18 November 2021 - As a key player in the French animal feed sector, Sanders Nutrition Animale (part of Avril Group) does not quite share the wave of optimism that the animal nutrition industry has generally been feeling for a few months now with global vaccination underway, and the return of industry events and long distance travelling.
The higher prices Sanders is seeing for its raw material costs is on the contrary making the situation more worrisome, or as Sanders’ Managing Director, Philippe Manry, said: “We are far from being euphoric.”
For instance, Manry mentioned the price of feed wheat, which is currently at a historical high (nearly €300/tonne, according to Euronext on 12 November), having surpassed the peaks recorded more than a decade ago.
He is concerned that the ramifications of such high prices for the French feed and animal production sectors will lead to big difficulties.
“I find it hard to be optimistic right now,” he commented.
Recent forecast data from the European Compound Feed Manufacturers’ Federation (FEFAC) predicts that compound feed production in the EU-27 will fall marginally by 0.16% to 149.9 million tonnes, affected by the ongoing spread of animal diseases and the impacts of COVID-19.
Production of feed for pigs is expected to fall 1.3%, as a result of high costs for feed grains and the lingering effects of African swine fever (ASF). Despite a bad year for bird flu across Europe, poultry feed production is forecast to rebound slightly by 0.8%, largely due to improvements in the HORECA (hotel, restaurants and catering) supply chain. And cattle feed production is seen almost level with last year, with the current estimates foreseeing a 0.1% increase over 2020, as the beef market remains relatively stable across the continent.
For 2022, be it at European or at French level, market problems for animal products resulting from the combination of COVID-19, bird flu and African swine fever impacts will continue to indirectly impact industrial compound feed production. The EU Green Deal and national authorities’ initiatives to tackle the environmental emissions and welfare issues will also continue to influence the livestock and feed sectors next year.
Manry says he is also not optimistic for French feed production volumes in 2022.
“Looking at the predictions of November 2021 for next year, we can already anticipate drops for the first half of 2022,” he said.
“For ruminants, raw material prices are high, and there is currently plenty of fodder supply. Consequently, compound feed output is expected to drop. Pig feed production is also likely to drop given lower pig herd numbers and the current market scenario wherein producers are confronted by unfair prices. As for poultry feed production, volumes may recover from 2021 levels, but this will depend to some extent on the amount of poultry meat imported into France [one out of two chickens consumed in France is imported] and on how severe the latest bird flu wave will be.”
Despite the rather bleak outlook for France’s compound feed sector next year, Sanders is of the belief that to ensure longevity is it vital to provide support to French livestock and poultry producers. For that reason, Sanders launched a marketing campaign in October, which aims to help consumers realise that eating French-made, high-quality animal products is essential.
Manry pointed out that over the past 15 years, approximately 43% of French livestock producers have exited the market. So, if the consumer continues to base meat and dairy product purchasing decisions solely looking at the lowest prices, the French animal production sector can only be further weakened.
“It is crucial that the consumers accept the price difference. We have to build this awareness and it will be our main driver for business in 2022,” he said.
This support of French-origin was also communicated in September 2021, during the SPACE trade show in Rennes, Brittany.
At the event, Sanders announced plans to increase its own GM-free, 100%-French-origin soy production capacities as well as volumes of organic animal feed.
The company said it was planning to increase GM-free, 100%-French-origin soy production capacity at its Sojalim factory in southwest France from 25,000 tonnes to 50,000 tonnes as of May 2022.
“Our objective is to continue increasing volumes to become more autonomous,” Manry, told journalists at the time. Sanders’ Managing Director also said the company will increase production capacities for organic animal feed for all species moving forward.
Manry said that 38.5% of the company’s annual non-GM soy usage (about 252,000 tonnes) today is French origin, 98,600 tonnes of which are produced by Sanders itself, 120,000 tonnes by partner Saipol, and 32,400 tonnes comes from other suppliers.
Over the past five years, the company has already invested €3.2 million in its protein production units in southwest France and in the Deux-Sèvres; investments which have allowed the firm to maximise the use of French-made proteins in its three organic feed factories located in Guigamp, Rethel, and Allègres-les-Fumades. Of the 31,000 tonnes of organic soy, sunflower and rapeseed used by Sanders for its organic feed brand Alinat, 75% is French origin.
Commenting on these investment plans, Manry said Sanders and other operators are investing in their 100%-French-origin grain capacities as they see the need to protect local production. However, in this context today of high raw material prices, it will be a challenge to maintain the investment momentum in France.
“France can to some extent reduce its dependence on protein crop imports, but only if local production is encouraged and developed significantly. Ideally, with more 100%-French-origin soy on the market, price volatility would be reduced,” Manry commented.
Sanders produces approximately 3.4 million tonnes of feed per year in its 23 feed facilities. When asked about further investments in industrial capacity, Manry said his company will continue to optimise its manufacturing footprint in 2022.