The Covid-19 pandemic was the main agenda for 2020. Like every sector, livestock and feed sectors have had their share of this outbreak. At the beginning of the pandemic, with the effect of panic purchases, the demand for meat, milk and fishery products increased.
However, disruptions in raw material supply, logistics, and labor resources due to restrictions made it difficult for the industry to respond to consumer demands at the same pace. The prolonged process caused the economic problems of consumers to increase and besides, to change their purchasing habits. In addition, restaurants and catering companies remained closed for a long time. And the sector spent the year of 2020 looking for ways to overcome these problems.
By Derya Yıldız
The year of 2020 which we left behind was a year that we cannot erase from our memories for many years due to the Covid-19 pandemic. The Covid 19 outbreak, which started in China in the last months of 2019, quickly spread all over the world and turned into a pandemic and stayed effective throughout 2020. And it looks like it will continue for the year ahead. Of course, the most irreversible effect of this pandemic was deaths and health problems. Many people around the world have lost loved ones or been left with serious health problems, perhaps irreversible.
Due to the priority of human life, countries had to make tough decisions to combat the pandemic. Lockdowns and social isolation came into our lives as the most distinctive feature of this process. Factors such as restrictions on the transition between countries, temporary closure of public places and workplaces, schools, which are seen as social environments, and the processes of forcibly staying at home, have hit many sectors and businesses in the industry. The livestock and feed sector also took its share from this process, especially in the early stages of the pandemic. However, foods of animal origin are the most basic nutrient and protein sources of the human diet… As long as human life continues, the need for these resources cannot be over. At the same time, this sector is very dependent on livestock and the life cycle of these livings must continue.
During the course of the pandemic, especially in its early periods, many organizations expressed that there was an increase in the demand for meat, milk, and fishery products with the effect of panic purchases. Therefore, it can be seen that the problems experienced in the livestock and feed sector originate mainly from supply-related problems. Disruptions in raw material supply, logistics, and labor resources due to restrictions made it difficult for the industry to respond to consumer demands at the same pace. However, concerns about Covid-19 infection through foods, buying habits that have changed with the intense economic pressures on consumers over time, and the long-term closures of restaurants and catering companies continue to have their effects on livestock and therefore on the feed sector.
STRATEGIC IMPORTANCE OF THE FOOD INDUSTRY
Another important issue was the vital importance of the food industry and ensuring food safety all over the world. This was one of the most clear and obvious issues that the pandemic revealed in 2020.
The joint declaration published by the non-governmental organizations representing the international animal and feed sector with the title “THE INTERNATIONAL LIVESTOCK PARTNERSHIP ON COVID-19” on 9 April 2020 also drew attention to this issue and included the following statements: “In these troubled times, international collaboration between the governmental and private sectors is more important than ever to ensure food safety, food security and nutrition and thus improving the general welfare of people around the world. Industry and global intergovernmental organizations must work together to ensure that both national food markets and the world market continue to be transparent, stable and reliable sources of food supply.
The members of the International Livestock Partnership welcome the actions taken thus far to support the continued well-functioning of value chains ensuring the production and availability of safe, nutritious and diversified animal-sourced foods for all globally. As you have recognized, participants in the animal-sourced food value-chain – from livestock farmers and feed producers, to input suppliers, to those in process and packaging, those delivering food to points of purchase and many others – are providing essential services that must continue.
Food derived from farmed animals provides readily absorbed proteins and nutrients and are essential to human health and food security. We therefore need to work together so that the animal-sourced food value-chain globally is not disrupted by the COVID-19 pandemic, thus resulting in pronounced consequences for populations globally.”
As stated in the statement in a sense, even if you can stop many things in life, it is impossible to stop the need for nutrition. People have to be fed to survive and all components of the food industry must continue to provide the necessary resources for nutrition. At the same time, it is extremely important that each country can provide at least staple foods with its own internal dynamics. Because, in extraordinary circumstances such as the Covid-19 pandemic process, countries that are heavily dependent on foreign food may experience much greater problems compared to other countries. Some countries’ restrictions on exports to meet their domestic demands during the pandemic process, the disruption of logistics processes, and the decline in production both affected the procurement processes of dependent countries and caused these countries to struggle with increasing prices.
THE FEED SECTOR IN 2020 AND THE IMPACT OF COVID-19
Now, let’s mention what general data in the feed sector in 2020 tells us… Alltech, one of the most important players in the feed additives industry, has taken its annual Global Feed Survey report to a much higher level this year and provided important data to the livestock and feed sector. This resource, which I have used a lot in this issue of our magazine, conveys important information about how 2020 passed for the industry.
According to this report, concerns about food supply caused panic purchases, especially in the early stages of the pandemic. However, later on, it turned out that the food supply chain continued to be stable and could meet the needs of consumers without much interruption.
