ton for April/Q2 contract deliveries, up from an average of $770/short ton in Q1. Availability in the spot market was minimal and prices were well above contract levels with orders fetching $1,000-1,500/short ton during March and April. In early March, a 35% tariff was imposed on Russian-origin product in Canada.

“Mining markets continue to do well and will continue to need copper sulphate so will almost certainly pull from feed copper sulphate supply,” a seller said.

By Heather McGuire Doyle, senior analyst

A buyer in the Benelux said, “I believe there is still enough material via other sources, though supply chain delays are becoming more active here also. Prices fluctuate due to LME volatility and FOREX. But I believe the average range is between €2850 and 3000/tonne.”

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Feed buyers have expressed additional concern about several other minerals, including urea, manganese oxide and manganese sulphate. “Manganese sulphate is certainly a big issue too and prices are crazy. This is mostly driven by freight and lack of shipping space for dangerous goods,” a trader said. “Manganese oxide gets worse too as there are many issues on logistics for the producer in AGeorgia.”Frenchbuyer expressed concern about having sufficient mineral volume for Q2 needs.

Phosphoric Acid

The benchmark Q1 phosphoric acid contract between Morocco’s OCP and one buyer was settled at a $200/tonne increase to $1,530/tonne CFR for 100% P2O5, up from $1,330/ tonne CFR in Q4. The deal does mark the eighth consecutive quarterly increase from a low of $590/tonne CFR for the Q1 2020 contract and is up by an aggregate of $940/tonne (159%). Challenges securing raw materials such as sulphur will most likely lead to further increases in phosphoric acid prices, market players have said. North African sulphur buyers usually source tonnes from Russia and Kazakhstan quarterly. They also have contracts with producers in the Middle East. However, it has been reported that they did not take any tonnes from Russia and Kazakhstan for Q2, due to the conflict in Ukraine. Sulphur prices in North Africa have increased sharply, due to the tighter supply, according to ICIS. Copper sulphate and other minerals According to Global Trade Tracker, the Russian Federation exported 52,000 tonnes of copper sulphate in 2021. Top export destinations by volume were Canada, Germany, Kazakhstan, the Netherlands, Australia, and the United States. Many buyers of Russian-origin copper sulphate have likewise begun to shop for product of alternative origin, although there was still some local inventory working its way out of the market. Some buyers quit buying any Russian-origin material shortly after the invasion, no matter where the product was warehoused at the “Anothermoment.concern for European buyers in general, is the cost of gas, much of which comes from Russia. If Russian gas is weaponised, i.e. they turn off the taps, then consumers in Germany, Poland and Turkey in particular will struggle,” an importerCoppersaid.sulphate indications are now €3,000/tonne on average. “The prices for copper sulphate have risen, but security of supply is still guaranteed thanks to other origins,” a European buyer said.

“Since the war, I have spent my time in risk management and closing positions in Q2, mainly trace minerals in France. The situation is very critical in France for copper, manganese, iron, zinc, iodate and selenium,” the buyer said. “There are no offers on the manganese products from Georgia. I don’t expect I will be able to get some contracted minerals which arrive via the Black Sea with ports shutting. We are expecting serious problems during Q2.”

The top use for copper sulphate in Canada is mining. Two sellers said they have seen new enquiries emerge from the mining sector.

He explained that numerous experiments have shown that intervention feed programmes introduced into birds’ diets at specific times of the production process can help significantly improve their resistance to disease without compromising their productivity.

The modern poultry production process has never been more efficient, and in the past, antibiotics played a large role in ensuring that bird illness did not derail this success. Today, as the industry is tasked with moving away from the prophylactic use of antibiotic therapies, it needs to find alternative solutions that will not only support bird health and performance, but also maintain the industry’s productivity. According to AB Neo’s Poultry Technical Manager, Mark Karimi, the sector already has made some significant strides in its antibiotics reduction efforts, but there is a lot more work that needs to be done to fully address the issue. “For people who have worked in the poultry industry for more than twenty years, some of these achievements look unbelievable. Only a few years ago, growing healthy birds on commercial farms without relying on some sort of prophylactic treatment was more like a dream than a reality,” he explained to Feedinfo’s Industry Perspectives team during a recent sit-down. “Nevertheless, it seems like there is still a rather long way to go and maybe it’s too early to call this campaign a thorough success. We can say that the whole industry is behind on achieving this task, but the good news is that the issue has been well spotted, its importance has been greatly understood and the potential solutions have been identified by all major players within the industry.”

Mark Karimi

In the past antibiotics were a blanket solution to some of these production problems. Not only did they help with bacterial infections in production birds, but they were also used to improve feed conversion and growth rate; all of which has helped the industry achieve fantastic growth in poultry meat production. Now, as the sector moves further away from sub-therapeutic antibiotic use, it is imperative for replacement strategies to address these challenges too to ensure productivity does not suffer in the“Thereprocess.are always some conditions which are out of the farmers’ hands. One of them for sure is dealing with a bird which might be more sensitive to challenges around it,” said Mr. Karimi. “Although all types of modern birds are adaptive to their environment and can survive in some harsh conditions, in commercial set-ups, just surviving is not enough to generate profit.” To successfully make the move away from the prophylactic

And this is good news for modern poultry producers who, according to Mr. Karimi, are dealing with birds with reduced immune performance due to the significant changes in growth rate and feed efficiency that have been bred into them over the years. He explained that genetic selection for increased bodyweight in modern broilers and turkey birds has led to a decrease in the relative weight of their primary and secondary immune organs, which has profoundly affected their immune performance. This has not only left production birds more susceptible to pathogen pressures but has also reduced their ability to withstand physical stressors that commonly form part of the modern poultry production system, like vaccination, heat stress, housing, transportation, etc. Feed itself can also present a challenge for birds due to various non-nutrients, like micro-organisms, that can put added pressure on the gastrointestinal tract and bird immunity. This can also include various biological components present in feed which can reduce nutrient utilisation or feed intake and impair gastrointestinal functions, and therefore its metabolic performance. “The bad news is that even the best quality feed may have some anti-nutritional factors (ANFs) in them,” Mr. Karimi told us. “If the level of ANFs within a feed stays under the threshold, birds can withstand the challenge and digestion/absorption would be carried out smoothly. If they exceed the threshold, birds’ health and performance will be compromised.”

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Feed & nutrition’s importance often overlooked in poultry industry’s antibiotic reduction strategies

One potential solution to the problem that Mr. Karimi feels might not be getting as much attention in the industry as it should, however, is feed and nutrition. He strongly believes that the true influence of nutrition on prevention, control and even curing diseases in all livestock operations, particularly poultry, is often overlooked. “Traditionally, on livestock farms, chemicals are used for cleaning and sanitising, vaccines for disease prevention, medicines for curing diseases, and feed for growth and weight gain. Such a one-dimensional approach needs to be changed. Incorporating feed and nutrition strategies to improve health and welfare on farms, rather than spending fortunes on traditional medication, must be considered more seriously.”

