Upbeat poultry industry, ready to invest

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WATT PoultryUSA, Poultry International  and Feed International  magazines asked 164 industry people responsible for producing and using poultry feeds worldwide about their business outlook and key trends involving supply chain integrity, composition of rations, sustainability, investment and more. Here are key findings:

• Over half (51%) foresee slowing improving sales and profits over the next 12 months.
• “Cost of grains” and “management of feeding programs to achieve performance” were rated as the two most important concerns in all world regions.
• “Food safety and/or supply chain risk” was rated the third highest concern by North American respondents but ranked lower in other world regions.
• Worldwide, 43% of respondents say that new or tighter audits are in place to ensure supply chain integrity, while at the same time 40% believe more needs to be done to guarantee the supply chain.
• Fifty-six percent expect their use of alternative ingredients and enzymes to increase over the next three years.
• More than half (55%) have a written sustainability strategy which incorporates nutrition and/or feeding.
• Feed production volume and poultry and egg production are predicted to increase in 2010.
  

Survey participants

Survey responses came from a cross section of businesses including consulting nutritionists/veterinarians (20%), feed manufacturing (17%), broiler production (15%), egg production (15%), breeding/hatching operations (13%), turkey/duck production (4%), as well as manufacturers and distributors of feed additives and premixes and others.

Responses came from around the globe, including North America (33%), Asia (21%), Latin America (18%), Europe (9%), Africa (8%), Middle East (6%) and Asia Pacific (5%).

Business outlook for 2010

The poultry nutrition sector’s business outlook is optimistic worldwide. Fifty-one percent of respondents believe that there will be slowly improving sales and profits; 18% expect business conditions will improve significantly in the second half of 2010; and 23% say that business conditions (sales and profits) are good now. Only 8% expect negative or poor profitability due to economic conditions. This optimistic outlook is held in every world region.

Major challenges in nutrition and feeding

“Cost of grains” and “management of feeding programs to achieve performance” were rated as the two most important concerns in all world regions.

There was less agreement about the importance of other challenges among respondents from the different world regions. For example, “food safety and/or supply chain risk” was rated the third highest concern by North American respondents but ranked lower in other world regions. Latin American respondents, for instance, rated this challenge next-to-last in importance among 10 challenges.

Latin American respondents, at the same time, were out of sync with the rest of the world in their down-rating of “mycotoxins (and other anti-nutritional factors) in grains” as a concern. They rated this challenge No. 8 in importance out of 10 challenges, while respondents worldwide ranked it fourth in importance.

North American respondents, meantime, ranked “availability/cost/quality of research to support decision-making” lower in importance than respondents in other world regions. They ranked “research” as their sixth most important challenge, while worldwide it was ranked the third most important challenge.

Challenges of lesser importance

Two challenges were ranked less important by all world regions – “discontinuation/unavailability of antibiotics in feeds” and “environmental concerns and/or sustainability.”

Nonetheless, all but one of the 10 challenges was rated on average to be at least somewhat important. Based on the average ratings for each challenge, there is little variance between the most important (cost of grains), with a 4.08 average, and the least (antibiotics in feed), with a 2.90 average.

Supply chain integrity

Following problems in the contamination of feed ingredients in the supply chain in recent months and years, survey participants were asked about the state of supply chain integrity today.

Many companies have taken action to shore up the integrity of the supply chain, according to survey participants. Forty-three percent say that new or tighter audits and testing are in place today. Thirty-seven percent use fewer, or different, suppliers. Twenty-eight percent have altered formulations or products. Four percent have taken other actions.

These actions have resulted in costs and prices being up, according to about 30% of the respondents. However, 31% indicated, “No change was needed because programs were adequate.”

When asked about present day integrity of the supply chain, responses were, in fact, mixed. Thirty-four percent of respondents said they are satisfied with the integrity of the supply chain, while 40% believe more needs to be done to guarantee the supply chain.

Composition of rations

Worldwide there is an upward trend in the use of alternative feed ingredients, including dried distillers grains solubles (DDGS), and enzymes, according to survey responses.

Fifty-six percent of respondents expect their use of alternative feed ingredients to increase in the next three years. The same percentage of respondents said their companies’ use of enzymes will increase over the next three years.

More than half of respondents, however, expect that their phytase use will remain the same over the next three years.

Sustainablity

Fifty-five percent of respondents say their company has a written sustainability strategy which includes nutrition and/or feeding. Strategy elements include the use of enzymes (81%), sourcing of grains/ingredients locally to milling production (78%), investment in high-efficiency feed milling plant/equipment (59%), selection of poultry breeds/genotypes based on sustainability principles (43%), location of production near consumer base (31%) and location of production near grain supplies (29%).

Production and investment

Feed production volume and poultry and egg production is predicted to increase in 2010.

In North America, respondents are evenly divided between production volume for poultry and eggs staying the same as 2009 and increasing.

To support these increases, companies are planning corresponding investments in equipment and facilities, particularly replacement and upgrades to feed milling equipment.

In Latin America, more than half of respondents say there will be expansion of poultry and egg production facilities and equipment, while 58% in Asia say poultry and egg facilities and equipment as well as feed milling facilities and equipment there will be replaced or upgraded.