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Winter 2022 Issue

THE SUPPLY CHAIN ISSUE How scarcities in containers, qualified labour, and other inputs are shaping business strategies RECRUITMENT

SENIOR EXEC OUTLOOK

INFLATION AND MEAT

Where is the industry going wrong?

Views on digitalization, supply chains, consolidation & more

Exclusive interview with Urner Barry’s Chadwick

Pages 8-10

Pages 30-36

Pages 40-41

YOUR CONNECTION TO THE GLOBAL ANIMAL NUTRITION AND FEED INDUSTRY

WELCOME

FROM THE EDITOR Welcome to the winter edition of Feedinfo Review

The urgent need to overhaul “business as usual”

e knew from the beginning of this magazine that we wanted to have a medium where we could zoom out from the daily grind of animal nutrition news and instead talk about long-term trends which our industry would need to have on the radar. What we didn’t know when we penciled a whole issue in for January under the vague catch-all title “the strategy issue” was how much this year would be dominated by forces outside our sector. We did not realise that activities such as logistics and supply chain management — generally much less visible and more poorly resourced than more exciting “core” activities such as R&D — would abruptly come to be top of mind for everyone, from the biggest to the smallest companies. Nor did we realise how many different markets and sectors would suffer from a general labour shortage, and how widely the problems it caused would resonate. In short, we couldn’t have known how urgent it was going to become to overhaul “business as usual”. Now that we know this is necessary, the million-dollar question is how to do so.

Shannon Behary, editor, Feedinfo

Indeed, while some of these stories are meant to diagnose problems or better understand their causes, it was important for us that this magazine not simply become a chronicle of all of the strategic or operational threats the industry is dealing with. It is harder, but more rewarding, to proffer solutions. Wherever possible, we have focused our attention on the actionable advice our interviewees have given out. From strategies to improve your outreach to college graduates looking for a job, to tips on how to more persuasively tell the story of meat to consumers who are skeptical of spin, one important goal of this magazine is to teach you how to do something about the numerous strategic threats stalking the animal nutrition industry. However, it is not always so simple. For one thing, different parts of the value chain might be experiencing a problem in different ways, and companies are not all alike in the resources they can mobilise to respond to a threat. For example, as a western European nutritionist points out later in this magazine, the rising costs of feed ingredients might truly threaten the survival of some in the livestock industry unless they can fetch a higher price for their meat, something supermarkets are resisting hard. And, frankly, not all problems have solutions; while investing more in the talent and building better data-driven models for demand forecasting might help avoid future supply-chain crunches, the only thing to be done right now if an essential container is stuck in an endless port queue is to simply wait things out. The best way to ensure your organisation can adapt to challenges which defy easy solutions is to make a point of listening to a diverse array of views, including perspectives from beyond your day-to-day beat. That is why this issue includes extensive input from experts outside the industry, from domains such as recruitment and shipping. Meanwhile, when it comes to the animal nutrition voices, we have included not only the company executives navigating the strategic threats, but also the nutritionists on the ground adapting to ingredients shortages or operational interruptions. Building a well-informed business strategy requires listening, and building a creative one requires diversity.

CONTACTS Editorial enquiries Shannon Behary – Editor +33 (0)6 70 11 27 38 shannon.behary@feedinfo.com

Feedinfo subscription enquiries Richard O’Donoghue – Client account manager +33 (0)7 88 14 28 09 richard.odonoghue@agribriefing.com

Advertising enquiries Lisa Guiraud – Global lead, Perspectives +33 (0) 6 37 46 86 47 lisa.guiraud@feedinfo.com

© AgriBriefing 2022 Cover photo © Travel man - stock.adobe.com All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical including photocopying, recording, or any information storage or retrieval system without the express prior written consent of the publisher. The contents of Feedinfo Review are subject to reproduction in information storage and retrieval systems. ISSN 1777-5566

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WINTER 2022 | 1

IN THIS ISSUE

CONTENTS WINTER

4-6

8-10

NEWS BITES

FEEDINFO REVIEW EXCLUSIVE

12-13

Headline news affecting our industry

Where is the animal nutrition industry going wrong on recruitment?

EXCLUSIVE INTERVIEW

ON THE GROUND VIEWS

16-17

How does Evonik’s methyl mercaptan investment fit in with its methionine asset strategy?

INDUSTRY PERSPECTIVES

Price pressures may reshape Europe’s livestock production sector

FEEDINFO SUMMIT

Adisseo’s next generation phytase offers innovative solutions to livestock sustainability challenges

How can the meat industry tell its story better?

ANALYST’S CORNER

SUPPLY CHAIN WEBINAR

20-21

Supply Chain Issues and COVID-19 Variants Remain Key Demand Drivers for Americas Feed Additive Sector

26-27

INDUSTRY PERSPECTIVES

22-24

Is the Worst Over? Dissecting 2021 Supply Chain Crisis Impacts

28-29 INTERVIEW

Cargill’s Galleon Decodes Flock Gut Microbiome to Help Broiler Producers Improve Bird & Farm Performance

Separate headaches over domestic and imported feed ingredients in US

SENIOR LEADERS 2022 OUTLOOK

30-36

Digitalization: where we’re at and where we’re going 30 Mitigating supply chain risks 32 Risks and alternatives to geographic consolidation 34

RECRUITMENT UPDATES Industry moves

2 | WINTER 2022

FEEDINFO SUMMIT

Animal Ag Value Chain Can Learn from Big Oil’s Challenges

40-41

CROSS-BRAND INTERVIEW Urner Barry talks about the year in meat and looks at what’s ahead

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NEWS BITES

Production developments MEIHUA COMMISSIONS NEW LYSINE PRODUCTION Meihua brought online 300,000 tonnes per year of lysine production capacity in early November. Although the new line in Baicheng, Jilin is currently producing lysine sulphate, Feedinfo has been informed it will also produce lysine HCl in the future.

NHU AND SINOPEC TO PARTNER ON NEW METHIONINE PRODUCTION

MEIHUA CONVERTING THREONINE CAPACITY TO MAKE VITAMIN B2 In late October, Meihua confirmed that it plans to convert some threonine capacity at its Tongliao site in Inner Mongolia to produce 1,000 tons per year of vitamin B2. The project is expected to finish in 2022 and cost CNY 32.6 million (approx. USD 5 million).

CJ DOUBLING SIZE OF BRAZILIAN AMINO ACIDS PLANT CJ Brasil is investing BRL 900 million (USD 136 million) in its amino acid plant in Piracicaba, in the Brazilian state of São Paulo. Completion of the project is scheduled for Q1 2023. The plant’s lineup is known to include lysine and tryptophan. It is understood the new expansion will approximately double the factory’s size.

FUFENG DISCUSSING US PRODUCTION SITE China’s Fufeng Group is discussing plans to construct a manufacturing site in Grand Forks, North Dakota. It is not yet clear which products the bio-fermentation giant would be making at the site, as its portfolio includes not only amino acids such as lysine, threonine, and tryptophan, but also products for other sectors including food & beverage, pharmaceutical, and wellness.

SUMITOMO CHEMICAL CO. DELAYS RESTART OF DL-METHIONINE PRODUCTION LINE A Sumitomo Chemical Company production line for DL-methionine was the site of an accident during regular maintenance this quarter, causing its restart to be delayed while the incident was investigated. The facilities were not damaged, and the company has several other production lines in operation, but warned in early December of possible shipment delays and the potential rejection of newly-requested orders.

CHINA LOCKDOWN PAUSES VITAMIN PRODUCTION NHU paused operations at its Shangyu site in Zhejiang in mid-December in compliance with COVID-19 lockdown regulations. The site makes vitamins A, E, and D3, as well as biotin and carotenoids. It was understood that the suspension would not affect the company’s ability to deliver contracts, and the Shangyu site had begun reopening by early January.

4 | WINTER 2022

Huvepharma established a joint venture to produce Omega-3 algal oils for human food as well as pet food, equine feed and aquaculture applications.

In late December, Zhejiang NHU Co. Ltd. and Sinopec Zhenhai Refinery Chemical signed a letter of intent for a joint venture to build a new methionine facility in Ningbo. Approximately CNY 3 billion, or USD 470 million, will be invested in the plant. Its capacity and the timeline for its construction are currently unknown.

METEX DEVELOPS NEW L-VALINE BACTERIAL STRAIN METabolic EXplorer (METEX) announced in early December that its ALTANØØV product innovation platform has developed a new bacterial strain of feed grade l-valine. The product samples required to apply for approval in Europe will be manufactured during H1 2022; the approval process is expected to take 24 months.

HUVEPHARMA JV TO MAKE OMEGA-3 ALGAL OIL In late November Huvepharma established a joint venture called Huve Nutraceuticals to produce Omega-3 algal oils for human food as well as pet food, equine feed and aquaculture applications.

DSM ADDING BOVAER PRODUCTION IN SCOTLAND DSM will build a new plant to manufacture Bovaer, its methanereducing feed additive for ruminants, at the company’s existing site in Dalry, Scotland. The announcement was made at COP26 in Glasgow — a venue where DSM also signed an agreement with meat firm JBS for the utilisation of Bovaer in JBS’s production chain.

BRENNTAG ADDING NEW PRODUCTION LINE IN POLAND Chemical and ingredient producer Brenntag is expanding an animal nutrition production unit in Poland, one of eight European facilities where it makes premixtures. This will include the installation of a new production line and other expansions due to be completed by the end of 2022.

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NEWS BITES CARGILL OPENS PREMIX PLANT IN PHILIPPINES

ARVESTA EXPANDING EUROPEAN FEED PRODUCTION

Mid November saw Cargill open a new swine and poultry basemix plant in Mindanao, to lower the reliance on imported premixes. Located beside Cargill Animal Nutrition and Health’s compound feed production facility in Villanueva in the province of Misamis Oriental, the new facility has an annual capacity of 30,000 tonnes.

Belgium’s Arvesta announced in mid-October that it would be investing EUR 25 million in the expansion and modernisation of its animal feed production sites. This will include expansions at Aalter and a refurbishment of Dumoulin in Belgium, as well as a new production site in Ichenhausen, Germany, expected to enter into operations in autumn 2022.

VENKYS PLANS VETERINARY MEDICINES PRODUCTION Indian poultry conglomerate Venkys announced plans to make veterinary medicines in Satara, Maharashtra. The equivalent of USD 4 million is being invested in the project, which is expected to begin commercial production in June 2022 of 600 tonnes per year of powders and 300 tonnes per year of liquid veterinary medicinal products.

PETFOOD EXPANSIONS Among the numerous petfood projects announced this quarter was that of Mars Petcare India, which will be investing around USD 65 million to add a second dry extruder line to its Hyderabad facility, increasing the facility’s capacity by around approximately 65,000 tonnes. In Europe, Nestlé announced plans to invest around EUR 97 million to expand pet food production in Bük, Hungary, where Purina products are made for over 50 export destinations.

M&A and corporate developments DARLING INGREDIENTS BUYS US RENDERER In the closing days of 2021, Darling Ingredients announced plans to acquire Valley Proteins Inc. for approximately USD 1.1 billion. Valley Proteins operates 18 rendering and used cooking oil facilities throughout the southern, southeast and mid-Atlantic regions of the U.S., making poultry by-products meal, meat meal, hydrolyzed feather meal and pet food grade poultry meal for feed and pet food, as well as products for other applications.

DE HEUS BUYS MASAN GROUP’S FEED ASSETS

Elanco Animal Health announced at the end of November that it would be eliminating 380 positions, including approximately 20% of senior management. This was in order to simplify the organisation, and follows at least two previous rounds of layoffs since the acquisition of Bayer’s animal health business in mid-2020.

US PREMIXER D&D CHANGES HANDS Late in December, it was revealed that California-based Swanson Family of Companies (including Associated Feed, Nutrius, and Virtus Nutrition) would be acquiring D&D Ingredient Distributors, Inc. D&D is an independent premix company based in Ohio.

ADM BUYS OUT CHINESE PET JV PARTNER In December, ADM assumed full ownership of Invivo Sanpo, a pet nutrition JV launched in 2017 in partnership with Tianjin Jinkangbao.

De Heus purchased the feed related business of Vietnamese conglomerate Masan Group’s MEATLife Corporation, which included 100% of ANCO and 75.2% of Proconco. The business operates 13 feed mills and one premix plant, with a total combined production capacity of nearly 4 million tonnes. It is expected that the combination of De Heus Vietnam and MNS Feed will create the largest animal nutrition company in Vietnam.

ELANCO ANIMAL HEALTH FIRES 380 AMID RESTRUCTURING

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WINTER 2022 | 5

NEWS BITES ADM ACQUIRES DEERLAND PROBIOTICS & ENZYMES

DSM ACQUIRES PULSE-BASED INGREDIENTS FIRM

The quarter also saw ADM acquire Deerland Probiotics & Enzymes, a company mainly involved in the human health and wellness sector but with some customers in pet foods, treats and supplements. Based in the US state of Georgia, Deerland operates five manufacturing facilities, one fermentation facility, and eight R&D and quality control laboratories globally.

Norway’s Vestkorn Milling joined DSM this winter in a deal worth EUR 65 million. Vestkorn specializes in pea- and bean-derived proteins, starches, and dietary fibres, which are used in plant-based foods, pet food, and animal feed.

JUSTICE DEPT. REVIEW PROLONGS SANDERSON ACQUISITION A securities filing revealed in late December that the Department of Justice had demanded further information in its review of the antitrust implications of the deal wherein Cargill and Continental Grain would acquire Sanderson Farms. The deal, originally scheduled to complete in Q4 of 2021 or Q1 of 2022, is now expected to complete sometime in H1 of 2022.

INVIVO CLOSES SOUFFLET ACQUISITION After receiving EU regulatory approval in late November, InVivo completed the acquisition of French agri-firm Soufflet shortly thereafter. The combined entity will have sales of around EUR 10 billion, including extensive activities in the grain trade, among other sectors.

UNITED PETFOOD ACQUIRES DUTCH PEER In late October, United Petfood bought Teeling Petfood, a Dutch manufacturer of dog and cat food. The addition of Teeling’s two facilities brings United Petfood’s footprint to a total of 19 pet food plants across 8 different European countries.

