The World Animal Feed Industry - Roger Gilbert

Roger Gilbert
Secretary General
International Feed Industry Federation

INTRODUCTION

It is appropriate to start by identifying just who and what the animal feed industry is. While there are various ways to produce feed for livestock, there are just three broad production and delivery systems involved where farmers ‘take in’ feed to assist them in producing their livestock products - be that dairy or beef cattle, chickens, laying hens, pigs, rabbits, goats and sheep or fish. They are:

• commercial operations producing feed for sale;

• integrated operations where large pig or poultry producers in particular produce their own feedstuffs;

• co-operative operations where farmers jointly own the feed mill or production plant that produces the feed they use.

These are the sectors that the International Feed Industry Federation (IFIF) represents through its National Feed Association members. Unfortunately, the vast majority of countries do not have feed associations and are therefore not represented by IFIF which also represents suppliers to the feed trade, including machinery and raw material producers.

What makes the industry similar or different between countries or across borders?

For a start the same livestock are fed (often rearing the same genetic stock); the same research and trial results are used to determine what animals need in order to maximise their genetic potential; the same feed formulation software is used to provide ‘least-cost’ diets in order to remain competitive in the market place. And finally the same manufacturing technology is used - the same equipment - and most often the same raw materials.

What makes the industry different and why it is that numerous feed mills are maintained within countries is the different cultures and skills that are brought to the business of making feed.

Today, fewer than 3800 feed mills manufacture more than 80 percent of the world’s industrial feed.

Despite the strong trends of vertical integration and consolidation within the industry, the world’s 10 largest feed manufacturers produce less than 65 million tonnes per year - less than 11 percent of global feed output. So, the global feed industry still remains broadly based, with many local and regional commercial feed companies as well as specialised firms. The European Feed Manufacturers' Federation (FEFAC) calculated that its members in the European Union, which produce some 120 million t of compounded feed annually, accounts for approximately a quarter of all feed consumed by livestock in Western Europe. Calculating fed production from a livestock base produces a figure of approximately 1000 million t annually.

However, IFIF’s best estimate - and supported by Feed International magazine figures - suggests that annual compound feeds production is in the order of 600 million t.

Ten countries produce more than 60 percent of the world’s total industrial feed, while 50 countries produce more than 90 percent of the total. Manufactured feeds for poultry are the greatest proportion of tonnage. Next is pig followed by cattle feeds, which are mainly concentrates for dairy cows. Feed products for fish and crustaceans accounts for 14 million t and is growing.

In 1999, global per capita feed use was 98 kg/person/year, down on the peak of 105 kg during 1995/1996. This figure modulates depending on improved or declining economic conditions (Table 1).

This brief introduction helps put IFIF and the compound feed production system in context with total livestock feeding.

In the following sections the three topics covered will be referred to as the three ‘Ps’. They are: protein, population and politics.

PROTEIN

Protein is the key building block for feed formulation systems. And the international trade in protein materials is central to the industry’s success no matter where production is carried out. Without this trade, the industry would not have the ability to formulate correctly and it would not be what it is today. And respective populations would have less choice and poorer diets as a consequence.

Yet with all the modern-day sophistication in trade, transportation, handling, formulation and delivery systems that gets products to livestock growers on a ‘just-in-time’ basis, protein sources are now in trouble.

TABLE 1
Global population, feed manufacture and per capita use

Source: Feed International 2002 World Feed Panorama Survey (2001 data).

Protein oilseed meals. Soybean meal for example accounts for 75 percent of all protein used in compounded livestock rations worldwide. There is an on-going debate and campaign to reject genetically modified organisms from livestock diets. The livestock feed sector will have to join this debate and win it if it is to have genetically modified organisms (GMO) developments in the future which will improve production and add nutritional advantages that are acceptable to the sophisticated western consumer. It is the affluent west European consumer that is gaining the attention of policy makers in Brussels, and what the European Union does seems to persuade others of the issues.

