Please note: Data used in this article came from public sources or directly from the companies mentioned. All companies mentioned in this article were asked, via email, for production information. For those that did not respond, the staff of Feed International used their best estimates for rankings. If your company is listed and you believe the data being used is incorrect, please contact Peter Best at [email protected] or Ken Jennison at [email protected] so that future content may be corrected.
The volatility of grain prices made the past year a tumultuous one as top feed producers worldwide worked to secure raw materials in an environment of fierce competition. For many feed companies, this was a time to hold on to current market share. However, some players – both large and small – used this past year to increase their share of the market by taking advantage of shifts in animal production in their region, through mergers or acquisitions, or increased capital investment.
Growth in the U.S.
When one of the world’s largest manufacturers of animal feeds announces a 13 percent increase in annual volume, it is time to take notice. That was the scale of the growth reported in the U.S. by Land O’Lakes Purina for its livestock feed business in 2011. According to the company, after several years of being a segment under stress, farm feeds finally benefitted last year from increases in the U.S. markets for dairy, beef and pork. For this reason, Land O’Lakes Purina has been moved from the number five to the number four slot in our overall rankings, specifically in the 25.0-10.0 million metric tons category (Table 1).
Other North America notes
Other names on the top 10 of big North American feed players also have been making news headlines over the past 12 months. For example, Cargill added premix and specialty feed interests internationally by buying Provimi from equity fund Permira for EUR1.5 billion. Grains-to-feeds operator Viterra of Canada became the takeover target of commodities giant Glencore.
There was activity in the U.S. liquid feed market when Westway Group agreed to sell its 1.8 million metric tons per year Westway Feed Products liquid feed supplements business to the company’s largest shareholder. And Archer Daniels Midland subsidiary, ADM Alliance Nutrition, moved into the liquids market by acquiring assets of U.S.-based supplements manufacturer, Liquid Feed Commodities.
Elsewhere in the U.S., there was the announcement of a new joint venture involving major players JD Heiskell and Kent Nutrition Group, between them representing about 4.5 million metric tons of annual feed manufacturing capacity at North American locations. They are joining forces to operate four Kent-owned mills in the northeastern states of New York and Vermont that specialize in producing feeds for dairy cows. This signifies an extension of territory for Heiskell, whose feed interests until now have related mainly to western states.
Movement in Asia
Not to be outdone, there has been activity throughout Asia as well. In general, this is not a surprise, as the vast majority of the top 63 feed manufacturers are based in Asia (Chart 1).
Once again, we rank Charoen Pokphand of Thailand as the top producer globally, with China-based New Hope Group holding the third spot after U.S.-based Cargill. Following, that of particular note is Guangdong Wen’s Group, a mover since the 2010 rankings.
Founded in 1983, Guangdong Wen’s Group has business operations in 20 of China’s provinces and has established more than 110 integrated companies. In 2010, it reported sales revenue of RMB21.94 billion, and for 2011, it indicated its feed production approached 10 million metric tons. In June 2012, it signed an agreement with Deya Agriculture Corporation for Deya to supply Guangdong Wen’s Group with raw corn for four of its feed mills in southwestern China on a non-exclusive basis. The four feed mills use approximately 200,000 metric tons of raw corn per year. Based on this information, the company has been moved from its 2010 ranking of number 11 to number seven in the 10.0-5.0 million metric tons category, and moves to number three among Asian feed producers (Table 2).
Expansion through acquisition
Major moves since the middle of 2011 also have been taking place in Europe. The most obvious of these has involved a double acquisition by ForFarmers, a private company that is majority owned by a Dutch farm co-operative. Up until 2011, the ForFarmers operation consisted of production and sales of feed in the Netherlands, Belgium and Germany, with five production locations in the central eastern part of the Netherlands and five in Germany. In 2011, ForFarmers produced nearly 2.5 million metric tons of compound feed.
In November 2011, ForFarmers signed an agreement to purchase Hendrix UTD from Nutreco for EUR92.5 million. Hendrix UTD operates 10 mills in the Netherlands, Belgium and Germany. In 2011 the mills produced 2.9 million metric tons of feed. The purchase was approved by authorities in April 2012.
In March 2012, ForFarmers signed an agreement for the purchase of UK-based BOCM Pauls for EUR85 million, becoming Europe’s largest feed manufacturer in the process. BOCM Pauls operates 11 feed mills. The purchase was approved by authorities in July 2012. The ForFarmers Group now has 8.8 million metric tons of feed production, of which 6.5 million metric tons is compound feed and 2.3 million metric tons are single products and co-products. These acquisitions enabled ForFarmers to leap from number 31 in our previous rankings to number 12 and a stone’s throw away from being in the top 10.
Capital investment
Another company with Dutch roots, De Heus, was also a mover in this year’s rankings. De Heus is a family run company with headquarters in Ede-Wageningen, Netherlands. It has 30 feed mills in eight countries and exports to more than 45 countries. In June of this year, De Heus opened a new feed mill in Dong Nai, its fourth in Vietnam. The plant was built at a cost of USD15 million and has a capacity of 300,000 metric tons per year. De Heus moves from number 20 to number 18 in the overall list, and it now ranks as number five among feed producers located in Europe (Table 3).
We would be remiss if we did not mention that while Nutreco did divest itself of Hendrix UTD this past year, it is still a major player both in the Netherlands and in the global arena, simply with an adjusted focus. Nutreco welcomed a new chief executive in August 2012 and announced during the past 12 months a series of initiatives in the aquafeeds and premixes sectors.
What to expect
A final observation for our readers is that many of the top players listed here are integrators – a sign of the way things are going internationally. More integrated companies look certain to enter the one million metric tons (or more) category soon.
One company we can look to as an example of this is Miratorg Agribusiness Holding in Russia. Miratorg is already the largest pork producer in Russia, and its pig enterprises required an estimated 720,000 metric tons of feed in 2011. The company has already invested to increase its annual feed production capacity from 270,000 metric tons to 630,000 metric tons and is building another plant in 2012 that will add another 360,000 metric tons to that number. We expect to see more companies making similar moves in the years ahead.
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