The extremely hectic situation on the raw materials market continues to occupy the minds of the raw materials and compound feed trade. There is great concern about the price level, but also certainly about the availability of raw materials, especially in Southern Europe. Henk Flipsen, director of Nevedi, calls the situation 'very worrying'. Politicians must act quickly, other insiders also report.
The significant price increases on the raw materials market are a major burden on companies in the chain. The price increases are so significant and are happening so quickly that they must be passed on to the chain as quickly as possible. This means that sales prices in supermarkets must increase. "Otherwise, companies will collapse very quickly. In countries in Southern Europe, a shortage of raw materials for animal feed is now a realistic scenario," says Flipsen.
Urgent situation, especially in Southern Europe
Flipsen finds the situation that has arisen 'not worrying, but very worrying.' He indicates that the issues are much broader and larger than just the question of whether certain chain-specific raw materials for, for example, organic and non-GMO feeds can still be supplied. The extreme price increases pose an enormous challenge for the entire chain. "A heavy burden. It requires a major investment from all links in the chain to initially bear the increased costs themselves. This is only possible for a very short period."
In addition to the concerns about price formation, Flipsen indicates that the security of supply of raw materials in Southern European countries will also quickly be jeopardized. He receives disturbing reports about this from feeding parties in this region. "The livestock farming sectors in Southern Europe are much more dependent on the import of raw materials, including from Ukraine. Particularly for parties there, measures must be taken very quickly at European level for relaxations regarding, for example, corn imported from South America. We are now not allowed to import certain GMO crops here, there must be temporary relaxations. In this region, the fact that there may no longer be sufficient feed for livestock is already being taken into account on the left and right."
Flipsen adds that Dutch livestock farming has a slightly more favorable position because relatively many residual flows from the food industry are used here. This makes the problem here less acute. Moreover, in our country a larger share of imported raw materials comes from countries other than Ukraine compared to, for example, Spain.
Yesterday (Wednesday, March 9), the chairman of the Spanish trade association made an urgent call on the European Union to immediately relax the import requirements for raw materials, especially corn, this week. He indicated that Spain only has four weeks' worth of corn in stock. If no action is taken, the country will have to quickly start slaughtering livestock, especially broilers.
In addition to relaxing rules surrounding imports, the use of raw materials for biomass power stations must be quickly reconsidered, according to Flipsen. "Politicians must ask themselves the question: do we want to have enough raw materials for food and feed? Then choices are necessary." According to Flipsen, the problem is so serious that it is not only about the security of feed for animals, but also about our own food security.
Mixing common raw materials into bio- and non-GMO compositions
In addition to the general shortage of raw materials, the supply of feed for chains with specific requirements such as organic and non-GMO certainly causes headaches for buyers of compound feed companies, especially in the medium term. The key to a solution here also lies with politics.
Inquiries from parties in the sector show that the market for biological raw materials has been very tight for some time. The current hectic and uncertainty is not doing the situation any good. A spokesperson for a major compound feed producer reports: "The growth of organic livestock farming, especially in dairy cattle, is much faster than the growth of organic arable land. This was actually already a problem before the conflict in Ukraine."
Although, according to various buyers, not an extremely large number of organic raw materials are imported from the Black Sea region, the market has recently been brought into sharper focus. "The uncertainty alone about whether there will be enough raw materials this year is driving up demand and prices. This makes the balance in the supply and demand for bio-based raw materials even more tense." The problem is on the political agenda and it is expected that a decision can be made fairly quickly to temporarily include regular raw materials in the organic rations.
The current war situation has a greater impact on non-GMO feeds. Ukraine is a major supplier of non-GMO corn and wheat. Although parties have often agreed on purchasing for the coming period (up to one or two months in advance) and do not expect any problems, the period afterward will be very uncertain. "The first question is how much of the old harvest will be shipped and also the question of how large the acreage and production will be in Ukraine," reports the aforementioned spokesperson. It seems likely that there will be a shortage of non-GMO raw materials and here too, politicians will have to ensure in time that short-term exemptions are granted to include regular feeds in the compositions.