June 12, 2015

 

'A four-on-one' with FRAmelco


 
 

An interview with L.F. Snijders, B.A. Snijders and D.F. Snijders of FRAmelco.

 

FRAmelco is a family-owned company specialised in the development, manufacturing, and marketing of animal feed and drinking water additives worldwide. With its headquarters in The Netherlands, FRAmelco provides the industry with innovative additive solutions that allow both agriculture and aquaculture to increase productivity and profitability in a sustainable manner.

 

In this edition FEED Business Worldwide decided to make an exception in the One-on-One section for this unique company and arranged a meeting with the three 'Snijders' brothers, the descendants of industry pioneer and inventor of the Formic/lactic acid combination – A.F.M. Snijders.

 

Below an interview with the CEO, Lars F. Snijders, the CFO, Benjamin A. Snijders and the Sales & marketing director of FRAmelco, David F. Snijders, about FRAmelco and their "FRA Easy Minerals & Vitamins".

                                                                      

 

FBW: Please share with our readers the early days of FRAmelco's development and its growth to the multi-species, multi-products company of today.

 

Ever since the three of us started FRAmelco our approach towards solving customers' problems is based on creating a collaborative relationship with those customers. At its core is our R&D team that combines academic knowledge with practical experience from our FRA-partners to develop product applications that increase productivity and profitability in a sustainable way. Together we identify the problem, develop a solution, and apply distinct programmes to ensure optimal results. FRA-products create value through effective implementation. This has led to the growth to the multi-species, multi-products company we are today.

 
 

The applications of FRAmelco are based on 1-monoglycerides, enzymes and nano-coated vitamins & minerals. Please explain the rationale and process in incorporating each application into the business of FRAmelco.

 

We focus on offering the industry animal-specific product solutions. As most of the challenges are caused by multiple problems we believe that the solutions to these challenges should be based on multiple product technologies. Our monoglycerides are mainly applied for their antibacterial and antiviral properties. We nano-coat vitamins and minerals to optimise bioavailability, and our multi-enzyme concept is designed to enhance the digestibility of mainly soy-corn diets.

 

Next to the product technologies above, our product applications may also combine other product technologies like: hydrolysed lecithins, essential oils, bioflavonoids, yeasts and traditional free fatty acids.

 
 

Are we correct to say that the business model of FRAmelco is to adapt and enhance the science of an existing additive product with an in-depth understanding of the nutrition and health issues of each animal species to bring about differentiated solutions to your customers? Can we say that such a business model requires a highly specialised technical team and an equally professional marketing department? How does FRAmelco deliver?

 

Developing, producing and marketing cost-effective applications indeed require an in-depth understanding of animal nutrition and health and yes, in a way you could say that our products are based on adapting and enhancing "existing additive products".
 

For instance, monoglycerides of fatty acids are the outcome of esterifying free fatty acids with glycerol and nano-coated minerals are the result of applying our in-house coating technique on conventional minerals.

Our business model not only requires a highly specialised technical team and marketing team, we strongly believe that the foundation of our FRA-concept is formed by combining the quality and focus of our FRA-partners worldwide with the advantages of operating as a family-owned company.
 
 

What is the ratio of each FRA Solution programme contribution to the total revenue of FRAmelco? What is the expected growth of each individual FRA Solution programme in the next five years?

 

We've developed health, performance, safety and nutrition programmes for swine, poultry, ruminants, pets and aquaculture. Within these animal-specific programmes we offer a variety of product solutions designed for specific challenges. As we've mainly been focusing on our health programmes, most of our applications aim to reduce the overall usage of antibiotics. These products target an improved health status by reducing the load of pathogenic bacteria and viruses. As a result, our product technology 'monoglycerides' currently accounts for over 60% of our revenues.

 

In the near future we will have completed the EU-registration of our 'FRA OctaZyme', which is part of our performance programme for poultry and swine. This EU-registration will enable us to grow the export business of our multi-enzyme concept and as feed prices continue to fluctuate, we feel confident that our 'FRA OctaZyme' will contribute to our future growth. Furthermore we've noticed that the demand for our nutrition programme products is rapidly growing as the market is starting to accept that nano-coated minerals are the most cost-effective and environmentally friendly solution to optimise the efficacy of minerals used in animal feed. Our nano-coated minerals are branded under the name 'FRA Easy Minerals'. How much do we expect to grow over the next five years? We would be disappointed if we could not maintain a steady growth of at least 35% per year.
 

 

What are the opportunities and challenges for each specific FRA Solution programme of FRAmelco, particularly the FRA Nutrition programme?

 

As you know the demand for antibiotic-free meat, milk and eggs is growing everyday while feed prices increase. Production efficiency must be further improved in a sustainable manner. We see these market challenges as major business opportunities, which lead to us having composed four different animal specific programmes to tackle these major industry challenges. Our Health programme applications target the reduction of medication usage by lowering total pathogenic bacteria and viral load. Our Performance programme products aim to enhance feed utilisation (proteins/fat) and boost gut development. The solutions of our Safety programme focus on improving the feed and drinking water quality.

