Even though the demand for animal feed has been relatively stable, the supply has been gravely hit by the coronavirus crisis.
Countries such as Romania have banned exports to non-European Union countries, thereby creating severe demand-supply problems in the animal feed industry. Banned grain export products include soya beans, bakery wares, flour, maize, barley and wheat.
On the other hand, China, a major supplier of organic soya beans, has caused disruptions for global organic feed producers in view of its draconian measures imposed to curb the COVID-19 pandemic. Moreover, the supply of containers and vessels has also been affected along with transport of certain micro-ingredients due to China’s logistics issues. The Indian government has ordered the partial closure of its international ports, promoting further disruptions in the animal feed supply chain.
The animal feed industry has also been badly affected by the closure of restaurants around the globe. The dramatic shift in consumers’ consumption patterns in light of the SARS-CoV-2 outbreak has compelled manufacturers to rethink their policies and strategies. Lamb production, aquaculture, beef and veal sectors in particular are among the worst affected. Aquaculture and livestock farmers have called for crisis management measures to mitigate the impact of COVID-19. Private storage aid is the chief mitigation measure being demanded by aquaculture farmers.
Soya bean, maize and wheat consumption
The worldwide consumption of fish and meat has declined drastically. Hence, the demand for grain and oilseed has reduced considerably as well. Analysts estimate about 6% decline in soya bean, maize and wheat demand for animal feed in countries such as Vietnam, Thailand, Malaysia, and the Philippines in 2020. Approximately 65% of the net annual production of soya bean, maize and wheat is utilised by the animal feed industry, while the remaining 35% is for food consumption. Therefore, even though the home consumption of grain and oilseed has increased, it is greatly outweighed by the reduced consumption in the animal feed industry.
Mass exodus of migrant labourers
Many formal and informal economies in Southeast Asia are sustained by migrant workers. In view of stringent lockdown protocols, these migrant workers began returning to their native lands, leaving distribution and supply chains, and production severely shattered. Hence, major manufacturers in the animal feed industry are left with a significantly reduced workforce. However, they are hopeful that governments will restart certain agricultural activities to prevent the economy from collapsing any further.
In addition, truncated air freight capacity, port congestion, roadblocks, and logistic disruptions in Southeast Asia are expected to escalate as stricter measures are implemented by governments. The consumption of fish, poultry, pork, and beef will decline in Southeast Asian economies through the second quarter.
As the United States (US) government implemented stay-at-home orders, many farmers resorted to panic buying of animal feed in the anticipation of potential shortages. Several concerns such as truck shortages, reduced deliveries, and employees contracting COVID-19 compelled farmers to stock their animal feed supplies. This move spiked the demand for animal feed additives during the first week of April this year. Farmers in the US are concerned about measured production in slaughterhouses as well. As the US ordered the shutdown of ethanol plants, it only added to the concern of farmers. Key stakeholders in the livestock feed market are worried about a lack of dried distillers’ grains (DDGs), an important by-product.
This trend, which was earlier reported from China, was reported by other countries such as Germany and France, and subsequently by the US, as the epicentre of COVID-19 shifted from Asia to Europe and then to North America. During the initial phase of the lockdown, French feed producers witnessed intensified purchases of ingredients. A similar trend was also reported in Germany. Amid concerns over the suspension of production, feed manufacturers engaged in panic buying in various parts of Germany. This led to a 10% jump in global feed sales in March.
Dutch government introduces protocols
The Netherlands has suffered little disruptions in terms of feed supply and delivery. The government has laid down new protocols to ensure the safety of farmers along with continual production and supply of feed additives. The Dutch feed industry association has drawn certain guidelines aimed at maintaining production continuity and delivery to farmers while protecting workers. Moreover, they have given the liberty to use the guidelines at their own discretion. The guidelines will be updated as the situation progresses in the foreseeable future.
The government of the Netherlands has implemented strict biosecurity protocols and stipulated that all necessary transactions take place by phone. Similar steps are also required in other countries where the supply chain has been severely affected.
Drivers delivering feed additives would need to follow World Health Organization’s (WHO) preventive sanitation measures. Additionally, contact tracing of drivers is of paramount importance. Any close contact must be either completely avoided or minimised. For the feed additive industry to function, farmers must follow hygiene measures.
As per guidelines, close contacts are those people who have been within two meters of a COVID-19 infected individual for more than 15 minutes. Farmers in the United Kingdom are following similar procedures in order to maintain feed supply continuity along with the well-being and safety of customers and employees. – All About Feed