With no doubt, the pandemic had a different effect in each region. While this process caused more difficulties in regions such as Africa, it was managed in a more controlled manner in more stable countries. Perhaps the most important alternative solution of this process was emerged as the e-commerce system. Many companies have tried to overcome their sales and marketing challenges with e-commerce solutions and achieved considerable success in this regard. It is seen that e-commerce, which is now accepted more by consumers, will continue to be preferred as a lifestyle habit in the coming years.
In 2020, the issue that affected animal products manufacturers the most was feed prices. Feed prices have increased significantly due to many factors such as insufficient production in grain raw materials, Covid-19 restrictions, and animal diseases. In addition to price increases, new decisions made by governments for more sustainable practices (such as reduced nitrogen use and reduction or abolition of antibiotic use) have been challenging for the industry.
HOW WERE DIFFERENT PRODUCTION GROUPS AFFECTED BY THE PROCESS?
The poultry industry had to combat rumors that the coronavirus spread primarily through the consumption of meat and meat products in 2020. Lockdowns applied to control the Covid-19 outbreak have affected the movement of vehicles carrying live animals, feed and feed materials in some regions. Moreover, factors such as the widespread closure of restaurants and catering companies as part of Covid-19 measures, bird flu, and instability in raw material prices also put significant pressure on the poultry sector in 2020. On the other hand, the demand for eggs, an important source of protein and a slightly more cost-effective food, has increased, thus allowing the industry, including poultry feed producers, to move in a more balanced path.
The pig industry, apart from the Covid-19 pandemic in 2020, also had to fight African swine fever (ASF). Although feed production was not affected much by the pandemic, ASF became a major problem, especially in some regions. The impact of the disease on the industry still continues. As the disease continues to spread in the Asia-Pacific region, there are concerns about the spread of ASF in Oceania. Despite this challenge in some parts of the Asia-Pacific, China appears to be significantly weathered the storm of both the Covid 19 outbreak and ASF. Despite the improvement in China, growth in the Asia-Pacific region remains stable as many other countries such as the Philippines and Thailand still continue to struggle with diseases.
Especially the closure of schools and restaurants within the scope of Covid-19 measures had a significant impact on the supply chain in the dairy industry. Milk prices fell in some countries and the profitability of farmers decreased accordingly. Consumer concerns about how milk is produced and its impact on the environment also stood out as additional challenges in the industry in 2020. In addition, some countries’ regulations that support antibiotic-free (ABF) production have also increased.
The beef industry declined by 1 percent globally in 2020. The beef industry was also affected by restaurants and catering companies that were shut down due to Covid-19. In addition, the growing economic problems of consumers after prolonged shutdowns, combined with concerns that meat was healthy/safe, all led to a decrease in beef consumption. The industry currently keeps struggling with these challenges.
The aquaculture industry has been the area that displayed the strongest growth in this process on a global scale. This effect was seen particularly in Asia, and to some extent in Latin America and Oceania. Factors such as the perception of fishery products as healthy by consumers and the lower environmental impact compared to other areas indicate that the sector will continue to grow in the upcoming period.
The pet industry has been one of the few industries to benefit from Covid-19 and imposed restrictions. The processes of lockdowns and perhaps a sense of loneliness increased people’s desire to adopt a pet. As a result, the pet food industry has recorded the largest growth in the past 3 years. Growth continued in premium pet food while growing economic difficulties led to an increase in purchasing lower-cost feeds.
WHAT WILL BE THE FUTURE OF THE FEED SECTOR?
According to the Compound Feed – Global Market Trajectory & Analytics report prepared by Research and Markets, the commercial value of the global feed market, which was estimated to be 446.2 billion dollars in 2020 when the Covid-19 crisis hit, is predicted to reach 594.9 billion dollars in 2027. This means that the compound annual growth rate (CAGR) between 2020-2027 will be around 4.2 percent. In the same report, it is predicted that the compound annual growth rate in grains will be 3.8 percent and with this increase, the commercial volume in grains will reach $ 184.4 billion.
The market size in the USA, one of the important actors of the global feed industry, was estimated to be 128.7 billion dollars in 2020. This means that more than 28.8 percent of the global market size will be originated from the USA.
China, which is the second-largest economy in the world and the most important actor in the feed and livestock sector, is expected to show a compound annual growth of 6.9 percent by 2027. China is expected to reach a market size of 105.1 billion dollars in 2027 after this growth. Japan and Canada, which are among other important geographic markets, are estimated to grow 2.5 and 3.4 percent, respectively.
In Europe, Germany is projected to record around 3.1 percent compound annual growth, while the rest of the European market is estimated to reach a market rate of $ 105.1 billion by 2027.
1. The European Feed Manufacturers’ Federation (FEFAC), Compound feed production 2020 expected to fall by 2.2%, Press Release, November 05, 2020
2. The American Feed Industry Association (AFIA), FAQs on COVID-19’s Impact on Animal Food Industry, Dec. 10, 2020
3. Alltech Global Feed Survey 2021
4. Research and Markets, Compound Feed – Global Market Trajectory & Analytics Report, September 2020, Global Industry Analysts, Inc
5. Markets and Markets, COVID-19 Impact on Feed Market, April 2020