And this, he continued, makes ASG a valuable tool for poultry producers to consider as they develop their antibiotic reduction strategies. According to him taking care of a bird’s gut health, and therefore its ability to digest and absorb the nutrients, can have a direct impact on its immunity and improve its resistance to infections and production stressors. He added that feed and nutrition’s role in facilitating this is absolutely crucial and that there are reliable tools and knowledge out there to help the modern poultry producer succeed on this journey.

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“This process has improved digestibility of all key amino acids by up to 2% (measured in broiler birds). By increasing the digestibility of protein in the small intestine, we observed less protein fermentation in the bird’s ceca and large intestine, and therefore less chance for harmful bacteria to thrive along with the noxious metabolites that they produce. The bio-active components within ASG therefore support the development of an optimal gut environment by creating good conditions for effective digestion and absorption of nutrients, as well as uniquely modulating the bird’s immune system.”

“Modern breeds can produce much more than their ancestors, if they are given what they need. If we fail to provide them with what they need, we may simply compromise their health and efficiency,” heAndexplained.whatabout the challenge that ANFs in feed can present to bird health and production, and, by extension, producer’s antibiotic replacement strategies? For the answer he points to AB Neo’s functional, protein-rich ingredient Alphasoy Gold (ASG).

Published in association with AB Neo

“Using our unique process, we have managed to reduce all known ANFs to a safe level, thus minimising the risk of stress caused by them.”

www.feedinfo.com Sponsored | INDUSTRY PERSPECTIVES SPRING 2022 | 21 use of antibiotics, Mr. Karimi believes the best course of action is to prevent rather than to cure. For him this is where nutrition can play a valuable role in powering bird health and well-being, which should go a long way in helping them adequately cope with the various production challenges they face and reach peak performance. He added that some novel feed and nutrition interventions have already been implemented on a number of commercial operations around the world and that these have shown some promising results in improving birds’ resistance to disease and their productivity.

“Scientists at AB Neo appreciate the fact that compromising a bird’s immune system at any stage may lead to an increase in metabolic disorders, influence the intestinal health causing immune suppression/inflammation, and eventually reduce resistance to infection,” he told Feedinfo. “Soybean meal (the most common protein used in poultry diets) and other unprocessed protein sources are hugely variable in consistency and quality depending on the growing season, source of origin and also processing methods. Moreover, the anti-nutritional factors within conventional soybean meal sometimes reach an unbearable level and these unavoidable features may cause a great deal of stress to young birds.”

MARK KARIMI

“Therefore, the AB Neo scientists designed a process to remove all of these variabilities as well as unlocking maximum nutritional and functional value from the soybean meal. The result was ASG, an innovative and affordable ingredient with both nutritional and functional properties. It has been tailored specifically to the needs of modern young poultry and designed to help young birds thrive and grow efficiently during the early stages of life. Using our unique process, we have managed to reduce all known ANFs to a safe level, thus minimising the risk of stress caused by them.”

FEED PRICES Unlike the conventional meat market, the European organic meat market has always dealt with high feed prices due to its premiumisation and to the lower volumes of organic feeds

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European organic meat demand continues to accelerate

growth also remain in place. Health and wellness are increasingly solid“Thedrivers.issues of sustainability and climate change have become even more important,” she says. “Young people especially, care about it. They are politicised eaters and have become a driving force.”

A LOOK AT EUROPE www.feedinfo.com22 | SPRING 2022

Influences of pandemic, war, and other events on a growing category

Asked which European countries are expected to be most dynamic moving forward, the AMI analyst sees the larger markets such as Germany, France, Denmark, Austria and Switzerland continuing to grow their domestic organic meat markets. To some extent the Sweden, the Netherlands and Belgium will be following a similar pattern. Italy is also growing fast, as are the Baltic states and the Czech Republic.

The organic meat market in Europe accounts for approximately 1-4% of the overall meat market, depending on country. Unlike in milk or eggs, where the organic products’ market share can reach double digits, organic meat remains a niche category in Europe. One of the reasons for this is price, as organic poultry and pork can often cost 40-50% more than conventional products. The price difference isn’t as extreme for organic milk or eggs. However, despite this price difference, the organic meat market has grown at fast rates in the past two years. Diana Schaack, an analyst at Agrarmarkt Informations (AMI), a leading firm for agricultural market information in Germany, estimates the organic meat sector’s volumes growth in Germany in 2021 at 19%. Germany is one of the main European countries in terms of organic meat, so growth rates may not be as high in other countries, but nonetheless it remains a good indicator of trends in Europe. Organic meat has generally been a dynamic product group during the COVID-19 pandemic, which might come as a surprise to some. But for Schaack it didn’t. Lockdowns resulted in fewer restaurant outings and more at-home cooking, which drove supermarket sales upwards. When cooking for themselves at home, many consumers decided to treat themselves to premium organic meat. Demand, which was already high prior to the pandemic, rose sharply again, and production couldn’t keep up with the pace. In Germany, there was a need to import more organic beef and pork from markets such as thepastacceleratedmeatdemandandPortugal,countriesalsoDenmark,AustriaNetherlands,theandbutfromotherlikeSpainBelgium.ForSchaack,fororganicmaywellhaveinthetwoyears,butfundamentalsfor

What is also helping most of these markets is the intra-country trade of organic meat going on, for instance, between Germany and the Netherlands, Denmark and Austria, she says. This trade ensures extra supplies. France, however, is the second largest organic meat market, but it acts alone as it is producing mainly for rising domestic demand, leaving little product for trade beyond the FrenchAnotherborders.advantage for organic meat compared to conventional meat is the fact that the larger European meat producers with organic offerings – such as Danish Crown in Denmark, Westfleisch in Germany, or Vion Food in the Netherlands — and the specialised smaller and marketbeenprovidersmedium-sizewhichhavepresentintheforalongtime,arebothpresentinsupermarkets,andsometimes benefit from equal shelf space.

Schaack doesn’t see consolidation between the larger and smaller organic meat producers happening for now, but with the financial problems they may be facing in the coming years, it may just be a matter of time. “I don’t see it happening just yet,” she says. By Simon Duke, editor-in-chief

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With feed prices and other input costs likely to continue increasing, and European consumer spending power expected to be increasingly pressured due to the economic context, the AMI analyst does fear for the future of the smaller organic meat specialists who will need to keep producer prices high.