 

Environmental awareness has also become paramount this past decade. This is one of the main reasons why governments have restricted the mineral levels in animal diets. Implementing nano-coated minerals, our  'FRA Easy Minerals', that are a part of our Nutrition programme, provides nutritionists with a tool to meet the necessary mineral requirements while complying with the legislation and keeping the environmental impact to an absolute minimum.

 
 

What are some of the biggest concerns of your customers these days with regard to the use of minerals? How do the FRA Nutrition programme applications provided by FRAmelco address these concerns?

 

One of the biggest concerns of our customers these days is that they're worried that the legal limits of minerals in animal diets set by the government do not match the actual mineral needs of today's animal. Furthermore, legislators needed to undertake action as mineral excretion must be reduced in order to keep the environmental pollution as low as possible. How do we address these concerns with our nano-coated minerals?

 
Let's take for example copper sulphate in swine husbandry:
 
Farmers know that in order to increase production efficiency their pigs need more copper sulphate than they're allowed to use. The government on the other hand states that copper sulphate digestion/utilisation are not optimal meaning that pigs excrete too much copper sulphate, which in return causes environmental pollution. The authorities take action and limit the usage of copper sulphate in animal diets. We saw an opportunity and decided to apply our nano-coating technique on copper sulphate resulting in a nano-coated copper sulphate product called 'FRA Easy Copper dry'. This product allows farmers to increase the production efficiency of their pigs, while complying with the regulatory limits. Farmer happy, government happy and FRAmelco happy!
 

 

In the past year, the global feed and livestock industry has generally not performed well. Like most commodities, prices of feed grains - corn, soy and wheat - have been treading at low prices, consequently dragging down feed markets worldwide. How has FRAmelco worked with its customers and end-users to improve their profit margins, particularly in the mineral business?

 

Although this past year has been a rough year for our industry, we have been able to maintain our steady growth. How have we managed to do so? As we've mentioned before our applications are focused on increasing the industry's productivity and profitability in a sustainable manner. Our products must be unique and have a clear ROI. To our opinion these two characteristics ensure that even in "bad times" growth can be achieved.

 

Implementation of "FRA Easy Minerals" results in a clear profit increase for the industry.

 

We ran several tests in various parts of the world. In Eastern Europe we conducted an experiment in fattening pigs with our "FRA Easy Copper dry" versus conventional copper sulphate. This trial started at the beginning of the fattening stage. Body weight was about 30 kg/pig. Both groups received 24 ppm of copper sulphate per tonne of feed. The control group received conventional copper sulphate and the treatment group received nano-coated copper sulphate ("FRA Easy Copper dry").

 

Results showed that at the end of the trial period the body weight of the pigs, which were fed with nano-coated copper sulphate, was on average 8 kg higher compared to the pigs which were fed with conventional copper sulphate. This result was obtained only by replacing conventional copper sulphate with "FRA Easy Copper dry". This is just one example of how we've worked with our customers to improve their profit margins by using our applications.

 
 

With the wide variety of inorganic and chelated mineral products which are offered in the market, how does FRAmelco differentiate itself from the competition with the nano-coated minerals?

 

That's a good question; however the answer is simple. The differentiation lies in the fact that we offer the most bioavailable mineral on the market at a very competitive price. Next to that, we're the only additive producer offering the industry nano-coated minerals.

 
 

Please elaborate on the concept of nano-coated minerals and vitamins also known as the "FRA Easy Minerals and Vitamins".

 

Our minerals consist of nano-sized particles of the conventional inorganic mineral embedded in a matrix of medium-chain fatty acid salts. The coating technique and coating material ensure stability during feed processing and feed digestion, and the nano-sized particles ensure an optimal bioavailability.

 
 

Would you agree that entry barrier to the minerals business is relatively less stringent than other feed additive products? Can we say the concept of nano-coated minerals is a marketing strategy to differentiate FRAmelco from the competition?

 

No, this is not the case. Don't let the name "FRA Easy Minerals" fool you. Entering the mineral market with a premium mineral line of products is not 'easier' than entering other additive markets.

 

Even though there are many different forms of 'premium' minerals on the market we've noticed that the mineral market is quite conservative and still mainly uses conventional forms of the mineral products. This is especially so in poultry and swine diets where we see that nutritionists are keener on using the traditional minerals.

 

In a way you could say that our nano-coated mineral solution is a marketing strategy to differentiate ourselves from the competition because we're as of today still the only additive producer on the market offering this type of mineral products.

 
 

With the emphasis on sustainable agriculture and animal welfare, feed mills and farmers increasingly have to meet these requirements in their additive products. Do your customers make demands that the solutions provided by FRAmelco meet these requirements? Please elaborate on how FRAmelco is meeting these demands.

