AMINO REPORT

December 2019 / January 2020

Indication Prices

(average cost and freight to Durban)

L-Lysine HCI

ZAR 15,66

L-Lysine sulphate

ZAR 11,97

L-Methionine

ZAR 31,23

L-Threonine

ZAR 15,56

L-Tryptophan

ZAR 93,84

L-Valine

ZAR 58,26

L-Arginine

ZAR 96,02

Headlines

China and South East Asia

  • It seems China has finally turned the corner with African swine fever (ASF), which has been battering China’s pig herds since mid-2018. China’s breeding sow population rose by 2,2% in December, up from the previous month, while pig stocks at large farms rose by 2,7%. China’s sow herd had declined by nearly 40% by October 2019, but according the Ministry of Agriculture the sow herd has already grown by 7% since September 2019. The number of pigs sent for slaughter in December rose by 14,1%, compared to November 2019, in preparation for the Lunar New Year festival in January 2020. In order to ensure a sufficient supply of pork, the Chinese government has released more than 200 000 t of frozen pork from state reserves since 1 December 2019, as well as 3 000 t of beef and mutton. Although further outbreaks are expected to continue, it seems the precautions put in place to manage the disease have been effective. In a recent report, only 5% of 243 samples taken from abattoirs across eight provinces tested positive. New measures also include criminalising the slaughtering, processing, and selling of diseased or suspected diseased animals, with convicted offenders facing the highest penalty. In a recent case, officials found 435 pigs being illegally transported into Sichuan province. Fifteen animals had already died, while the rest tested positive for ASF. The animals were immediately culled and the drivers arrested.
  • To put the ASF outbreak in China into perspective, consider the following numbers from the National Bureau of Statistics of China:
    • The breeding sow herd has fallen by 41%, while the entire national herd declined by 55%.
    • The 2019 pork production was the lowest since 2003 at 42,55 million tonnes.
    • The number of slaughtered hogs fell 21,6% to 544,19 million head in 2019. A November forecast by Rabobank, however, expected the final production for 2019 to drop to 40,5 million tonnes, a drop of 25%, with another 10–15% drop for 2020.
  • In December 2019, China’s Ministry of Agriculture and Rural Affairs announced a three-year plan to ensure a speedy recovery of pig production. The plan targets to recover the industry to previous levels by the end of 2020. As part of this drive, the Chinese state has made more than USD 7 billion (ZAR 105 billion) available to fund cooperation between large commercial farms and small family farms. The plan calls for large farms to either buy shares or lease family owned farms, who will, in return, be able to upgrade their facilities. Nearly half of all pork in China comes from farms that produce less than 500 animals per year.
  • Sichuan province, China’s top pork-producing province has pledged to produce 60 million pigs for slaughter in 2020. Local authorities have approved a subsidy of CNY 300 (ZAR 640) for every new sow added. The province produced 66,38 million pigs in 2018. Since August 2019, 435 new farms have been built in the province, promising to produce more than nine million animals annually.
  • In a bizarre twist, one of China’s biggest animal feed producers reported that it has caught criminals using drones to drop ASF-contaminated pork products on its pig farms. Apparently ASF has inspired some people to deliberately spread the disease as part of a racket to profit from the health scare. Some of these gangs have also faked outbreaks on farms in order to convince farmers to sell healthy animals at prices far below the market.
  • China’s Ministry of Agriculture has issued biosafety certificates for domestically grown, genetically modified (GM) corn and soybean traits. The certificates were granted to a corn trait developed by Beijing Dabeinong Technology Group Company Limited, a double-stacked corn product developed by Hangzhou Ruifeng Biotech Company Limited and Zhejiang University, and a GM soybean developed by Shanghai Jiao Tong University. The granting of certificates is one of the last steps required before GM products can be sold to farmers for planting. It is hoped that these varieties will help increase domestic production of important food crops. China boosted its soybean production by 13% in 2019 to 18,1 million tonnes. Total food crop production for 2019 rose by 0,9% to nearly 664 million tonnes, despite the rapid spread of fall armyworm.
  • China’s National Agricultural Technology Extension and Service Center (NATESC) warned that fall armyworm is expected to spread even further in 2020, threatening the key corn-growing areas, and could potentially have an even greater effect than last year.
  • China approved two new genetically modified (GM) crops for import that could boost agricultural purchases from the United States (US), while renewing permits for 10 others. These include soybeans, corn, canola, beet and papaya varieties.
  • The phase one trade deal between the Unites States (US) and China was signed recently and has been reported on widely, with differing numbers. According to the US, China will buy more US agricultural goods, while the Chinese have stated they will buy according to their domestic demand. Some analysts have questioned if China will be able to meet commitments made under the new deal. Uncertainty about the fate of current trading partners and contracts already in place also remains. It may be that the two sides already have different interpretations of the agreement. Early in December 2019, China approved imports from several alternative suppliers, for instance Ukrainian rapeseed meal as well as rice bran and palm meal from Thailand. It seems China will continue to diversify its supply chain despite the newly signed agreement with the US.

