FEED Business Worldwide - August, 2011
Kemira identifies further opportunities in AGP ban
by Julius ARIFIN
"I have a very simple belief that the cream comes to the top," said Han van der Broek, Kemira Asia Pacific's manager for Sales & Marketing Food & Feed. "If you look at what happened in the past ten to twenty years in Europe, the cream, the organic acids, have come to the top. They are, by far, the most widely-used alternative."
The same may well happen in Asia. In July, South Korea instituted a complete ban on AGPs in animal feed, becoming the first country in Asia to do so.
"Any ban on antibiotics will definitely create a lot of opportunities for Kemira," said Van der Broek. With an increasing number of countries and regions banning or limiting the use of AGPs, organic acids have become the leading alternative to antibiotics, an opportunity Kemira has taken full advantage of with their range of mould inhibitors and feed acidifiers.
Engaging Asia Pacific's feed industry
Kemira began its strategy to be more directly involved with the Asia Pacific feed and farming industry in 2007, when it participated in that year's Victam Asia trade show in Bangkok, Thailand.
At that time, Kemira was still a relative unknown in the Asia Pacific region, especially in the feed industry. The challenge then was to create brand awareness and recognition for Kemira in the Asia Pacific market, which Van der Broek believes they have succeeded at, with Kemira now well-known in the Asia Pacific feed and farming industry as a reliable supplier of cost-effective organic acids and salts.
As a basic producer of organic acids and salts, Kemira's product development is at the forefront of the industry's activities. Take for example, Kemira Proturalâ„¢, a sodium benzoate-based pig feed acidifier that solves several issues with existing conventional benzoic acid solutions.
"Benzoic acid is approved as a feed additive in the EU," said Van der Broek. "However, there's a drawback with benzoic acid. The customers are telling us that it is volatile, it is pungent, it is not an easy to handle ingredient."
In comparison, sodium benzoate has a higher solubility, is easy to handle, and does not have a pungent odour. Sodium benzoate is already widely available as a human food preservative, with the code E211, but Kemira has after extensive registration efforts, obtained approval from the EU for its use in animal feed.
"We at Kemira can now deliver sodium benzoate, which is the salt form of benzoic acid, to the EU feed industry but we have already been supplying the product in Asia-Pacific for the past couple of years," said Van der Broek. "It is a product that has really been developed with the needs of the pig feed industry in mind."
Another Kemira product that has been recently launched as an alternative to AGPs is Kemira Pro GITÂ® SF3, a synergistic blend of short-chain and medium-chain fatty acids and their calcium salts enriched in lauric acid, specifically developed for the poultry industry.
The blend is effective in suppressing the bacteria responsible for necrotic enteritis, one of the most common and financially devastating bacterial diseases found in modern broiler flocks, and a compelling reason to use AGPs in the first place.
"We did the official launch in Bangkok earlier this year, but we have been introducing that product selectively to people and operators in the Asia Pacific region, and we're getting some tremendous response already," said Van der Broek. "We're really anticipating that this is a product which will fulfil the needs of the poultry industry."
Market forces and AGP alternatives
Similarly, Kemira also anticipates changes that will create markets for it, such as South Korea's ban on AGPs. With Korea's antibiotic-in-feed ban impending, Kemira had been preparing for an increase in organic acid consumption in South Korea over the past year-and-a-half, gearing up for a heightened demand for AGP alternatives and making sure that it had the right products available for the feed industry.
Based on Kemira's experiences in marketing organic acids, customers that had previously been using antibiotics will start using organic acids as an alternative. Existing organic acid usage likely had relatively low inclusion rates, and Kemira expects these inclusion rates to double, if not triple.
Therefore, Kemira anticipates a major increase for organic acids usage in the Asia Pacific region, especially in countries where AGPs will be banned. "In South Korea, with the ban on AGPs in place, organic acid sales could grow 50% within the coming years," said Van der Broek.
However, there are still several obstacles to overcome, and adoption of organic acids may not be swift in coming. For example, South Korea's outbreak of food and mouth disease (FMD) in late 2010 and early 2011 forced many companies to make their own survival a higher priority than adopting antibiotic alternatives.