Important context COSTLY INPUTS PLAGUE LIVESTOCK INDUSTRY

CALIFORNIA HOUSING BAN LOOMS OVER US HOG INDUSTRY A California ballot initiative passed in 2018 obliging that the animals which produce California’s meat and eggs have a minimum amount of space loomed over the country’s livestock industry, particularly the pork sector, going into the new year. The law was set to take effect in 2022, but rules surrounding its implementation have been slow to arrive and legal challenges continued into January, meaning the industry has, in turn, hesitated to make the investments necessary to meet new standards. Although it was understood that existing inventories could be legally sold in California, there were fears that a lack of compliant pork could soon drive up prices in the most populous state in the country.

EUROPE EXPERIENCES ITS WORST AVIAN INFLUENZA EPIDEMIC

BIDEN ADMINISTRATION CONTINUES PUSH FOR MEAT PROCESSING COMPETITION

The ongoing bird flu season is the strongest ever experienced in Europe, according to the Friedrich Loeffler Institute, Germany’s official animal health research body. As of the end of December, it had counted 675 avian influenza infections in wild birds and 534 farm outbreaks in Europe, and warned “there is no end in sight.”

In early January, the White House released the “Biden-Harris Action Plan for a Fairer, More Competitive, and More Resilient Meat and Poultry Supply Chain.” The plan includes dedicated funds to support independent processing capacity, a commitment to “vigorous and fair enforcement of competition laws” and changes to “Product of USA” labelling rules, interagency cooperation to address potentially unfair and anticompetitive practices in the agriculture sector, and increased transparency for cattle markets. Meat industry consolidation has been a recurrent theme in the first year of the Biden presidency.

CHINA COAL SHORTAGE SHUTDOWNS END Most of the Chinese feed additive factories which were known to have paused or reduced production last quarter in connection with fuel shortages have confirmed that normal operations have resumed. However, government-imposed restrictions on energy use will likely continue to affect operating rates.

CHINESE PORK EXPANSION DISPLACES IMPORTS China announced it would be returning its tariffs on imported pork to 2020 levels. As Reuters reported in mid-December, high levels of imports and a rebound in hog numbers as the country recovered from the devastation of ASF had caused prices for Chinese producers to fall below production costs in the third quarter.

6 | WINTER 2022

The ongoing bird flu season is the strongest ever experienced in Europe

The quarter saw high feed ingredients and additives prices squeeze producers from Kansas to Kenya. Rabobank’s Animal Protein Outlook for 2022, published this November, predicted a “welcome return to more stable [feed] prices” after the volatility of 2021, but warned that global feed prices were expected to remain at elevated levels because of tight stocks and firm demand. Feed wasn’t the only input whose rising cost has been pressuring producers; the price of labour, energy, and freight have also risen in markets around the world, adding costs at various levels of the value chain. “On balance it is hard to see most cost pressures being materially alleviated in 2022, although there will be important regional variations,” predicts Rabobank.

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FEEDINFO REVIEW EXCLUSIVE

Different recruitment experts’ views on how to improve

Where is the animal nutrition industry going wrong on recruitment?

hen talking about the future of the industry and the challenges it will need to face in coming years, one topic has come up again and again: concerns about the increased difficulty in acquiring necessary talent. The problem predated the pandemic, and comes in many different forms, from challenges in finding the right person for a highly specific qualified position to the perpetual failure to attract enough young recruits to keep the pipeline of talent refreshed. Fortunately, according to experts in the matter, there are several areas where companies can take action to improve their prospects in this changing recruitment landscape.

Why do animal nutrition companies have trouble filling specific roles? In the view of Georgina Lewis, director of Kapia Partners, a specialty recruitment firm focused on the animal and crop sciences sectors, recruitment challenges can be divided into three categories. First are problems in finding the talent: maybe your company doesn’t have a network in this area because it is a new product category or geography, or maybe you just don’t have the internal resources for a talent search. This is simple enough to understand, although for some young companies, it is still a significant problem. As Lewis explains, one of Kapia’s missions is supporting startups at critical times during

“When I’m speaking to passive candidates and ask ‘what’s the thing that would motivate you [to move]’, it’s the products, the scientific background, and what [the target company] is doing within the industry.”

GEORGINA LEWIS 8 | WINTER 2022

their growth, when they really need to be putting all their money in product development or business expansion but also need exceptional and highly-motivated talent to make the enterprise a success. “We might not necessarily charge them straight away, or we may set up a [payment plan] or wait for that investment to come in. For those startups, it’s crucial to get the right people on board.” Second are problems in attracting the talent: perhaps your company doesn’t yet have much in the way of industry reputation, or the portfolio or research opportunities are not compelling. For someone like Lewis, whose work largely concerns “passive candidates” — those who are not necessarily looking actively for a new post, but who are open to a new opportunity and have highly desirable skill-sets — this is a point not to be underestimated. “One of the top things that people say, when I’m speaking to passive candidates and ask ‘what’s the thing that would motivate you’, it’s the products, the scientific background, and what they’re doing within the industry,” she claims. As she tells it, in previous years, when specialty feed additives were a new sector for many of the major companies and new ground was being broken, there was a dynamism that made hiring easier than it is today, when companies are perhaps seen to be doing the same sorts of things: “It’s gone from companies having the upper hand to candidates having the upper hand. It’s a candidate-driven market, lots of vacancies in the same space, but the candidates won’t move unless it’s new innovation or something really different.” And third are problems in securing the talent. This requires a look at the internal processes, salary, or any other conditions that might cause a candidate to refuse an otherwise tempting offer. The classic example of 2021 is the question of flexible working. Lewis points out that a company that flat-out rejects working from home for positions where this would be appropriate and instead demands new employees physically relocate to a very remote site will simply be left behind in today’s talent market. ‘If [companies] are not willing to make the changes that others in the industry are progressing on, if others are moving forward and you are staying exactly where you are, you might as well be moving backwards. [If] your salaries are not industry standard, if you don’t have flexible working… it’s extremely unlikely you’ll be able to successfully recruit.” “What people should be doing is looking at these three core areas when they are recruiting… If you can improve in those three areas, in

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FEEDINFO REVIEW EXCLUSIVE or acquisitions or transitions or reorganisations is: communication is the biggest key to those individuals: make sure that they are aware that their job is secure, what their options are…if you want to keep those good staff, the minute something is happening, they will look elsewhere, or at least will listen [to recruiters]. And you only have to get the right [competing] company, the right time to contact them, and even if their boss planned a big promotion for them, they’ve already listened to that recruiter and potentially gone elsewhere.”

How can the industry better communicate with college students about career opportunities?

“Internships are very effective, but they’re not cheap. They require a lot of care and feeding.”

MIMI COLLINS www.feedinfo.com

Get in early with high quality internships According to Kevin Grubb, Associate Vice Provost for professional development and Executive Director of the career center at Villanova University in Pennsylvania, successful recruitment efforts are beginning earlier and earlier in a university career, and including tie-ins with academic projects on the regular curriculum, if possible. This early engagement can take a wide range of forms. There are, of course, the traditional routes for communicating about job opportunities — participating in job fairs or other on-campus recruitment events. But industries with particular needs might need to think more originally and go a bit further — for example, Grubb suggests reaching out to faculty teaching in a relevant domain to see about using a real-world problem for a case study in class. “That’s great integration…these sorts of things can help create that affinity and get students interested in a company.” Internships, especially, are critical tools; Grubb cites “organisations who are starting to strategically build a pipeline from internship to full-time hire,” using the internship as a way for the organisation to help educate students about both the industry as a whole, as well as the company. However, he also notes that, with the internship process starting ever earlier in a student’s academic career, “many will end up completing more than one internship or more than one practical experience before they graduate.” Therefore, employers might need to be offering different kinds of experiences adapted to different student profiles, with one or two-day job shadows for junior students, to longer ones with more responsibility for more advanced students. Mimi Collins, Director of Content Strategy at the National Association of Colleges and Employers (NACE, a nonprofit network to help bring together university career services professionals with companies looking to hire college graduates), agrees with the importance of internships — if done

finding the talent, then attracting, then recruiting, there’s no reason you can’t get the best talent on board, but every single company will have issues with different parts of the process,” she concludes. Over the last year, one of the biggest problems has been the sheer size of the industry’s recruitment needs. Unsurprisingly, this is a consequence of the pandemic. “The end of 2020 going into 2021 was a massive spike in activity. March 2020, everybody completely stopped… it was just all uncertainty… people didn’t know how COVID would impact their business at that time.” Then, after a roughly 4-5 month pause, she recounts, all the vacancies went online at once. “People had left during COVID, they’d either been made redundant, or left themselves because they felt like they’d been treated poorly [because of companies cutting bonuses, for example].” For her, the recruitment business has remained very active since then. She says, however, that not all companies in this space are experiencing this crunch equally: “Some businesses stopped [their recruitment activities] and a lot of those have really struggled since that point [to fill a backlog of vacancies], while those that put the time and energy into making sure that they were going to be successful off the back of COVID have now either got through the other side or are doing even better.” There is, perhaps, a lesson to be learned there; along with the talk about an end to “just in time” inventory management, maybe the industry should be talking about an end to “just-in-time” recruitment. Lewis is clear-eyed about the importance not just of recruiting, but also actively working to retain key talent, not only at executive level but all throughout the business. She points out that this is essential during any sort of corporate transition — periods where new funders are coming onboard and reorganizing, or especially during M&A. “Mergers and acquisitions heavily affect individuals … the biggest recommendation that I would have to any businesses that are going through any mergers

However, this is only half the story. If the animal nutrition industry wants to ensure itself a steady supply of high-quality talent for the long term, it needs to be better in its outreach to students — making young people aware of the existence of the industry, of the opportunities it can offer, and of how their skills can be of use. Lewis, who herself studied animal science, observed this firsthand: “I think I did one module in animal nutrition, and at no point was it made clear that this was an industry I could easily get into, how I [would] get into that industry, who were the contacts, who were the companies, what the products were like.” Of course, building a pipeline from the university into the industry is easier said than done. Fortunately, there are structures in place which can help, in the form of career services centres at universities. Below, two professionals from this world share their “dos and don’ts” for successful college outreach.

WINTER 2022 | 9

FEEDINFO REVIEW EXCLUSIVE right. “Internships are probably one of the best ways to recruit new college graduates. They’re very effective, but they’re not cheap. They require a lot of care and feeding. ” She is adamant that internships should be paid, not only for ethical or legal reasons, but also in order to attract as wide a group of applicants as possible: “If you have an internship program that is unpaid, you’re only going to get people applying for that that can afford to go without a paycheck for the summer. Right off the bat, you’re narrowing your potential talent down to a very, very small pool.” Moreover, she notes, internship programs might involve other expenses. “That actually happened during the pandemic, where a number of companies felt they needed to keep their internship programs going, so they sent laptops to all of their interns. They gave them hot spots. They provided them with all of the software and platform access they would have had in the office.” In other words, these companies are investing in interns — not viewing them as temporary or disposable assets, but as essential future employees to cultivate. On the other hand, NACE data shows that internship programs are not just beneficial in getting young college grads in the door; they are also useful for retention. “We find that folks who have done an internship are much more likely to be there at the one year mark, at the five year mark, than their counterparts who haven’t done one.”

Get to know students — and help them learn about you Beyond internships, Grubb offers several other ideas for employers to raise awareness of their brand among students. One is through the use of online platforms which allow companies to reach out to students with relevant profiles — think LinkedIn, Handshake (where students create profiles and can be invited to apply for jobs) or other widely used social and professional networks. Another is by encouraging employees who are alumni of a target school to remain involved in campus life, as a sort of informal ambassador for the company. Moreover, he proposes that companies consider whether they can act in concert with others in their industry, even with competitors for the same potential hires, in order to effectively communicate the differences between them and help outsiders understand what sets them apart. “Sometimes [organisations or companies] will say ‘we’d like to all have a panel or a discussion in an event where we’re talking about this industry as a whole, or some of our programs versus some of their programs.’ Not to combat each other, but to say ‘here’s what we’re doing, and here’s why [we do it that way]. Here’s what they’re doing. And they’re both awesome. But ultimately, if you wind up getting an offer from both of us, we want you to pick the right offer and not regret it or renege on it…’” One important thing to keep in mind: the earlier in their academic career you reach out to a student, the less likely they are to be at ease with the customs of the professional world. For those wishing to connect with first-year students, Grubb suggests creating low-pressure situations for getting-to-know-you types of conversations. He points to the tradition of having “first-year-friendly” areas at Villanova University’s career fairs: “We then advertise that list (of employers) to our first-year students and say ‘you don’t have to go up there and be perfect. They’re not expecting you to know exactly what to do for a job interview. They just want to have a conversation with you, just to get to know you and to give you practice.’” For Collins, the rise of video interviews for at least some parts of the hiring process means companies must work very hard to make sure that they are coming off as authentic and transparent in their communications with potential hirees. Young people consider these points espcially critical, she says: “[Are recruiters] telling them the truth about the company? Are they being transparent about their hiring process? Did they follow up?”

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Demonstrating genuine respect for young applicants is an important part of this; for example, “ghosting” entry-level candidates — interviewing them for a position but never getting in contact afterwards — is “not a good practice,” she concludes.

