FBA Issue 4: September / October 2005
Vitamins - Better health, even for producers?
by Daphne TAN
with additional reporting by HUANG Qisheng
Is Asia's market for animal nutrition vitamins a growing, lucrative one? Or squeezed by higher costs on the one end, and greater competition with surging supplies, particularly from the Chinese, on the other?
Asia holds the bulk of the world's livestock population. So it comes to little surprise that leading vitamin producers, like DSM, BASF and Adisseo, have set their sights on the region. Where once backyard farms ruled Asia's meat supply, the rise in the numbers and level of sophistication of commercial farms has pushed up demand for feed additives exponentially.
Likewise, consumption of vitamins, essential for livestock health, is rising rapidly all across Asia. "This is a genuine growth market", noted Fred Schwenke, area manager in the Asia Pacific for DSM Nutritional Products, the world's largest vitamins producer since the 2003 takeover of Swiss pharmaceutical Roche's vitamins business. Although poultry and swine are traditionally strong in Asia, it is aquaculture, said Schwenke, that is leading the demand growth in animal nutrition vitamins while countries like China, Vietnam, India and Indonesia are among the world's most promising markets for feed additives. The development of new agro-industries, like warm water aquaculture, also stimulates new vitamin applications.
Recent disease outbreaks, ironically, had helped raise the profile of animal health issues. By hitting producers where it hurt most, financial losses from mass culls and market closures spoke volumes of the need for quality feed additives in rearing healthy animals. After a drastic fall, livestock production and feed demand are inching back to a rebound. And so too will demand for vitamin products.
What diseases like bird flu have also done was to accelerate the pace of integration among Asia's commercial farms and feed mills. Export-oriented productions, like the Thai broiler industry, now rely heavily on economies of scale to improve efficiencies and cope with escalating losses in bird flu's aftermath. Regaining export competitiveness is also easier for bigger operations, as the new rules of the game--HACCP, GMP and ISO certifications--can be more easily complied.
As the level of integration grows, so too will average customer size. "In Asia, 10 to 20 years on average was all it took for small customers to develop into big ones. Some of them, like CP, began as feed producers but quickly diversified geographically and into integrated production" said Schwenke, pointing to Thai broiler and feed leader Charoen Pokphand. "Just look at them now."
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