    According to the trade agreement, China will buy an additional USD 32 billion (ZAR 478 billion) worth of agricultural goods over the next two years. That’s USD 16 billion (ZAR 239 billion) more per year than 2017 (pre-ASF) levels of USD 24 billion (ZAR 358 billion). Chinese officials who were involved in the negotiations indicated that China will primarily increase wheat, rice and corn imports to meet the new targets. Other products like pork, beef, poultry and dairy will also be part of the mix. However, some analysts are adamant that grain and oilseed imports will only account for 50–60% of the target and expect that tariffs on other agricultural products will soon be removed in order to facilitate imports. It’s important to note that China’s agricultural imports from the United States were CNY 14,1 billion (ZAR 30 billion) in December, before the agreement was signed. This included 375 000 t of pork and 189 000 t of beef. 

  • In July of last year, China’s Ministry of Agriculture and Rural Affairs announced regulations banning the use of antibacterial growth promoters. Production and imports of sub-therapeutic antibiotic growth promoters (AGPs) have been suspended from 1 January 2020, while production of feed additives containing growth-promoting antibiotics are to be seized by 1 July 2020. Feed products that have already been manufactured can be marketed until the deadline of 31 December 2020.
  • While the worst of the ASF outbreak seems to be behind China, other countries in the region are still facing severe consequences. Both Vietnam and the Philippines are facing lower pork production and lower total feed sales, despite expected growth in poultry and aqua feed. Philippine pork output is expected to drop by 8% in 2020. Vietnam, however, has been hardest hit. Full-year pork production for 2019 is expected to be 21% lower than the previous year. Vietnamese pork prices are at an all-time high as nearly 22% (more than 6 million head) of the herd has been culled. Live hog prices have increased by up to 40% in some cases. The country imported around 10 000 t of pork per month during 2019.
  • Indonesia has reported nearly 400 outbreaks of ASF since September 2019, causing the deaths of almost 30 000 pigs. The outbreaks seem to be limited to the northern Sumatera Utara province.
  • Kazakhstan has banned livestock exports until at least April. Beef and cattle exports almost doubled in 2019, driven indirectly by higher international prices due to greater demand in China and neighbouring Uzbekistan. Local beef prices have risen by 16% over the last year. The move was criticised by Kazakhstan’s meat union as unnecessary interference in the market economy.
  • India has reported two outbreaks if H5N1 bird flu, one in the central state of Chhattisgarh, and the second in the neighbouring eastern state of Odisha.