Work closely with colleges offering relevant programs Both Grubb and Collins encourage companies to work closely with schools to build a long-term relationship. This can happen at many levels, from participating in events hosted by the career services department all the way to close collaboration with the relevant academic department in order to basically design curriculum around a given industry’s needs. “If you’re currently invested in hiring bachelors’ degrees and above, you might want to consider whether there are things at the two-year college level that could be shaped [to your needs],” advises Collins. “A lot of community colleges [American institutions focused more on professional credentials than on research, which is generally the preserve of universities] will work directly with employers on specific skill sets… a number of years ago, one of the railroad systems developed a really robust program with a community college to develop some of the folks that they needed to hire.” Grubb also encourages companies looking at their early-career recruitment to “take their cues from the experts within” a university, whether among the faculty, the career services office, or recent alumni. “Maybe build yourself a council of people to get advice and opinions from, and to help understand what’s happening at the at the college/university level: what kind of person [today’s student] is, what they’re interested in, what we’re teaching, how they’re experiencing things. Because I think some of the swings and misses come when there’s not that shared understanding of who these people are, and I think some of that can be rooted in generational differences of expectations.” In his opinion, companies that are in close coordination with the institutional experts can thus be assured that projects to help students discover jobs are not coming at an inconvenient time in the school year, are not too ambitious in terms of what they are expecting of students at a given level of their academic careers, or are not tone-deaf in how they communicate. Of course, all this presupposes that you already know which universities are training the kinds of graduates you’re interested in. For those without that understanding of the landscape, the resources of the National Association of Colleges and Employers might prove valuable, particularly NACE’s specialty reports. In Collins’ words: “What we found is folks have developed relationships with schools historically, but have failed to keep up with what the demographics show… so in the animal nutrition field, there may be several majors that are a good fit for the jobs that your industry offers, right? So you would want to know: which schools have those students? And once you know where they are, reaching them is a lot easier.”

Don’t neglect retention Beyond recruitment, Collins makes one final important point: “make sure that you’re retaining people, because it’s a lot easier to keep employees then to hire them. So, you need to consider things like what are the career paths within your organisation? Are they going to be stuck in the same job forever or can they move up? …[You might] have an excellent employee, [but have to recognize] that you need to offer them something that’s going to make them want to perform. They need to get something out of it too, so tuition reimbursement is also a very big benefit right now, because they recognise education is key to their long-term success.” Shannon Behary, senior editor, Feedinfo

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EXCLUSIVE INTERVIEW Backward integration into methionine precursor at Mobile production site

How does Evonik’s methyl mercaptan investment fit in with its methionine asset strategy?

ne of the biggest strategic challenges of 2021 was adapting to disruptions whose root causes were far away. A port deciding to lay off staff last March means containers can’t be unloaded now. A foreign government placing restrictions on energy use on the other side of the world means much more trouble getting feed additives locally. Backwards integration — production of the inputs your own operations need — can make a company less vulnerable to disruption of this sort. Evonik has thus announced plans to add production of methyl mercaptan, a precursor for DL-methionine, at its methionine hub in Mobile, Alabama. The new facility is scheduled to come onstream in the second half of 2024. In an exclusive interview for Feedinfo Review readers, Dr. Emmanuel Auer, Head of the Animal Nutrition business line at Evonik, explains the strategic rationale of this investment. [Feedinfo Review] Evonik’s methionine operations in Antwerp and Singapore already include methyl mercaptan production, and Evonik has looked into adding methyl mercaptan production in Alabama in the past. What makes this the right step for Evonik’s methionine strategy at this point in time? [Dr. Emmanuel Auer] Evonik constantly analyses developments in global and local markets regarding customer demand and all aspects of supply reliability, to ensure delivery of our products and services to customers. In recent years, with costs of freight and raw materials increasing, we evaluated our contractual supply situation, including delivery schedules. We concluded that investing in on-site methyl mercaptan production is the best longterm option to secure and expand methionine production for three major reasons: • Increased supply security for our customers • Strong commitment to Responsible Care by terminating transportation of hazardous goods • Flexibility for further plant modifications to increase methionine capacity [Feedinfo Review] What will this mean for the supply of methionine in the Americas? Do you envisage expanding methionine production at Mobile as well — and if so, what would be the timeline and capacities for such an expansion?

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[Dr. Emmanuel Auer] With our asset setup, including three world-scale methionine production hubs located in Antwerp (Belgium), in Singapore, and in Mobile, Alabama, we set the standard for the manufacturing of leading products of the highest quality and safety standards. This is paired with supply security for our customers, particularly in times of global supply chain interruptions. All three hubs offer several modular expansion options ready to be realized with short lead times. The methyl mercaptan investment increases our flexibility to implement smart debottlenecking right at the point when the market requires greater capacity at a competitive cost. Corresponding decisions will be made based on this criterion. However, we will decide about these steps at a later date. [Feedinfo Review] What kinds of shifts have you seen in the last 2 years in terms of where the methionine from Mobile is being consumed? How have exports towards places like Canada, Mexico, or Brazil evolved? What has driven shifts in domestic (US) consumption? [Dr. Emmanuel Auer] Our hub in Mobile serves the largest protein producers in the Americas. Especially in times of global trade uncertainties, we feel that the US and Latin American protein industries need a strong, reliable, and regional DL-methionine producer with a clear growth track record. Some of the biggest producers of meat worldwide are located in the region, and to solve the global food challenge it is essential that we can meet their needs. That’s not only true for methionine, but also for other products and solutions, such as lysine, probiotics, as well as precision livestock farming tools and services. Another example of this principle in action is our lysine production setup; we have local lysine production plants in Castro, Brazil, and Blair, Nebraska, USA. Generally, we believe resuming a regional market approach for feed additives is valued by the market and local production improves the environmental footprint. [Feedinfo Review] To what extent has the global supply chain crisis — expensive freight, long lead times, etc. — played into the decision to invest in production in Mobile? [Dr. Emmanuel Auer] The global supply chain crisis acted as a catalyst. A clear take away from the pandemic is that our approach

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Evonik will be adding methyl mercaptan production to its methionine production site in Mobile (Alabama).

EXCLUSIVE INTERVIEW

“The methyl mercaptan investment increases our flexibility to implement smart debottlenecking right at the point when the market requires greater capacity at a competitive cost.”

DR. EMMANUEL AUER Evonik Industries AG / Frank Preuß

to investing and strengthening our local production, and thus shortening delivery routes, is the right one. Additionally, we are avoiding the risk of delays or operational failures caused in connection with the supply of methyl mercaptan. Sustainability benefits also played an essential role in our decision to increase backwards integration. We are minimizing our carbon footprint by eliminating long distance travel and delivery routes; we estimate that this move will decrease the carbon footprint of DL-methionine produced in Mobile by 7%. Finally, following strict Responsible Care protocols, we are focused on minimizing and avoiding risk in transport and handling, both in the design and in the construction of the methyl mercaptan plant in Mobile. [Feedinfo Review] Having added methyl mercaptan production to all three Evonik methionine sites, are there other key intermediates for methionine production which you will be looking to bring in-house? [Dr. Emmanuel Auer] With this step, all three of our world-scale methionine production hubs will be clear industry leaders. We believe we can only serve the growth of our customers if we are taking advantage of economies of scale, leading cost position and future-proof technologies. All these requirements are met with our fully backwards integrated production hubs. We will continue to implement process improvements while at the same time lowering our carbon footprint as part of our sustainability efforts. [Feedinfo Review] What is the next step for Evonik’s methionine asset strategy? [Dr. Emmanuel Auer] As part of our global system solutions approach, there are two important next steps: 1. Supporting the growth of our customers with reliable supply, and if needed, by implementing smart debottlenecking at the time the market requires greater capacity at a competitive cost. 2. Implementing sustainability goals, e.g. by low carbon footprint technologies, eliminating travel and delivery routes based on global supply chains. Evonik’s investment in Mobile is a clear commitment: we are

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proud to be here to stay, preparing for further growth. Or, in other words: methionine, made in America – for the Americas. [Feedinfo Review] Evonik is also bringing manufacturing of Mepron (rumen-protected methionine) to the US. What can you tell me about the details of this project and the factors driving it? [Dr. Emmanuel Auer] Rumen-protected amino acids are the most cost-effective source of methionine for dairy rations. With Mepron soon to be produced locally in our Mobile plant, we will be offering this well-known and established product for the dairy industry more reliably for our US based customers by making it independent of long shipping routes, following the same logic as for DL-methionine. Both projects express our clear commitment to the Americas region, but in different ways. [Feedinfo Review] Will this be Evonik’s first time making rumenprotected amino acids in the US? Where was Mepron previously being supplied from? [Dr. Emmanuel Auer] We are currently supplying our customers globally with rumen-protected amino acids (Mepron) from a production facility in Europe. In the US, we temporarily produced Mepron at our Mobile plant a couple of years ago, but due to the weaker demand during the pandemic, when milk prices plummeted, we switched to importing the product for the Americas from our production facilities overseas. The strongly increasing demand for Mepron post-crisis means it is appropriate to resume production at the plant in the USA and thus shorten the delivery routes and strengthen the reliability of supply for our customers in the Americas. [Feedinfo Review] Beyond methyl mercaptan production and Mepron production, are you adding any further products or intermediates to your production site in Mobile? [Dr. Emmanuel Auer] We are constantly looking for ways to keep our production up to date with the latest technology. This also means a continuous de-bottlenecking and capacity increase at our plants for the years to come. With that, we underline Evonik’s position as a reliable and trustworthy partner for the food industry in the region. Shannon Behary, senior editor, Feedinfo

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ON THE GROUND VIEWS Price pressures may reshape Europe’s livestock production sector

What we’re hearing One UK feed formulation consultant specialised in pig and layer diets shared a view from the market in November:

What is the situation on the ground in terms of feed ingredients availability? Are there shortages? “Lysine, valine, and choline are all short, with some mills hand to mouth. [Specialty] additives seem to be ok on the whole, as suppliers have had some stockpiled, although a few additive companies have longer lead times than previously. Mills only seem to have a problem if they haven’t taken this on board. There are people running out for short periods as deliveries are delayed. Some have backup stock of products that they are having to run down, others do not and are having to wait for the delivery.”

What’s being used instead? “With a shortage of amino acids there is an increased use of soya. Not great for our carbon reduction plans, but they are having to be [waved] due to availability and now also cost of the amino acids. We have seen soya short in local markets too, as one of the boats due into Liverpool was delayed. This had a greater impact on smaller businesses compared to the larger feed producers. Sometimes there are alternatives, like using Lysine HCl (bagged) instead of liquid lysine. There can be an increase in cost for this, depending on when the HCl form was purchased and the liquid lysine purchase price. There can also be an added cost to extra hand tipping in the mill for the bagged lysine if the mill is not set up to use Lysine HCl on a carousel for example. Increased soya usage can also have a negative effect on the health of the livestock unless extra enzymes can be used to help negate the ANFs (AntiNutritional-Factors).

As the formulator we try and meet the diet specification as best we can with what is available. It is a last resort to reduce that specification or change the diet to such a degree that performance/health are impacted. We have not reached extreme crisis point where we have had to do that. If lysine [deliveries], for example, continue to be slow, and if the number of livestock slaughtered does not increase, we could have a bigger problem in the next few weeks, especially as slaughterhouses reduce kill over Christmas and new year.”

What does that mean for the sector? “I have never seen anything like this before. The concern over a [potential] shortage of amino acids is huge for all involved. The impact on health, performance, and cash flow [would] be massive for the producer. Who, then, would cover that cost to the producer [from the consequences of a potential shortage, such as] reduced number of eggs per bird, [or] reduced growth rate [causing] livestock to back up on farm at a time when they are already backed up from low kill rate? It is unprecedented and we are all hoping it does not get worse. Most producers in UK and Europe have not made profits in some time. If we see an impact on reduced performance with no compensation, producers will be very much in the red, and making very heavy losses instead of just heavy losses. Unless food prices increase and that increase is passed down to the producers, then our industry will see further shrinkage. We are all trying to promote eating local, buying local, supporting local. Maybe we need investment in more local production of our raw materials, [to counterbalance] a heavy reliance on China. However, it is difficult to see how that can be done, with wages and costs escalating in Europe and China able to control their costs and production. It would be beneficial if people paid more for food and we could see more of that money passed down to producers, as currently (and in recent history) they have been squeezed from both ends—[high costs for inputs and low sale price of the final product]—until there is probably more money being an artic lorry driver than there is in being a farmer!” Shannon Behary, senior editor, Feedinfo

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From grains to diesel to labor, input prices for animal production are pushing steadily upwards. Alarm bells are ringing in several parts of the world that margins for livestock farmers, already razor-thin and too frequently negative, will not be able to handle the blow that will come from the next round of price increases.

INDUSTRY PERSPECTIVES | Sponsored

Adisseo’s next generation phytase offers innovative solutions to livestock sustainability challenges

or more than three decades phytases have played a role in improving nutrient efficiencies and livestock performance. But as animal agriculture faces increasing pressure worldwide to reduce its environmental impact, the industry is leaning more and more on these products as it looks to establish more sustainable production systems.

Adisseo has been a player in the phytase arena for around 25 years with its Rovabio brand which it launched back in 1996. Since then, the French feed additive producer has added to the Rovabio family of products, with the latest addition, Rovabio PhyPlus, making its debut in November 2021 and promising customers quick degradation of phytates, powerful phytic phosphorous extraction and high thermostability. Here, François Pellet, Adisseo’s Executive Director of SBU Specialities, and Jean-François Rous, Executive VP of Innovation, tell Feedinfo about the science behind the new generation product, the efficiencies it can help livestock producers unlock, and how its development translates into a renewed commitment from the company to working with its customers to ensure they are environmentally and financially sustainable for the long term. [Feedinfo] With so many phytase products on the market, how is Adisseo navigating this busy environment to stand out? [Jean-François Rous] The first phytases were introduced in the market around thirty years ago. Several improvements to phytase technology have been made since then, and our focus has been on making improvements in intrinsic thermostability and nutritional value. With the development of our latest product, Rovabio PhyPlus, we have taken a big step forward. It is the first commercial phytase product that can be applied in liquid form directly in the mixer before high temperature pelleting. François Pellet Specialties Executive Director Both thermostability and liquid application in the mixer lead to simplification of daily enzyme usage for our customers by improving flexibility. [Feedinfo] What led to the development of Rovabio PhyPlus, and what have you learnt from other products in the Rovabio range that you were able to apply here?

