DSM Supports Drive Towards Resilience and Sustainability in Tough Cost Environment - INDUSTRY PERSPECTIVES

Source: DSM via Feedinfo

01 December 2022 – Very few parts of the value chain can be said to be winning right now. Whether you’re manufacturing additives, producing feed, or raising animals, you are faced with what feels like existential threats from all sides. Volatile prices for materials from natural gas to grains are raising everyone’s production costs. The inflationary environment is reducing customers’ purchasing power. The urgency of ecological threats such as climate change and nutrient discharge are leading to calls for agriculture to rethink “business as usual”. This pressure is acute, and it is not clear how soon it will go away.

In such conditions, it becomes critical to ensure that you are getting the maximum value out of your inputs and outputs, both for the health of the planet and the survival of your own business. In order to learn how DSM can help customers do more with less—and indeed, how the company is applying the same logic to its own operations—we hear from Silvia Sonneveld, Vice President for Essential Products, and Fidelis Fru, Vice President for EMEA at DSM Animal Nutrition and Health.

[Feedinfo] How have the energy crisis and general market conditions impacted DSM’s clients? What are you hearing from the field?

[Fidelis Fru] In situations like these, we at DSM never take our eye off the reality of what our customers are facing. We know about the difficulty of high input costs and the struggle to protect operating margins at a time when consumers are reacting to the current environment by changing their purchasing habits.

Customers are managing inflationary pressures and volatility in other aspects of their businesses, and we’ve been working hard to make sure that reliable access to our feed solutions is one worry they can cross off their list.

The inflationary environment has raised price sensitivity among some clients, at least temporarily. However, it’s important not to let short-term conditions lead to unintended, longer-term consequences. If all feed ingredients were relocated to the most economical manufacturing regions, this could lead to a more vulnerable supply chain that jeopardizes food security in many places. Quality and environmental aspects of production could also deteriorate. 

 Fidelis Fru, DSM

Fidelis Fru
Vice President for EMEA
DSM Animal Nutrition and Health

As the recent VUCA (volatile, uncertain, complex, and ambiguous) environment has demonstrated, the feed and food value chain must be reliable, sustainable and resilient for our industry to fulfill its role in feeding the world.

[Feedinfo] What are some of the ways that DSM is prepared to support clients who are facing hardship because of the current situation?

[Fidelis Fru] We’re working more closely than ever to understand customers’ needs, keep open lines of communication and deliver solutions efficiently and on time. Our clients’ largest input cost is feed, so feed cost optimization is crucial. We provide technical support along with digital tools to ensure that our clients achieve the best results from our portfolio of innovative gut modulating additives, specialty nutrients and feed enzymes to improve efficiency. We have a long-standing history of breaking new ground in products and services, and this puts our portfolio in a unique position to help our customers through these turbulent times. We have recently introduced the newest generation of feed enzymes to the market, including our complete phytase solution, HiPhorius™, and our second-generation protease, ProAct 360™, so that producers can get the most value from feed.

Furthermore, it is now particularly important not to ignore the contamination of feedstuffs by mycotoxins. When feed costs are high, the cost of mycotoxin contamination from impaired animal performance is also higher in absolute monetary terms, so there’s a more compelling need for producers to apply an effective mycotoxin deactivation strategy and protect their margins. Unfortunately, climate change is creating unpredictability in harvest quantity and quality. Frequent droughts, floods, unpredictable seasons, will only further exacerbate the occurrence of different mycotoxins in feed raw materials. Recognizing the importance of this issue both now and in the future, DSM will remain at the forefront of mycotoxin monitoring and management, with market-leading deactivators that specifically target fumonisins and zearalenone, for example.

Finally, companies will themselves need to innovate in order to maintain their current customer base and attract new consumers. Here we can leverage our comprehensive toolbox to help producers differentiate through product quality, price and sustainability. One example of our Precision Services is Sustell™ which gives producers insights into their environmental footprint to make data-driven decisions that deliver genuine improvements.

[Feedinfo] Have recent challenges facing feed and animal protein producers overshadowed the drive for sustainability?