Headlines

Europe and Russia

  • The Russian agency Rosselkhoznadzor (the Federal Service for Veterinary and Phytosanitary Surveillance), has imposed restrictions on beef supplies from two Paraguayan and five Argentine meat plants after finding traces of ractopamine in some shipments. Temporary restrictions on three Brazilian plants, originally imposed for the same reason, have been lifted.
  • Rosselkhoznadzor also announced that it has suspended lysine imports from two US suppliers due to non-compliance with inspection requests. It is also looking into suspending certain Chinese feed additives due to contamination with Salmonella and Escherichia coli.
  • The continuing rail and port strikes in France are having serious repercussions for the agricultural sector. Various feed and feed additive companies have been struggling with raw material supplies, to such an extent that Addisseo had to declare force majeure on methionine contracts. The grain industry has also been hit hard. With freight trains and port operators on strike, cereals destined for export are stuck in grain storage. According to the French cereal industry organisation, Intercéréales, 450 000 tof grains are stuck in ports.
  • Britain has announced a GBP 3 million (ZAR 58,8 million) funding package to support British farmers over the next two years as the country withdraws from the European Union’s Common Agricultural Policy. The United Kingdom left the European Union (EU) on 31 January 2020.
  • Dutch farmers and construction workers blocked roads with tractors as they gathered in protest against being singled out as the main source of nitrogen pollution. This comes after the Netherlands was found to be in violation of the EU’s reactive nitrogen rules. The main contributors to nitrogen pollution are the agricultural, construction, and transport industries.
  • Poland has seen a number of serious disease outbreaks in the last two months. Fifty-five cases of African swine fever (ASF) have been found in wild boar, with some close to the German border. This has made the German authorities extremely uncomfortable, since Germany is a major exporter of pork products. German and Polish authorities have been discussing the building of a fence on the Polish side by the German Civil Defence Force. Some German states bordering Poland have already begun constructing their own fences to try and keep wild boar from crossing the border and have relaxed hunting regulations. Apart from ASF, Polish authorities have also detected a number of cases of H5N8 bird flu. Turkey, poultry, and geese farms have been affected. Poland is the largest poultry producer in the EU.
  • Apart from Poland, serious cases of H5N8 bird flu have been identified in Ukraine, Hungary, Slovakia, Romania, and the Czech Republic, and ASF has been detected in wild boar in the east of Serbia, close to the Bulgarian and Romanian borders.
  • Bulgaria culled 24 000 pigs on a farm near the village of Nikola Kozlevo in the north-east of the country, and a further 40 000 pigs not far from there, close to the Black Sea port of Varna.
  • Ukraine has recently obtained the right to export fresh chicken eggs to Japan. Ukraine is among the top European egg producers and increased output by 3,5% to 15,5 billion eggs from January to November 2019. It is unknown if the recent bird flu outbreaks will affect this agreement.

Headlines

The Americas

  • Brazil’s Ministry of Agriculture, Livestock and Food Supply announced a ban on the commercialisation and use of the antimicrobials tylosin, lincomycin, and tiamulin for growth promotion in animals. All three are considered antibiotics important to human medicine by the World Health Organization.
  • Over the past two months the United States Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service has confirmed 17 cases of Newcastle disease in California – 14 in San Bernardino County, two in Riverside County and one in Los Angeles County.
  • The US wants to pursue a similar trade strategy with India as it has done with China over the past few years. It has been described as a mini Chinese trade deal. The US wants India to buy at least another USD 5 billion to USD 6 billion (ZAR 74,75 billion to ZAR 89,70 billion) worth of American farm goods if New Delhi wants to win reinstatement of a key US trade concession and seal a wider agreement. India was removed from the Generalized System of Preferences (GSP) program that allowed zero tariffs on USD 5,6 billion (ZAR 86,72 billion) of exports to the US. In retaliation, India slapped higher tariffs on more than two dozen US products. The aim is to reduce the current USD 25,2 billion (ZAR 376,73 billion) trade deficit with India.
  • The Canadian Food Inspection Agency cancelled the Safe Food for Canadians licences of three meat companies, after receiving false and misleading information regarding E. coli results. which previously had licences suspended. The move affects Ryding Regency Meat Packers Ltd, and two others operating under St. Ann’s Foods Inc., Canadian Select Meats Inc. and Beef Boutique Ltd. All three had previously had licences suspended.