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[François Pellet] The biggest scientific learning has been that in order to capture the full value of enzymes we should consider the impact of all enzymes together – which we call our Feedase approach – and customise this feedase matrix by using scientific tools, like Near Infra-Red (NIR) analysis which can be used to determine the anti-nutritional content in the feed. Rovabio PhyPlus forms an important pillar in Adisseo’s Feedase programme. With those matrix customisations linked to the usage of selected products from the whole Rovabio range, which now includes PhyPlus, Adisseo continues to support customers in achieving their goals of reducing feed costs. [Jean-François Rous] We have also learned that several of our customers not only need safe and highly effective products, but also tools and expert support to extract the maximum value of feed. Each feed is different, and objectives and constraints for each feed mill are different. Nutritionally, we can help our customers achieve precision feeding and their return on investment (ROI) objectives through proper understanding of the raw material, substrates, the interactions of those substrates with the nutrients, the consequences of the variability of anti-nutritional factors like arabinoxylans and phytic phosphorus, and so on. All of those elements allow us to provide nutritional values not only for phosphorus, but for amino acids and energy, with strong trials supporting the numbers. [Feedinfo] Can you tell us more about the thermostability of Rovabio PhyPlus? How does it perform against other thermostable phytase products? [Jean-François Rous] The thermostability of PhyPlus comes from its intrinsic protein structure. The melting temperature of this phytase protein is 101°C, which is much higher than other phytase products. This high stability in liquid form, in addition to its powder form, presents new possibilities for our customers; for example, spraying liquid PhyPlus directly in the feed mixer before pelleting. This is a game-changer in phytase application. Trials conducted in experimental facilities, as well as at customer level, all concluded that our phytase stands within the best in class for thermostability. In standard conditions, Rovabio PhyPlus maintains a high recovery rate when pelleted at 90°C. [Feedinfo] You claim that Rovabio PhyPlus can achieve complete degradation of phytic acid (IP6) in 30 minutes. Why is this important? [Jean-François Rous] We focused our research for a new

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Sponsored | INDUSTRY PERSPECTIVES phytase on its capacity to not only release phosphorus, but also break down the connections between IP6 and other potentially unavailable nutrients such as amino acids, minerals, trace elements, and improving accessibility to the carbohydrates. IP6 is the IP with the largest negative effect. The speed and comprehensiveness of phytic phosphorus degradation are important qualities for phytase selection. [Feedinfo] You also say the product can extract more than 80% of the phosphorous contained in poultry feed. Can you share more about your findings? [Jean-François Rous] We found that Rovabio PhyPlus increases pre-cecal phosphorus digestibility to over 80%, after 500 FTU/ kg of feed supplementation, making Rovabio PhyPlus one of the most effective phytases on the market. But more than the quantity of phosphorus, what is important to nutritionists is the nutritional value of Rovabio PhyPlus. Along with releasing phosphorus, PhyPlus has an exceptional, positive impact on nutritional digestibility, improving the overall performance in terms of ROI and sustainability. When combined with Rovabio Advance, that performance can be increased further. [Feedinfo] You are promoting Rovabio PhyPlus for use with your PNE® and ADICT platforms to help with environmental and operational sustainability. How do these different products and services fit together? [François Pellet] The objective of our Feedase programme is to help customers improve environmental and operational sustainability and profitability by extracting the maximum value from feed. It consists of a five-step process, beginning with assessing customer objectives, understanding a customer’s situation, offering recommendations, supporting implementation and monitoring the impact. Each step is achieved by not only using products like Rovabio Advance and PhyPlus, but also tools and software, nutritional support, engineering services, analytical services, and so on. For example, PNE is Adisseo’s proprietary ingredient quality

“Today’s global companies have to be leaders in sustainability, and they should be engaging with their stakeholders to help drive environmental improvements.” FRANÇOIS PELLET

analysis service using a Jean-François Rous Executive Vice-President Innovation NIR-based platform. Over the last two decades, we have been constantly improving our calibrations in this science-based software and adding new nutrients and raw materials to keep up with the changing feed market. After the phytic phosphorus calibration launched as part of PNE about five years ago, we added ADICT, a tool helping our customers dynamically transfer their feed quality data from PNE or other sources to their formulation software on a routine basis. Also, as part of our Feedase programme we offer services to enable the proper use of our enzyme products. Whether customers decide to use PhyPlus liquid in the mixer by spraying the liquid enzymes post-pelleting using a PPLA (Post Pelleting Liquid Applicator) system, or use one of the powder formulations, Adisseo’s team of engineering and analytical experts will support them with implementation, regular quality tests and monitoring. [Feedinfo] How have the introduction of the Feedase programme and the launch of Rovabio PhyPlus contributed to Adisseo’s overall sustainability strategy? [François Pellet] Today’s global companies have to be leaders in sustainability, and they should be engaging with their stakeholders to help drive environmental improvements. At Adisseo, we’re raising awareness of the nutritional solutions our products offer, as well as their potential to help reduce climate change, soil acidification and water eutrophication through improving phosphorous and calcium retention. It is important to reduce the footprint of every stage of the chain, which is why Adisseo is mobilising its sales and technical teams to collaborate with customers to help lower their environmental impact. This requires having accurate and relevant figures to establish credibility and integrity, as well as collaborating with new partners who are climate-change experts. For example, new measurement methodologies and recognised standards, such as the strategic use of life cycle assessments, are fully embedded in our Feedase programme. [Feedinfo] What was the thinking behind launching Rovabio PhyPlus in Mexico, India and Pakistan first? When do you expect to have it available in the rest of the world? [François Pellet] As a leader in animal nutrition, Adisseo supports customers all over the world. We are excited to make Rovabio PhyPlus available to all our customers as we receive local regulatory approvals. Published in association with Adisseo

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WINTER 2022 | 17

FEEDINFO SUMMIT are a meat company, embrace a reframing as a “protein company” rather than fighting the emergence of new meat alternatives.

What not to do

How can the meat industry tell its story better?

his October saw the long-awaited return of live conferences for the animal nutrition industry with the Feedinfo Summit in Geneva. The two-day, content-led event kicked off by addressing one of the major strategic threats worrying industry executives: how the meat value chain is perceived, and how to improve that perception. To paraphrase Poran Malani, director of S4Capital: being in the business of feeding the world is a good story, but we are bad at telling it. Fortunately, Mr. Malani, who has worked with large and highly scrutinized industries like big tech and soda, was able to offer concrete suggestions for how we can help improve the reputation of a value chain which is often demonized.

What to do Appealing to the consumer of today requires authentic storytelling, a process which begins with introspection. Malani recommends companies start by asking themselves: “How do you fit in? What is your story?” Second, he is a firm advocate of audience research in order to effectively reach the specific segments whom companies hope to convince. According to his telling, it is remarkable how little we understand about farmers, in terms of the profiling information — education, psychological

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drivers — that is elementary for a successful marketer to design a campaign that will have an impression. “That kind of work hasn’t been done… I’ve gone through reams and reams of information, but very little is known about farmers.” Third, he calls for the creation of an overarching body that can proactively and perpetually advocate for the industry. He wants “not just coordination, but a body with teeth…to put forth the narrative without getting hijacked by one company’s message.” Fourth, and probably the most important, as it recurred throughout the session, is the need for integrity in market communication. Spin is dead, in his view. Don’t be disingenuous. Today’s media-savvy consumers can see right through greenwashing, and find vapid selfpromotion grating. Instead, Malani recommends a focus on provenance — where food came from. For companies which are active across the agricultural supply chains, this is a story that we can tell authentically, down to talking about the very grass a cow was fed on. Finally, Malani encourages everyone to understand what’s a frictional change and what’s a structural change. Frictional changes should not be resisted. If you are a soda company, for example, don’t attack health drinks; learn to live with them. Similarly, if you

The audience of the session was quite concerned with the emergence of rivals such as plant-based protein, and especially about the narrative that these actors are pushing. Malani encourages them to stop treating these companies as the enemy. “Be careful who you give a voice to,” he cautions. The most vehement critics of the industry will never be convinced about the merits of meat, but most of the public is reachable, as long as your message doesn’t turn them off. “Don’t get involved in a shouting match, you’ll just drag yourself down. ” Without saying so directly, he also suggests that the established industry avoid punching down, pointing out that these newcomers are small and looking to make a name for themselves. “[New proteins] need an enemy,” he says. “They gain if you engage. They might have trends on their side, but they don’t have behaviour,” — in other words, while “alternative meats” are in the spotlight at the moment, they don’t have centuries of tradition reinforcing their regular purchase and consumption. Meanwhile, the market is big enough for everyone to share, both now and in the future. “[Alternative proteins] are complementary, they’re different ways of getting protein.” That is to say, they’re not going to replace meat. As he points out, even in traditionally-vegetarian India, meat consumption has grown along with income, because that is simply how this market works, and will continue to work as the developing world enables billions more to become meat consumers. “Nobody promoted meat, it happened naturally… the smell, the texture is different, and people want it. It’s not a conflict [with plant protein]; balance is good.” Want the full experience the next time around? To register your interest and keep up to date with the 2022 Feedinfo Summit, click here.

“Don’t get involved in a shouting match, you’ll just drag yourself down.”

PORAN MALANI www.feedinfo.com

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ANALYST’S CORNER

Supply chain issues and COVID-19 variants remain key demand drivers for Americas’ feed additive sectors

orth American demand for most feed ingredients increased during 2021 over 2020 levels, according to many buyers and sellers polled by Feedinfo. However, the outlook for 2022 was uncertain as the latest COVID-19 variant was spreading rapidly in the final weeks of 2021. Increasing COVID-19 vaccination coverage and rising economic activity drove recovery through the end of 2021. In addition, restaurant re-openings helped immensely in the consumption of meat and cheese. On the other hand, rising raw material prices continue to have an impact on farmers’ margins and, as a result, the amount of industrial feed used by livestock. In December, there were still many uncertainties concerning how demand would develop, given the persistence of the pandemic, a weakened global economic outlook for 2022, and continuing supply chain challenges. Rates for shipping containers from East Asia to the Americas remained elevated at the time of writing in late December; although largely stable, some market participants said they saw increases as they scheduled Q1 2022 shipments. The main drivers of the elevated rates continue to be high consumer demand and congestion at US ports. Resellers expressed concerns about the availability of crucial amino acids and vitamins during Q1. They expected firm prices to persist due to delays in the delivery of material from China, in addition to other ongoing supply issues. They explained that the unloading of ships is taking longer than expected, and many customers have been confronted with problems amid their need to secure early Q1 deliveries. In addition, Chinese

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manufacturers have expressed that there could be production restrictions and raw material shortages from January to mid-March due to the Beijing Winter Olympics. Typically, the Americas market looks at Q2 as the beginning of the lower-priced part of the calendar year. However, purchasing managers said they were concerned that the shipping situation might keep prices stable to firm longer than expected. “I think we have customers with that mindset, but how can freight go down automatically in Q2? Will ocean carriers develop so much capacity that they have to lower prices? We can’t see them giving up these record profit rates. So, the shipping situation would more than likely keep the prices stable.” The ongoing high costs and delays in shipping prompted many buyers in the Americas region to change their buying habits during 2021, a trend that looks likely to continue in the near term, according to buyers across the industry. “We are experiencing allocations, shortages, and price increases in everything, so I think buyers are asking how long can I get to protect our business going forward,” a US spot buyer said in December. Indeed, the supply chain crisis, which began in 2020, has caused widespread change in buying patterns. This became evident in the Americas market during Q2 2021. A global vitamins supplier announced an increase on vitamin E during the spring of 2021 but reportedly told customers they could buy long before the increase went into effect. Aware that supply chains were not improving, buyers moved to purchase for six months instead of three if they had the means to do so. For years, buyers from several industries have focused on just-in-time procurement, which optimises for lower costs. Now, buyers have had no choice but to shift to just-in-case purchasing. The focus now is on maintaining enough stock to supply customers through volatile times. This is easier for some players to do than others. Some have storage space, and some do not. Some have the credit, and some do not. This purchasing behaviour change forces buyers to sign more extended contracts, place more oversized orders, and buy spot at unpredictable prices. So, until the supply chain adjusts to this move

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Methionine Buyers remain concerned about the methionine supply/demand balance in the US. “I think the USA is in a supply/demand challenge still as we only have one Western DLM and one HMB producer, and Chinese/Spain product is still slow to enter at cost plus tariff,” a US buyer said in December. “I think the large integrators are realizing this as they walk into annual negotiations and maybe getting sticker shock.” The buyer added that methionine supply/demand was relatively balanced for the time of year due to a mild hurricane season, and that had prompted some lower spot offers for end-of-year trading. “We’ve been blessed with not having any large weather events this fall to upset the balance of supply/demand any further than what the fallout has been with the anti-dumping case,” the buyer said. “I think in general buyers have added to their long positions to keep the product around them whenever possible. The just-in-time inventory method is dead.” Some North American sellers said that methionine demand in 2021 has been steady with 2020 levels. US producer Novus suspended operations in mid-February because of power outages and supply chain constraints that impacted the US Gulf Coast following winter storms. Damage was found at the facility, extending the downtime to mid-March. This exacerbated the supply shortage in the US caused by the ongoing anti-dumping investigation and worsening freight congestion on the transpacific route. As a result, Chinese manufacturers returned to the US market in early March for the first time after exiting in 2018.

Lysine Prices for critical amino acids such as lysine HCl reached historical highs during Q4 2021, prompting many farmers to reduce lysine inclusion rates and use more soybean meal in diets. The same trend was seen with urea. By December, spot prices for prompt lysine HCl were still quoted around $5/kg in some cases. According to buyers, some quotes for late Q1 were lower, but the volume of material available at those levels was insufficient. Some sellers and buyers estimated a 10-15% decline in dry lysine and a 15% increase in liquid lysine consumption in 2021 in North America. These estimates include the US, Canada, and Mexico.

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The main reason for the change was availability. Domestic producer ADM exited the dry lysine HCl market in the second half of the year and switched to liquid lysine. Chinese-brand dry lysine imports were not enough to cover the gap.