“The issues of sustainability and climate change have become even more important,” SCHAACK

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In this quest to produce organic feeds more locally, animal nutrition companies are already aiming to secure additional capacities and make domestic organic markets more autonomous. For instance, leading French animal feed producer Sanders announced plans in September 2021 to increase its own GM-free, 100%-French-origin soy production capacities as well as volumes of organic animal feed. Next month (May 2022), Sanders’ Sojalim factory in southwest France is expected to see its capacity grow from 25,000 tonnes to 50,000 tonnes. Around that time, Belgium’s Arvesta announced its intent to concentrate organic feed production at its site in Ichenhausen, Germany, where it also plans to launch a new production site for conventional feeds by thisSchaackautumn.expects more feed production lines to be converted and facilities to be expanded in the coming years as conventional feed companies have recognised that additional organic capacities are needed. She is also noticing extra storage and drying facilities coming online catering to organic feed.

A LOOK QUALITY AND SAFETY SYSTEM FOR SPECIALTY FEED INGREDIENTS AND THEIR MIXTURES.www.fami-qs.orgFEATURES Feed Safety Management System chapter Good Manufacturing Human Health supporting document manufacturing Feed Fraud Prevention Feed Defence Audits Transparency on the certification scope of certified feed business through our public list Facilitate the worldwide trade of Specialty Feed Ingredients and their Mixtures We set the worldwide leading accredited scheme for the feed industry contributing to safe food. We facilitate trade, driven by uncompromised focus on risk management, safety and quality. With our collective experience, knowledge, and expertise, we proactively respond to the emerging challenges for the specialty feed ingredients and their mixtures.. OUR MISISON Excellence and Trust in Specialty Feed Ingredients. OUR VISION produced. In Schaack’s view, the organic meat market is relatively less exposed to the high feed prices and volatility that have been exacerbated since the start of the Ukrainian war, as organic feed tends to be sourced more locally. “I think the organic market is not as volatile as the conventional one … But like the conventional market, it’s influenced by the rising prices of conventional food and feed,” she says. “And so, if for example the price of conventional wheat is going through the roof, then organic wheat is surely going there too.”

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MEAT ALTERNATIVES www.feedinfo.com24 | SPRING 2022

Consumers globally interested in plant-based meat alternatives

Similarly, Singapore, the first nation in the world to issue regulatory approval for cultivated meat, views the alternative meat revolution as a potential tool to food security. Singapore currently imports 90% of its food and is hoping that, with the help of locally produced meat alternatives, it can produce 30% of its food domestically by 2030.

By Adam Robinson, editor

Some believe that concerns around sustainability, animal welfare, and rising costs are driving more consumers away from meat. Indeed, in the UK, meat consumption has fallen 17% in the last ten years. However, questions remain about the extent to which consumers in different parts of the world are truly ready to embrace alternatives to meat, such as plant-based substitutes. Globally, the plant-based foods market was worth $7 billion in 2020 (according to the Plant Based Foods Association). Data from a Bloomberg Intelligence report found plant-based food sales in the US grew 43% between 2018 and 2020. Meanwhile, the 2021 European Union Smart Protein Project found that European plantbased food sales grew 49% over the same period, with total sales exceeding €3.6 billion during that time. That project, which asked 8,000 Europeans from 11 countries about their protein buying habits, found that 46% of respondents are eating less meat than a year ago, with a further 39% intending to lower their consumption in the next six months. As it stands, 35% would buy plant-based meat, while 25% actively plan to increase their consumption of meat alternatives, suggesting European engagement with the nascent category is growing. However, there are still variations in consumption habits by country. For example, the Smart Protein Project found that in Germany, plant-based meat sales grew 226% between 20182020, but over the same period, sales of plant-based meat in Italy fell 10%, making it the only country in Europe to record a drop. In Asia, estimates for plant-based meat sales are harder to come by. Southern Asia is home to many religions whose adherents avoid some or all meats, and 39% of Indians identify as vegetarian. Consumers there are familiar with traditional vegetarian food and the consumer acceptance of processed plantbased foods is on the rise, with one 2021 report from the Good Food Institute (GFI) India finding that 63% of more than 1,000 respondents said they would buy plant-based meat alternatives. Elsewhere on the continent, rising GDP and recovery from African swine fever (ASF) have led to a rise in traditional meat consumption. Pork and poultry are especially popular for the growing middle class. However, younger generations and growing western influence are slowly impacting the market. One study from Kerry Food Group last year, which questioned almost 4,000 people across 10 Asian-Pacific countries, found that 62% of respondents would be keen to buy plant-based foods regularly.

Even in China, the world’s largest meat market (expected to consume 53 million tonnes of pork and 10 million tonnes of beef in 2022 according to the USDA) there is a growing appetite for meat alternatives, especially from younger generations, although the relatively high prices of products are limiting their adoption on a larger scale. A recent report from Euromonitor found that China’s vegan food market is expected to grow to $12 billion by 2023, up from $10 billion in 2018, while a local DuPont study estimates meat alternative demand will increase 200% in the next five years.

Official interest in meat alternatives In some countries, it is not only consumer buying habits that are fuelling the alternative meat industry, but research funding, regulatory approvals, and positive rhetoric from leaders.

What does consumption and survey data say about meat’s competition?

Last year, Israel’s Prime Minister Benjamin Netanyahu expressed support for alternative protein, and the country is investing in basic research in this category (which includes not only plant-based products but also cultured meat and other solutions). Within this favourable environment, Israel’s alternative protein sector grew 450% in 2021, with $623 million in investments, representing 12% of the world’s alternative protein investments last year.

“...we need to make sure younger generations think as favorably about meat [as their older

ANNE-MARIEcounterparts].”ROERINK

In a survey of over 1,300 US consumers in December 2021, 74% described themselves as meat eaters, with 16% as flexitarian, 6% as vegetarian or vegan, and 4% as pescatarian. On the one hand, that could be seen as good news: nearly 3 in 4 Americans are not attempting to reduce their consumption of meat. But on the other hand, the demographic breakdown reveals a striking age differential: only 54% of Gen Z believes meat and poultry belong in a healthy, balanced diet, compared to 83% of ItBoomers.isimportant not to overdramatise the threat posed by reduced-meat diets. After all, IRI data shows that growth in sales of refrigerated meat alternatives descended from triple-digit dollar growth in early 2020 to a mere 15% by Q1 of 2021, and was negative by Q3. Moreover, this came amid a period of much higher inflation for meat than for plant-based counterparts. It appears a lot of the initial sales growth was driven by the desire to try something new — about half of households who have bought meat alternative products only bought them once — and at some point, without repeat purchasers, the pool of new customers runs out. Still, says Anne-Marie Roerink of market research firm 210 Analytics, “we need to make sure younger generations think as favourably about meat [as their older counterparts].” Roerink and her firm put together the 17th annual Power of Meat report on behalf of the Food Marketing Institute (an association representing the US food industry, retailers, and wholesalers) and the Foundation for Meat and Poultry Research and Education (connected with NAMI, the association of North American meat producers). At an online presentation for the Annual Meat Conference, she discusses how the demand for “better” proteins can be harnessed to attract consumers with high expectations. From “better for me” to “better for others”