Middle East and Africa

  • In October 2019, Nigeria started to clamp down on poultry meat smuggled into the country by closing its borders to poultry imports. It has been estimated that since the effort began, the Nigerian poultry industry has saved almost USD 138 million (ZAR 2 trillion). Nigeria consumes about 2 million tonnes of poultry meat per year, 70% of which is imported. It’s estimated that poultry smuggling can be cut by at least 1 million tonnes per year if the government continues with the clamp down.
  • Kenya has introduced a livestock bill (The Livestock Bill, 2019), which will see the establishment of the Kenya Livestock Regulatory Board to regulate the quality of all livestock inputs, including animal feed. Henceforth, all animal feed producers must be licensed by the board. The board will also regulate auxiliary services such analytical and extension services.
  • United States (US) sanctions against Iran have made trade more difficult, but not impossible. Brazilian meat packers are now sending shipments to neighbouring countries, and then by road on to Iran. There is an additional cost, making the lives of ordinary Iranians more difficult, but overall trade flows have been maintained. It seems Turkey is the preferred route, since Brazilian exports to Turkey have increased while exports to Iran have decreased by similar amounts over the same period. The real challenge lies with getting payments out of Iran. Most major banks are unwilling to process payments, but it seems that an intricate system of small banks handles the bulk of monetary flows. One anonymous exporter quipped, “It’s more stops for the money than it is for the meat cargo.”
  • Namibia’s Meatco is considering importing cattle from Botswana as the worst drought in almost a century has decimated local cattle herds. Botswana and Namibia have the same health standards as both are exporters to the European Union (EU). Namibia became the second southern African country to be cleared for bone-in beef exports to China. Namibia currently exports 10 000 t of beef per year to the EU.
  • A South African auctioneer had been arrested on suspicion of violating a ban on selling animals from an area affected by foot-and-mouth disease in Limpopo province. Live auctions have been suspended in Limpopo, Mpumalanga, Gauteng and North West provinces, while eSwatini and Zimbabwe have banned imports from South Africa.

Markets

  • According to the Food and Agriculture Organization of the United Nations (FAO), global meat prices reached their highest level in December since 2014, after rising by 18% during 2019. This is in the aftermath of ASF devastating swine herds in South East Asia.
  • China has announced a number of relaxed customs regulations and lower tariffs after signing phase 1 of the trade deal with the US. In order to diversify soybean imports, customs regulations have been relaxed to encourage imports from Kazakhstan, Russia, and Ukraine. China will also lower tariffs on several US products, ranging from frozen pork and avocados to semi-conductors. Temporary import tariffs lower than the most-favoured-nation tariffs will be in place on more than 850 products. Frozen pork, for example, will be subject to a tariff of 8% instead of the most-favoured-nation tariff of 12%. China has also lifted a ban on Japanese beef and pork, while two Russian beef producers, Miratorg and Zarechnoe, have been cleared for export.
  • Thailand is expected to increase chicken exports to China by 60% in 2020. Fifteen of Thailand’s 27 chicken-processing plants have been cleared for exports since 2018, while the remaining 12 are in the process of accreditation. Total chicken exports are expected to reach 980 000 t, with Japan and the European Union (EU), it’s largest export markets at 440 000 and 324 000 t, respectively.
  • Brazilian beef exports reached 1,828 million tonnes in 2019, worth USD 7,45 billion (ZAR 111,38 billion), mainly driven by Chinese demand. Pork exports rose to a record of 750 300 t in 2019, up by 16% from the previous year. China was the main destination for Brazilian pork, buying 248 800 t, an increase of 61% from 2018, while sales to Vietnam soared by 83% to 13 540 t.
  • Brazil and China are also finalising a standardised health protocol to allow more Brazilian soymeal export to China. Brazilian demand for biodiesel is driving a higher demand for soybean oil, leaving processors with excess soymeal. Demand is set continue to rise as the government plans to raise the mandatory quantity of biofuel to be blended into diesel from 11% to 15%. Brazilian processors crushed 43 million tonnes of soybeans in 2019, and that number is expected to rise by another nine million tonnes by 2023.
  • Brazil’s 2019/2020 soybean crop is forecast at 123,5 million tonnes according the United States Department of Agriculture (USDA), with exports expected to reach 75 million tonnes, and 44 million tonnes destined for local processing.
  • Brazil could lose around USD 10 billion (ZAR 149,5 billion) worth of farm exports after the recent US–China trade deal was signed. Brazilian farm exports to China surged to USD 35,4 billion (ZAR 529,2 billion) in 2018 from USD 26,6 billion (ZAR 396,7 billion) the year before, while US farm exports to China dropped to USD 13,2 billion (ZAR 197,3 billion) from USD 24 billion (ZAR 358,8 billion). The main products expected to be impacted are soybeans, poultry and cotton.
  • A combination of higher than normal corn exports in 2019, higher than normal demand from meat producers, and delays in second corn plantings have all combined to push Brazilian stocks to the lowest levels since 2017. Brazil could be forced to import corn later in 2020, after exporting a record 41 million tonnes in 2019. On the bright side, Brazilian agricultural output is expected to grow by 3% in 2020. Brazilian meatpacker JBS S.A. is already in talks to import nearly 200 000 t of corn in response to higher prices in the domestic market.
  • Indonesia will likely need to import 60 000 t of buffalo meat for retail consumers, 129 000 t of beef and buffalo meat for the food industry, and 550 000 head of feeder cattle in 2020. Brazil, Argentina and Australia are being considered as preferred suppliers, based on preliminary costs.
  • The fight between traditional meats and plant-based meats regarding labelling is expected to become fiercer in 2020. At the centre of the debate is the use of terms traditional terms such as burger, meat and milk, with alternative suppliers claiming any restrictions on their use is anti-competitive. The global plant-based meat market is expected to reach USD 27 billion (ZAR 403,6 billion) by 2030.

