Since the pellet mill was developed decades ago a feed pellet for farm animals has had a cylindrical shape, which sort of symbolises the level of innovation in feed processing. This lack of innovation encouraged a group of companies in the Netherlands to set up a Feed Design Lab with the aim to support innovation and education in feed processing and by connecting all relevant parties that are active in and around the feed manufacturing industry.
A recent report by the US Department of Agriculture showed that from the inputs in R&D in the agriculture sector worldwide the investments in animal nutrition are much lower than in other parts of the ag industry. “Growth in the productivity of the global food and agricultural system will be largely determined by today’s investments in research and development,” the authors write.
In recent decades, the private sector has become a major player in developing innovations for food and agriculture. Factors spurring private companies to invest in food and agricultural research include the emergence of biotechnology and other new scientific developments, the strengthening of intellectual property rights over agricultural innovations, new regulatory requirements, the expansion of markets for improved agricultural inputs and food products, and rising consumer demand for more diverse foods. More recently, rapid growth in the market for biofuel has pushed companies to expand their R&D investments in this area as well, the report states.During 1994-2007 (the latest year for which estimates are available), annual private-sector food and agricultural R&D grew from $11.3 billion to $19.7 billion, or 4.3% per year (or, in constant 2006 dollars, from $14.6 billion to $19.2 billion, or 2.1%). Growth in R&D investment was uneven across industries. The most rapid increase in R&D was in crop breeding/biotechnology. Significant growth in R&D spending also occurred in farm machinery and food manufacturing. However, real (inflation-adjusted) R&D spending declined for crop protection chemicals and animal nutrition.
R&D spending by animal feed companies
R&D investments in the feed industry are made to develop new products, to reduce manufacturing costs through process innovations, and to determine optimal feed use in animal husbandry. There is only very limited information available on R&D spending of feed firms. To estimate R&D spending by the animal nutrition industry, the authors used company R&D data when available and for other firms representative R&D-to-sales ratios to firms in different segments of the industry were used. It was assumed that only the 60 largest feed manufacturers worldwide conduct R&D. These firms accounted for about 30% of global production in 2006. For firms in high-income countries, an R&D-to-sales ratio of 4.7 % for manufacturers of nutritional feed additives was assumed and 0.50% for producers of bulk feeds. Average R&D intensities of manufacturing industries in developing countries are typically half or less the average level for high-income countries.
Total R&D spending on animal feed by the largest 60 feed manufacturers was calculated at $375 million in 2006 (Table 1). Companies located in the Europe-Middle East region made up 62% of the total, with Dutch and German firms both ahead of US firms. Relatively high expenditures on animal feed R&D by European firms may be attributed to stricter EU regulations on the use of antibiotics, hormones, and animal parts in animal feed products. Such regulations increase farm demand for alternative feed ingredients and husbandry methods to provide for animal health and growth.It is likely that at least half of the total R&D by the animal feed industry is conducted for the nutritional feed additive segment of the market. The authors also estimated that real R&D spending on feed in the United States declined by an estimated 25% over the past three decades.
Size and sexiness
The feed industry is facing challenges it has not been confronted with before: a foreseen shortage of food, water, commodities, phosphate, and energy and on the other hand there is too much waste and medicine use is too high. These challenges could be tackled by companies individually, but most problems are interconnected meaning that a multiple approach would give a much more satisfactory outcome. These challenges and the general low emphasis on innovation in the animal feed sector worried a few feed millers and equipment manufacturers in the Netherlands. However, they are too small to do something about it individually. It would also bring little benefit because only small steps could be made. Apart from the company size problem, the whole feed sector is confronted with an unsexy image, meaning that very few students choose feed manufacturing as a subject for their further study, personal development and future job.