Retailers explore

Of course, those interested in healthier options tended to skew older. Meanwhile, Gen Z and Millennials dominated the groups interested in products which are environmentally or socially responsible. According to Roerink, this idea that meat should be more socially responsible, better for the farmer or worker, has only shown up on the radar fairly recently, but is growing year-on-year and is now a priority for 35% of survey respondents, equal to the share looking for greener products. Labels which reference “small, independent family farms” or “fair pay” are one way to reach these consumers. “Across categories that I look at, people find this to be very important, but for the most part, a lot of people say, ‘well, maybe a few brands do this, but not all brands, by far,’” reports Roerink. Clearly this is a point of differentiation which the industry might currently be underutilising.

and

Meat should present as socially or environmentally conscious to woo young consumers

Consumers seeking better-for-the-planet meat options, meanwhile, have a diverse set of priorities (and options catering shopper perceptions of fresh and processed meat poultry

POWER OF MEAT REPORT www.feedinfo.com26 | SPRING 2022

Environmental and animal welfare

According to Roerink’s data, an impressive 86% of consumers said they look for options that are better for themselves/their families, the farmer/worker, the planet, and/or the animal. It is clear, therefore, that this is a very important lever for sales. By far the most popular priority was “better for me/my family”, with 64% of respondents saying this was something they looked for when making purchasing decisions. This actually represents a decline from a year ago – rather unsurprisingly, given the context of a global health emergency leaving consumers in 2020 eager to protect their health in any way they could. Roerink suggests retailers, meatpackers, and others in the supply chain can appeal to this desire to make healthier choices using things like individual packaging to favour portion control, and the integration of fruit and vegetables in display cases to give meat a healthy halo. Meanwhile, at the farmer level, producing meat or eggs with higher omega-3 fatty acid levels, for example, might be a way to participate in this push.

The idea that meat should be more socially responsible, better for the farmer or worker, is growing year-on-year and is now a priority for 35% of survey respondents, equal to the share looking for more environmentally-friendly products.

By Shannon Behary, senior editor

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Takeaways on communication

Once again, though, the consumer’s conception of how to identify a high-welfare product was a little fuzzy. Many interviewees seemed to infer better welfare came along with the purchase of an organic or expensive meat product, or from shopping at a premium specialty retailer, like Whole Foods. For others, a very common response was that they didn’t think about welfare when making purchasing decisions, but rather assumed an adequate baseline was already in place. In other words, they trust the industry and retailers to only be offering protein from animals which were treated decently. This, for Roerink, suggests that what the meat supply chain needs to do with their communication around animal welfare is “[give] people the confidence their assumptions are correct.”

Pointing out that consumers are getting “surround-sound” messages about animal welfare from a wide variety of sources, from social media to documentaries to information from friends and family to communication from animal rights groups, Roerink tells her audience of supermarket professionals, “it is really not just the producers needing to have these conversations [about animal welfare]. It is really everybody, from retailers to the producer, and it’s very very important for our voice to be heard widely.”

www.feedinfo.com POWER OF MEAT REPORT SPRING 2022 | 27 to them). With 77% of this sub-group professing interest in locally-raised meat, 74% in grass-fed beef, 67% in regenerative agricultural practices which help restore natural resources and habitats, and 60% in carbon neutrality, there are clearly opportunities for upstream actors including additives producers, feed manufacturers, and animal farmers to participate in efforts to appeal to these consumers.

Finally, 31% of survey respondents expressed interest in protein raised with practices which are better for the animal’s welfare.

And yet, of these claims, only the organic label has seen growth in volume terms over the last two years. Nearly half of shoppers said they want more US-raised meat, while approximately four in 10 are looking for protein with a free-from label (no hormones, no antibiotics, all natural, etc.) or grass-fed animals, suggesting there is room for growth in production practices which align with theseHowever,goals.this needs to be done carefully, cautions Roerink. In the course of her research, she found that most consumers had very little idea of what some claims, like “air-chilled chicken” or “regenerative agriculture” actually meant. “My big lesson here is, if we use claims, let’s make sure that the consumers know what they mean and know why they are an actual advantage and worthy of a price differential.”

Still, keeping a few rules about communication in mind can help the meat industry as a whole continue to thrive. “Be transparent in all areas of sustainability, which is driving interest and dollars,” she recommends. “Communicate clearly to create differentiated advantages,” she adds. “Let’s make sure people understand what our lingo actually means.”

Still, it is not a point on which we can afford to drop the ball.

Finally, she concludes, “underscore meat’s role in a healthy, balanced lifestyle.” After all, even as many consumers are looking for something “better”, that “better” option can still be a meat product. “Eating meat is the norm, it is just for us to figure out how we can make that as easy as possible.”

Overall, Roerink says that the US meat industry will have a hard time beating the exceptional growth years of 2020 and 2021, particularly given the significantly inflationary environment.

When it comes to what Roerink calls “claims-based” purchases — organic meat, meat with a claim about antibiotics, grass-fed, etc. — 34% of consumers reported having specifically sought these out in 2021, and such “claims-based” purchases represented USD 9.7 billion in sales over the pandemic period.

Ukraine is one of China’s main sources of corn imports. According to China customs data, imports from Ukraine totalled 8.24 million tonnes (29.07%) in 2021. In the first week of March, China’s agriculture ministry said it would facilitate the commercialisation of genetically modified soybeans, corn, and cotton crops. Firm amino acid prices

Vitamin E and D-Calpan are the two only vitamins that have stayed firm. A Chinese vitamins producer said that demand was low due to the pandemic. Another producer said that the low demand for vitamins is because there is a lack of profit in the breeding business, as the sale of each pig would lead to a loss of CNY 400, whereas previously there would have been a profit of CNY 2000 per pig.

Ukraine war among the factors driving up costs

any thispriceannouncedcompaniesChineseincreasesquarter due to surging costs for raw materials, including corn and soybean meal. “Feed companies are generally increasing the price of pig fattening feed and have made at least three price increases this year”, according to Li Ming, a live hog analyst at Shanghai Steel Union’s agricultural products division quoted in the China Business Herald on 4 March, who noted that the average increase was CNY 150-200/tonne.SomeChinese news media has reported that many wellknown enterprises including New Hope, Haida, Great Northern Agriculture, Cargill, Tongwei, Tequ, and other feed companies have successively increased their quotations in 2022.

High raw materials costs plague Chinese feed and amino acid production

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Chinese amino acid prices were assessed higher after Russia invaded Ukraine, mainly due to raw material costs surging.

Most Chinese amino acid prices were assessed higher after Russia invaded Ukraine, mainly due to raw material costs surging. Methionine solid export prices were assessed by Feedinfo at $3.30-3.50/kg FOB China on 24 March, up from $2.95-3.20/kg on 24 February.

A Chinese vitamin producer told Feedinfo in early March that “feed product prices [are] going up because of the commodity prices rising, while feed producers need lower feed additive prices to control their own production costs.”