Vitamin A The US imported more vitamin A during 2021 despite all the logistical problems, primarily due to premixers choosing to take larger positions and trying to maintain more physical vitamin A inventory than they usually would. Some buyers were caught in an emergency supply situation during Q1 in which some vitamin A was transported to the US by air freight at very high costs. “By late 2020, it would’ve become obvious to all major US blenders that their primary vitamin A vendors were all unable to maintain normal US vitamin A inventory and were now operating at the mercy of the shipping lines,” a vitamin reseller said. “As this new reality dawned on US blenders, they all changed their buying behavior and purchasing strategies. The ‘just-in-time’ inventory management philosophy of major US corporations works well when global logistics is operating normally and supply chains are flowing. COVID blew up that world.” Another background factor was a delay in BASF restoring supply of its ethoxyquin-free vitamin A 1000 product. BASF attempted throughout 2021 to resolve quality issues and re-establish itself as a core vitamin A vendor to the North American market. But as successive delays were announced in making this product available, US blenders were more comfortable taking larger forward vitamin A positions. “The blenders didn’t need to fear BASF quickly coming back into the North American vitamin A market, perhaps dumping below-market priced vitamin A to expedite this process, and thus destroying the blenders’ vitamin A positions,” the reseller said. On 17 November, BASF Animal Nutrition said it planned to start offering feed-grade vitamin A 1000 in a “stepwise approach” by early Q1 2022. Heather McGuire Doyle, Senior analyst, Americas, Feedinfo

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toward just-in-case procurement, many buyers have said they expect to continue to see price volatility across all products in feed formulas.

SUPPLY CHAIN WEBINAR

In case you missed it

Is the worst over? Dissecting 2021 supply chain crisis impacts

“Shipping has gone from one of those costs you don’t really think about…to almost as valuable, if not in some instances more valuable, than the commodity itself that’s moving.”

hat statement from S&P Global Platts Freight Editor George Griffiths helps explain why professionals from across the animal agriculture value chain, from grains to feed additives to meat, tuned in to an AgriBriefing webinar in early December to discuss the disruption being experienced across different agricultural commodity markets. The roots of this extraordinary situation go back to early 2020, as Griffiths recounted. Even before COVID-19 reared its head, there were already changes ahead for the shipping sector, with new regulations on

22 | WINTER 2022

sulphur emissions set to impose speed limits and capital investments on the sector, so the world was already seeing higher shipping rates. Then came the pandemic. Whether because of strict lockdowns making it literally difficult for staff to come to work and for goods to be produced and exported, or because of companies involved in port operations or other logistics activities letting go of staff amid uncertainty about the future, the sector lost qualified personnel. And then, lockdowns eased, and a torrent of bottled-up demand hit global supply chains which were unprepared to meet it. In Griffiths’ words, “it was almost the perfect storm—there was a lot of demand and not a lot of staffing”. The chokepoint proved to be containers, which were now taking longer to remove from ships and out of ports into inland destinations. “And what we ended up with was a real shortage of containers in the market.” Shipping prices, therefore, went through the roof; Griffiths said AsiaEurope prices pre-pandemic were between $1500 and $2000, but

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SUPPLY CHAIN WEBINAR

peaked at $18,000 from Asia to UK and $25,000 to the US. This has driven demand towards other shipping formats, including dry bulk. Beyond raising rates, another consequence has been shippers choosing to prioritize cargo that was easier to handle based on the existing infrastructure, even if the price was not meaningfully different. Griffiths gives the example of sugar coming into a port with a Tate & Lyle terminal upstream; a ship loaded with sugar can simply sail up, empty out, and turn around, operational once more, without the queues imposed by a lack of crane operators or truck drivers.

What’s ahead As Agrimoney Editor in Chief Mike Verdin noted, by October of this year, indexes tracking shipping rates, such as the Baltic Dry, appeared to have peaked. Pressed for an explanation, Griffiths said they had finally reached unsustainable levels. “In terms of fundamentals there’s not that much that changed, there was no market-shifting news… there actually wasn’t that much demand going on at that point, and a whole lot of these ships that had been tied up on these long voyages were suddenly coming back into the market.” To illustrate the impact, he claimed that dry bulk rates have almost halved in some instances compared to where they were at just in October. Still, the pandemic which is at the root of the disruption is not over, and developments such as the recently-detected Omicron variant of SARS-CoV-2 could still prove to be a “black swan” event. At the time of the webinar, it was still unclear whether Omicron would prove to be even more infectious than the currently dominant variants, or might even

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“it was almost the perfect storm—there was a lot of demand and not a lot of staffing”. GEORGE GRIFFITHS

prove to have immune-evading mutations which might make vaccinations less effective. Asked whether shipping had been affected by the news of Omicron’s emergence, Griffiths was unequivocal: the impacts were immediate, especially the new restrictions by governments. “People are running scared,” he said. “We’ve seen commodity and financial markets already take a bit of a tumble over the uncertainty that this has [brought] in.” Shipping rates, somewhat counterintuitively, have gone up, thanks to frontloading of orders. “We’ve seen a tick up in containers and dry bulk and

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SUPPLY CHAIN WEBINAR anything that moves across the ocean... everyone’s trying to move goods before we go into a full lockdown,” he explained. However, setting aside the effects of a black-swan event like a worsening of the pandemic, Griffiths seemed to indicate that the craziness of 2021 might be in a position to ease somewhat. In dry bulk, he pointed to the possibility of a little more supply coming in, with new ships entering into service. Meanwhile, on the demand side of the equation, the big peak that came from companies trying to play catch-up might be behind us. “People have covered a lot of what they lost in 2020…we’re back down to around 2019 levels, people have rebalanced their markets, people have rebalanced their stores... short term, a little bit of uptick -- we’re still uncertain over how this new variant is going to impact us; but slightly longer term, it should be, I don’t want to say smoother sailing, but at least heading back towards something [usual].” Still, he warned that high freight rates are likely to be somewhat sticky, with shipping companies loathe to lose the huge profits they have been realizing during this unprecedented time. “You’re not going to see [freight prices] falling off a cliff,” he said.

Beyond the container crisis It is certainly true that these unprecedented freight prices, and in some cases the lack of availability of any shipping capacity whatsoever, has affected every part of the agricultural sector. After all, everybody has goods to move around. However, as pointed out by Hélène Duflot, grain market analyst from Feedinfo sister brand Tallage – Stratégie Grains (a service providing analysis and market forecasts for agricultural commodities), the freight situation is not always the most significant factor when it comes to prices of different agricultural goods. “The increases in grain prices are even more important than the increase in freight costs,” she said. This is because at a global level, harvests were very bad this year: “disastrous” in Canada and the US, and coming in lower than expected and with bad quality in Western EU and Russia. In response, she said, we are seeing some importers lower their standards, for example by allowing increased rates of pest damage, to have more choice and hopefully lower prices. Meanwhile, while the northern hemisphere lacks supply, some are turning to the southern hemisphere. According to her, the FOB price difference between Argentinian and European wheat means that, even in a time of historically high freight rates, it is cheaper for North Africans to import from Argentina rather than their northern neighbours. “In the grain markets, shipping is important but it’s not the biggest element this year, because there are fundamental elements which lead to this increase in grain prices,” she concluded. On the other hand, the importance of shipping is quite different for agricultural inputs that are only made in a select few places, such as amino acids or vitamins. As recounted by Heather McGuire Doyle, Feedinfo senior analyst, the US spot price for lysine is now so high that it is above the shadow price. This is the theoretical maximum price that buyers will pay before it becomes more economical to reformulate and use soy-based ingredients rather than synthetic amino acids. “That’s had a knock-on effect; as lysine is taken out of diets, more soybean meal is needed, so then we saw this surge in soybean meal because of the higher demand.” Again, though, the shipping situation was only one of several factors contributing to the upheaval in this supply chain. There were also production and delivery issues at manufacturers around the world, including the disruption caused by the interruptions in Chinese power generation (China being a major exporter of both vitamins and amino

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acids). Another factor causing headaches for many: a domestic producer of dry lysine decided to switch over to liquid lysine in recent years, making it even more complicated for producers who did not have the means to adapt their facilities to this new format and who cannot secure needed volumes of the old format. Finally, there were the freak events, such as a hurricane in the US which destroyed a shipment of imported amino acids a few months back, causing a force majeure declaration in October. “That came right after all the power issues in China, so it was impossible to get material in to replace it right away. So, fourth quarter was just extremely tight, especially for that product.” Will that craziness continue? Doyle said that the biggest concern is not having supply until after the Winter Olympics in China (an event expected to be accompanied by pollution controls which slow down production and exports). According to her, for additives with no US production at all, such as vitamins, we have seen a lot of long buying throughout the year, particularly in spring, and there is consequently less buying happening now. “But now as there’s concern about… nothing [being] available in that first quarter, now people are starting to buy again, and then the COVID variant has made people even more concerned.” Even further down the supply chain, meat production is grappling with its own supply-chain woes. Gary Morrison, market reporter/analyst for boxed beef and beef variety at Urner Barry (a Feedinfo sister brand focused on pricing and analysis for proteins), pointed out that the container issue in sea freight was really only half of the story of 2021’s shipping crisis. What the US meat sector is feeling most keenly is the trucking shortage. As he said, the last two years has piled new problems onto a trucking industry which had already been in decline and struggling to recruit workers: mandates related to the pandemic meant there were cities where certain truckers were less willing to go, and now California — the landing site for most trans-Pacific imports — is imposing new and cumbersome regulatory burdens on the sector. Consequently, the industry is navigating not just a high price environment, but also one where there isn’t enough supply (in terms of shipping space) to go around. “Whenever you can get on the truck, when you get a delivery date, you take it,” he said. “Product availability is top of mind, and pricing is almost secondary. ‘Can I get my product when I need it, I don’t really care about the price.’” The sentiment is echoed by other panelists in the webinar; moreover, as George Griffiths points out later, at a global level capacity has been taken off of the more niche routes to service the backlog in mainstream routes, a phenomenon which has affected places like Africa. Back in the US, the other main issue is labour. When the packing plants went down in the worst days of the pandemic, this caused a “significant supply shock across all proteins.” However, at the same time that supply went down, demand swung in the other direction. The inevitable conclusion: “You saw prices spike across the board.” More recently, wages have also been surging upward. Today, he said, “food price inflation is really one of the top stories here at this time.” Although we now have more sophisticated tools than closing meat plants to keep the coronavirus in check, Morrison does not believe there will be a price correction for meat. “There seems to be a structural shift here…I don’t think some of the things causing price increases are going away. Wage and energy increases are huge contributors to prices.” At the same time, as he points out, even with processing now operating at full tilt, demand is higher than ever. “People still have money in their pocket and are buying protein at high rates, even at elevated prices.” Shannon Behary, senior editor, Feedinfo

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INDUSTRY PERSPECTIVES | Sponsored

Cargill’s Galleon decodes flock gut microbiome to help broiler producers improve bird & farm performance

he importance of the gut microbiome in creating optimal bird health, wellbeing and performance has become a well-established concept in poultry nutrition and agriculture. While this has resulted in a myriad of gut health solutions for producers to consider, the microbiome is a very complex system, and deciphering it can help identify where these solutions can be applied to boost bird and farm performance. A more complete picture of the microbiome can enable producers to pinpoint the various internal and external factors that can upset and throw the microbiome system off, which can be valuable information to have when making decisions on how to improve farm operations. Thousands of organisms make up the microbiome in just a single bird, with each organism and their combinations causing different outcomes. Interpreting this data and converting it into actionable insights across flocks can be overwhelming and costly. This is where Cargill sees its microbiome intelligence tool, Galleon™, making a difference. The analysis tool is currently used for broiler producers. Using artificial intelligence (AI) and statistical tools combined with Cargill’s extensive expertise, Galleon provides insights into the flock’s microbiome status. Cargill’s technical experts can then suggest interventions to optimise operations. Feedinfo sat down with Dr. Jean De Oliveira, Cargill Animal Science Research Manager, to find out more about how Galleon works. [Feedinfo] In your opinion, how aware are broiler producers about gut health and its impact on flock performance? [Dr. Jean De Oliveira] The vast majority of broiler producers are knowledgeable and recognise the impact of gut health on their flocks. They regularly attempt interventions for flock wellbeing based on intuition or anecdotal evidence. The biggest challenge lies in the complexity of being able to create a link between microbiome composition, performance, and actions that can be implemented for improvement. This is mostly due to customers’ unfamiliarity of the microbiome, and trying to understand this relationship without expert help can be expensive and time consuming. With insights into the gut microbiome, we believe producers have an opportunity to enhance their perception even more by understanding the microbiome’s connection to performance. This can be achieved through recommendations from experts in the industry who have access to data, experience, and expertise that can be used to provide actionable insights to improve their farm management practices, and support flock health and performance.

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[Feedinfo] What are some of the main industry concerns that an improved understanding of the gut microbiome can help broiler producers address? [Dr. Jean De Oliveira] The gut microbiome is intimately connected to the health and performance of the bird. Tracking the health of the gut microbiome then becomes a key step that producers can take to improve the performance of their flock. A few common examples we have seen in which microbiome analyses have provided insights leading to improved performance in the industry include: • Being able to pinpoint the reason why different farms Dr. Jean De Oliveira that have the same inputs — feed management, antibiotic regimens, etc. — have different performance results • Having access to insights and solutions to manage inexplicable disease episodes in flocks • Being able to maintain a healthy flock and potentially limiting the use of antibiotics • Having the capability to improve the performance of the flock for economic benefit, by means including but not limited to: switching feed, using additives, or improving management practices. These examples are shared by integrators, feed producers, etc., who are also seeking solutions to some of the same problems. [Feedinfo] So how can Cargill’s Galleon broiler microbiome tool help address these concerns? What are some of the benefits of improved gut health it can help unlock for broiler farmers? [Dr. Jean De Oliveira] Galleon is an innovative, patent-pending microbiome assessment tool designed for commercial routine use. It combines powerful statistics with AI modelling based on an extensive databank of samples analysed over 10 years which continues to grow every day. This AI makes it possible to understand the complex relationships between microbiome composition and performance, simplifying the process of evaluating the health of the microbiome for the customer. Galleon microbiome analysis can be used to monitor the effects of

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Sponsored | INDUSTRY PERSPECTIVES changes in raw materials, diet, feed additives, vaccine programs, farm management practices, or other activities and interventions that influence the microbiome. The insights customers receive through the analysis allow them to move from anecdotal decision making to knowledge-based decision making — it moves them from being reactive to being proactive. Galleon helps farmers understand why things are happening on their farms so they can act based on the data they receive. Producers can take nutritional knowledge to the next level to overcome challenges. Galleon is a real tool that can help not only identify problems, but also potentially help solve problems. [Feedinfo] Let’s talk a bit more about the nuts and bolts of Galleon. What exactly does the process entail and how long will it take to deliver insights for practical application?

