From R&D activities, which bring about the existence and manifestation of new products & services, to great marketing efforts, which bridge the gap between actual and potential demand, collaborations are of great importance across industries, with the global animal feed industry being no exception.
As per Alltech’s 2016 global feed survey, the livestock feed industry has already crossed the threshold of a billion ton of production, across animal species and feed variants, with an estimated market size of about USD 350–400 billion. However, an interesting phenomenon to note here includes the collaborations across the entire value chain of feed production, to further maximize the overall value of the industry and the market size.
The year 2017 witnessed some large ticket collaborations in the global feed industry, specifically in terms of mergers and acquisitions toward inorganic growth.
In year starting, it was joint venture of Royal DSM and Evonik to invest USD 200 million to set up a manufacturing facility omega-3 fatty acid. Once started, the facility is expected to meet approx. 15% of salmon aquaculture industry’s annual demand for eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA).
Next, Cargill acquired Diamond V, a leading global provider of innovative natural solutions and technologies. It aims to better serve customers who are increasingly turning to unique natural technologies to unlock the potential in feed to promote healthier animals and improve performance. Apart from other such acquisitions, Cargill also invested in Delacon, the Austrian feed additives manufacturer.
The acquisition of Nutriad by Adisseo being the latest transaction brought the calendar year to an end on an optimistic note.
Similarly, the year 2016 was no exception, in terms of M&A activities focused on the animal feed industry, with over 100 deals taking place during the year1. Highlights for that year included Forfarmers Nederland’s acquisition of VleutenSteijnVoeders, and Nutreco’s acquisition of Micronutrients, the US based leading producer of hydroxy trace minerals.
Then in South Asian market, it was strategic marketing collaboration of Nuscience Group and Jubilant Life Sciences for distribution of Nuscience products in India, Sri Lanka and Nepal.
Based on the views expressed by the global giants of the livestock feed industry, it is apparent that the industry will continue to look forward to collaborations; either in terms of partnerships, joint ventures, or outright mergers and acquisitions; to expand their footprint globally and strengthen their market shares in the markets already catered to.
Post Cargill’s acquisition of privately owned “Integral Nutricao Animal,”Brazil-based feed products manufacturer, Celso Mello, head of Cargill’s animal nutrition business in Brazil, expressed and validated the overall sentiments of the industry toward a focus on collaborations for future growth. As quoted by Reuters, Mr. Mello confirmed the company’s plan to grow organically as well as through acquisitions in the cattle feed segment.
Similarly, the last year also witnessed another significant collaboration in the industry, with ADM entering into a strategic collaboration with Anco Animal Nutrition Competence GmbH, an Austrian feed additives provider. As reported by ADM, Michael Eder, managing partner of Anco, stated that by leveraging the expertise of both ADM and Anco, the new partnership will help to provide poultry, swine, and cattle producers with a range of high-quality products that contain natural ingredients, including phytogenics and other compounds, which are selected to help animals adapt to the nutritional stress factors often present in feed rations.
So, what does it all entail for the future of the livestock feed industry, what direction is it expected to take, and how are collaborations going to play an important role? As per Chris de Lavinge, head of KPMG’s agribusiness strategy team based in Singapore2, feed businesses will have to differentiate themselves from the competition by investing in innovations and collaborations. Given the volatility around the prices, the advent of alternative proteins in the marketplace, and the issues related to the environmental release of nitrogen and methane, it is expected that the industry will witness more integration across the value chain.
The agribusiness experts with MarketsandMarkets are of a similar view.“With the market place becoming competitive, there will be a pressure on the bottom line of the companies. The solution to this would be either innovation or consolidation.” The industry will have to overcome these challenges together, through the collaborations of market players.This would have to be in line with catering to the increasing demand amongst the challenges that the industry is facing, further substantiating the fact that no company alone will be able to handle the concerns; rather, that collaboration is going to be the key.
1. Reported by WATTAgNet, the US-based media house
2.Quoted to feednavigator