5 February 2021 - Last year, DSM Nutritional Products launched two strategic initiatives, which on paper seem disassociated but have proven to be intertwined with a view to pave the way for the company’s innovation and investment strategy in 2021 and for the years to come.
On one hand, there is 'Fit for Growth' a programme put in place by DSM Nutritional Products in mid-February 2020 to increase company agility and simplify its operating model in both Human Nutrition and Animal Nutrition (including sales operations for customer-facing teams). This led to a revised organisational structure to support the more focused business priorities.
The reorganisation resulted in around 350 redundancies (approximately 3% of the DSM Nutritional Products workforce), mainly in central and at managerial levels, affecting mostly DSM Nutritional Products’ global HQ in Switzerland and its organisation in North America, but was necessary to adjust to a more challenging market environment and respond to different customer needs. For Animal Nutrition, DSM divided operations into two business lines named ‘Core Products & Premix Solutions’ and ‘Specialty Solutions’.
And on the other hand, there is ‘We Make it Possible’, announced in August 2020, which is understood to be a 'tangible translation' of DSM Animal Nutrition & Health's overall strategy based on sustainability as a business driver. DSM Animal Nutrition & Health at the time said the initiative would influence how it plans to drive its animal nutrition business forward particularly in relation to innovation in all markets and across all species in which the company operates. As a result, most of the company’s future investments will be made with this initiative at the core of all decisions.
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With 'Fit for Growth' dealt with last year, understandably combined with a large focus on dealing with the repercussions of the global COVID-19 pandemic, DSM Animal Nutrition & Health claims it has turned a page and has its sights on delivering on that promise of making ‘We Make it Possible’ tangible. Feedinfo spoke to DSM’s Animal Nutrition & Health’s President Ivo Lansbergen to touch base on 'Fit for Growth' and what the situation is one year later, as well as discuss his company’s priorities in terms of investment in its innovation strategy. |
Ivo Lansbergen |
[Feedinfo] Mr. Lansbergen, now nearly a year later after announcing ‘Fit for Growth’, what kind of efficiencies have been created for DSM Animal Nutrition and Health?
[Ivo Lansbergen] Our main goal was to establish a clear level of accountability and transparency in the organisation of DSM Nutritional Products to become more agile. We were active in many areas but not efficient enough. The split between ‘Core Products & Premix Solutions’ (our essential products like vitamins) and ‘Specialty Solutions’ means that today there is a clear differentiation between the two segments and there is more specialization and dedication to the categories within. It made for an easier divide of categories and allowed for us to connect internally. The categorisation was very helpful when it came to integrating the Biomin and Romer Labs acquisition later in 2020.
[Feedinfo] Did the COVID-19 pandemic result in any delays in the implementation of ‘Fit for Growth’ in 2020?
[Ivo Lansbergen] There were no delays caused by the pandemic, but we had to implement the strategy in different ways than anticipated and we adapted smoothly during this transition, carrying it out remotely in most part. This is what we did in China in February 2020 when the pandemic was rampant in the country at that moment. Back in Switzerland, we were able to hold the first discussions in-person with local employees. However, implementing the strategy digitally – though not ideal from the human perspective - did allow us to reach a maximum number of staff. This reorganisation was of course emotionally heavy for all involved and was sometimes difficult for us at leadership level as we weren’t always able to meet people face to face. ‘Fit for Growth’ was rolled out and implemented by the first week of April and is now a closed dossier. The 350 redundancies were made across DSM Nutritional Products (human and animal divisions).
[Feedinfo] What can you tell us about the ramifications of ‘Fit for Growth’ for DSM Animal Nutrition & Health in 2021?
[Ivo Lansbergen] ‘Fit for Growth’ is a one-off initiative, and we will not be undertaking any operating model agility reorganisations in 2021. We are well-prepared. But thanks to ‘Fit for Growth’, we have identified further areas for improvement based on changes we are noticing in the market. For instance, the banning of AGPs around the world and the subsequent rise in demand for eubiotics and gut health solutions. Our dedication to that segment and our reorganisation will help us meet the opportunities out there.
The split between ‘Core Products & Premix Solutions’ and ‘Specialty Solutions’ also helps us better deal with volatility, but it is important to bear in mind that, on one hand, essentials like vitamins which are exposed to price fluctuations, will always be needed in animal diets, and on the other hand in the specialties categories pricing is different and more stable. Put together, we are better faced to deal with volatility. Moreover, we have operations in all regions of the world, and which are evenly spread, which allows us to offset local issues, such as for instance African swine fever’s impact on Chinese pork production.
[Feedinfo] Within the ‘We Make it Possible’ framework, what kind of resources are you injecting in ‘Specialty Solutions’ in 2021?
[Ivo Lansbergen] Our existing portfolio and the acquisition of Biomin and Romer Labs last year was a clear sign of our commitment to the specialty space. With ‘We Make it Possible’, our investments moving forward will always look at the platforms which are improving productivity by getting more out of less, reducing the amount of waste, adopting a more circular use of resources such as local feed raw materials and by-products, and reducing ammonia, methane and nitrous oxide emissions.
Moving forward, the way we will be bringing innovations to the market will be different. Decisions will not be solely based on FCRs or RoIs. We will include measurable targets to determine how exactly an innovation will be geared at making animal farming environmentally, financially and socially sustainable. Our industry is under huge pressure to deliver such measurables whilst creating profitability at farm level. It’s a duty for players like us to seek solutions that help the farmers. There is a need of a metric way to show farmers where improvements can be made. Solutions need to be tangible rather than just talking about them. They need to get a fair price for the animal proteins produced.
We will be looking at further ramping up investments at our Veramaris algal oil joint venture this year. We will also seek to reposition ourselves in feed enzymes and we’ll aim to be as tangible as possible in terms of evaluating ammonia or nitrogen levels that come into play in nutrition. Finally, we are working on a metric based system calculating the environmental exposure of farmers, alongside which concrete advice will be given.
[Feedinfo] For which of your ‘We Make it Possible’ sustainability platforms will you be seeking help via new partnerships in 2021?
[Ivo Lansbergen] ‘We Make it Possible’ is not just a campaign, it is an integral part of DSM’s strategy. But we can’t do it alone.
On 21 January 2021, DSM launched ‘Reducing Emissions’ (one of the platforms) to help animal farming reduce the emissions it produces, cutting the levels of methane and nitrous oxide produced, both directly and indirectly, and reducing ammonia emissions. It is also a call to action across the industry.
A value-chain approach is certainly needed. Today, DSM is working with value chain partners and evaluating new partnerships. Our latest collaboration was announced last week. We entered an agreement with dairy co-operative Fonterra to accelerate the transition to lower methane agriculture in New Zealand. Methane makes up almost half of the nation’s greenhouse gas emissions.
However, despite the efforts made, the sustainability of mainstream animal production continues to be under increased scrutiny from policymakers and associated stakeholders. Policymakers will no doubt play an important role, especially when the value-chain is brought together with initiatives like ‘We Make it Possible’.
And we must not forget financial institutions and making them aware of the opportunities in animal protein production. True, there is a lot of investor focus at the moment on plant proteins and alternative ingredients, and sometimes current farming and feeding practices are mistakenly believed to be unchanged and taken for granted. The power of innovation in the feed additive sector right now may at times be underestimated by outside investors. At the end of the day, most products in the animal nutrition sector live side by side and are complementary.