Corporate headlines

  • Zambeef Products PLC (Zambeef) has announced the retirement of both its chairman, Dr Jacob Mwanza and chief executive officer (CEO), Francis Grogan. They will be replaced by Michael Mundashi and Walter Roodt, as chairman and CEO, respectively. This announcement coincides with an approval to sell its Sinazongwe Farm to Chenguang Biotech (Zambia) Agri-Dev Limited for USD 10 million (ZAR 149,50 million).
  • As mentioned earlier in the section on Europe and Russia, Addisseo declared force majeure late last year. The products affected include DL-Methionine (Rhodimet® NP99), AdiSodiumTM, sodium sulphate and carbon sulphur. This is in response to difficulties in obtaining certain raw materials and intermediaries required, precipitated by the French pension reform strikes.
  • Avara Foods in Hereford in the United Kingdom (UK) are plucking the fruits of investing over GBP 6,5 million (ZAR 127,4 million in 2019. Investments in new technology, facilities, and worker pay have resulted in an increase in capacity by 100 000 chickens per week, as well as improved efficiency and productivity.
  • Alltech has announced a partnership with Ingenieursbureau Heemskerk B.V., a Dutch dairy nutrition company, to develop a nutritional solution to improve protein utilisation and reduce ammonia emissions in dairy cattle. An additional solution to treat ammonia in manure storage facilities is also being developed.
  • Agricultural conglomerate Cargill Inc. says it’s setting a new target to reduce greenhouse gas emissions across its global supply chains by 30% per tonne of product by 2030. Cargill has been heavily criticised this year, with environmental groups saying the company will fall short of a previously set goal to halt deforestation. The new target relies on improving soil content, reducing carbon emissions in its ocean shipping and planting trees.
  • Beyond Meat Inc. and Impossible Foods Inc. are considering China as their next big market for plant-based meat products, but local start-ups aim to leverage their own knowledge of Chinese tastes to gain an edge over the US companies. Impossible Foods unveiled its plant-based meat burger in China at a Shanghai trade fair attended by President Xi Jinping last year and has also introduced a soy protein-based pork alternative in Las Vegas, which they hope will give them the edge in the Chinese market.
  • Thailand’s largest agribusiness firm, Charoen Pokphand Foods Public Company Limited (CPF), will introduce its own plant-based meat substitutes this year to the Thai market. The plan is to expand into other Asian markets in time.
  • Brazilian food processor Marfrig Global Foods S.A. has also launched a global brand of plant-based meat products. A gourmet hamburger to be served in Brazilian restaurants will be the first product to be rolled out under the brand Revolution. The veggie burgers will be exported and sold in local supermarkets later in 2020.
  • ADM Animal Nutrition has opened a new animal nutrition technology centre in Decatur, Illinois. The centre includes a pilot extrusion facility, a pet food culinary kitchen, a feed evaluation laboratory enabling specialised screening, and an enzyme analysis laboratory.
  • Nutreco N.V. became the first animal nutrition company to join the Funding for Soy Farmers in the Cerrado initiative, which aims to conserve native vegetation and biodiversity in Brazil’s Cerrado region where over 80% of Brazilian soy is produced, by providing financial incentives to farmers to produce soy only on existing agricultural land and help offset deforestation. Via Trouw Nutrition and Skretting, Nutreco has pledged to commit EUR 1 million (ZAR 16,6 million) to the fund over the next five years. Two other companies that have also joined the initiative are Tesco and Grieg Seafood.
  • Danish bacterial protein company Unibio has received an investment from Japan’s Mitsubishi Corporation. This will allow the company to expand production to a global scale. Unibio makes Uniprotein®, a protein ingredient made from bacteria which feed on methane, a greenhouse gas.