[Feedinfo] You’ve already mentioned the AI model of the service. But exactly how does it generate insights on microbiome management? [Dr. Jean De Oliveira] We know that extracting insights from microbiome data can be challenging, and even overwhelming. Galleon’s proprietary AI engine explores non-linear relationships in each dataset to complement statistical analysis, which is powered by high biological and technical replication, to connect the “microbiome dots.” The analysis makes it possible to detect differences between conditions and circumstances experienced on-farm. These valuable insights can help Galleon customers understand the impact of those conditions and circumstances on their flocks’ health and performance. [Feedinfo] How long has this service been in the works at Cargill? [Dr. Jean De Oliveira] Cargill began development of what would become Galleon in 2009. Initially the service was only available internally and was used in the development of quality animal feed. In 2016, Cargill made the information contained in the database available to customers to support on-farm performance improvement. In 2020, the service officially launched as Galleon and has been offered as part of a “soft” launch in Latin America, Southeast Asia, South Africa, and Europe. [Feedinfo] Based on what you’ve learned from these soft launches, what are some of the future developments you are planning for Galleon?

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“The gut microbiome is intimately connected to the health and performance of the bird.” DR. JEAN DE OLIVEIRA [Dr. Jean De Oliveira] As Galleon matures out of the soft launch phase, Cargill is actively investigating the possibility of broadening the scope of microbiome analyses beyond broilers into other poultry, like laying hens and breeders. Additionally, in the interest of further understanding the microbiome, Cargill is adding more biomarkers to the existing long list Galleon already looks at. From an operational standpoint, our goal remains to create value and build confidence in our technology and expertise. We’ll do this by continually improving what we provide users of the Galleon service in terms of turnaround times, as well as providing additional actionable insights that help Galleon customers improve farm management practices, while supporting flock health and performance improvement. Visit www.Cargill.com/Galleon for more information. Published in association with Cargill

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[Dr. Jean De Oliveira] Customers first get in touch with a Cargill representative. Through an interactive process, Cargill experts will work with the customers to understand their concerns, and then recommend a trial to assess the microbiome health of the customers’ flocks. Cargill then ships sample collection materials, instructions, and a return box to the customer. Samples are taken, often at set time intervals (for example 7 days, 21 days, etc.) using simple, non-invasive cloacal swab-sampling of live birds. The customer will then need to ship these samples to the laboratory designated by Cargill for analysis. Once samples are analysed, the customer receives a detailed report that includes a summary specific to their farm. This typically includes an analysis of sites sampled, the microbiome biomarker composition of sampled flocks, overall health assessment, pathogen identification, and insights that can be turned into practical applications on-farm, which Cargill’s technical experts will help the customer understand. From sample collection to meeting with a Cargill technical expert to review results and discuss improvement opportunities, turnaround time is approximately 30 days.

INTERVIEW On the minds of feed formulators

Separate headaches over domestic and imported feed ingredients in US

n a period beset by supply chain interruptions, Dr. Kyle Coble, director of nutritional services at JBS USA, is congratulatory when it comes to the industry’s ability to adapt to the unprecedented supply chain situations that are defining this year. “I think the [premix] manufacturers and the blenders of the US have played in this market long enough to know what needs to get done… being prepared is a selling point, right? If they’re prepared, and you know that you can get those ingredients confirmed, not just procured but also confirmed for delivery, they’re going to be somebody you want to work with…all the way through the pandemic, they’ve been able to deliver to the US swine industry continuously. I think they’re prepared.” However, as he acknowledges, this is a somewhat unusual environment just because of how widespread the disruption is. “We’ve seen this before on an ingredient-by-ingredient basis, not across all ingredients…the number of ingredients that are impacted, I would say, is unprecedented.” In a discussion about the consequences of this environment for feed formulation early in Q4, he identifies a few pressure points where the changing dynamics in feed ingredients markets may have consequences.

Holding times on imported ingredients When it comes to securing supplies of imported ingredients like vitamins in a tight market environment, advance preparation is everything. “It seems that toll mills that are watching the market and have planned for that have done a much better job of being prepared for this lysine shortage that we are seeing in the market, versus some of the mills that might not have planned,” says Coble. Fortunately, at the level of feed additives importers, advance planning had already been forced onto the system a couple of years prior, when research began showing that foreign animal viruses could potentially survive transoceanic shipment in feed ingredients, and the swine industry got serious about the danger of inadvertently importing these diseases.

“... we should plan now so that we don’t have to skimp on biosecurity measures in the future for inbound ingredients into this country …” DR. KYLE COBLE 28 | WINTER 2022

“Two or three years ago we started implementing multiple biosecurity measures, due to African swine fever [in East Asia] that really forced us to have holding times, and ingredients [had to] be procured much further in advance. “When we put those stipulations as an industry in place, those blenders were not prepared for that [at the time]. Now they are. It's almost second nature that ingredients have to be in the country at a certain temperature for a certain duration… whether it's [holding times of] 30 days, 60 days, 90 days, their pipeline is now much fuller than it used to be.” Coble is adamant that the industry must not cut corners on those important holding times, even if supply becomes even shorter. Observing that holding times are not mandated by law, but have simply been adopted voluntarily as best practice, he adds: “I just want to stress to my [industry] colleagues that we should plan now so that we don’t have to skimp on biosecurity measures in the future for inbound ingredients into this country … it’s very easy to get into a panic mode and scramble and make decisions that you might not always make.” Instead of hastily jumping on material that has been insufficiently quarantined, he encourages buyers, nutritionists, and others to “slow down and think about it… don’t underestimate the value of a good plan.”

Amino acids woes The complications in international shipping and overseas production also come amid a changing landscape for amino acids production. With key domestic manufacturers having strongly pushed a switch to liquid lysine, “dry lysine is somewhat nonexistent on the market today, and if you have not prepared for that shift in product type, it’s going to be very, very challenging for you to be flexible in procuring those ingredients,” says Coble. He warns that the consequences of that move might be to make the US less independent in meeting its own needs. “We’ve had a lot of internal suppliers quit making dry lysine. I hope they think about that. We’ve moved a lot of [demand] to either liquid or export supply. Don’t underestimate the value of a domestically produced product.” Of course, regardless of origin or form, the prices in the amino acids market are driving many to reconsider their feed formulations. However, according to Coble, the use of greater amounts of soy is not necessarily a bad thing when it comes to the state of the animal or the efficiency of the feed. “We could actually see better performance with some of these rations that we’re feeding. There's a lot of amino acids that we don’t necessarily measure, these non-essential amino acids, that are going to ©Loopy Mouse / Shutterstock.com

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INTERVIEW

“... if a [trucker] is out sick, that really throws a wrench in.” DR. KYLE COBLE be coming into these diets. The amino acid profile of soybean meal is very, very good.” Still, the switch to more soy-heavy diets will impact the use of other ingredients. “It’s going to compete a little bit more with distillers’ [grains]; you will typically see distillers’ start to come out of the ration as more soybean meal comes in, and it’s going to be harder for a lot of those byproduct ingredients to come into the ration,” he asserts. Meanwhile, the indexing of other crystalline amino acid use to that of lysine means that when prices for this product are high, the others suffer. “When we start to cut lysine, these other amino acids are going to come out. You’re going to have less synthetic valine, less synthetic isoleucine for sure, and less synthetic tryptophan.”

The value of a truck driver JBS’s size and resources perhaps contribute to its ability to plan far in advance when it comes to securing imported ingredients. In Coble’s words, “When it comes to [products that are not domestically produced], imports that we’re getting from across the borders, that definitely seems to be harder for our toll mills that have a little more control of their own internal procurement versus [those dependent on] the procurement that we do in-house, where we’re purchasing our own amino acids.” However, in other ways, they are definitely feeling the same pressures as

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the rest of the market. One of the most significant is the trucking situation, which makes domestic delivery unreliable. “It’s very hard to find trucking availability. [The question is] not necessarily just ‘can [they] get under the load’, but ‘can [they] get underneath the load and deliver it on time?’” Coble points out. “In general, very few mills have an abundance of storage, where you have four- and five-day storage for all ingredients. There might be some ingredients that could only have 18 hours of storage, given current use. So when you're under those types of constraints… if a [trucker] is out sick, that really throws a wrench in. If you take an ingredient like soybean meal [as an example], it’s really hard to even formulate a diet if you don’t have it… that just [starts] a ripple effect, the mill goes down for a few hours, and if you’re in the fall season…in that prime growing season, that, at times, can lead the system to really ride the line in terms of making sure feed gets to the pig before they need it. And the paradigm can shift from a ‘deliver before’ to ‘deliver just in time’ in terms of on-farm storage.” According to Coble, the situation has really underlined just how essential the shipping industry and its workers truly are — and how prioritizing cheap solutions and cost-cutting can backfire when things get difficult. “Don’t underestimate the value of a truck driver!” he pleads. “A supply chain that you can depend on is really invaluable…that labor pool is beyond important.” Shannon Behary, senior editor, Feedinfo

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SENIOR LEADERS 2022 OUTLOOK

digitalization:

Where we’re at and where we’re going

igitalization is widely seen a key component of the future of agriculture, including animal agriculture. In a series of endof-year interviews carried out with feed industry executives, Feedinfo asked how different companies thought about digital transformation in 2021 and how they see the road ahead.

WHERE WE’RE AT “We’ve seen a digital wave building for several years within the animal nutrition sector, and the pandemic really seems to have amplified and accelerated it.” — Lisa Deverell, President, Purina Animal Nutrition “Data science, data management, and artificial intelligence (AI) are still in their infancy and our industry is not particularly advanced in these areas. At the same time lots of new applications and technologies in development are very promising.” — Jean-Marc Dublanc, CEO, Adisseo “We have seen some digital development at farm level already. For instance, dairy farms in the Netherlands can run a fully automated process where extensive data is collected for each animal and direct data connection with their dairy companies. This development will continue.” — Aart Mateboer, EVP Animal Nutrition, Perstorp “…Many forms of data science and analytics are currently too focused on the far future and overlook the gold that is lying in front of us. Descriptive analytics may not sound fancy, but we can learn much from them to help us step up in diagnostics, predictive or even prescriptive analytics. We aim to share and commercialise data for better decision-making at customer level.” — Saskia Korink, CEO, Trouw Nutrition

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HURDLES TO OVERCOME “Combining information from various data sources is still a struggle. It requires critical mass of data. Within north-western Europe we see more and more large agricultural players, as well as new entrants, creating platforms to share and collect data.” — Yoram Knoop, CEO, ForFarmers “Connectivity is the new electricity, and COVID-19 exposed serious fissures. There is much more work to be done, especially globally. Reliable internet access for all is fundamental to future advancement in digitalization on the farm and in the field.” — Mark Lyons, President & CEO, Alltech “The main blocking point for wide adoption [of transformative tech] is not necessarily the technology but rather the business model and the value

sharing between the different contributors.

Will we see the development of platforms in our industry like in the mobile phone or the media industry? Maybe… but we are still far from it.” — Jean-Marc Dublanc, CEO, Adisseo

COLLABORATION WITH OTHERS “Success has one condition: look beyond the direct customer to find new customer value spaces. This introduces the need to partner with customers more than just through products, and to look for data-driven partnerships upstream/downstream within the value chain. The so-called ‘ecosystem partnerships’ and ‘digital platform collaboration’ are the keys to success.” — Stefaan Van Dyck, President EMENA, Kemin Animal Nutrition and Health

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SENIOR LEADERS 2022 OUTLOOK

“Tech providers from industries outside of our own will definitely help us make this step up: we need to embrace this kind of collaboration, bring the best of both worlds together and start building integrated solutions. There is value in combining innovative technology from young technology startup companies with the scale and expertise of larger corporations. This is something I also expect to see more of in 2022.” — Saskia Korink, CEO, Trouw Nutrition “[Those outside the sector] have technical expertise but lack a connection to the farm, and, therefore, their solutions often have fatal flaws. We need to do a better job of linking these innovators or ‘outside sparks’ to the farm, creating cross-functional teams who can deliver effective solutions.” — Mark Lyons, President & CEO, Alltech “We think that we’re in the very first innings of what precision feeding, nutrition, and treatment will become; all of which requires improved software, wearable technologies and data scientists teaming with nutritionists and researchers in different ways. These advancements will shorten the innovation cycle.” — Lisa Deverell, President, Purina Animal Nutrition

PRACTICAL APPLICATIONS OF TECH “There’s no doubt that data-based decision making is going to drive productivity in our industry just as we’ve seen happen in the human healthcare and technology industries.” — Dan Meagher, President and CEO, Novus International “Using AI as a widespread predictor for animal illness, for example, will enable us to offer preventative solutions to help maximise efficiency as well as animal welfare,” — Pauel Fokin, Vice President, Danisco Animal Nutrition

“We strongly believe in data science and trust this will pave the way for the next level of customer engagement. CJ Bio’s ultimate goal is to provide real-time information on nutritional value for our customers to decide on purchasing major feed materials in a

timely and economical way.”