Rendered Animal Products. Meat and bone meal, a long-time traditional ingredient and rich source of amino acids and minerals in livestock feeds worldwide, is banned in the European Union. This is due to the bovine spongiform encephalopathy (BSE) crisis and the link to the new variant Creutzfeldt - Jakob disease (vCJD) in humans.

Fishmeal. The inability of current testing procedures to distinguish animal by-products now being produced under new processing procedures from fishmeal, has led to fishmeal being included in the overall animal protein ban. There is also an underlying concern over dioxin levels in fishmeals.

There are other sources of protein, but from the industry’s point-of-view, these are the ‘Big Three’. Within oilmeals, soybean dominates as a protein source.

All three proteins are key components in commercially produced livestock rations in all countries, and all these proteins are traded globally. It is the raw materials that travel to the areas in which the livestock, that will consume them, are being farmed. Feed mills in general, are located near the centres of livestock production and seldom does complete feed cross national borders or travel far from the point of manufacture. Feed concentrates on the other hand - where the protein content or the micro-ingredients are expensive and require careful formulation - may be traded internationally and over greater distances, but the volumes in comparison to complete feeds is minute.

Yet the industry often feels that governments do not see the importance of the trade in feed raw materials as part of the food production systems. With protein sources facing crisis and projections putting world population on target to reach nine billion by 2050, it is timely for FAO to set up this Expert Consultation.

There are two key reasons why the industry should take more than a passing interest in protein sources:

1. It is part of today’s food chain. What consumers say, what they believe about the feed industry and how it goes about its business will effect the livelihoods of all involved, and what happens in one country can have a dramatic impact on the operation of the feed industry in another.

2. Population development - As total populations grow and as incomes rise, consumers will demand more animal products in their diets.

POPULATIONS

Every minute there are 251 births and 106 deaths worldwide; giving a net gain to the world’s population of 145 individuals. Over one year that is an increase of 76 million people.

The following is a brief review in terms of global population and how that will change over the next two to three decades.

1. Total world population stands at 6.4 billion (6 219 221 150)

2. In 25 years this will have increased to 7.8 billion and to 9.2 billion in 2050

3. The reason to chose the year 2050 is because it is the projected point at which world population increase begins to tail off and by the end of the century a plateau is reached. The pace of increase also decreases at this point.

Therefore, in terms of feeding people - (and note that protein is only one component in diets, and livestock products make up only a proportion of that) it is what happens over the next 25 years that becomes critical to the future success or failure of the feed industry.

Data from the United States Census Bureau show that countries with populations of over 100 000 million will be joined in 25 years time by many developing countries, and all with increasing gross domestic products (GDPs). Their demand for protein can only increase dramatically in the years ahead. David Bossman, President of the American Feed Industry Association and vice President of IFIF, has stated that “we will have to treble our protein production over the next 30 years to meet the growth in demand”.

Where do protein supplies come from? Who will have access to protein sources if demand outstrips supply? Will free trade - the traditional supply and demand scenario - continue to work when protein is in short supply? And if there are shortages what price will we have to be paid to secure protein supplies?

Many people claim that there is sufficient food in the world today to feed everyone, and it’s just a problem of distributing it. That is not necessarily true and it can be argued that food is best produced close to where it will be consumed. If that is true then it is good news for the feed industry. Move the bulk raw materials, manufacture feed close to animal populations - and presumably those animal populations are close to the populations demanding more livestock products. This scenario will mean that all the countries with populations predicted to expand to more than 100 000 million over the next 25 years will experience rapidly rising planes of protein demand, especially if they have rising GDPs as well.

Encouraging people to eat more cereals to combat the problem is not likely to work. It’s a fact that humans prefer animal products in their diet - not just for their essential nutrients but also because they taste good - and the developed world is in no position to deny people in developing countries from graduating from vegetable-based diets to livestock products as their incomes improve. In addition, animals are more efficient in converting all sorts of vegetable products that humans can’t digest into highly-digestible protein.