Prices for most Chinese vitamins have been weak since the start of this year. The average Chinese vitamin A 1000 export price was assessed at $63.00-$65.00/kg FOB on 24 March, down from $73.50/kg at the beginning of this year. Average prices in Europe and the US have dropped by more than $4.00/kg in the past two months.

Raw material price increases

Corn and soybean meal prices have both surged since the beginning of 2022, due to weather conditions in South America and the Russian-Ukraine war. The most actively traded soybean meal futures on the Dalian Commodity Exchange were for delivery in May 2022 and settled at CNY 4,313/tonne ($677/tonne) on 28 March, up by 33% from CNY 3,234/tonne ($512/tonne) on 25 January. The most actively traded corn futures on the Dalian Commodity Exchange were for delivery in May 2022 and settled at CNY 2,884/tonne ($453/tonne) on 28 March, up by 5% from CNY 2,745/tonne ($434/tonne) on 25 January.

The Chinese tryptophan and valine markets have also started to firm since the Russian invasion. On 7 March, a Chinese amino acids producer said that domestic prices of corn, coal and liquid ammonia (comprising the main production costs for amino acids) are all rising. The source added that some other Chinese lysine producers started to offer higher prices that week. Weak vitamin prices

ANALYST’S CORNER www.feedinfo.com28 | SPRING M2022

The outbreak’s spread to Shanghai and the lockdown of this major hub caused difficulties for logistics. According to one manufacturer in late March “it’s alright to export from Ningbo [a major deep-water port 2.5 hours from Shanghai], but Ningbo is overloaded.”

Meanwhile, at least one possible source of disruption is off the table: since the beginning of this year, Chinese feed additive producers have indicated that they no longer consider the country’s energy consumption controls to be a major concern.

www.feedinfo.com ANALYST’S CORNER SPRING 2022 | 29 Build Business Connections DiscoverIndustry Breakthroughs wConnectithyourPeers Shaping the Future of the Animal Nutrition & Feed Industry B A R C E L O N A , S P A I N S E P T E M B E R 2 6 2 7 , 2 0 2 2 R E G I S T E R N O W !

Part of a drive to increase energy efficiency and lower usage, the “dual energy consumption control” policy was imposed by the Chinese government in 2021. Coinciding with a rapid rise in electricity demand after the summer, parts of China, particularly in the north, experienced temporary coal shortages and high prices for coal and electricity in the later parts of the year. Power shortages thus resulted in lower output during Q4 2021 from some Chinese vitamin and amino acids producers.

Another producer said that the controls were a major concern towards the end of 2021, and this could prove to be the case again during the autumn/winter period of 2022. However, there are other more serious matters to focus on now such as the Russia-Ukraine war, it added.

Join the leaders and experts of the animal feed and agriculture industry at this unmissable 3 day event. Or contact John Collins on john.collins@agribriefing.com COVID-19 resurgence Another factor which threatened to impact China’s production and transportation of feed additives in the quarter was a growth in the number of cases of COVID-19. According to China’s National Health Commission, there were 27,745 confirmed cases of COVID19 in 31 provinces as of 27 March. Given China’s pursuit of a “zero-COVID” policy, outbreaks still have the potential to cause disruption.Thelogistics situation is in chaos, according to a producer. The road delivery lead time used to be 1-2 days and now is 1-2 weeks, while domestic logistic costs have doubled or risen by a factor of five or six, another producer said in early April. In mid-March, one source told Feedinfo “The domestic outbreak is intensifying, and transport and raw materials will be affected… Jilin’s main epidemic area is also one of the main corn-producing areas.”

Energy consumption controls recede in importance

China’s Ministry of Agriculture and Rural Affairs has urged its officials to implement virus control measures while also ensuring production and transportation of agricultural products during the spring farming season.

Several producers told Feedinfo during this quarter that the controls had not been a topic of conversation among manufacturers recently, although one confirmed that all local governments still have orders to control their carbon emissions.

On the feed additives production side, one source told Feedinfo in late March that there were not enough workers in its factory due to COVID-19, and its operating rate is down to 50%. It added that its logistics are still working and so it is able to fulfil its contractual deliveries.

By Lydia Ma, analyst

NEW@ www.feedinfo.com

Feed additives space gets IOSCO-compliant price reporting

Feedinfo’s Managing Director, Julien Hardwick, concludes: “This assurance is big news for all of us. We’re part of a traded market worth 25 billion dollars a year. This is a clear signal that that market has evolved — that we are compliant, transparent and that our prices are not dependent on a small group of players or a process that nobody sees or understands.”

Urner Barry, a US-based price reporting agency for the protein sector under the same parent company, AgriBriefing, also achieved the same milestone. “The IOSCO principles cover a wide range of areas. That includes methodology, record keeping, training, a formal complaints procedure — which we hope we won’t be using too often — and, of course, the annual external audit,” explains Sam Weatherlake, Principal Analyst at Feedinfo. “We have always maintained high standards at Feedinfo, but third-party assurance of our compliance with the IOSCO principles confirms to our subscribers that we are a goldstandard PRA and that our price assessment process is robust and consistently applied.”

journals

© kldy / Shutterstock.com “Third-party assurance of our compliance with the IOSCO principles confirms to our subscribers that we are a gold-standard PRA and that our price assessment process is robust and consistently applied ” Sam Weatherlake, Principal Analyst, Feedinfo

Over the last 23 years, Feedinfo’s feed additive price reporting and news have become critical to the global animal nutrition industry, helping to bring transparency to opaque commodityRecognisingmarkets.theimportance of demonstrating that the prices it publishes are the result of a scrupulous, high-quality discovery process, Feedinfo is committed to adhering to the highest standards in existence. In the world of price reporting agencies (PRAs), those standards are set by IOSCO, the International Organization of Securities Commissions’ Principles for PRAs. Earlier this quarter, Feedinfo received confirmation of having successfully completed an independent review of its price reporting methodology and control procedures undertaken by auditor BDO. The Type 1 assurance report, which examined ten benchmark price indices, confirms that Feedinfo’s processes are aligned with the IOSCO principles.

