11 March 2019 – Even though Alltech announced a 3% increase in global feed production in 2018 in its annual feed survey, the prospects for 2019 may be not as good. FEFAC market experts have already stated that they are rather pessimistic concerning industrial compound feed production in the EU in 2019.
But the real question marks come from China where African swine fever (ASF) outbreaks are continuing and how the spread of the virus will impact not only demand in China but also internationally as China remains the central piece of the global feed and protein trade puzzle. And coupled with the uncertainty born out of the disruptions to global trade due to political reasons, the animal nutrition sector is on the lookout for signs of reassurance or confirmations that that global feed industry remains a safe bet.
Feedinfo News Service asked to Pilar Cruz, President of Cargill’s compound animal feed and nutrition business (Cargill Feed & Nutrition) – which represents approximately 11,000 employees worldwide and 165 feed plants in 21 different countries that produce 12 million tons of feed per year for 50,000 customers – what she thinks about the feed sector’s big challenges of the moment and discussed where, on the contrary, she sees opportunities not only for her firm, but for the market in general.
Ms. Cruz confirmed: “The key challenges in the near future are ASF, followed by trade challenges. When trade flows are disrupted this creates challenges for us, mainly when it comes to sourcing raw materials for the production of feed.”
“But we are in a good position to navigate the challenges,” she added, stressing that we remain in a growth industry.
In her opinion, ASF is still very concerning for the Chinese and Asia-Pacific protein and feed industries, but the virus is not new to Cargill as it has been a factor to watch in the EU for five years and Russia for 10 years already.
“Vigilance is crucial and we look at how we can help our customers from a biosecurity investment and market-preparedness standpoint. We look at measures to minimize the impact ASF can have on their operations and try to implement best practices learned from the earlier European outbreaks,” Ms. Cruz commented.
Cargill Animal Nutrition created a taskforce last year to see what can be done and to reduce the risk of ASF on customer operations. Their job is to work with suppliers to improve quality, food safety and now help ensure the risk is properly managed.
“Whatever the scenario, we remain highly committed to the Chinese feed industry,” Ms. Cruz went on to say.
Pilar Cruz also gave us hints about which market segments and in which geographies we will possibly see Cargill Feed & Nutrition focus on next.
On a general note, she pointed out that global protein consumption is poised to increase by more than 50% by the year 2050. And Cargill Feed & Nutrition is especially excited about the potential in the Asia-Pacific, where much of this growth is expected to occur. The company also sees a significant rise in demand for seafood as well as growth in demand in the US where it expects 2019 to be another strong year for animal protein consumption.
“We continue to make investments where we see growth aligned with market trends,” Ms. Cruz said. “Our plants are located in the geographical areas of growth and we’re in the right places in terms of opportunities.”
This is made possible thanks to coordination between Cargill Feed & Nutrition and the rest of the Cargill business.
“There is a great level of collaboration and connectivity between the different Cargill units, and not just between Cargill Animal Nutrition and Cargill’s Protein Enterprise, but across the company. We work very closely together. We share market trend insights as well as customer data. We look at opportunities that can be of benefit to all segments,” Ms. Cruz commented.
Illustrating this point with the acquisition of Konspol’s food and fresh chicken business in Poland, she said that the deal offers advantages not only in terms of branded food products, but also in terms of poultry and poultry feed as Konspol has more than 1,700 employees in Poland and operates a feed mill, five broiler farms and two processing complexes.
Cargill Feed & Nutrition’s global presence and 165 feed plants allows the firm to be diversified and enables commitment to multiple markets at the same time. This focus is further enabled through the company’s ongoing investments in digital innovation in places like Europe and Latin America, or even in China where it is piloting an e-commerce partnership with Alibaba to deliver feed.
“We’re not just concentrated on one geography,” Ms. Cruz commented, citing a few examples of recent Asian investments.
In October 2018, Cargill Feed & Nutrition opened a USD 28 million, 240,000 ton-per-annum feed mill in Vietnam’s Binh Duong province, its 12th animal nutrition facility in the country, catering to the poultry and swine markets.
And more recently, in January 2019, Cargill this time said it was planning to invest more than USD 200 million in the next three-to-five years in Pakistan. It is expected that Cargill’s animal feed operations are likely to benefit from the investment. And though, Ms. Cruz could not disclose any specifics she said the Pakistani investment is in line with Cargill’s overall Asian expansion plan. Being the world’s sixth most populated country, Pakistan offers huge potential in terms of feed and protein, especially dairy and poultry.
Asia is a high growth market but Cargill Feed & Nutrition has not lost sight of the more mature markets.
The US, for instance, may be perceived as a mature market with little room for growth, but the company believes it is still a strong market – with the 2018 acquisition of Pro-Pet, an Ohio-based manufacturer of private label and co-manufactured pet foods, and the 2017 acquisition of the feed assets of Southern States Cooperative, Inc. (including seven feed mills, a large portfolio of products, and a means to bolster Cargill Feed & Nutrition’s customer support in the Southeast, Mid-Atlantic and Northeast regions of the US) are testimonies to that.
Ms. Cruz commented: “The continued demand for protein encourages us to understand evolving customer needs and find opportunities to broaden our reach in the US.”
Cargill Feed & Nutrition operates over 50 production and distribution facilities across the US. And the company’s ongoing or recent investments in the US are either on-track or on-target, Ms. Cruz said.
“In the US, we are focused on building our core capabilities aligned with the trend of better feed for better livestock welfare and health,” she commented. “The new USD 32 million feed mill in Temple, Texas is a good example of our feed and protein businesses coordinating. The facility currently produces bulk turkey feed. It is now also designed for agricultural retail and beef customers. And our Owosso, Michigan plant is now serving 1,500 dairy farms and offering advanced digital capabilities as our customers are even more interested in a transparent supply chain.”
When asked what Cargill Feed & Nutrition expansions are in the pipeline for 2019-2020, Ms. Cruz could not disclose any specific new projects, but did sow a few seeds.
“You can expect Cargill Feed & Nutrition to leverage its nutritional expertise and our investments will be made in line with our multi-year strategic plan aimed at investing in places where we have strong presence today or in fields where we want to build capabilities, like young animal nutrition or new and strategic ingredients we could use more in our formulations, such as insect meal, food industry co-products and algae.”