— So Young Kim, Head of Animal Nutrition Business Division, CJ CheilJedang

“On the commercial front,

we’re seeing significantly more transactions and interactions occur on digital platforms. Customers and suppliers want to be able to connect with us efficiently and easily at any time, in any location, on any device. Digitalization is driving that increased convenience and flexibility, both of which will be in even higher demand going forward. All of that data is critical to real-time decision making, especially with massive and unpredictable supply chain disruptions.” — Lisa Deverell, President, Purina Animal Nutrition “From selecting feed ingredients and suppliers, to designing and formulating diets, to managing feed mills and feed inventory, technology can make delivery of animal feed and nutrition more effective and efficient. Putting this data and technology in the hands of producers enables faster, more informed decisions to improve their productivity, animal well-being and sustainability.” — Ruth Kimmelshue, Sr. Vice President, Cargill Animal Nutrition & Health

“We see a strong and growing demand for actionable insights on raw materials composition – as this drives our customers’ formulation and feeding strategies. However, this can’t be looked at in isolation, as many more factors influence our customers’ strategies, such as pricing, weather information and on-farm data. Connecting the dots will be key going forward and will require businesses to collaborate and co-create.” — Saskia Korink, CEO, Trouw Nutrition

that I do not see a lot of movement on yet would be the feed and feed additive supply chain. There is very little data integration in “A digitalization opportunity

that part of the value chain, clearly an opportunity for the future where we can save cost, increase efficiency and reduce waste for all parties involved. Vendor managed inventory is a digitalization-driven principle that we see being applied in other industries but not as much in animal nutrition yet.” — Aart Mateboer, EVP Animal Nutrition Perstorp

“The feed industry can use advanced digital solutions to access and apply standard measures for analysis that impact our entire sector.” — Pierre-Joseph Paoli, President of Additives, Ingredients and Amino Acids, ADM Animal Nutrition

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WINTER 2022 | 31

SENIOR LEADERS 2022 OUTLOOK

Mitigating supply chain risks

n 2021, an accumulation of different problems combined to cause huge unpredictability in global supply chains. Globally, all industries were forced to grapple with high freight costs, long lead times, and shipping space that was often cancelled at the last minute or altogether unavailable. Specific products or sectors were also affected by more local problems such as labour shortages or high raw materials prices. Greater details on the causes and consequences of this supply chain disruption can be found elsewhere in this magazine [see pg. 22 – 24, for example]. However, what can be done at an individual company level, or collectively with others, to build greater resilience? Industry leaders weigh in:

AN END TO JUST-IN-TIME SUPPLY? “There are certainly supply chain practices that can be improved to secure supply. In most cases they are related to [a balance to be struck] between

securing a regular flow of supply versus keeping the freedom to shift from one supplier to

the other.”

— Jean-Marc Dublanc, CEO, Adisseo “What recent events have shown us is that supply chain risks are real, and you simply can’t make several months’

worth of inventory materialise overnight. As an industry, we need to rethink our stock-keeping strategies to ensure our supply chains are more robust. This is going to mean

moving away from just-in-time models,

which were not designed to handle the type of disruption we’ve seen recently, to a policy of holding more inventory throughout the value chain.” — Pauel Fokin, Vice President, Danisco Animal Nutrition

“However, I would like to bring an additional perspective on a few points. Animal nutrition is a relatively continuous business and feed manufacturers are usually relatively good in estimating how much raw materials they need to keep their production going. The manufacturers of feed additives are also familiar with their production capacities and, for reasons of economy,

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strive to ensure that their systems are fully utilised. Maintaining large stocks costs money and, in addition, the decreasing shelf life of

the products in storage must be taken into account. Therefore, there are limits to the options for action.” — Daniela Calleri, Vice President Business Management, BASF Animal Nutrition

ESSENTIAL FORECASTING REQUIRES CONFIDENCE IN PARTNERS “The critical points of a successful supply chain are data transparency and collaboration between all players. It starts from the point of customer demand with a collaborative and open sharing of information and forecasts between customers and suppliers. And it follows with all actors across the supply chain transparently sharing needs, data, and stock levels, so we can work together to meet these needs (for example, by booking freight, plant capacity and raw materials). This transparency will allow us to prepare our best options, take the best decisions to minimise any bottlenecks or limiting factors, and get the best outcome and benefits for all actors in the chain – first and foremost, our long-term and strategic customers and suppliers.” — Saskia Korink, CEO, Trouw Nutrition “The last two years have taught us that, as much as we’d like to be able to see around corners and anticipate demand, demand forecasting is very challenging to do during unprecedented times. Customers all around the world can rely on Alltech to service their businesses and we have increased safety stocks in each country as part of keeping this promise. For the ingredient supplies that we rely on, our focus has been on investing in relationships with key suppliers and providing the best forecast possible. As a large buyer, we believe that it

is our responsibility to help our suppliers be successful in planning their shipments to us.” — Mark Lyons, President & CEO, Alltech

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SENIOR LEADERS 2022 OUTLOOK “Over the past 20 months, we’ve all seen some pretty erratic behaviour, oftentimes driven by rumours of product shortages. We’ll first see a rush to stock up, then a desire to draw down, followed by another buying spree. In that light, we do what we can to watch order patterns and filter out ones that appear to be opportunistic and that might draw product away from longer-term customers. Likewise, if we notice that certain customers aren’t ordering within historical trends, we might reach out to better understand their current situation to ensure that they didn’t accidentally overlook a particular product.” — Lisa Deverell, President, Purina Animal Nutrition “There is an opportunity for further digitalization of the supply chain, where sharing data real-time would enable the partners to anticipate their customers’ needs [in a timely way]. As an example, when a poultry integrator would order eggs for the hatchery, this could trigger the feed producer [to start preparing], book freight, etc. and any deviations from planned schedules will then be directly available to the integrator.” — Aart Mateboer, EVP Animal Nutrition, Perstorp “If we want to avoid these disruptions in the future, our industry has to focus on digitalization and collaboration throughout the value chain. All the data points have to be connected in real-time for the entire supply chain, and only then does good forecasting have its value. From a technological perspective, we already have opportunities to improve, but the true difficulty is in getting all players involved to share and connect their data. The security

aspect of this digitalization might be, in the end, more critical than keeping the supply chain stable. Blockchain technology may play a critical role in

securing the confidentiality of data so that information cannot be abused.” — Stefaan Van Dyck, President of Kemin Animal Nutrition and Health, EMENA

WHAT CAN BE DONE TO ADAPT?

maintain business operations.”

— Pierre-Joseph Paoli, President of Additives, Ingredients and Amino Acids at ADM Animal Nutrition

“The pandemic opened our eyes to flaws within our complex global supply chain. Unfortunately, incredibly long lead times, exorbitant shipping costs, labour shortages, and unprecedented demand for packaging components aren’t going to resolve overnight. And there’s nothing to say these won’t be challenges again in the future. For these reasons, the strategic

focus of supply chain management is evolving from trying to have the cheapest supply chain to having the most stable supply chain. There’s a lot companies can do to swing the pendulum toward stability: broadening the supplier base, regionalising partnerships and practices, near-sourcing, planning optimisation, aligned demand planning with customers and suppliers, and business continuity planning for the unknown disruption that is sure to come.” — Dan Meagher, President and CEO, Novus International

“As an industry, we can build a more robust supply chain if we

move away from making predominantly short-term commitments based on last-minute

market circumstances for each individual part of the supply chain and towards making more long-term commitments based on stable business partnerships across the entire supply chain. We also need to increase our focus on regional sourcing and reduce our reliance on the production of raw materials in one part of the world to be shipped around the whole globe. Achieving this level of professionalism and collaboration requires supply chain actors to take appropriate positions at an early enough stage on raw material, energy and transport capacity based on

“Risk management helps us prepare for disruptive events all along the supply chain. Our experience dealing with issues such as natural disasters, widespread disease, industrial issues and geopolitical disruptions helps

us better manage gaps within the supply chain to preserve business continuity. We are prepared with business continuity plans and try to avoid single sourcing from one supplier or country. We identify risk with real-time, reliable information from trusted professionals who can identify and analyse potential issues. We monitor the impact of the situation as it evolves and report our findings with high-frequency meetings of key stakeholders. Specifically, industry players can diversify their procurement strategies, prepare logistics for alternate transportation methods and be prepared to pay higher prices to

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SENIOR LEADERS 2022 OUTLOOK Companies with an advanced and mature supply chain and procurement organisation and processes definitely have a competitive advantage. Working together in this way forecasts.

will mitigate spikes and is key to avoiding the well-known bullwhip effect, leading to high peaks that are followed by sharp valleys. In a time of crisis or significant disruption, collaboration and transparency with our partners on data are the keys to success for everyone.” — Saskia Korink, CEO, Trouw Nutrition

SUPPORTING LOCAL SUPPLY CHAINS “The pandemic has taught us that as a global industry with local footprints in terms of feed and protein supply, we have to face our weak spots. We believe in the importance of strong, self-sufficient, regional production and supply to ensure reliable production and food supply security for end-consumers.” — Emmanuel Auer, Head of Animal Nutrition Business Line, Evonik

“Companies will need to reflect upon their sourcing strategies to ensure that they are geopolitically robust. I expect this will result in supply chains becoming more local as feed producers invest in locally sourced raw materials, and this transition will require careful management in order to maintain performance.” — Pauel Fokin, Vice President, Danisco Animal Nutrition “If you look back at the last 10 years, I think on the one hand we should be incredibly impressed how we developed a global network feeding almost 8 billion people three times a day. It has worked so far, but we must realise how incredibly important food is and reflect on how to organise supply in a in a good way for the coming 20 years. We really need to protect the feeding of billions of people from geopolitical tensions. I think we should be looking at ways to gain more control over our food supply, at least have a serious think about it... Start to put your energy in the more regional solutions. I think we have to take that as a serious answer to all those global complexities because I don’t see them going away.” — Dick Hordijk, CEO, Royal Agrifirm

Risks and alternatives to geographic consolidation

mid 2021’s historic disruption to supply chains and the increased interest in local sourcing, the executives participating in this roundtable were asked to weigh in on the centrality of China in producing certain key feed additives such as vitamins or amino acids. Here are their thoughts:

CHINA REMAINS A CENTRAL AN ATTRACTIVE MARKET “China plays a crucial role in our animal farming value chain, and that’s not necessarily a bad thing. Indeed, China is a market with huge potential: to meet the protein demands of a growing population, we will need their important contribution.” — Ivo Lansbergen, President, DSM Animal Nutrition and Health “Similar to agriculture crops growing most efficiently in areas where soil is most fertile and climate most supportive, feed additives are most efficiently produced in areas where the main ingredients are near and cost to produce is lowest.” — Yoram Knoop, CEO, ForFarmers “There is no doubt that the animal nutrition industry has become increasingly dependent on an international supply chain. If we didn’t recognise that fully in the months before the pandemic began, we certainly

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Chinese suppliers have proven to be very dependable, cost efficient, and quality-conscious partners.

have a better understanding of that now.

But as we all know, policy considerations can easily trump commercial expediency.” — Lisa Deverell, President, Purina Animal Nutrition

ROBUSTNESS OF SUPPLY CHAIN MEANS A SINGLE POINT OF FAILURE PROBLEMATIC “[China] is a very attractive market to produce [in], to source [from] but also to sell products [into] for every company. At the same time these questions of dependency are relevant… Unfortunately, there is no one size fits all answer to the questions. It really depends on the product, and its specific integrated supply chain. However, looking forward, we can probably consider that the

historical model of a huge production plant located a low-cost country and serving the world is losing ground and that the industry is progressively

moving towards a better repartition of its risks over various continents.” — Jean-Marc Dublanc, CEO, Adisseo

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SENIOR LEADERS 2022 OUTLOOK “Things will not necessarily get better on a geopolitical scale. I think we are vulnerable. If demand soars in a country, it will most likely upgrade the capacity of its factories and cater to its own people first. And said country will likely use this scenario as a force when negotiating food trade. Then dependency becomes unbalanced.” — Dick Hordijk, CEO, Royal Agrifirm “It should be clear now, with all the challenges and disruptions our industry has experienced, that we cannot have our businesses rely on China as a single or significant supplier of any critical ingredient or raw material.

decisions. Therefore, I could see more investments in the US and Europe over time that will reduce our independence from China.” — Aart Mateboer, EVP Animal Nutrition, Perstorp

PRODUCTION INVESTMENTS ELSEWHERE “We believe that the recent logistics and energy crisis will stimulate

an increase in vitamin and amino acid This risk is not correctly accounted for in production capacity outside of China.” — Saskia Korink, CEO, Trouw Nutrition our current procurement formulas. The short-

term benefit of less expensive goods is not nearly enough to justify the systemic risks to our production systems and the long-term effects of not supporting the investment required to produce these high-end ingredients locally or regionally. We need to look at this situation critically from an industry sustainability view, which we all are accountable for, and not just an optimised, short-term procurement view. As an example, the capital investment required just to produce the increase in yearly global demand of methionine is in the multiple hundreds of millions of dollars. Those investments cannot be sustained if large users of methionine prioritise procurement strategies that do not account for the risk of creating extreme supply dependency in one country, such as China” — Dan Meagher, President and CEO, Novus International “Living in China and managing our business there for more than seven years, I witnessed first-hand its rapid development as the world’s largest feed market. President Xi Jinping understands food security’s importance in maintaining social stability within the world’s most populous nation. The disruptions of the last several years have inspired all countries to be more introspective and ensure the sufficiency of their supply chain.

