Amino report – July 2021
AGP ban: What can we learn from China?
On 1 July 2020, China banned antibiotic growth promoters (AGP) in feed. For years the Chinese government has pushed for less AGP to be used in feed to safeguard food production and limit antibiotic resistance in animal production. A year on, there are some lessons to be learned.
In other news
The Parané River is at its lowest level in 77 years. The low water level has throttled grain exports from the Argentine river port of Rosario and is threatening water supply to millions of people. This prompted the government to declare a state of emergency in large parts of the river basin. The low water levels are forcing ships to carry up to 25% less grain, pushing high shipping costs even higher. The crisis also comes at the peak of Argentina’s maize harvest season. Even though dredging the riverbed to maintain a minimum depth is possible, it is expensive and could cause serious environmental damage as natural wetlands could be drained as a result. This is the latest setback in one of the world’s leading agricultural exporters. The ongoing battle of producers and exporters against constant government intervention in agriculture continues as the government proposed a government-managed toll system to finance the dredging operations and replaced a ban on beef exports with an export cap to limit food inflation. Argentine agricultural exports already carry some of the highest export taxes in the world, and is the main source of foreign currency for the embattled country.
Taming Russian food inflation
The Russian government is fighting to contain food inflation without creating shortages in the market. Russia has become a powerhouse in international grain trade in the last few years. Government investments in increasing agricultural production has made it possible for Russia to become one of the leading wheat exporters in the world. The drive to substitute imports with local produce to counter various sanctions has been largely successful but has also driven up many basic food prices. The government has been coming under increasing pressure to deal with the problem and even President Vladimir Putin publicly criticised the government’s slow response. A number of measures have been introduced recently, such as an export tax on wheat, as well as minimum levels for state stockpiles of certain goods. A crackdown by the Russian veterinary agency Rosselkoznadzor (the Federal Service for Veterinary and Phytosanitary Surveillance) on specific imported feed additives, has also resulted in increases in the cost of premixes and could, potentially, impact the efficiency of Russian meat production. This has already, and will continue, to drive up the cost of meat production. Balancing the long-term goal of self-sufficiency and agricultural exports with short-term price stability is a difficult act, with no easy answers.
Faltering soybean meal
Chinese soybean imports are expected to fall during the second half of 2021. Pork prices have dropped sharply in recent months, while wheat prices have increased substantially, putting profitability under severe pressure. Cheap wheat has been used as a replacement for expensive maize, but the increased demand for wheat has driven prices up in response. The Chinese government has also been pushing to decrease crude protein in diets and, thus, soybean meal, in an effort reduce the country’s dependence on imported soybeans. The combination of low and negative pork margins and lower inclusion rates has lowered soybean meal demand considerably. Slow Chinese demand, and a bumper harvest in the United States (US) could have a significant impact on soybean prices, giving some respite from high feed prices.