Without adopting biotechnology; without making meat and bone meal safe for use (in those countries where there is BSE in cattle); without convincing the consumer that these protein meals are safe and suitable for use, and without convincing consumers and governments alike that the industry is capable of adopting and sticking to safe procedures or that it is indeed a part of the food chain, how can it hope to meet the future demand for animal products - even within national borders?

It appears that the larger a country’s population the less likely it is to maintain protein self-sufficiency. For example, following the withdrawal of meat and bone meal from livestock rations in January 2001 for six months, and then extended indefinitely, the European Union’s dependence on imported protein sources went up by over 12 percent. It is interesting to note that prior to the ban, the European Union was just 29 percent self-sufficient in animal feed proteins. Since the ban, that self-sufficiency has decreased to just 25 percent. Other factors, such as the reform of the common agricultural policy (CAP), will also contribute to the falling level of self-sufficiency.

To bring population and protein production together in a meaningful way, it is possible to compare the leading countries in terms of population with their respective compound feed output (Tables 2 and 3). Not all reflect a balance between the two and some leave much room for growth, as can be seen when comparing the United States and China for example.

TABLE 2

Source: Feed International 2002 World Feed Panorama Survey (2001 data) and The US Census Bureau

TABLE 3
Top 10 feed producing countries by region

Source: Feed International 2002 World Feed Panorama Survey (2001 data).

POLITICS

BSE, the dioxin crisis in Belgium and various other health scares surrounding the feed industry, particularly in Western Europe have caught the attention of FAO and Codex. Codex Alimentarius responded by setting up a ‘Task Force on Feed’. This Task Force is made up from Codex member country representatives (there is no exclusion and any country can participate) and its objective is to establish a Code of Good Animal Feeding Practice. It has four years in which to do this. It is now in the third year of the process with the latest meeting taking place in Copenhagen in June 2002.

This is not a code for the feed industry. It is a code that must be ratified and adopted by Codex member countries and in turn incorporated into domestic legislation. The aim of the code is to provide governments with the information they need to change their national laws to reflect uniform world protection and safety when it comes to health issues involving feedstuffs. This process is well underway and will recommend national association members and others that they adopt processes and procedures that pre-empt and accommodate the eventual changes in national law that will take place.

The Task Force has defined the sections of the final Code and has approved a list of definitions for the key words it will be using. An area that took up considerable time at the most recent meeting was whether there should be positive, negative and undesirable substances lists. Discussion has not yet centred on BSE, but there could well be arguments to sideline rendered products from feed rations based on human health safety concerns.

CONCLUSION

This consultation offers a unique opportunity to the feed industry. It allows the issues surrounding the proteins that are used to be reviewed and discussed in an informative way. It helps to explain the role of the industry and the importance of maintaining adequate and unhindered supplies of various protein sources. Too often the needs of the industry are overlooked in countries where feeding livestock more effectively could make a big difference in meeting human nutritional needs.

This consultation also offers the opportunity to address some of the perception issues that plague the feed industry and which it has been unable to address individually or in a co-ordinated way in the past.

The project will help lay the foundation for meeting the challenge of feeding 7.8 billion people by 2025 and satisfying an eventual world population of 9.2 billion in 2050.

However, as the feed industry changes from being a ‘processor’ and ‘transformer’ of agricultural commodities and other raw materials into basic livestock diets, to a sophisticated nutritional delivery system that is very much part of the food chain, it is cognisant on governments to take greater interest in the work that the industry does and to sanction the raw materials that it has to use.

As part of the discussion process, it is important that the ‘Three Ps’ are kept in mind. Understand the role of protein in livestock production, keep an eye on population increases and where they are occurring and finally, identify the policies and politics that will help the industry to meet its objectives - whether that includes getting involved in political issues or talking to the consumer about what the industry does and why.