One of the most significant risks includes dependence on any single source, whether that is a manufacturing site or a sole country supplier that could be compromised by geopolitical

issues, natural disasters, or any number of issues. There are always going to be political reasons to focus on one country or another, but the review countries and business are doing of their supply chains is not about that, but instead about prioritising away from just-in-time and least-cost as the only areas to focus on and moving towards a far more balanced approach to supply chain management.” — Mark Lyons, President & CEO, Alltech

SUSTAINABILITY MAY DRIVE CHANGES “Relying heavily on a single country or region does not make sense from a sustainability perspective. A more localised approach allows us to have better control over supply chains, reduce transport impacts and improve distribution reliability and sustainability.” — Emmanuel Auer, Head of Animal Nutrition Business Line, Evonik “Freight costs are unlikely to return to pre COVID-19 levels, an increasing focus on reducing environmental impact in China

is adding costs for the manufacturers, and purchasers in Europe and the US will take sustainability impacts into account when making purchase

36 | WINTER 2022

“We produce the majority of our feed additives in Ludwigshafen, Germany. In addition, BASF has its own power plant and produces the necessary process energy itself. This is intended to reduce dependencies and ensure better production reliability. We will continue to build on this production in Germany also in the future. Currently we are

investing in new and in the modernisation of existing production facilities, for example with

enzymes and vitamins.” — Daniela Calleri, Vice President Business Management, BASF Animal Nutrition “Given what could be a protracted period of supply chain disruptions and strained political relations, it would be wonderful to see meaningful investments in manufacturing assets in North America. There are environmental issues that would, no doubt, need to be addressed, along with policies that would ensure and enable the competitiveness of such ventures… We’re hopeful that recent headlines announcing planned investments in domestic amino acid production come to fruition and encourage other companies to think about locating ingredient manufacturing assets nearby. We need a steady, secure, and predictable pipeline of ingredients because, as we all know, animals eat every day. The most dependable and efficient pipeline certainly needs

to include international links, including China, but we would all be well-served by supporting increased diversification.” — Lisa Deverell, President, Purina Animal Nutrition

“At Kemin, we make sure to always have production capability in multiple regions for the majority of our technologies so that when a disaster strikes, we are still able to continue to service our customers. This also drives the investment programmes since we often do not choose

the cheapest option, as it usually does not best serve our customers.” — Stefaan Van Dyck, President EMENA, Kemin Animal Nutrition and Health

These are samples from the Feedinfo series “Animal Nutrition Industry Senior Executive Outlooks for 2022.” Subscribers already have access to the full series. If you are not a subscriber, you can access it in report form by signing up to our mailing list. Interviews conducted by Simon Duke, editor-in-chief, Feedinfo. Edited for magazine by Shannon Behary, senior editor, Feedinfo.

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Jeroen van der Veer, former CEO of Royal Dutch Shell speaks at the recent Feedinfo Summit in Geneva.

FEEDINFO SUMMIT

Animal ag value chain can learn from Big Oil’s challenges

rom dealing with outside disruption to communicating with a sustainability-minded public increasingly suspicious of our motives, many of the strategic challenges faced by animal nutrition and animal production businesses are not especially unique to our industry. Speaking at the Feedinfo Summit in Geneva, Jeroen van der Veer, former CEO of Royal Dutch Shell, suggests that the parallels with the fossil fuel industry might prove instructive. “Big oil and agriculture are more interlinked than people realise. They are very international businesses, and they need to keep an eye on the world.” For example, he points to some of the lessons of the pandemic. “With hindsight, COVID-19 was not such a disruption as feared,” he opines, pointing out the resilience of the businesses. “Had this crisis surfaced 10 years ago, it would have been a lot worse.” According to van der Veer, this resilience comes down to people and smart use of technologies. This bodes well for the future. Pressure brought by NGO or activist are simply part of life, and you can’t afford to not deal with them, he also argues. “I see NGOs as either dolphins or sharks,” he explains. “There are those you can talk to and those who don’t listen. Try and have informal discussions with the sharks. Don’t have a big ego. But move on if they still don’t want to listen.” “‘Dislikers’ are a lot more vocal than before,” he adds, recommending that companies in the animal nutrition sector tailor their messages to address not only the ‘likers’ or ‘dislikers’, but also those who are neutral.

“Understand how markets perceive sustainability [differently] and take it as an opportunity… being proactive like this will create new business over time.” JEROEN VAN DER VEER 38 | WINTER 2022

“Keep on measuring, segmenting these categories, and see what else can be done,” he says. “Be open and transparent. Don’t be defensive about issues. Ask yourself what you are going to do about them, and don’t over-commit, especially regarding environmental issues,” he warns. In terms of crisis management and communication strategy, van der Veer refers to his experience at Shell and the issues and backlash his former company is commonly associated with. Internally, he recommended a harmonised communications strategy, whereby the same message is sent to all members of staff in order to drive home the key points which outside world should be aware of. When it comes to external communication, he argues that top management must be visible and keep the ongoing discussion based on facts. “Visibility is simple. Be predictable. Don’t be emotional and be diplomatic, when possible, when faced with confrontation,” he says. “This is how you manage crises.” Dealing with fake news requires a similar approach, he reckons. “Act quickly with the facts or don’t react at all. Or it gets worse,” he asserts, adding that you can always seek third party help to deal with fake news and track down the source of the problem. Both for big oil and for the animal agriculture sector, van der Veer identifies sustainability as a huge opportunity. “There are different understandings of the topic in different parts of the world. Understand how markets perceive it and take it as an opportunity,” he states. However, he points out that a company can’t tackle all angles of the sustainability conundrum. “You have to know your company and in which fields you can have an edge. You can’t be a leader in everything.” “Do experiments at the fringe and be open. See what goes well and emphasise the result if it works, or simply cut if it goes the other way.” “Being proactive like this will create new business over time.” Want the full experience the next time around? To register your interest and keep up to date with the 2022 Feedinfo Summit, click here.

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RECRUITMENT UPDATES

INDUSTRY MOVES Recent senior job moves within the global animal nutrition industry Minerals company AMLAN INTERNATIONAL has broadened their technical capabilities in the Asia Pacific (APEC) region with the appointment of Dr. Kim Huang as regional technical services manager.

HILL’S PET NUTRITION announced two new appointments: Jolle Kirpensteijn, DVM, PhD, Diplomate ACVS and ECVS as Global Chief Veterinary Officer and Karen Shenoy, DVM as Chief Veterinary Officer US. Both appointments are effective January 1, 2022.

ARM & HAMMER ANIMAL AND FOOD PRODUCTION announced Dr. Xandra Smith will be stepping into the role of director of innovation and product development.

LESAFFRE appointed Brice-Audren Riché as the Group’s new CEO effective 1st January 2022. Subsequently, the company made another new appointment to its Executive Committee: Christine M’Rini Puel, who became chief R&D officer.

Sven Keller joined German feed additive company BIOCHEM as technical manager for central Europe in October.

NUTRECO appointed Geke Naaktgeboren-Stoffels as global director of quality in October.

In October, Geir Molvik revealed plans to step down as CEO of CERMAQ GROUP. The new CEO from March 2022 will be Steven Rafferty, who is currently MD of Cermaq Chile.

PERSTORP appointed Patrice Pinsard as EVP strategic markets & innovation as of October 18. On January 4, the aquaculture joint venture SALMAR AKER OCEAN appointed Roy Reite to be its new CEO.

In early 2022, Tyson Foods subsidiary COBB-VANTRESS appointed Joyce J. Lee as its new president.

Jean-François Laudouze joins VERAMARIS as global business development manager, companion animals for Veramaris Pets.

Agri-technology company DEVENISH appointed Whad Fayed to the new role of poultry nutrition product manager. On 1 February, Jakob Lave will join Danish farm co-op DLG as director of sustainable business development. FORFARMERS has announced that Yoram Knoop, CEO and member of the Executive Board of ForFarmers N.V. will step down after the Annual General Meeting of Shareholders on 14 April 2022, the date on which his current term ends.

WILBUR-ELLIS announced in October that Matt Fanta had been named president of its nutrition division, with the retirement of Andrew Loder. ŸNSECT has announced the hiring of three new leadership positions. Joining Ÿnsect’s executive committee are Shankar Krishnamoorthy – EVP, chief strategy officer, Tina Lawton – EVP, chief growth officer and Isabelle Toledano-Koutsouris – EVP, chief financial & administrative officer.

GLOBAL NUTRITION GROUP announced the appointment of Mr. Amaury Laine as the new general manager of its companies, Global Nutrition International and NutriConcept SA, from October 1st 2021.

ZINPRO CORPORATION welcomed Alfredo Lopez as corporate controller in December, to lead the accounting, accounts payable and receivable teams.

Brian Perkins, who joined GSA as chief operating officer on March 1, assumed the role of CEO of GLOBAL SEAFOOD ALLIANCE (GSA) effective Jan 1st.

ZOETIS announced the appointment of Robert J. Polzer, PhD, as executive vice president and president of research & development for the company, effective Jan. 1, 2022.

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

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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

WINTER 2022 | 39

CROSS-BRAND INTERVIEW

Urner Barry talks about the year in meat and looks at what’s ahead

[Feedinfo Review] 2021 was an extraordinarily challenging year, operationally-speaking, for feed and feed additives companies. Was the same true for meat? What specific factors caused these complications? [Jamie Chadwick] A resounding yes, really. This year was incredibly challenging for our industry. Labour shortages were one of the biggest challenges, more for some markets than others. Generally, this was concentrated at the production level: plant workers being able to operate a full shift and produce the amount of product needed to fulfill demand. That was one massive issue that stemmed from COVID and the resulting fallout. And some cuts are more labour intensive than others. So, if you look at the spread between bone-in and boneless hams, for example, that illustrates the scenario beautifully. We’re just not seeing as many boneless hams available because we don’t have the labour to do it. And then, of course, labour issues put further pressure on the logistics side of the equation: finding truck drivers, and dock workers, and so

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on, to get the product from point A to point B. On that same note of transportation: just the costs associated with the backlog and the various pinch points throughout the supply chain. All of those costs add up and they snowball. Port congestion is creating delays in getting product off ships. We’ve got shipments of imported products turning to other ports and then trucking it to where it needs to be. But then of course there’s higher costs associated with trucking, and a shortage of trucks, and a shortage of drivers. So then you start to run into new problems, even when you’re trying to solve other problems. And that’s not to even mention exports, because of course we’re a net exporter of a lot of our protein, so it has certainly been extremely challenging year. And there there’s still things that existed before the pandemic as well that we have to continue worrying about, like African Swine Fever, or PRRS. It’s also all the normal stuff that we deal with on a year-to-year basis. That’s all still there. [Feedinfo Review] Let’s talk about inflation. How is that impacting meat markets and especially meat consumption? [Jamie Chadwick] So there’s quite a delay between when we see market swings at the Jamie Chadwick wholesale level to when they make it to the consumer level, that is, if they ever even make it to the consumer level—you know the wholesale price is a lot more volatility than consumer price. But once that inflationary market stays steady and it’s long-lasting, those costs do end up getting passed down to the consumer. They don’t see it quite as quickly or as violently as we do. But, when you do get to that point, what we see is they do tend to trade down to less expensive cuts. Maybe instead of steaks, they are buying ground beef… But then, we’re also talking a lot about personal savings rates being really high, and we have seen that customers are still willing to pay for quality. When you look at the grading of beef, right now there’s a lot of high choice and prime grading because the cattle are doing well, and you see customers enjoying that eating experience and wanting that quality product, and a good portion of them are willing to pay for it. We do kind of start to see some trade down… retail spending tends to fall in January/ February because everybody is paying off credit cards from their holiday shopping back in December. So we do see a little bit of budget consciousness among consumers that time of year. But earlier this year we were talking a lot about this concept of revenge spending and this concept is very real. We were cooped up for a very long time and so we were seeing…I think the statistic was $765

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t times of exceptional volatility, having solid data to inform your business strategy is more important than ever. Providing that data is the mission of Urner Barry, a price reporting agency for center-of-the-plate proteins founded in 1858 (no, that’s not a typo—they’re really over 160 years old). The benchmark pricing, insight, and analysis that Urner Barry provides on beef, pork, chicken, turkey, eggs, seafood, and plant protein is used by buyers and sellers all throughout the food value chain. For Jamie Chadwick, editorial director at Urner Barry, these markets can be thought of like a puzzle, and her team’s job is to put the puzzle together, every day, and to help make sense of the individual pieces. To do this, Chadwick oversees staff writers, analysts, and a network of global correspondents that work to collect and develop content surrounding the latest developments impacting markets in the US and around the world. “We were actually one of the first news outlets to report on coronavirus,” she asserts. “At the time when reports were surfacing, it was this virus originating out of a wet market in Wuhan, and that market being a notable seafood market led to us covering it pretty closely. We were on top of developments on our Seafoodnews site and our COMTELL platform, essentially right from the start, before it was really hitting mainstream media.” Today, she brings that foresight to help Feedinfo Review readers unpack some of the trends going into 2022, from inflation to consumption habits.

CROSS-BRAND INTERVIEW

“If I could tell the industry to keep watch on anything, it would be inflation, COLD STORAGE and production numbers ... how much product do we have in cold storage at the moment?” JAMIE CHADWICK more per month that Americans were spending just on dining out and travel compared to the previous year. That was that was August, I think. Everybody is getting back out there and eating out again. They’re taking their families out and spending up some of that money that was saved up, fulfilling the demand pent up during the lockdown or during quarantine. So you’ve got both sides of the coin. You have a little bit of that still happening. We’ve got family gatherings back in full swing for the holidays this year, whereas last year we really didn’t. I think it was a lot of small gatherings. Still, even talking about what you’re serving at holiday dinner — maybe last year you had a smaller gathering, so instead of a ham, maybe you were doing a standing rib roast. Because you weren’t feeding that many people, so you could buy the higher end item and spend the money there. But now maybe this year, maybe you’ve got 18 people coming to your house and you’re not doing a standing rib roast for 18 people, so you’re going to pare down to a traditional ham, or a turkey, or meatballs or something like that. [Feedinfo Review] What else, on either supply side or demand side, do you have your eye on going forward into 2022?

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[Jamie Chadwick] If I could tell the industry to keep watch on anything, it would be inflation, cold storage and production numbers. Inflation, we’ve talked about. Cold storage: how much product do we have in cold storage at the moment? Because that’s a very good indicator of what you’re supply situation looks like… and then we’ve got the cattle inventory report coming out in January, which is going to give us an indication of what we’re seeing with the cattle herd. Are we in a period of contraction or liquidation? I believe we were heading in that direction over last year when we were looking at inventory. So that’s going to be something that we’re watching at the start of the year. And then, of course, staying on top of spot market prices as they relate to historical benchmarks and utilising the resources that you have at your disposal, like Urner Barry, like Feedinfo, making sure you’re staying on top of all of the variables and the headwinds that our industry is facing right now, because it’s certainly complicated. I don’t envy those that have to develop buying strategies in this in this climate. Shannon Behary, senior editor, Feedinfo To learn more about the protein pricing and market analysis offered by Urner Barry, click here.

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