March 17, 2025
Hamlet Protein CEO highlights geopolitcal risks and policy uncertainty in 2025 market outlook
The outlook for 2025 is uncertain; market developments will largely depend on how the global geopolitical situation will evolve and how increasing regulation on sustainability will impact markets, Hamlet Protein said.
A possible trade war is looming on the horizon. With US President Donald Trump in the White House and a Republican majority in the US Congress, there is a significant risk that an aggressive implementation of tariffs could destabilise global trade flows and impact animal protein and animal feed production along the way.
Lack of clarity on timing and scope of EU regulations aimed at driving sustainable industry practices could put European producers at a disadvantage versus their Asian, American, and Latin American counterparts. While there is broad support within the industry to invest in sustainable practices, unilateral initiatives create the risk of disrupting markets and slowing down investments.
Poultry and aquaculture are expected to be the clear winners in 2025. Swine is expected to show limited growth, whereas a decline in beef is foreseen. While there is a growing attention for meat substitutes, animal protein is still expected to outgrow its plant-based alternatives.
Feed is the most significant cost of livestock production, often representing as much as 60-70% of the total production costs. Feed costs are expected to remain relatively stable in 2025 when compared to 2024 year-end levels, yet lower when compared to the full year average.
In the following parts of this article, Hamlet Protein chief executive officer Erik Visser shares his outlook on the key topics that will shape markets in the coming year and its impact on animal protein and animal nutrition supply chains.
How will geopolitics impact markets
The biggest unknown with possibly the highest impact will come from Donald Trump's new term in office. If his administration implements the tariffs that were announced by Trump, then trading partners are likely to respond with retaliatory tariffs. Such a trade war would significantly impact global economies.
For the European Unio, US tariffs on European goods may slow GDP growth in the region by limiting export opportunities and increasing production costs. Similarly, China could face headwinds, particularly as higher tariffs disrupt its export-driven economy, although domestic stimulus and market diversification may mitigate impacts. The United States might see initial growth from fiscal policies but could encounter medium-term pressures. Protectionism would be likely to increase inflation in the US as higher tariffs raise consumer prices, compounded by wage pressures from stricter immigration policies.
At the same time, we will closely follow the political developments in European powerhouses Germany and France as they are the dominant economies in the European Union. An new chancellor was recently elected in Germany, that will focus on battling low economic growth rates in Germany where increasing political uncertainty in France give rise to uncertain outcomes.
What is your macro economic outlook
Global real GDP growth is forecast at 3.2% in 2025, matching 2024 levels but remaining below the pre-pandemic trend. While disinflation is predicted to continue, with global consumer price growth projected to fall to 3.8%, upside risks to inflation remain. Potential disruptions, such as a slower disinflationary process, could lead central banks to delay interest rate cuts, adversely affecting growth.
The overall outlook for emerging and developing economies is positive but marked by divergences across regions and markets. Real GDP growth in developing economies is projected to stabilise at around 4.1% in 2025. Asia remains a bright spot, with growth projected at 5.1%, fueled by surging demand for electronics and semiconductors, and robust investment driven by supply chain diversification efforts.
In Latin America, real GDP growth is projected to recover slightly, reaching 2.4% in 2025, but the picture is mixed. For instance, Brazil's growth is predicted to ease to 2.1%, as restrictive monetary policy, reaccelerating inflation, and a cooling labor market weigh on momentum.
Meanwhile, Mexico's outlook is more subdued, amid tighter fiscal and monetary policies, and risks of rising trade tensions or tariffs under the Trump administration.
What developments do you foresee for feed costs
Feed is the most significant cost of livestock production, often representing as much as 60-70% of the total production costs. A large portion of that cost comes from soy, wheat, and corn.
Ukraine is a major exporter of wheat, barley, and corn. Even though it has managed to continue to export reasonable volumes of agri-commodities through the Black Sea corridor, the ongoing war with Russia could disrupt this channel at any time.
The cost of animal nutrition strongly impacts profitability levels of producers, and lower feed costs typically lead to increased inclusion of feed additives and specialty ingredients. We expect feed costs to remain relatively stable in 2025 when compared to 2024 year-end levels, yet lower when compared to the full year average.
Increasing tension in the relationship between EU and US on the one hand and China on the other hand could create a supply risk for key feed ingredients, as China produces more than 70% of the world's vitamins, and many critical amino acids, including more than 75% of the world's lysine and more than 25% of methionine.