 

Safety is a global public health concern. We take pride in ensuring that all of our products and manufacturing processes are safe for people, safe for the animals, and safe for the environment. Sustainability is all about securing food supply for future generations. FRAmelco is committed to exploring new ways to produce meat, eggs and milk in an economic way while safeguarding the environment. Our additive solutions facilitate the continued development of sustainable agriculture and aquaculture.

 
 

How do you see your product portfolio or applications, particularly the products in FRAmelco's FRA Nutrition programme, change in the next five years to meet customers' expectations?

 

Over the next five years the industry will become increasingly transparent. We believe basic producers of product technologies will play an even more important role.

 

For us this means that we will continue to focus on product applications based on monoglycerides, nano-coated minerals and enzymes, as we are a basic producer of these product technologies.

 

Our Nutrition programme comprises nano-coated minerals and vitamins, and will expand as customers increasingly see the benefit of our nano-coating technique. At this moment we only offer nano-coated zinc, nano-coated copper and nano-coated vitamin D3.

 
 

Please share with us the R&D activities carried out at FRAmelco, particularly in the mineral nutrition segment. What ratio of your R&D expenditure is utilised on existing solutions versus creating new product applications?

 

As we are the basic producers of our top three product technologies, nearly all our R&D resources are invested in our monoglycerides, nano-coated minerals and enzymes. We set aside per year 25% of our R&D budget for fundamental research trials and 25% on laboratory tests, which are designed to further improve the efficiency of our product technologies. 50% of our R&D expenditure is invested in animal trials, which we set up with our research partners.

 

New product applications are continuously under development as we work in close collaboration with our dedicated FRA-partners worldwide. R&D work on our nano-coated minerals currently consists mainly of fundamental research which is required to further explore the potential of this technology.

 
 

Where are FRAmelco's key markets for "FRA Easy Minerals & Vitamins"? What is the growth forecast by world regions in the next five years?

 

As our network of FRA-partners is active in over 70 countries, our mineral business is currently being introduced in all continents. We do see that the European and Southeast Asian markets are more open to our concept of nano-coated minerals. We intend to quadruple our mineral sales in the next five years. We are currently only promoting our "FRA Easy Zinc dry" and our "FRA Easy Copper dry" but within the next 12 months we will have tripled the number of nano-coated minerals we offer.

 
 

How would you differentiate your minerals business in developed markets like in the US and Western Europe, where the growth in feed production is negligible, versus countries which are still strongly developing in Southeast Asia and South America, where feed production continues to register good growth driven by rising meat consumption?

 

Our nano-coated minerals are accepted very well in both developed markets and developing markets.

 

However we do see a difference between countries where mineral inclusion levels in feed are limited versus countries without any limitations on mineral inclusion levels in feed.

 

Naturally, countries which have a strict regulation on mineral inclusion levels in feed are even more open to implementing our "FRA Easy Minerals" concept.

 
 

How are the demands and expectations of your customers in Asian countries such as Vietnam and Thailand different from that in developed markets such as US and Western Europe? What are the local partnerships you have in these countries to deliver the same level of technical support and marketing activities as you would provide in your home regions?

 

Firstly you should understand that all around the world we have chosen to work with local distributors whom we call FRA-partners. These FRA-partners are carefully chosen for their expertise and commitment to the 'FRA-brand'. There are no real differences between their clients as customers all expect that a FRA-product delivers. We, FRAmelco, produce the highest quality products while our local FRA-partner provides the in-depth knowledge on how to apply the FRA-products.

 

The FRA-partners in our home region provide the same level of technical support as our FRA-partners in the Asian region. We ensure this by organising training sessions with each individual FRA-partner at least once every four months. Next to that we host regional FRA-partner meetings once every year. Our next meeting will be in Phuket.

 
 

China is among the world's largest, if not the largest, feed, poultry, pig and aquaculture producing country. Its dairy sector has also developed substantially in the past years. Please describe your presence in China, and your approach in overcoming challenges.

 

In China our good friend Mr. Gong Zhao who formerly held a top position at MSD China represents us. Currently Mr. Gong Zhao operates through his own company called Bioscwin – FRAmelco – FRAnklin. We started our collaboration about four years ago after we met him at the VIV Asia 2011.

 

Prior to our market entry into the China market we've carried out many customer visits together with Bioscwin - FRAmelco - FRAnklin. This enabled us to select the right products before starting any registration procedure. At the moment we've registered nearly four FRA-products based on the monoglyceride product technology. Soon our applications based on enzymes and nano-coated minerals will be registered as well.

 

Registration procedures in China are indeed tedious, especially after the authorities made it even more difficult a few years ago. On the other hand the complicated registration procedures also provide certain advantages vis-à-vis competitors wishing to enter the Chinese market. We've overcome this hurdle by relying on the strong reputation that Bioscwin - FRAmelco - FRAnklin enjoys with the Chinese government.
 

Our market approach in China focuses on three main pillars: product quality, technical support and relationship building. Next to that, we aim to support the fast growing demand for meat, milk and eggs in China by focusing on additive products that increase the production efficiency and profitability of Chinese farmers.