    The Ukrainian pet food producer Kormotech Group will substantially expand its domestic and international operations thanks to a loan of up to EUR 10 million (ZAR 165,6 million) provided by the European Bank for Reconstruction and Development (EBRD). The funds are part of a wider investment programme, which includes the construction of a new production facility in Lithuania and the expansion of the group’s activities in Ukraine. As part of the project, Kormotech will support the expansion of specialised veterinary education across Ukraine to improve the job prospects of young professionals from remote areas. Kormotech Group is one of the top three market players in the Ukrainian pet food market and the first and largest Ukrainian producer of high-quality pet food for cats and dogs. The EBRD is a leading institutional investor in Ukraine and to date has committed more than EUR 14,5 billion (ZAR 240 billion) in over 450 projects to the country. The EBRD’s investments in Lithuania stands at EUR 900 million ZAR 15 trillion) at present.

  • Tyson Fresh Meats Inc., the pork and beef subsidiary of Tyson Foods Inc., has entered into an agreement with the government of Kazakhstan and Singapore’s Kusto Group to collaborate on a project to build a beef-processing plant with an anticipated capacity of 2 000 head per day. Tyson Foods Inc. will reportedly be investing USD 5 billion (ZAR 74,8 billion) to construct at least three meat-processing plants in the country.
  • A fully automated 70 000 t-per-annum feed mill has opened in the Turkestan region of Kazakhstan, mainly producing cattle feed from wheat and barley. The mill will initially supply neighbouring domestic markets, but there are plans to also export to Uzbekistan and Afghanistan.
  • China’s Huayu Agricultural Science and Technology Co., Ltd has selected HatchTech B.V. to construct and equip a new parent stock hatchery, which is being developed by Huayu in Handan, Hebei Province for the production of Hy-Line poultry layer genetics. The new hatchery will ensure a constant supply of Hy-Line poultry layer genetics with an estimated capacity of 10 million parent layers a year.
  • Argentine soy crushing giant Vicentin S.A.I.C has halted most of its operations as the company battles to restructure its debt after defaulting earlier this month. Vicentin has not explained how its debt situation became so dire, but financing costs are a well-documented problem in Argentina, where the benchmark interest rate is a whopping 63%. Vicentin has around USD 350 million (ZAR 5,24 trillion) in outstanding payments to suppliers, while financing deals with local and international banks add up to well over USD 1 billion (ZAR 14,95 billion). Argentina’s Banco de la Nacion is a major backer. Dutch entrepreneurial development bank FMO, the World Bank’s International Finance Corporation, Rabobank, ING Group and others have lent funds to the firm. Vicentin’s financial meltdown underscores the challenge facing Argentine President Alberto Fernandez, who took office on 10 December 2019, as he looks to revive growth, calm rampant inflation and revamp about USD 100 billion (ZAR 1,495 trillion) in sovereign debt.
  • Tyson Foods Inc. received approval from US and Chinese authorities to export American poultry to China from all 36 of its US processing plants.
  • Global Bio-chem Technology Group Limited has announced that the temporary shutdown of its lysine production factory, Changchun Dahe, which was supposed to end in late-November of last year, will continue until after the Chinese New Year. Global Bio-chem has recorded a significant increase in consolidated net loss for the ten months ended 31 October 2019, as compared with the ten months ended 31 October 2018. This is mainly attributable to an increase in production costs of downstream production, a decline in sales volume and selling prices of feed products due to the impact of African swine fever and US–China trade tensions.
