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The vitamins industry has been confronted with weak prices throughout the year; according to Feedinfo data, the European vitamin A price in mid-November 2023 was 72% lower than the price in mid-November 2021, for example, while the vitamin E price was 39% lower than two years ago. |
Vitamin A 1000 price 2019-2023
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This has been felt by vitamins manufacturers, with Dimitri de Vreeze (at the time co-CEO of DSM, and now sole CEO of dsm-firmenich) stating in May that “today, on vitamin A, nobody is making any money at these prices.” This comment was followed a few months later by the announcement of a restructuring of dsm-firmenich’s vitamins business and extended shutdowns of its European vitamin production operations in Sisseln, Switzerland.
What are the long-term consequences of low vitamin prices? dsm-firmenich, for its part, suggests that investments in capacity and innovation will suffer, and argues that stakeholders should pay close attention to ensuring that local production of these critical micronutrients remains viable.
“As a leading vitamin producer, we feel it is our responsibility to address the risk that what we have already observed in the cases of medicines, antibiotics, or microchips could also become a reality for vitamins,” said Silvia Sonneveld, who heads up the company’s animal nutrition and health (ANH) vitamins unit, in a recent conversation with Feedinfo.
The landscape of supply
One concern is that the economic pressures facing vitamins manufacturers might ultimately leave Europe with less capacity, something which the continent could come to regret if supply chain issues return to the forefront.
“Following Covid and the Russian invasion of Ukraine in 2022, food security has jumped at the top of governments’ agendas,” observed Sonneveld.
“Each region has its own priorities and dynamics, but generally ensuring food and energy security has become a deliberate policy objective of many governments around the world. We very much welcome these new initiatives, as they provide an opportunity to understand the risks posed by the vulnerability of supply chains. But we also feel that vitamins deserve more consideration in this context, because of their essential role in both human and animal nutrition.
“Food security is critical for an orderly and well-functioning society. As a society, we need to understand the vulnerability of the global vitamin supply chain as an essential ingredient for food security, public health as well as political and economic stability. It is important to bring together all the stakeholders in an open, action-oriented way.”
It should be noted that most observers of the vitamins market today are not suggesting that supply shortages are imminent; indeed, today’s generally low prices are the result of ample stocks.
For Sonneveld, however, the focus should be on the longer-term impacts of these market dynamics. “That there is sufficient vitamin supply today misses the bigger point. What matters is how we ensure food security and public health globally now and in the future. Is the supply of critical ingredients resilient? Putting all eggs in one basket, opportunistically going for the lowest price, and ignoring environmental impact and supply dependency introduces unwanted risks for modern food system. We need to think about what kind of supply we want and need: one that is reliable and supports our farmers, the industry, consumers, and the planet. That kind of consideration is lacking.”
Echoes of 2017?
Of course, the vitamins market has experience with deeply disrupted supply chains, even predating the Covid-19 pandemic. Sonneveld recalled that the 2017 shortage, when manufacturing of an intermediate used in certain production processes for vitamin A went offline, had “a significant impact in terms of animal health and economic losses for industry, [and] is in that sense illustrative of what would occur.”
“Without sufficient vitamin premix for feed, some producers were forced to suspend operations. Further along the value chain, processors and slaughterhouses also shut down. In all, it cost the industry millions in losses,” she claimed.
Naturally, any comparison to 2017 has its limits. “At the time, there was an unpredictable, temporary and sudden change in supply capacity for one large producer, while all other factors remained the same. Vitamin producers in Europe and China responded to the shortage by increasing production capacity and working closely with customers and partners to ensure a stable supply of vitamins A and E. Today, the supply crunch is foreseeable and affects multiple vitamin producers.”
Still, she said, the crisis served to underscore just how important vitamin manufacturing is for animal production. “Simply put, with an interrupted supply of a key vitamin e.g. A, E, B3, D, or B5, significant issues in the animal protein production system will soon appear, through lower growth, poor health and immunity and fertility issues, while also impacting further down the value chain.”
Reorganisation at dsm-firmenich
At dsm-firmenich, the reaction to the ongoing period of low vitamin prices has gone beyond the shutdowns in Sisseln. The company has also closed its feed-grade vitamin B6 plant in Xinghuo, China, and announced that its vitamin C activities will be refocusing on its site at Dalry, UK, meaning that production of vitamin C at its Jiangshan plant will be ending.
As to the future of that plant, Sonneveld said, “the Jiangshan, China, site has manufacturing assets that can be utilized for a variety of products that includes vitamins. We are evaluating the different options, potentially with one or more partners, to utilize these assets most effectively.”
Beyond that, the company has also created the role of Vitamin Transformation Program Director, a senior executive post tasked with delivering on the performance plans including the changes to the production asset footprint and regaining cost competitiveness.