Newcuratesrubriclatestanimalscience

research of 20+

Optimizing Swine Nutrition: Advantages of Including Black Soldier Fly Larvae Ingredients in Swine Diets A

As the body of science grows, it is increasingly important to ensure that it is being made accessible to those who can take action on it. That is the mission behind a new initiative at Feedinfo: the Partners’ Research Library, an exclusive repository of sponsored white papers and scientific research. It allows companies to break down highly technical concepts for a more general audience, and provides a platform for the distribution of in-house research helping to clarify the mechanisms, effects, or other aspects of proprietary solutions. Papers in the Partners’ Research Library can In recent years, the open access revolution has dramatically increased the amount of research available for consultation. On the one hand, this has made available huge amounts of experimental data and scientific insight. On the other hand, navigating the greatly-expanded landscape of scientific publishing can be daunting. In order to help Feedinfo subscribers keep up with the latest animal science research, Feedinfo has launched Journal Updates Each Feedinfo daily newsletter includes a curated selection of English-language research related to the production of economically important production animals (monogastrics, ruminants, and key aquatic species). The main focus is on nutrition research, but it also includes research in the adjacent domains of animal health, production/welfare, feed quality issues such as mycotoxins, and more. Journal Updates cover more than 20 relevant peer-reviewed journals indexed in the Directory of Open Access Journals and, in most cases, Scopus as well. Many are associated with an industry body from the Asian-Australasian Association of Animal Production Societies to Brazil’s Fundação APINCO de Ciência e Tecnologia Avícolas to France’s INRAE. Others are associated with a university, such as Huazhong Agricultural University or Wageningen University and Research. “What we are aiming for is regularity, meaningful scope, and of course, providing value to our readers,” states editor in chief Simon Duke. “With so much research being generated, we want to help monitor journals which might not be on the radar, keeping track of how much and how often they are publishing items relevant to our readers’ interests. The idea is to bridge the gap between research and industry, and bring important discoveries to the attention of those who need to be aware of them.”

Check out the following examples of items recently included in the Partners’ Research Library: white paper by EnviroFlight Need white paper by Eastman

EnviroBug, Meal

The

Piglet: © Foto-Sabine / Shutterstock.com Modeling Improvements: Danisco Animal Nutrition | IFFand Oil: EnviroFlight 6-Phytase A scientific paper by Danisco Animal Nutrition | IFF

For more information about getting your company’s paper included in the Partners’ Research Library, reach out to lisa.guiraud@feedinfo.com

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Partners’ Research Library boosts reach of company research and technical white papers be accessed by anyone, with or without a Feedinfo subscription. To quote Ollie Theocharous, Head of Perspectives Content at Feedinfo: “the Partners’ Research Library facilitates the sharing of content across the animal nutrition and feed sector. Over time, as more and more industry partners share their articles, papers, and reports here, the information bank will grow to offer even more content from businesses directly to our supply chain.”

Modeling Improvements in Ileal Digestible Amino Acids by a Novel Consensus Bacterial

for Holistic Approaches to Reduce Weaning Stress A

Variant in Broilers

As of 1 March, Roger Watchorn, who has been with CARGILL since 1994, joined the executive team as leader of Cargill’s Agriculture Supply Chains (CASC). Ross Hamou-Jennings was also named the company’s chair of Asia Pacific.

After Steven Rafferty took over as CEO of CERMAQ Group, his role as Managing Director of Cermaq Chile was filled by Pedro Courard.

DARLING INGREDIENTS  Vice President, Investor Relations, Sustainability and Global Communications, Melissa Gaither will retire effective April 29 after more than 33 years of service, to be replaced by Suann Guthrie who started her role on 31 January.

Recent senior job moves within the global animal nutrition industry mentalmind Shutterstock.com

VILOFOSS GROUP Jacob Holm has resigned, to be replaced by Boudewijn Morelissen. IFFO announced its new President as Gonzalo de Romaña, formerly Vice President, a role that has been filled by new Vice President Egil Magne Haugstad. Ida Steensen has taken over as Director of  HAGE ’s feed division.

Aquaculture specialists

As part of our industry recruitment service, Feedinfo covers recent senior job moves within the animal nutrition world, helping readers keep up to date with new roles, board appointments and business changes. Please send any announcements to recruitment@feedinfo.com

AND SERVICES Thomas Schäfer stepped down as Executive Vice President & Chief Scientific Officer at CHR. HANSEN at the end of March. Thomas will continue as Chief Science Advisor, with Henrik Joerck Nielsen taking on the role of Chief Scientific Officer. At TROUW NUTRITION , Coen Smits became Director of Sustainability for the livestock feed business line, and John Doelman started as livestock feed Global R&D Director.

At the beginning of April David Hallas commenced his role as CEO and board member for ECO ANIMAL HEALTH GROUP PLC , after Marc Loomes indicated he was ready to retire.

After 22 years as CEO of DLG’s vitamin and mineral business

AB AGRI appointed Simon Heath in its new CCO (Chief Commercial Officer) role. The company also recruited business development specialist Graham Wong for its Southeast Asia operations.

At AVIVAGEN , James Nickerson was made President, having held the role of Vice President of Business Development and Innovation and reaching 15 years with the company.

ROYAL AGRIFIRM GROUP  appointed Fanny Weinbreck as Global R&D Director & Oliver Thimm as Global Innovation Portfolio Lead.

In addition, organisations seeking to recruit specialist or senior staff can take advantage of Feedinfo’s recruitment service, which offers an audience of engaged and highly qualified animal nutrition specialists, managers and executives. For more details, contact our recruitment specialist, Dineo Komane at dineo.komane@agribriefing.com

COMMUNITY BLENDERS LLC (CBL) welcomed Mike Wright as the company’s new Chief Operating Officer. Dr. Antonia Tacconi joined  PERSTORP ’s Animal Nutrition team as Global Product Manager Gut Health, with effect from 1 February 2022. NUQO  FEED ADDITIVES THAILAND announced the appointment of Bundit Thoaphan as Sales Manager.

Japanese conglomerate AJINOMOTO CO., INC. announced that Taro Fujie took on the newly created role of President/CEO effective 1 April 2022, replacing previous President Takaaki Nishii.

RECRUITMENT UPDATES www.feedinfo.com32 | SPRING 2022 INDUSTRY

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Feed additives producer ANPARIO appointed Dr Lawrence Brown as Senior Technical and Account Manager for aquaculture.

The  BASF  Board of Executive Directors announced that Michael Heinz will assume responsibility for the Agricultural Solutions, Care Chemicals and Nutrition & Health divisions, while continuing to be responsible for the North and South America regions.

BENCHMARK GENETICS  expanded their core genetics team by hiring Dr. Grazyella Yoshida as Senior Geneticist and Hans Ekvall as Junior Geneticist at the Bergen HQ.

NATURAL BIOLOGICS announced that Global Business Development Manager, Le Luchterhand, has become a partner in the business, while Carl Jones joined the sales team as Poultry Business Development Manager Magnus Kagevik took over as Group President and CEO of  LANTMÄNNEN on 1 April, replacing the retiring Per Olof Nyman. MOVES

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NITROGEN AND PHOSPHORUS IMPROVEMENTS

The impact of these types of changes can be quantified with a concept known as whole farm mass nutrient balance (WFMB). Put simply, this is a measure of how much of a nutrient like nitrogen or phosphorus is being imported onto a farm, generally in the form of feed or fertiliser, versus how much is being exported, in the form of milk. According to a 2017 paper by Cela et al. quoted by Professor Chase, a study of 91 dairy herds in the Upper Susquehanna over the 9 years to 2013 found that WFMB for nitrogen decreased by 50% while that of phosphorus dropped 51%. “Decreases in feed nitrogen and phosphorus imports to the farm were a primary factor for the change in WFMB,” he asserts. In other words, these declines were not mainly from the increase in milk production, but were from more effectively and responsibly using inputs like feed to maximise the impact of the nitrogen and phosphorus it contains.