In addition, it is still uncertain if other countries in the Asia Pacific region will follow South Korea's lead in enforcing a ban on AGPs. Without the same legal pressure as in the EU and South Korea, a large portion of the livestock industry would still rather go for the cheap antibiotics than invest in organic or more natural alternatives.
Nevertheless, Kemira does believe that it is only "a matter of time" before AGPs are phased out completely, and that this move will favour of organic acids-based products, as they saw in Europe.
As societies gain greater financial freedom, particularly in developed countries, consumer pressure makes AGP usage in animal feed becomes less attractive. Hence, even if no official legislation is present to restrict or ban AGP use, market forces may result in the same outcome.
"It goes hand-in-hand with social pressures, the economic development in the country, legislation, and the availability of products," Van der Broek said. "But I think it will happen."
Opportunities in adversity
Apart from organic acids for performance enhancements as an alternative to antibiotics, Kemira has also seen success in their mould inhibitor and anti-microbial businesses, which are keeping pace with the growth of the feed industry.
With grain prices going up, there is a much higher financial risk for potential damages in feed ingredients. Hence, grain producers and purchasers may see this as an incentive to secure their investments.
"For some customers it's an incentive to make sure that they treat this grain with mould inhibitors, in order to make sure that they won't get the grains spoiled over three or six months' storage because of mould growth and mycotoxin contamination," said Van der Broek.
Kemira is the largest producer and supplier of calcium, sodium, and ammonium propionates in the world, all of which are used to preserve feed grains. They are also the second-largest producer of formic acid in the world, and are continuously seeking to improve their manufacturing processes to keep up with world demand for this highly effective antimicrobial organic acid.
However, Kemira is not only active in the feed and farming industry. Its solutions are also offered further down the feed-to-food supply chain where Kemira has launched an organic acid salt-based solution for extending shelf life in processed meat.
Kemira ProvianÂ® is one of the few ingredients available to the industry that can control the spread of Listeria monocytogenes, one of the most virulent foodborne pathogens, which has a 20% to 30% mortality rate.
"The impact of Listeria contamination for the consumers is a lot bigger than it is for E. coli or Salmonella, where you can get pretty bad food poisoning," said Van der Broek. "But Listeria can potentially kill you. So there is a lot of emphasis in the meat processing industry on Listeria control."
Overall, Kemira remains the most optimistic about AGP alternatives, as they have contributed the most to its bottom line. As AGPs are phased out in ever more countries and jurisdictions, organic acid-based alternatives the feed and livestock industry will replace them with organic acids.
However, due to the significant differences in national legislation and economic development between countries, the precise amount of growth may vary, particularly in the Asia Pacific region. "Here in Asia, there are still a lot of alternatives on offer, and a lot of people who still need to understand and appreciate how organic acids need to be used, and how products need to be evaluated," said Van der Broek. "This makes the Asia Pacific the most exciting region in the world right now."
Another challenge for Kemira to overcome is competition in the form of a proliferation of cheap low-quality products. Apart from chemically impure ingredients, many companies are also offering cheap blended materials, with a lower concentration of active ingredients, sometimes down to a shocking 1%.
By comparison, "Our products are more expensive because they are much more concentrated, in the order of 70% to 80% active organic acid content, and I strongly believe that they are more effective," said Van der Broek.
Van der Broek adds that while customers are much more informed now about organic acids-based products and the dangers of watered down imitations than four years ago when Kemira first entered Asia Pacific,"there's still a lot of work to be done."
In all, Kemira has a sense of achievement, challenge and hope. In just four years, it made great strides, both in establishing its Asia Pacific presence and in changing how its livestock sector makes meat. Moreover, by offering everything from mould inhibitors to meat preservatives, Kemira gives its clients sustainable end-to-end solutions that span the entire agribusiness supply chain.
At the same time, it faces a slew of challenges; ranging from inferior imitation products to livestock farmers who cling to unsustainable but still popular AGP-based animal rearing. Nevertheless, just as cream rises to the top, Kemira is confident that its top quality products will not only define livestock farming's new era but also set its highest standards.
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