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INSIGHT: Animal Nutrition Industry Executives Cautiously Optimistic About 2024 Economic Prospects


Source: Feedinfo by Expana

According to a November 2023 Reuters poll, leading banks predict that global economic growth will remain slow in 2024 due to high interest rates, increased energy prices and a slowdown in the world's top two economies (USA and China), among others. They add that geopolitical risk, including the wars in Ukraine and the Middle East, could further worsen the global financial outlook.  

Other banks present a more optimistic picture, pointing to the better-than-expected performance of the global economy in 2023, and that GDP growth and employment have held relatively steady in many of the major economies facing sustained inflationary pressures. 

At the Feedinfo Summit a few months ago, John Manzella of The Manzella Report, a source for global business and economic news and analysis, said that ‘the light at the end of the tunnel is coming for inflationary pressures in 2024 and 2025’ in some regions, while also warning that ‘there are many factors and geopolitical variables’ that could change this outlook.  

We asked senior executives of leading animal nutrition companies how they perceive a potential recovery in 2024. 

Many expect the pressures to continue in the short-term. 

“Our anticipation is that the world, and as a result the global markets, will remain extremely volatile with upsides and downsides in commodities,” said Pieter Wolleswinkel, CEO of ForFarmers.  

“The lower inflation rates are not expected yet for 2024. We still have in mind the impact of the war in Ukraine, and raw material prices skyrocketing. Raw materials, ingredients prices and transportation costs are lower than in first half of 2022 but will remain highly volatile. Buffers against shocks are lean,” added Rémi Cristoforetti, CEO, Le Gouessant.

Ruth Kimmelshue, Head of Cargill Animal Nutrition & Health, also said: “We have seen stagnating growth in the global feed industry over recent years. Fear of recession, higher costs of ingredients and production, and difficult producer profitability have been challenging for our customers and the industry. It’s likely many of the pressures will continue in 2024 and beyond.”   

Labour costs are another salient factor, which contributed to inflationary pressures.

As Jolanda van Haarlem, Group Director Specialties and Global Strategy Director, Royal Agrifirm Group, said: “We're also cautious because it's not only about the inflation. If you look at the labour costs, they have been increasing enormously. If you add it all up it has an impact this year and it will also have an impact next year.”  

Dr. Mark Lyons, President & CEO, Alltech, went on to say: “I do not believe that the complexity of the present situation is going to subside any time soon”.  

“It’s incredible to think that only a short time ago we were bemoaning negative interest rates in Europe and the potential for zero growth in many major economies. Inflation has now been the order of the day in most markets, and food inflation has been particularly painful for many households. For our customer base, the inflationary pressures have been added to the extreme volatility that already existed in the industry. Presently, our customers are facing pressures on all sides, and our role is to help them to navigate the uncertainty that is impacting almost all elements of their businesses. We have seen a return to cash flow focus and lower inventory levels more like the just-in-time approach that we had been used to before the pandemic. Companies are more open to partnerships, and in many ways are looking for more from a supplier than just a product and price,” he said.  

While companies in the sector have proven to be resilient thus far, they are counting on greater stability in 2024. 

As stated by Julia Raquet, Senior Vice President, BASF Nutrition Ingredients: “Looking ahead, we do not expect an easy start to 2024. We hope for a more agile and flexible market situation,” adding that as soon as demand picks up again, her company is prepared to provide support to its customers worldwide and is ready to cater to increased demand in vitamins, carotenoids, and feed enzymes. 

Dr. Chris Nelson, President & CEO, Kemin, also said: “There is no doubt that 2023 has been challenging due to inflation and global currency fluctuations. Kemin has continued to successfully serve its customers and grow in many areas of the business this year, but higher costs of goods and supply chain impacts like energy prices and atypical weather incidents have impacted us globally. While we are cautiously optimistic that the global economy will become more stable in 2024, the ongoing conflicts in Ukraine and the Middle East, as well as the upcoming US presidential election, do create uncertainty.”  

“We stay resilient with all the challenges that we are facing. We can really be well prepared to have good opportunities in 2024,” added Royal Agrifirm’s van Haarlem. 

Other senior executives remain cautiously optimistic, while hinting at reduced inflationary headwinds next year. 

“The current wars in the Middle East and Ukraine, as well as increased costs of energy and raw materials, presented significant challenges to the global economy. However, there are reasons for me to be cautiously optimistic about the development of the economy, particularly in the feed and food industry, in 2024 and beyond,” said Gaetano Blanda, Head of the Animal Nutrition business line of Evonik. 