  • Nestlé S.A. has agreed to sell a majority stake in Herta, its packaged meat business, to family-run Spanish company Casa Tarradellas S.A. to create a joint venture. The decision to sell the cold cuts and meat-based products unit came after strategic review as it “no longer fits the company’s strategic focus on healthy nutrition and plant-based offerings”. It’s no surprise that Herta’s vegetarian business will remain with Nestlé.
  • As part of efforts to help the Chinese swine sector to recover, two Chinese companies have announced major investments. New Hope Liuhe Co., Ltd is investing CNY 5,79 billion (ZAR 12,33 billion) in seven new integrated swine projects, which will aim to produce 4,7 million animals for slaughter, and 1,28 million tonnes of feed. Wen’s Foodstuff Group Co. Ltd will invest in breeder farms, feed mills and technical centres to produce 3 million animals per year.
  • China’s East Hope Group Co. Ltd has announced a sizeable investment project in the pork industry which may as much as double its current hog production.
  • Ceva Santé Animale and Vietnam’s Department of Animal Health have signed several accords to promote preventative animal health research and development in the country. Two specific areas of focus for the partnership include a technology transfer collaboration aimed at developing more effective local foot-and-mouth disease vaccines, specifically adapted to the local epidemiology, and a scientific collaboration for an African swine fever (ASF) vaccine.
  • Commodity trader Olam International will create two separate businesses, Olam Food Ingredients and Olam Global Agri, focused on food ingredients and agricultural supply respectively, as part of its multi-year revamp.
  • Brazil meatpacker JBS S.A. has signed a memorandum of understanding with Hong Kong’s WH Group Limited to supply up to BRL 3 billion reais (USD 717,3 million or ZAR 10,7 trillion) of fresh beef, poultry and pork per year to the Chinese market.
  • Hubbard has invested EUR 8 million (ZAR 132,4 million) in its Premium French research and development centre. Hubbard has been involved in the selection and marketing of slower-growing broiler breeds for more than 50 years.
  • Tiger Brands Limited CEO Lawrence Mac Dougall will retire on 31 January 2020, having reached the company’s mandatory retirement age of 63. Chief financial officer Noel Doyle will take over as CEO from 1 February and Mac Dougall, will stay on until 31 March to ensure a smooth handover.
  • JBS S.A. plans to invest about BRL 8 billion (ZAR 28 million) in Brazil over five years as it braces for strong demand for meat products both locally and globally. This does not include recent investments, such as a new beef plant in the state of Mato Grosso to cater to the domestic market or its 37th Brazil-based beef unit, which is in the town of Brasnorte.
  • Brazilian meatpacker Marfrig Global Foods S.A. has reached an agreement with the government of Sao Paulo to invest BRL 600 million (ZAR 2 billion)to expand the processing capacity of one of its plants to 100 000 t of animal and vegetable proteins per year.
  • DuPont Animal Nutrition are to combine its Nutrition & Biosciences (N&B) business with International Flavors & Fragrances Inc. (IFF), creating a leading global food ingredient supplier. The new company will continue to be called IFF and be based in New York. The firms said that the combined company will have first or second positions across taste, texture, scent, nutrition, cultures, enzymes, soy proteins, and probiotics categories, but it is unclear at this stage what the ramifications are for the animal nutrition segment of DuPont Nutrition & Biosciences.

