affecting our industry

NEWS BITES

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].

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

BIRD FLU CONTINUES RAVAGE

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.

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.

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

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.

NEWS BITES

Production

NHU SITE IN SHANDONG RECEIVES 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.

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.

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.

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.

BASF EXPANDS FEED ENZYME PRODUCTION IN GERMANY

BASF brought online an expansion which “significantly increased the annual number of feasible fermentation runs” in its feed enzymes plant

© Dolgikh Pavel / Shutterstock.com Three different Chinese vitamins or amino acids producers had news of expansions this quarter. in Ludwigshafen, according to an announcement in late January. The company’s enzymes portfolio includes phytase, xylanase/glucanase, and mannanase.

AJINOMOTO AND CJ SETTLE US PATENT LITIGATION

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.

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

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.

SPECIALTY FEED ADDITIVES EXPANSION IN THE QUARTER

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. 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.

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.

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© Billion Photos / Shutterstock.com M&A

AMINO ACIDS PRODUCER EPPEN TO GET NEW OWNER

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.

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.

CARGILL SELLS FORMAT SOLUTIONS

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.

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.

DUTCH FEED ACQUISITIONS

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 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.

CARGILL INVESTS IN CHILEAN SALMON FARMING COMPANY

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.

GRAIN TRADER GAVILON CHANGES HANDS IN BILLION-DOLLAR DEAL

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.

OLAM AGRI STAKE SALE

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.