David Blakemore, CEO, Trouw Nutrition, added: “Over the past few years, we have continued to see a slow recovery from the economic downturn and expect that overall global GDP growth will remain slow in 2024 vs. 2023. We expect slight growth in the US and Europe, and the Chinese economy to struggle, and that inflationary pressure will ease but consumer confidence will remain low as people continue to feel the impact of rising costs and high interest rates. Certainly, volatility will remain, but reduced headwinds can feel like a tailwind as we move into 2024.” 

Dan Meagher, President & CEO, Novus, expects some relief too: “Our global economy has gone through extraordinary challenges in recent years and, according to the International Monetary Fund, economic growth for 2024 is expected to be slow. Increasing geopolitical tensions can have major implications on commodity markets and financial stability, which is a concern for us all. Still, falling inflation rates should provide needed relief for consumers. Despite the concerns, I remain fairly upbeat about 2024 as these conditions challenge us to identify opportunities for growth, they help focus our teams, and they offer perspective on where and how to invest to grow the company.”  

“As we’ve demonstrated in the past, making bold decisions and shifts can lead to effective value creation. Not all shifts will be successful, but action is a must. We cannot wait for every aspect of our economy to normalise. We must move forward in every way we can and, in doing so, we support economic recovery,” Meagher added.  

Encouragingly positive signals are also being noticed by the industry. 

Frédéric Jacquin, Chief Operating Officer & Deputy President, and Dr. Zhigang Hao, Chairman & CEO, Adisseo, jointly pointed out: “The current market conditions seem to be improving and the demand is slowly reaccelerating. The bottom seems to have been reached in Q2, but recovery is slow. Offer is also playing a major role as after two years of very adverse market conditions, capacity has been adjusted to demand and this is likely to continue in 2024. Regional dynamics are also quite different. APAC and MEA drive the growth (in rate) but the big unknown is how big the rebound in China will be.”  

“There are some encouraging signs lately. Despite these positive indicators, caution should remain, given the high degree of volatility due to the various geopolitical crises that keep popping up (Israel/Hamas war) and the high risk of global diseases (HPAI outbreak risk in Brazil, renewed ASF threats, etc.)” they added. 

Ivo Lansbergen, President Animal Nutrition & Health, dsm-firmenich, also said: “Despite some uncertainties for 2024, I see several signals in the market that support a more positive outlook for our sector next year. We’re witnessing an improving grains availability, and as a result, grains and oilseeds prices (though still higher than pre-Covid levels) are expected to ease downwards. Following steep increases in 2022, feed prices have decreased anywhere from 3% to 19% in China, Brazil, the EU and US in 2023. Inflation has tapered in, for example the EU, and global GDP is expected to grow by 2.7% in 2024.”  

“Feed price development, and the subsequent pressure on margins for farmers and producers, has been one of the most impactful reasons for a slow demand in feed additives. With easing pressure on cost, farmers and producers will have more space to breathe, to make a profit and do what is good for their animals and for the planet,” Lansbergen added.  

Reassuringly, the long-term fundamentals of the animal production supply chain remain unchanged. 

Ismael Roig, President, Animal Nutrition, ADM, argued: “Despite some short-term uncertainties and challenges, we believe that the fundamental long-term growth drivers for the industry have not changed. We continue to see the interconnectivity across food security, health and well-being and sustainability having a strong influence on the nutrition industry for both animals and humans. We have positioned ADM to be nimble in managing these global trends and we are prepared for various scenarios in economic outcomes.”  

“Specifically, our animal nutrition business is well-positioned to provide solutions to our customers. Whether the market sees continued higher inflation numbers and trade-down effects from consumers, we provide poultry and swine offerings, while being diversified in more costly proteins such as beef, in case inflation numbers revert to historical norms. We are confident for a positive year in 2024,” Roig added. 

For Alltech’s Dr. Lyons, we must find new ways to grow and simplify our ways of working.

“While this era requires a high level of energy and engagement to ensure success, I feel that many of the characteristics of our business create some unique opportunities right now that I believe will provide us with growth in 2024. It does seem that many key sectors will see more stability toward the back half of the year, and I remain optimistic that we will see many of the negative trends turn in the new year,” he commented.   

Evonik’s Blanda added: “With the global population growing, and with it, the demand for protein, our industry will expand in the coming years. In my opinion, only the innovative companies within our industry will emerge stronger from the current situation, while companies that manufacture products conventionally can expect greater losses.”  

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