Research and technology

  • The founding members (Archer Daniels Midland, Bunge Limited, Cargill Inc., COFCO International, Louis Dreyfus Company B.V. and Glencore Agriculture B.V.) of the industry-wide initiative to modernise global trade operations have announced its new project name: Covantis. Furthermore, the initiative launched a new website which explains their vision to connect the agri-industry via an independent and trusted digital platform to enable post-trade efficiency for all participants. Covantis will also be the name of the digital platform now in development and expected to launch in this year subject to regulatory approvals. Covantis (covantis.io) is a blockchain initiative focused on modernising global trade operations. The founding members are jointly developing a platform to make global trade simple, secure and efficient. The initiative aims to bring efficiencies and cost savings to companies throughout the international supply chain.
  • Lallemand Animal Nutrition has entered a research and development partnership with the French biotech firm Dendris. The partnership will focus on developing a monitoring tool to characterise microbial fibrinolytic activity in the ruminant digestive tract. The objective of this new tool is to evaluate the effect of nutritional interventions, including probiotic supplementation, on the functional activity of the digestive microbiota. This research tool will help advance precision feeding for ruminants and help in the development of diet formulations or new feed additives aimed at maximising energy released from fibre degradation. The companies believe the work will improve animal efficiency in a sustainable way.
  • Edinburgh-based biotech startup MiAlgae has received an investment of GBP 1 million (ZAR 19,6 million) to focus on the commercialisation of its revolutionary microalgae product, targeting the rapidly growing global aquaculture and pet food industries. The biotech business uses co-products from the whisky distillation process to produce microalgae, which is high in omega-3 fatty acids and other nutrients. The algae can be used to sustainably feed fish and create animal food. MiAlgae estimates that one tonne of its algae saves up to 30 t of wild fish.
  • Cultured meat firm Mosa Meat has entered a partnership with Nutreco N.V. and with Lowercarbon Capital, a US-based venture capital fund that invests in emission-reducing technologies. The development of Mosa Meat’s pilot production plant, where the first commercial products will be grown, is well under way. The cost of growing meat from self-replicating animal cells has dropped significantly, but still has a way to go before it can compete with beef raised on the hoof. Current production costs are in the thousands of euros per pound, but the company expects to refine its processes and be able to sell its beef for “a couple of euros per hamburger” in approximately two years.
  • Skretting (part of Nutreco) has entered a partnership with BlueNalu, Inc., a San Diego, California-based developer of seafood products directly from fish cells. The two companies aim to build upon BlueNalu’s platform technology for production of cell-based seafood products from a wide variety of species.
  • Memphis Meats, the leading cell-based meat, poultry and seafood company has announced the close of a USD 161 million (ZAR 2,4 billion) funding round. The funds will be used to build a pilot production facility, continue to grow its world-class team, and to hit a major milestone of launching products into the market. The company has not yet announced a date for product launch and is working with regulatory agencies to ensure a timely and safe market entry.
  • According to research published in the Journal of Virology, an experimental vaccine is showing promise against the African swine fever (ASF) that has led to the deaths of hundreds of millions of hogs over the last year and a half. Researchers from the USDA’s Plum Island Animal Disease Center and academic institutions said they used predictive models to identify proteins associated with the virus and have developed a vaccine that’s proven 100% effective in both high and low doses. More work is needed to meet regulatory requirements for marketing the vaccine.

Charts

Chinese lysine prices remained subdued over December and January as most feed producers stocked up before the Lunar New Year celebrations. Most producers closed for the holiday as well. European spot prices are slightly firmer, after three non-Chinese producers halted production to gauge the effect of the novel coronavirus outbreak, which was first reported from Wuhan, China, on 31 December 2019. So far, this has had a minimal impact, since most producers are covered into the second quarter.

Very little to report from the Chinese market. The European market has seen recent price spikes. Raw material deliveries remain a challenge due to the ongoing rail strike in France. A gradual return to production is expected, as the strike is coming to an end, but is by no means guaranteed.

Chinese demand is very low and, with most producers closed, prices are stable. European spot prices have increased due to concerns about shipping delays out of China.

European valine prices increased sharply as a main European producer stopped offering product until the possible disrupting effect of the novel coronavirus is clearer.

Chinese tryptophan prices have increased due to stronger demand before the country’s New Year holiday. Further support came from non-Chinese producers who stopped production in the wake of the novel coronavirus outbreak, seemingly to prepare for possible supply chain interruptions.

For more information

contact Heinrich Jansen van Vuuren
heinrich@chemunique.co.za

This report contains information supplied by and compiled from eFeedLink and Feedinfo.
Detailed reports and references are available on request.

Synthetic amino acids

L-Threonine

Synthetic amino acids

L-Lysine

Synthetic amino acids

L-Arginine

Synthetic amino acids

L-Tryptophan

Synthetic amino acids

L-Methionine

Synthetic amino acids

L-Valine