Raw materials

News

Covid-19: The impact on the animal feed industry

Even though the demand for animal feed has been relatively stable, the supply has been gravely hit by the coronavirus crisis.

For instance, countries such as Romania have banned the export to Non-European Union countries thereby creating severe demand-supply problems in the animal feed industry. Amongst the banned grain exports include soybeans, bakery ware, flour, maize, barley, and wheat.

On the other hand, China, a major supplier of organic soybean has caused disruptions for global organic feed producers in view of its draconian measures imposed to curb Covid-19 pandemic. Moreover, the supply of containers and vessels has also been affected along with transport of certain micro-ingredients due to China’s logistics issues. The Indian Government has ordered partial closure of its international ports promoting further disruptions in the animal feed supply chain.

The animal feed industry has also been badly affected by the closure of restaurants around the globe. The dramatic shift in consumers’ consumption pattern in the light of SARS-CoV-2 outbreak has compelled manufacturers to rethink their policies and strategies. Lamb production, aquaculture, beef and veal sectors in particular are amongst the worst affected. Aquaculture farmers and EU livestock have called for crisis management measures to mitigate the impact of Covid-19. Private storage aid is the chief mitigation measure being demanded by aquaculture farmers.

Covid-19 Up-date
What impact is the pandemic having on the global animal feed sector and how are they dealing with it.

Analysts predict reduction in use of soybean, corn, and wheat in animal feed

The worldwide consumption of fish and meat has declined drastically. Hence, the demand for Grain and Oilseed (G&O) has reduced considerably as well. Analysts estimate about 6% decline in soybean, corn, and wheat demand for animal feed in countries such as Vietnam, Thailand, Malaysia, and the Philippines in the year 2020. Approximately 65% of net annual production of soybean, corn and wheat is consumed in animal feed industry, while the remaining 35% for food consumption. Therefore, even though the home consumption of G&O has increased, it is greatly outweighed by the reduced consumption in animal feed industry.

Mass exodus of migrant labourers hinder production in Southeast Asia

Many formal and informal economies in Southeast Asia are sustained by migrant workers. In view of stringent lockdown protocols, these migrant workers began returning to their native lands, leaving the distribution, supply chains, and production severely shattered. Hence, major manufacturers in animal feed industry are left with a significantly reduced workforce. They are hopeful that governments will restart certain agriculture activities to prevent the economy from collapsing any further.

Dutch feed industry association has drawn certain guidelines aimed at maintaining production continuity, delivery to farmers while protecting workers. Moreover, they have given the liberty to use the guidelines at their own discretion. Photo: Bert Jansen
Dutch feed industry association has drawn certain guidelines aimed at maintaining production continuity, delivery to farmers while protecting workers. Moreover, they have given the liberty to use the guidelines at their own discretion. Photo: Bert Jansen

In addition, truncated air freight capacity, port congestion, roadblocks, and logistic disruptions in Southeast Asia are expected to escalate as stricter measures are implemented by governments. The consumption of fish, poultry, pork, and beef will decline in Southeast Asian economies through the second quarter.

Panic-induced purchase fuel demand for animal feed additives

As the United States government implemented stay-at-home orders, many farmers resorted to panic buying of animal feed in the anticipation of potential shortages. Several concerns such as truck shortages, reduced deliveries, and employees contracting Covid-19 compelled farmers to stock their animal feed supplies. This move spiked the demand for animal feed additives during the first week of April, 2020. Farmers in the United States are concerned about measured production in slaughterhouses as well. As the US ordered shutdown of ethanol plants, it has added to the concern of farmers. Key stakeholders in livestock feed market are worried about lack of Dried Distillers Grains (DDGs), an important by-product.

This trend, which was earlier reported from China, was report by other countries such as Germany and France and subsequently by the United States as the epicentre of Covid-19 shifted from Asia to Europe and then to North America. During the initial phase of the lockdown, intensified purchases of ingredient was witnessed by French feed producers. Similar trend was reported from Germany as well. Amid concerns over suspension of production, feed makers engaged in panic buying in various parts of Germany. This led to 10% jump in global feed sales in the previous month of March.

Dutch Government introduces protocols for continual feed production

The Netherlands has suffered little disruptions in terms of supply and feed delivery. The government has laid down new protocols to ensure safety of farmers along with continual production and supply of feed additives. Dutch feed industry association has drawn certain guidelines aimed at maintaining production continuity, delivery to farmers while protecting workers. Moreover, they have given the liberty to use the guidelines at their own discretion. The guidelines will be updated as the situation progresses in foreseeable future. The government of Netherlands has implemented strict biosecurity protocols and ordered that all necessary transactions take place by phone. Similar steps are required in other countries as well where the supply chain has been severely affected.

Drivers delivering feed additives would need to follow World Health Organization’s (WHO’s) preventive sanitation measures. Additionally, contact tracing of drivers is of paramount importance. Any close contact must be preferably either completely avoided or minimised in the least. For the feed additive industry to function, farmers must follow the hygiene measures as well.

As per guidelines, close contacts are those people who have been within 2 meters of Covid-19 infected individual for more than 15 minutes. Farmers in the United Kingdom are following similar procedures in order to maintain feed supply continuity along with well-being and safety of customers and employees.