Photo courtesy of PIX and Feed Conference.
A record 1,500 people attended the conference, which included representatives from the feed and flour milling industries as well as suppliers to those industries who showcased their latest products on the trade show floor.
Tim Hart, CEO of Ridley Corporation Ltd., a large feed supplier based in Melbourne, Australia, described the challenge of feeding a growing world population as well as Australia’s own population growth, which is projected to increase to 30 million by 2030. Australians will want more chicken (with demand projected to grow 3% per year), fish (up 25% by 2022) and dairy products, Hart said.
Australian agribusiness has the resources to meet the growing demand in the aforementioned areas, but Hart said livestock production will increase only if there’s an equivalent growth in the feed industry.
In outlining Ridley’s sustainability vision, Hart said the company wants to improve the cost of feed-to-yield ratio for its customers. To do so, Ridley has focused on improving quality, nutritional expertise and yield performance while simultaneously lowering merchandising, by-products, location and freight to reduce the cost of the feed. Ridley, he said, wants to maximize the difference between these quality, nutritional and yield performance and feed costs.
Hart noted that the aquaculture industry has great potential for growth. While it’s still a small industry in Australia, aquaculture has grown at a compound annual growth rate of 11% over the last 20 years, he said. In Asia, which represents 90% of global aquaculture production, farmed fish will exceed wild catch by 2018.
“The two major growers are both investing in new farms and biomass to continue growth,” Hart said.
He said the biggest challenge the aquaculture industry faces is a decline in the raw material needed for fish feed, but this may be addressed by using novel raw materials, including terrestrial animals, to meet demand.
Consumers turning to protein
Rabobank’s Angus Gidley-Baird also spoke of the challenge of meeting the growing demand for food. He estimated that by 2024 an additional 72 million tonnes of protein would be required to meet global demand.
Driving this demand is an expanding world population, increasing wealth that allows people to buy more food and a switch to more expensive protein-based diets. Gidley-Baird said Southeast Asian countries in particular have growth potential.
“There is growth in consumption globally, but predominately it is occurring in developing nations where they have big population bases, growing wealth and are changing to a western diet,” he said. “The meat consumption trend is an encouraging sign, and we will continue to see more demand.”
He also pointed to the aquaculture industry, which in Australia is projected to grow by 60% over the next decade to produce 600,000 tonnes per year. Currently, the industry uses marine-based feedstock, but there is a switch to other more sustainable sources that may provide a new opportunity for feed manufacturers.
Protein demand is being driven by an expected 20% increase for poultry, followed by dairy and lamb (18%), fish (13%), beef (11%) and pork (8%). This extra demand also will call for extra grain for feed use, which has been trending upward since 2009, Gidley-Baird said.
Regarding Southeast Asia, Gidley-Baird said the region may achieve significant growth in poultry consumption over the next 10 years.
“Southeast Asian nations alone will see very strong poultry meat growth of 15%,” Gidley-Baird said. “Indonesia’s per capita consumption could increase 25%.”
He said the Australian feed milling industry has experienced steady growth largely driven by the dairy and beef industries, with adjustments due to seasonal conditions (drought).
Gidley-Baird noted that in Western cultures there is a limit to the amount of chicken people will eat. Over the last 20 years, consumption has plateaued at 45 kilograms per year in Western countries, he said.
Even if the Australian market experiences this leveling out of consumption, growth of 3.5% is expected as 95% of Australian production is consumed locally, he noted.
By 2020, Gidley-Baird estimates Australian chicken consumption will be 1.4 million tonnes per year.
“Chicken meat production has increased by 5% over the last five years and will continue to grow,” he said. “This growth is underpinned by its efficiency in production, low costs, feed conversion ratio and its consumer appeal.”
He explained that capturing the market’s potential will require the improvement of margins through productivity gains, capture of a larger share of consumer spending and the development of new markets.
Regarding consumer demand trends, Gidley-Baird explained that more consumers are demanding products that are gluten free, cage free, sustainable, organic, ethically raised and free of artificial flavors, preservatives and antibiotics.
He also noted that consumers have become increasingly aware of what they’re eating, which has created a need for processors to label their products.
Gidley-Baird said the industry could also harness the opportunity to add value to their products to entice consumers to pay more for them. This opportunity, coupled with improvements to technology, access to monitoring livestock and using data, would drive opportunities and growth into the future, he explained.
Australian weather outlook
David McRae from the University of Queensland spoke of Australia’s highly variable rainfall and the impact it has on grain production.
McRae said the current El Niño climate pattern appears to be losing strength with the likely outcome being a return to neutral or a La Niña. He also said the Darling Downs, an area with significant sorghum production, has a good chance of receiving over 3 inches of rain. Queensland has experienced dry conditions since 2013.
About 60% of Australia’s sorghum crop is grown in Queensland, so a return to normal or wetter-than-normal conditions would be welcome. The grain primarily is used in feed for the cattle, pig and poultry industries with China being a large buyer.
Ray Johnson, managing director of Agricultural Appointments, a large industry recruiter based in Melbourne, Australia, discussed the challenges the feed industry faces in attracting and retaining staff, changing employee attitudes toward working, and finding workers capable of operating its highly technical equipment.
Johnson explained that all sectors of the agricultural industry are experiencing a skills gap, and with the introduction of newer technologies, this problem may only get worse.
“Skills shortages remain the number one threat to the agricultural sector’s ability to succeed,” he said.
Johnson also said the industry was in the midst of a major generational change in the workforce as baby boomers retire and Generation Y becomes dominant.
“This change is important because Generation Y’s have different attitudes and approaches to employment and working life,” he said. “Unless the agricultural sector understands these differences and adapts, the already growing skills shortage will quickly escalate.”
Johnson explained that the industry would need to adapt to these many changes in order to compete in the future.
The event included a trade show featuring suppliers to the grain and feed processing industries.