And what about soybean meal
Even though the protein requirements in animal diets can come from different sources, soybean meal (SBM) remains the preferred protein source for most producers.
More than 50% of the world's soybean production comes from South America, with Brazil as the world's top producer. North America represents roughly 30% of the global production volume, and the production predominantly comes from the US. That balance is unlikely to change in the coming year.
The US harvested a record crop in 2024, and South America has increased its plantings for the 2025 harvest. Couple that with a declining SBM demand from China, and we expect prices to stabilise at current low levels or slightly decrease.
Even though the weather phenomenon La Nina could have some impact on the South American harvest, we do not expect that to significantly impact price developments.
In case of a deepening US–China trade war, China would likely target US soybean export. This could lead to a drop in US soybean price levels and be followed by a reduction in soybean acreage, while simultaneously driving increased Chinese demand for South American soybeans.
The implementation of the EU's Deforestation Regulation (EUDR), that is now scheduled for the end of 2025, will have an impact on pricing of SBM and global trade flows. Europe represents only a small fraction of the global soybean meal trade, and there is a risk that European producers will end up paying a premium, while non-EUDR compliant SBM will be diverted to geographies with less strict regulations.
Which species will see strongest developments
We expect poultry and aquaculture to show strongest growth in 2025, with limited growth for swine and a decline in beef. That does not mean all regions will see the same development, as most growth will come from Asia and South America.
Improved demand and lower feed costs will drive aquaculture production growth in 2025. All key species should see growth, with Pangasius and Tilapia in the lead. Shrimp, which continues to face relatively low prices, is expected to grow by just 2%.
The global outlook for poultry markets continues to be strong, with increasing consumption in Asia, Middle East, and Europe. Low pricing of poultry products makes it an attractive alternative to other protein sources.
Improved profitability has slowed swine herd contraction in most regions, yet producers are moderating rebuilding efforts. Disease pressure in parts of Europe and Asia are affecting production growth, as are US slaughter constraints and EU regulatory headwinds.
This outlook can obviously change with animal disease outbreaks, like African swine fever, avian influenza and foot and mouth disease, as they will affect production volumes and export opportunities. As long as an effective vaccination is not available for farm management, biosecurity and nutrition will remain critically important.
Will consumer preference impact animal protein consumption
On a global level, most consumers still prefer animal-based protein over plant-based alternatives. Yet, there is an increasing interest from consumers in animal welfare and sustainability that producers will need to address.
For all the innovation and efficiency gains that livestock and feed producers have realised in past decades, the industry will need to do a better job working alongside all stakeholders to explain how it contributes to feeding the global population in a sustainable manner.
What will the impact of sustainability policies be
Sustainability will remain a crucial focus for the global feed industry, driven by both private sector initiatives and international regulations. The regulatory requirements in particular can have a strong impact on our industry.
Where consumers have been focusing on animal welfare in the past years, an increasing focus on sustainability can be seen from consumers and governments alike. With it, sustainability has moved from being a ‘nice-to-have' in corporate strategies to a license to operate.
The market is increasingly expecting companies to take responsibility for impacts across their whole value chain, especially related to climate and human rights. At the same time, investors and financial institutions will increasingly base their financing decisions on ESG performance.
A broad range of voluntary industry standards are emerging as well; some of them aligned with government-led regulation, others driven by local interests. Not all of them have an objective way of measuring impact yet.
As long as industry standards are not clearly defined and as long as other large producing countries do not implement similar standards, European producers are at risk of becoming less competitive.
And what about further regulation
Europe is taking the lead in implementing a wide range of ESG regulations and companies will have to invest time and money to keep up with a changing landscape. Even though the implementation of the EUDR was recently postponed for a 12-month period, we do expect increasing regulation targeting livestock and feed producers.
Across all industries in large European companies, listed SMEs and financial institutions will face additional reporting requirements in 2025 to comply with the Corporate Sustainability Reporting Directive (CSRD). The CSRD was designed to boost transparency and hold companies accountable for their environmental, social, and governance (ESG) impacts. Even if an organisation does not yet face additional reporting obligations, or is located outside the EU, it may be asked to provide information to their business partners as they need to submit data on their entire supply chain.
The EU has been working on a new legal framework for feed additives and communicated that this is a strong priority for 2025. The existing regulation is over 20 years old. New legislation will focus on sustainability, animal welfare and health, and lawmakers will seek to align it with the EU Farm to Fork Strategy and the EU Green Deal.
