2 June 2020 - Since October last year, Cargill's animal nutrition and health group has gone through an internal reorganisation. The company now consists of three units: Cargill Animal Nutrition (feed, nutrition and premix), Cargill Aqua Nutrition, and Cargill Health Technologies.
At the time, David Webster, head of Cargill Animal Nutrition and Health, explained that the animal protein market is rapidly evolving, and consumer focus on animal health and well-being is becoming increasingly important. It’s a key area for growth. Webster’s words ring especially true in the current market environment as COVID-19 has certainly brought its fair share of challenges.
Adriano Marcon, who was president and group leader for Cargill's aquaculture business globally prior to October 2019, is today President of Cargill Animal Nutrition. Marcon is also a member of the Feedinfo Summit Leaders Network and will be actively involved at next year’s Feedinfo Summit, taking place in Geneva, Switzerland in April 2021.
The past few months have been particularly busy for Marcon as he oversees operations at Cargill’s 194 animal nutrition plants spread across 33 countries and has been checking in with his local teams, risk management crew, and, with their help, working with all partners in the supply chain to ensure that ingredients, feed and food are provided.
Giving an update on the months of April and May, Marcon was pleased to say that all Cargill Animal Nutrition plants have been operating as planned and no significant disruptions in production and supply were noticed. Of course, like many companies in this industry or others, the country lockdowns naturally led to some transport challenges, especially in the initial days of country lockdowns (the transition phase).
“We had some temporary shutdowns of plants in China and other markets (e.g. our plant in Jordan had a longer than expected delay),” Marcon said, “but we are fortunate that animal nutrition is an essential part of the agricultural production supply chain. The local government licenses to operate plants came quickly.”
Looking more specifically at the US and the multiple meat and dairy plant closures in that market, Marcon acknowledged that considerable challenges have been seen in the processing part of the US meat supply chain, but he is confident that all the players - and he made special mention of the front-line workers like plant employees and farmers - are doing a good job to keep the supplies coming and have been working around the clock.
“We’re confident that what we’re seeing won’t lead to a big disruption in the US. We’re even seeing meat processing capacities recovering, rising every week,” he commented.
“It’s important we stay positive about the food system and we should be proud about the industry,” he added.
In Marcon’s opinion, being ‘glocal’ means being part of a global organisation that is able to invest in new technologies, has global supplier relationships, and can scale to build a strong network of knowledge providers that bring value through local presence.
“We believe in local presence and we’re problem solvers, not simple feedstuff providers anymore. We create young animal nutrition products, functional premixes, digital tools. And we want to be the trusted advisor of the industry. We currently have 4,500 people on the ground supporting customers: data managers, nutritionists and other specialists in a wide variety of animal production areas who address different situations in various countries,” flagged Cargill Animal Nutrition’s President.
And in his view, it’s important to look beyond the restrictions of the coronavirus and stay connected and helpful in order to remain relevant to the customer. This has prompted the team of 4,500 sales and technical specialists to look at new ways to connect. “Our digital engagement efforts are allowing us to reach an incredible number of customers, and that was unthinkable a few months ago,” said Marcon.
Besides webinars, his co-workers have been able to conduct product tests and validations virtually or visit farms virtually by camera.
“And we continue to pull data from farms and transform it into insights for customers,” he commented.
According to Marcon, the increase in these type of virtual practices will not stop after COVID-19 but ‘tech’ will never replace ‘touch’. It’ll be more a smart combination of both.
“We will have to implement new ways of working. Using technology will be more common in our industry. The use of digital solutions will enable the sector to run operations more effectively and engage with customers,” he argued. “Our customers will invest more in automation. And in rural areas, broadband internet and access to digital really ought to be like electricity. Meaning, you shouldn’t have to think about digital as something special; digital tools will be the new normal.”
Having said that, it remains nevertheless difficult to predict exactly what the impacts of this crisis will be on future animal protein demand.
“In the short-term, of course we will see some disruption as one of the main drivers for demand is GDP growth and GDP growth will be going down in some countries this year. We have to keep an eye on discretionary income and to what extent that will decline and affect protein consumption. Other key factors that will impact consumption include limitations on food service (e.g. restaurants) and the significant decline in tourism. Perhaps there will be less demand for beef and more demand for more affordable proteins like poultry and eggs. All this will depend on the length and the severity of the lockdowns. We see this having an effect on the consumption of luxury items or specialty higher priced artisanal foods like Iberian hams for example,” Marcon highlighted.
“But we don’t expect any severe reductions in the production or consumption of meat moving forward. The upward trend in consumption, generally-speaking, will continue,” he added. “China and other Asian countries like Vietnam are recovering from African swine fever related herd losses. And China still has a protein supply gap which needs to be filled. Pork economics are doing well in most producing countries. For the foreseeable future, China will continue to drive global meat demand. That will sustain pork and poultry production in the world.”
As for Cargill Animal Nutrition’s own growth and expansion plans, the company remains committed to delivering on targets.
Starting with the reorganisation. Last year, David Webster also said that the “heavy lifting” of the reorganisation plan would be the combination of the feed and premix businesses. Marcon who has been at the heart of the matter stressed that he is pleased with the progress made so far.
“By merging our feed and premix businesses we have become a more agile organisation with fewer boundaries. The unification has given our customers closer access to our global capabilities. Our new focus on species rather than products has resulted in a more dedicated team, specialised in their species and in the tailored technologies specific to each specie. So we have also seen our functions become more professionalised and we have become more responsive and intimate with customers,” he commented.
“This happened in time before the global COVID-19 pandemic and, thanks to our risk management processes, we are better equipped to deal with volatility,” he added.
In terms of infrastructure, Marcon revealed that there were some overlaps in the business and with newer plants being larger and more modern, this reduces the need for smaller, outdated assets, which eventually can be closed.
Likewise, Cargill Animal Nutrition has various facility expansion projects in the works globally, but these are inevitably pushed back a little depending on the market.
“The key investments we have mapped out are still in progress,” he stated, disclosing that the next sizeable project that will be up and running is the USD 50 million antibiotic-free premix and animal nutrition plant in Lewisburg, Ohio. Marcon expects the facility to open this July.
This plant will includes four segregated production lines and it will manufacture 154,000 tonnes of non-medicated animal nutrition products per year, including specialty and custom blends, additives and Provimi-branded premixes. “Designed to be free from cross-contamination and with ultimate micro-dosing precision, it will be our most modern premix plant providing peace-of-mind to our customers and advancing feed safety in the animal protein sector in North America,” Marcon commented.
As for further growth by M&A, Marcon said: “We continue to be interested in advacing in key geographical markets. We are probably still under-represented in Asia and China. And our M&A strategy will be more likely geared towards new nutritional solutions and new technologies.”
This suggests that the company will prioritise added-value acquisitions rather than simple bolt-on deals.
“Organic growth will be our main focus in the coming years,” Marcon said.