There are a variety of ways that the exact impact of this can be calculated, but according to Professor Chase, the upshot is that between 75 to 85% (and sometimes more) of a dairy ration is Sector has increased output while decreasing negative externalities for 30 years now.

gains in dairy nutrition deserve wider recognition

Nobody in the animal protein value chain can afford to ignore the growing consumer concern with sustainability. This point is inarguable. However, it is also true that the consumer doesn’t actually know much about how animals are raised and fed. In the case of US dairy nutrition, this has created a somewhat frustrating state of affairs. Years, or in some cases decades of meaningful and measurable progress on the sustainability of dairy feed has gone underappreciated by consumers and other stakeholders.Inapresentation to the Cornell Nutrition Conference last autumn, Professor Larry Chase of Cornell University’s Department of Animal Science attempted to rectify the situation and draw attention to the different metrics on which the sector has improved. As he went on to explain to Feedinfo in a recent interview, whether we’re talking about how much milk cows are producing per unit of feed, what is going into their feed, or what is coming out the other end as nitrogen or phosphorus emissions, the US dairy industry has improved remarkably upon the sustainability of its feeding practices, and continues to do so.

Sustainabilitystory.

PRODUCTIVITY: DOING ASTONISHINGLY MORE WITH LESS In some ways, it is almost understandable how the point about improved productivity has gone overlooked; it has been an exceptionally long-lived revolution. “If you look at the trend in the US, we’ve been going up 200 to 300 pounds of milk per cow per year for the last thirty years,” Professor Chase points out. In other words, this is not a recent change, but more like a background increase which has gone on for nearly a generation. “We’re on a continual path upward,” he notes. “Everybody wonders where the end is, but I don’t see a bend in the line yet.” Still, it is impressive nonetheless. In his CNC presentation, Professor Chase quoted researchers including Capper and Cady (2019) showing that US Energy Corrected Milk (ECM) per cow increased by 22% in the decade from 2007 to 2017, meaning that with only a slight increase in the total number of dairy cows (up 2.1% over that same period), the herd was able produce 25% more milk. Each metric ton of milk, therefore, required less feed (17% less), less land (21% less), and less fresh water (30% less); meanwhile, emissions of nitrogen, phosphorus, and greenhouse gasses per unit of milk were down 17, 14, and 19% respectively. “We’ve had continual improvement in understanding better the protein and the carbohydrates in rations, and the interactions. And then the amino acid balancing comes in also. Those are the three keys, in addition to forage quality… improvements in forage genetics and digestibility of the forages,” asserts Professor Chase.

Moreover, there is another misconception about the feeding of dairy cows that is harming the consumer perception of the industry: the idea that cows are consuming massive amounts of calories that could be feeding people instead. However, this misses the very important point that cattle are able to digest fibres and extract nutrients from forages which are nutritionally useless for non-ruminant animals, including humans.

It is also important to understand that the remarkable sustainability improvements seen in recent years are not just a function of improved productivity. In other words, it’s not all about making more milk. Professor Chase also highlights research carried out in dairy herds in New York (Higgs et. al. 2012, Van Amburgh et al., 2019) where dietary reformulations such as dietary crude protein reduction lowered daily manure nitrogen output (and also, happily, increased income over purchased feed costs). Of course, studies showing that a more sustainable industry is possible are not, in themselves, proof of positive change; what truly matters is whether those changes are being incorporated on the ground. “I think if we look at the trend in the industry, the industry is feeding lower phosphorus, lower protein, then they did,” Professor Chase opines. “Obviously not all farms always buy into these things. But I’d say, when I look at rations on progressive farms, they’ve all made those types of shifts…[those farms] interested in incorporating new concepts, new technology, improving their livelihoods and profitability…”

Time to tell this

NUTRITION INTERVIEW www.feedinfo.com34 | SPRING 2022

BYPRODUCTS AND HUMAN-INEDIBLE FEEDSTUFFS IN DAIRY RATIONS

Professor Chase, therefore, recommends that any sustainability action plan be based in a deep understanding not only of animal nutrition, but also of the land resources, crops, manure management, and economics. “The whole farm model gives us a chance to integrate the feed needs of the animal along with best [practices] taking advantage of the soil types and the cropping programs. Sometimes we might make a ration change — let’s say we want to feed more corn sileage — but if the land can’t produce more corn sileage, then it’s not a good match,” Professor Chase explains. Or in other words, as he told the CNC, “Developing forage-based diets without considering the capability of the land resources and cropping system to supply the needed forage quantities and qualities is a problem.”

However, the real concern is not that the industry might begin to see these nutritional changes as silver bullets or one-size-fits-all solutions. Instead, Professor Chase is more concerned by the fact that the very significant progress on sustainability that the industry has achieved is going unnoticed by a society which claims to be concerned by these issues.

www.feedinfo.com NUTRITION INTERVIEW SPRING 2022 | 35

Works cited in this story available here By Shannon Behary, senior editor Shutterstock.com/Toa55©

What’s more: when it comes to the use of coproducts in the feed, dairy cows are not only turning useless fibre into useful milk; they are helping to avoid the negative environmental impacts of disposing of those coproducts in another way. “Utilising co-product feeds in rations decreases the need to landfill or incinerate these feeds,” asserted Professor Chase’s CNC submission. “It was estimated that 137 million tons of co-products were available in an annual basis in the U.S. (Knapp, 2015). Less carbon dioxide was released if co-products were used in diets than if they were incinerated (Van Amburgh et al., 2019).” And again, this is not a niche practice with a limited impact; the use of coproducts from grain milling, ethanol production, beer brewing, or the rendering industry is quite well-established generally making up double-digitpercentages of the feed. Professor Chase’s own work in 2019 found coproducts made up 26% of total dietary dry matter in 46 high-producing dairy herds, while the Ven Amburgh et. al. 2019 study found they made up around 31%, with a range of between 9% and 57%.

NUANCE WANTED Of course, it is difficult to generalise about sustainability. Every choice will depend on the circumstances, on the context; just as it can be environmentally problematic to swap out locally-raised veal for avocados shipped by air, so too can some of the sustainability strategies for dairy have unintended consequences.

As he puts it: “We’ve made progress, but I think the average person doesn’t realise that.”

inedible to humans. Meanwhile, each cow is turning that ration of mainly inedible fibre into hundreds of pounds of milk per day, milk which can feed humans. “I think it’s an important message to get out to people, that [for dairy cows] a lot of the feed they use is not human-edible. A lot of people don’t realise that.”

If you look at the trend in the US, we’ve been going up 200 to 300 pounds of milk per cow per year for the last thirty years.