In the US, the AAFCO's feed ingredient definition process expired in October last year. The Innovative FEED Act, a bipartisan legislation amending the Federal Food, Drug, and Cosmetic Act to give feed additives an efficient way to come to market, has not yet been passed into law. This bill would establish a new regulatory path for non-nutritive animal food ingredients that act in the animal's gut to provide production benefits, address human food safety concerns, and affect byproducts from digestion in the animal.
On a global level, the use of medication in general and antibiotic growth promoters in particular will increasingly be regulated. As there is no single product that can replace antibiotics, a multi-faceted approach will be needed to drive animal health and performance. Increasing regulation will provide opportunities for feed additives and specialty ingredients producers.
What should we look out for in global supply chains
Global supply chain challenges continue to pose significant risks for feed manufacturers. Recent years have highlighted the industry's vulnerability to transportation disruptions and ingredient shortages. While the available capacity has increased, this is no guarantee for lower freight costs.
The ongoing unrest in the Red Sea and Gulf of Aden continues to disrupt shipping through the Suez Canal, driving prices up.
Even though a tentative deal was struck between unions and employers in early January, the risk of another port strike in the US still exists. A shutdown of operations at East and Gulf Coast ports would lead to further disruptions of the global supply chain and drive transportation costs up.
What role will artificial intelligence play
Artificial intelligence (AI) dominated the headlines last year, since ChatGPT and other large language models were launched. In livestock production, animal nutrition and animal health AI technologies are being evaluated and implemented targeting precision nutrition, feeding systems, and disease management.
The applications of AI continue to expand and evolve rapidly, and research budgets will increase to optimise animal nutrition and health using innovative technology.
A successful integration of AI into livestock and feed management will largely depend on proper data collection and data management. Without comprehensive datasets to train AI algorithms, models cannot be implemented effectively.
Will the labor market see significant changes
The labor market continues to be tight, and professionals are aging. To maintain the innovative nature of our industry, companies need to attract young talent. Being part of feeding the world in a sustainable manner is an attractive proposition for young professionals. Yet, feed and protein producers should do a better job in getting that message across.
Younger generations do not join companies for the salary alone. Organisations with a strong and clearly defined purpose will win the war on talent.
The US is expected to overhaul its immigration policies and deport undocumented foreigners under the Trump presidency. US agriculture is highly dependent on migrant labor, with immigrant farmworkers making up more than 70% of the workforce. How the US ag supply chain may be affected will depend on how policy changes will turn out.
What will Hamlet Protein focus on in 2025
Providing the right nutrition in the first life stage determines the overall lifetime performance of the animal. With increasing pressure on the use of medication and with more countries banning (or limiting) the use of antibiotic growth promoters, the focus on specialties for young animal nutrition will continue to grow in the new year. It is in that area where Hamlet Protein has been able to create a global leadership position, and we will use that position to further increase our presence in key markets with a focus on swine, poultry, and ruminants.
The SSP market size is estimated at 1,6 million metric tons, and the market will continue to grow at an average of 3-4% year-on-year. This market growth is supported by macro-economic drivers such as a growing world population, increased regulation, and further market consolidation. At the same time, Hamlet Protein will take share of animal protein diet sources like plasma and fishmeal to further increase our volumes.
Hamlet Protein already has strong market shares in North America, Europe, and Asia. In 2025, we will expand our footprint in Latin America, the Middle East, and Africa. That growing market share will not only come from our flagship product HP300; we have different product options that we will position to address the needs of specific markets, species, and life stages.
Hamlet Protein will continue its research into protein kinetics. The faster protein is digested and absorbed, the more of it is available for growth. Our research, which was done in cooperation with renowned universities, clearly shows that Hamlet Protein provides the fastest protein source available in the market. In 2025, we will further explore how our insights into protein kinetics can be applied to further optimise animal /diets.
Sustainability is core to Hamlet Protein's strategy. We have created a clear ESG roadmap to comply with existing and newly introduced laws and regulations and meet industry standards. In 2025, we will complete our life cycle assessment (LCA) and continue to work with suppliers and customers on creating a more sustainable supply chain on all levels.
Hamlet Protein will continue to invest in bringing the best solutions for early life nutrition to the market. That means investing in the best technical and commercial talent, driving efficiency at our plants, and working alongside our business partners to provide solutions for today's and tomorrow's challenges. We feel confident that we are well positioned to drive further growth in 2025.
- Hamlet Protein