So the group of Dutch entrepreneurs joined forces and developed a plan to do something about it. They founded the Open Innovation Centre Feed Lab Design (FDL). This foundation became a fact in December 2011 with a starting capital of €2 million. Founding fathers of FDL are: equipment manufacturer Dinnissen Process Technology, feed additive producer DSM Nutritional Products, technology firm Imtech, Agricultural College HAS Den Bosch, feed miller Vitelia (known from its MagiCon feeds) and bulk truck manufacturer Welgro. Harrij Schmeitz of Imtech is outsourced to FDL and appointed as managing director. “My task will be to connect all sectors in the feed industry and to get them to participate in this project. We want to create a community in which everybody with interest in the feed industry participates, either with money, but also with ideas and physical means,” Schmeitz says. At start up FDL focuses on the Netherlands and surrounding countries, but international participation is very much encouraged.
The foundation is not a group of companies that sit around tables and have occasional meetings. The first step is to create a real test facility for making innovative feeds. “In the real world we see that all mills have to run at full capacity and produce, say, minimum 30 tonnes of feed per hour. There is no room for experiments, because the volumes are too high. That is why we want to build a new test facility that we have called the Living Lab,” Schmeitz says. “It is a plant where we will install the most modern technology for manufacturing animal feeds, which facilitate the feed chain in developing feeds based on new raw materials with new technologies for new product-market combinations.”
The plant will be set up to test, measure and learn. Many feed facilities in western Europe are outdated. Schmeitz recalls a simple example of Dutch farmers demanding a hard pellet for their animals. “The operator in the mill then makes some adjustments to the pellet mill, but he doesn’t have a clue what happens to energy use, which with the current high prices may not be beneficial to the company at all. This is mainly due to the fact that the plant has not been modernised and energy cannot be measured where it is used. In our test facility we will be able to do such tests.”There will be equipment for grinding and rolling, mixing and sieving, conditioning, extruding and pelleting, drying, sieving and crumbling, coating and cooling. Product coming out of the plant will have to comply with specifications on shelf life, hygiene and handling. The Living Lab is projected in Wanssum, in the heart of Dutch intensive animal farming, where it is surrounded by other feed and technology firms, but also close to a food producing and a horticulture nucleus from where products can be obtained to be converted into animal feed.
Modern feed manufacturing is a high tech industry. A modern feed mill nowadays can be operated by two to four people. This requires specific skills of these operators, which go beyond basic education. An operator in a feed mill today is a technical engineer, who understands machinery and computers, but on the other hand also has the touch of a feed maker and knows about animal nutrition. These specific studies are not available. “Operating a feed mill cannot be learned anywhere, at least not in the Netherlands,” says Schmeitz. “Therefore we want to create a community around FDL and build a training centre where in the Living Lab practical training and courses can be taught in the fields of feed manufacturing, process technology and animal nutrition – the reason why HAS Den Bosch is involved.” The training centre is aimed at supplying the chain with young feed professionals. The FDL plan is recognised by the Dutch government in one of its spearhead programs and as such was granted a subsidy of €750,000 to stimulate the training centre.
With modern technology and social media Schmeitz also has a task to build a community – a third focal point of FDL. He intends to create an open community in the total supply chain of meat, eggs, dairy and animal protein by cross docking and knowledge of business needs, feed technology, production and technology (Figure 1). “The idea is that the agribusiness in the feed chain participates in this community. I am thinking of companies active in raw materials and ingredients, animal feed, pet food, wild feed and technology companies, and government, education, research and knowledge institutes that work together and share knowledge in networks. Furthermore projects need to be set up to develop new feeds and new technology for a sustainable animal protein chain in 2020.”
The innovation themes that FDL is focusing on are aimed at the three P’s of People, Planet and Profi t with projects on health (people and animals), sustainability (feed and process), a bio-based economy (valorisation of food co-products and waste) and internationalisation (companies and chains). To lift the project to the next level FDL has developed several sponsor programs ranging from €250 for an individual person/company to gain full access to trial outcomes up to €250,000 for companies who then will become a member of the board. A second source of income will be projects to run for third parties.