UKRAINE WAR: RAW MATERIALS www.feedinfo.com36 | SPRING 2022

Feed ingredients in short supply following Ukraine invasion

On corn, Ukraine represents nearly 20% of global exports, and was expected to play an especially important role this season, given the size of the crop. Of the 33 million tonnes expected to be exported this marketing year, about 13 million remained in the country when it was invaded, slightly less than half of which was destined for the EU. So, concludes Defois, in a worst-case scenario where none of those exports actually ships from Ukraine, “the impact on the European Union will be very sharp.”

Early impacts on Ukrainian and Russian products

Touching base on the situation five weeks after the invasion, Defois observes that exports out of Ukraine have effectively stopped: ports are out of operation, infrastructure has taken damage, and the Ukrainian government has placed restrictions on the export of some commodities, although those have evolved throughout the month of March. On the Russian side, though, she says things are “not as bad as expected”; whereas Stratégie Grains’ original post-invasion projections put wheat exports for the month of March at 1 million tonnes, they have more recently been observed to be closer to 2 “Nowmillion.the question is, will this last until the end of the season, the end of June? Or will we see some flows decrease over the comingDefoismonths?”saysStratégie Grains predicts some decrease, based on the impacts of sanctions which will increasingly make themselves felt throughout April and May, the difficulties in shipping from the ports of the sea of Azov, and the hesitation of some businesses to deal with However,Russia.direpredictions of the impacts on Russia’s exports made at the beginning of the conflict are now being revised downwards. For example, before the invasion, Stratégie Grains had World’s ability to make up for the deficit of Black Sea grains and oilseeds limited

Effects will be widespread, given the extensive reach of Black Sea wheat, which is shipped to destinations around the globe. “I would say nearly the entire world will be concerned.”

Russia’s invasion of Ukraine in late February has caused massive volatility in agricultural commodity markets. This is understandable, given the importance of both countries in the production and export of critical grains and oilseeds. According to Andrée Defois, Managing Director of Stratégie Grains, a sister service of Feedinfo offering supply and demand forecasts for major food commodities, the market braced for the biggest disruption is certainly sunflower oil. Ukraine alone is responsible for about 50% of global exports, she says; together with Russia, the two countries currently at war account for 80% of global exports. There is, therefore, literally no other country in a position to step up and replace anything close to the volumes being produced around the Black Sea. Moreover, Ukraine still has large existing stocks of sunflower to crush. “If Ukraine is not able to get these volumes transformed and sunoil exported out of the country, a lot of countries, and especially the EU, India, and China, will definitely have to reduce their consumption,” predicts Defois. The grain situation is also quite tense. In wheat, Ukraine and Russia together represent 30% of global exports. Defois says that as of the date of the Russian invasion, for the current marketing year through to the end of June, an additional 8-9 million tonnes had been expected to ship from Russia and 5 million from Ukraine. Should this wheat fail to show up on global markets, a few countries may be able to supply greater quantities — Defois suggests Australia, India, and parts of Europe — but the total will still fall short: “all these countries together will not be in a position to replace, like that [in a short time period], about 14 million tonnes of wheat.” That scramble for replacements is made even harder by last summer’s drought in North America, meaning alternative supply from Canada or the US will be unavailable for the end of the 2021/22 marketing season. “Consumers will have to switch, to reduce consumption, or maybe to wait for the next season.”

Meanwhile, all of this is happening in the context of massively high raw materials prices independent of the war, just based on the supply/demand fundamentals — drought, La Niña, demand for crude oil and biofuels recovering post-Covid, and the palm oil sector’s acute labor shortage. “The situation was very tight, and the Russia/Ukraine problem comes as a new factor… we were thinking that prices had already matched their highest level. But now with Russian exports lower than estimated before, and Ukraine going out entirely from the scene, then the situation becomes explosive again.”

Stratégie Grains expects Ukraine’s wheat crop for next season to be down by around 33% compared to pre-war estimates, and next season’s corn to be down by around 40%.

Shutterstock.com/GouinJ.J.©

corn should be sown now, she explains, but many farmers can’t go into their fields; wheat was sown in the winter, but it also seems unlikely farmers will be able to harvest. “We have anticipated that the wheat crop could be reduced by about 1/3 in Ukraine compared to what was estimated before the war. We have estimated a close to 40% reduction for the maize crop as compared to what was estimated before the war,” sheThisasserts.willhave knock-on effects for the global supply. Stratégie Grains’ pre-war forecasts expected global wheat production to be up 25 million tonnes on last year (a year characterised by drought and exceptionally tight supply), but are now only expecting a 12 million tonnes increase on last year.

Supposing average prices remain quite close to those in 20212022, this could of course have grim impacts for industries whose fortunes are closely tied to those of the grains industry, like swine production.“Pigmargins are very low in the EU. Despite the aid package decided recently by the EU Commission, we forecast a sharp reduction in pig compound feed production for the 2022/23 season,” says Defois. Going forward, she says it will be very important to follow how inflation in everything from crude oil to nitrogen to food will impact demand.

Indeed, while the tight supply situation could incentivise farmers in other parts of the world to expand their production of grains and oilseeds to make up for the deficit from the Black Sea, Defois warns that rising input prices may limit their ability to do so. “Despite high prices for their crops, we think the increase in areas [planted] will be rather moderate, even for the 2023 harvest.”

Predictions for next season Defois predicts the 2022-2023 season will remain disrupted by the war, due largely to the sizeable reduction in Ukrainian wheat andUkrainiancorn.

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“Some people in the market are saying that the only impact of the conflict [on the agri-commodities markets] concerns Ukrainian exports. We don’t agree with that. We observe, and we forecast, that it is impacting Russian exports as well, but at a lower magnitude.”

“We have already revised downward, by less than 1%, our forecast for global wheat demand for the next season, but it could be the case that it has to be reduced far more drastically.”

www.strategie-grains.comByShannon Behary, senior editor

www.feedinfo.com UKRAINE WAR: RAW MATERIALS SPRING 2022 | 37 originally forecast Russian wheat exports would reach 33 million tonnes for the marketing year through the end of June; in the early days after the invasion, it was forecast that this number might need to be reduced by as much as 5-8 million tonnes; however, today, the company believes Russia will still manage exports of 30-31 million tonnes, only 3 million less than originally expected.

Stratégie Grains offers a variety of tools to follow the latest development of the export situation in the Black Sea, and the global supply and demand environment for agri-commodities more generally. These include a Line Up tool to track ships and get figures on raw materials exports before customs data are available, a regularly-updated list of open tenders along with the results when available, and of course the company’s flagship supply and demand forecasts.

Meanwhile, 2022-2023 corn production is now predicted to be stable compared to this year, a 17 million tonne reduction compared to the estimates of February. Beyond the impacts of reduced production in Ukraine, there are also the behaviours of other producers to consider; Stratégie Grains predicts that skyhigh fertilizer prices will drive some US maize farmers towards soybeans instead, aggravating this deficit.

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