DSM who partnered with us for our first event in Frankfurt, Feed Additives 2017, spoke with Feedinfo News Service to share their perspective on vitamin volatility.
There has been much recent discussion about the state of flux in the feed vitamin market. Gertjan de Koning has recently joined DSM Animal Health and Nutrition as Global Commercial Vice-President, which has required him to bringing a fresh perspective on vitamin production and supply into 2018. Although no stranger to DSM, having worked in a diverse range of roles across the company, he has stepped into the animal nutrition arena at a time unlike any other seen by colleagues who have been in the business for over 30 years.
[Feedinfo News Service] Mr. de Koning, how do you see the current situation in the vitamins market?
[Gertjan de Koning] Right now, all eyes are on the recent Force Majeure declarations and its consequences for the vitamin A and E markets. These events have tipped the scales of an already nervous market into major concern. However, it is important to remember that the underlying reason for the nervousness started to show its effects already several months ago, impacting all vitamins.
[Feedinfo News Service] What do you think is the source of this unprecedented volatility?
[Gertjan de Koning] What’s happening in China is having a big impact on feed additives worldwide. The real change in the market and major influencing factor is China’s rigorous enforcement of environmental protection measures. Many industrial facilities are subject to drastic reduction in output or even complete shutdown, even more so now in the Chinese ‘heating season’. The resulting supply issues are currently disrupting a wide range of industries. Feed additives are no exception, since Chinese production plays a central role for the agrochemical industry and its raw materials.
[Feedinfo News Service] How will these regulatory changes affect vitamin production?
[Gertjan de Koning] The determination, shown by the people and government of China in making this change for the better, deserves a lot of respect. Companies in China need to run facilities differently. The actions required to upgrade facilities to ensure regulatory compliance will take time and investment. Things will be shaky for a while. Still, this is in fact good news for the industry, as consistency and overall environmental standards of manufacturing practices will increase considerably.
[Feedinfo News Service] What is DSM’s position during this current period of instability?
[Gertjan de Koning] What does concern us is the fact that some prices in this overheated market are extremely high, and that some vitamins, irrespective of price, will be very difficult to obtain. Both factors may well put pressure on vitamin inclusion levels in feed, and responsible animal nutrition may be at risk. DSM is well aware of the seriousness of the current market situation, and we will do our best to make available to the market all material we have in order to mitigate the disruption. Still, for part of 2018, we expect that the supply situation of the market will remain very tight.
[Feedinfo News Service] Why is the reduction of vitamin inclusion rates concerning?
[Gertjan de Koning] Vitamins are essential and irreplaceable nutrients. Some alternatives currently being proposed, irrespective of their regulatory status, cover at best only part of the metabolic functionality. Truly equivalent alternatives for vitamins do not exist. Optimal vitamin levels to maximize animal health and productivity have been established by extensive research for every species and every life stage. We strongly recommend not to deviate from these levels for perceived cost reasons. The cost of vitamins, even under the current exceptional market conditions, is still small compared to the value they bring in terms of productivity and quality.
[Feedinfo News Service] What would you recommend to those short on certain vitamins?
[Gertjan de Koning] When short supply leaves no choice but to reduce the inclusion rates, we recommend adjusting formulations only for the specific vitamin not available. Instead of cutting levels across the board, we recommend a differentiated approach: supplementation levels for young and gestating animals should be maintained, to avoid adverse effects on animal welfare and livestock production; the least risk to health, performance and profitability is likely to be achieved by vitamin reductions in the terminal growth period only. Once again, such approach intends to mitigate the risks for deficiencies, but will not optimize long-term herd health and production. Our customers can count on our commitment to be the reliable partner helping them navigating through the challenging landscape.
[Feedinfo News Service] What is DSM’s long-term view of the industry?
[Gertjan de Koning] Sustainability is in the genes of DSM and we are committed to this industry. We have continuously invested in advancing our processes and environmental controls and are now well positioned with robust sustainable practices in place. We welcome the fact that all players in the vitamin market will now be held against similar high standards, and consider this the inevitable correction the industry had to go through. The industry is facing a tough period now, but in the end the market will be sustainable on the other side.
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We are running our first event in Asia, in Bangkok, May 2018. More information can be found here.