[Silvia Sonneveld] The COP27 in November firmly fixed food system transformation on the agenda for the foreseeable future. Some of the recent challenges are directly related to sustainability. Livestock are projected to drive a 6% increase in greenhouse gas emissions from agriculture in the next decade. Significant change is needed to reverse this trend.

We have seen calls for a reduction in the number of food-producing animals at a time when inflation is challenging producers and threatens to make more people food insecure—an untenable position, in my view. Part of the answer is to adopt a holistic view of sustainability that feeds people, provides jobs and respects both animals and the planet. 

Sylvia Sonneveld, DSM 

Silvia Sonneveld,
Vice President for Essential Products
DSM Animal Nutrition and Health

We need renewed emphasis on productivity improvement fueled by innovations that address consumers’ demands for safe, nutritious, environmentally friendly and affordable eggs, meat and milk while generating income for everyone throughout the food value chain.

Widespread adoption of farm management best practices and further localization of food systems would also go a long way to reducing the environmental footprint of food production while improving sustainability and reinforcing food security.

[Feedinfo] Looking towards the future, what are some of the ways that the industry as a whole can become more sustainable? How is DSM contributing to that transformation?

[Silvia Sonneveld] Sustainable animal protein production spans a range of issues from air and water emissions to land use and biodiversity. It starts with establishing a baseline—establishing where we are currently in order to begin to plan improvements. It’s like the old saying “you can’t manage what you don’t measure.” Many of the solutions already exist. If we were to apply best practices across all farms globally, we could see greenhouse gas reductions of 37-41% in ruminants, 24% in pigs and 17% in poultry, according to the FAO.

Work that DSM has done with FAO LEAP shows that for highly optimized Western European-type production systems, nutritional strategies including feed enzymes, vitamins and eubiotics resulted in meaningful reductions in greenhouse gas emissions, eutrophication and respiratory inorganics related to ammonia production in broilers, fattening pigs and dairy cows. What’s needed is to create the right incentives in the industry and along the value chain to make it worthwhile for companies to invest and start to make a difference together.

[Fidelis Fru] Absolutely. And I would just like to add that, as we pursue that goal, precision nutrition becomes more urgently needed than ever before. Today we have access to big data which enables us to optimize how we transform feed raw materials into affordable animal proteins. The consequence of this precision nutrition revolution will go a long way not only in reducing cost but also environmental impact, thereby making animal farming more sustainable.

[Feedinfo] Regarding its own production, DSM is focused on meeting its own energy needs from renewable sources, and even investing in the move away from fossil fuels. Can you talk a bit more about these initiatives?

[Silvia Sonneveld] In line with DSM’s ambitions regarding GHG emission reduction, all production sites are increasingly reducing their dependency on fossil fuels, as well as continuously improving their energy efficiency. An illustrative example is the biomass-based heat and power plant in Sisseln which entered into operation in 2019. Overall, we have set ambitious, science-based targets for ourselves, including purchasing 100% renewable energy by 2030 and having net zero emissions by 2050.

We are investing to make our processes more sustainable and significantly decarbonize the production of DSM products. Through these efforts (including, for example, the testing of a new bio-based vitamin A), our vitamins have about a 70% lower environmental footprint compared to competitors. This information is documented in the Environmental Product Declarations that are available to DSM customers upon request.

[Feedinfo] What can you share about the preparations that are in place in case DSM has to operate with less gas than necessary for full operations at Sisseln (Switzerland), Grenzach (Germany), or any of your other large-scale production sites?

[Fidelis Fru] DSM has been working on gas supply risks for some time and has multi-faceted continuation plans in place. Fortunately, many of our plants are in countries that are less dependent on Russian gas, or are already using renewables such as wind and solar or biomass for a portion of power and heat generation. At other sites, like our Grenzach, Germany, Vitamin B6 plant, we can switch to heating oil instead of natural gas in case of reduced availability.

An advantage of being a truly global company is that we have a global supply network to help maintain supply security. In addition to continually evaluating and responding to the energy situation, we’re actively communicating with our customers to ensure their needs are met. Despite all these measures we are still facing unprecedented challenges in production costs and it is very difficult to predict if they will be enough to meet and support the current demands and expectations of our industries.

Published in association with DSM