MARKET OUTLOOK 2024: GROWTH AT SLOWER PACE
At the start of the New Year, Hamlet Protein CEO Erik Visser talks about key market drivers and developments. Animal protein production, and with it the production of animal feed, will keep growing in 2024 but at a slower pace. South American and Asian markets are better positioned for growth than mature markets in Europe and North America. Animal diseases and geo-political matters can potentially strongly impact the industry, and ESG regulation will play a more prominent role in business decisions. Feeding a growing world population in an efficient and sustainable manner will be the main focus for all market segments.
MARKETS
“Markets vary greatly across species and geographies. On a consolidated level we foresee a continuous growth in animal production in 2024, but at a slower pace.”
“In Europe regulation is having a strong impact on the entire supply chain. Not only on the number of animals reared in certain geographies, but also on the conditions on farm in terms of environment and animal welfare, as well as on the supply of raw materials. Where poultry consumption is expected to grow, we foresee a decline in beef and pork.”
“Asian economies in general, and China in particular, are under pressure which affects consumer spending. Especially in China we expect to see continuous pressure on animal numbers if consumption levels do not return to historic levels. Poultry is expected to grow in China, with growth in pork expected in other Asian geographies.”
“North America has been seeing pressure on mono-gastric numbers, which is expected to continue in 2024, until the market rebalances. Mexican growth depends strongly on the US, both in terms of supply of feed and consumption of animal protein. On the other hand, Canda relies on US consumption for its’ pork export at the same time the US will be looking at Canada for poultry export potential.”
“In South America, Brazil is the powerhouse. Growth for the region will come from export opportunities. Development in Chinese demand would drive sales opportunities for pork, whereas poultry exports will also depend on the US’ market position.”
FEED COSTS
“A healthy supply chain should allow all market segments to generate a healthy profit. That means from farm-to-fork. That has not been the case for all markets in 2023.”
“As 75% of the cost of production comes from nutrition, animal protein producers will closely monitor developments in global feed commodities. Corn, soy and wheat make up a large portion of the diet and their price levels will be impacted by El Niño – especially when looking at South American harvests -; the continuous war in Ukraine that reduces exports from the region; a possible escalation of the Israel – Hamas conflict spilling over into a regional war; regulation on supply chain in the EU and new policies adopted by the recently elected Argentinian president to name a few.”
“Even though at relatively high levels still, feed costs have come down in 2023 and we expect a further decline in 2024. Similarly freight costs have come down last year, and we expect to see a further decline in the new year.”
ESG
“Where consumers have been focusing on animal welfare in the past years, we now see an increasing focus on sustainability 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.”
“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. That investment may generate an inflationary effect that will need to be priced in.”
“We also see a broad range of voluntary industry standards emerging, some of them aligned with government led regulation, others driving local interests. Not all of them have an objective way of measuring impact yet. Across the value chain companies need to manage compliance and market communication and collaborate to meet requirements.”
ANIMAL DISEASES
“African Swine Fever (ASF) and Avian Influenza (HPAI) will continue to present the main challenges for animal protein producers in 2024, and with it provide uncertainty on feed volumes.”
“Swine numbers reduced strongly in Asia in 2023, and producers will continue to feel its effects in 2024. As long as a scientifically proven vaccination is not available yet, ASF has the potential to affect the industry, particularly in those regions where bio-security and farm management are underdeveloped still. Markets that are impacted by ASF will see small operations and backyard farming disappearing, leading to further consolidation. The European swine producers will support all efforts to control ASF, that continues to emerge in wild boars across the continent, to protect the industry.”
“We do expect to see further outbreaks of Avian Influenza across the world and will closely watch Brazil as the world’s largest poultry exporter.”
GEO-POLITICS
“With elections in sixty countries, representing half the world population, 2024 will be an incredibly important year for political institutions, policies, and possible geo-political tensions. The European parliament, India, Mexico, and the US, to name a few power houses, will all potentially see a different leadership emerge.”
“Our industry, just like any other, benefits from clear and consistent policy making and a free flow of goods and people to drive business. That gives entrepreneurs and investors the confidence to invest for growth. For export business to thrive, relationships between countries need to be stable and friendly so companies can compete on quality and service.”
LABOR
“From blue collar to c-suite, the labor market is expected to remain tight in industrialized markets. This will not only put pressure on salary levels, the ability to recruit and retain will also impact the execution of strategic plans across the industry.”
“A changing political landscape may result in further pressure on immigration, which will be felt in labor intensive industry segments like farming and processing and may lead to disruptions in the market.”
“The animal protein and animal nutrition industries see an ageing workforce. It is critically important that a career in these segments is considered an attractive option for students and young professionals. The sector, and individual companies as well, needs to engage in employer branding, defining a clear purpose that new hires can commit to. Feeding a growing world population in a sustainable manner creates plenty of opportunities for a strong messaging.”
HAMLET PROTEIN
“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 and more countries banning the use of anti-biotic growth promoters, we expect the focus on specialties for young animal nutrition to 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.”
“We estimate the market size of SSP at 1,6m Mt, and expect the market to 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, we will take share of animal protein diet sources like plasma and fish meal to further increase our volumes.”
“At the end of 2023 we came out with new research data on 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. Our teams will share this information with producers and work with them to formulate more efficient 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. We will continue to work with our suppliers and customers and assume our responsibility towards creating a 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 todays and tomorrow’s challenges. We feel confident that we are well positioned to drive further growth in 2024.”
Erik Visser has been the CEO of Hamlet Protein since 2019. Hamlet Protein produces soy-based protein ingredients for young piglet, poultry, and cattle feed at two production plants in Denmark and the US. Hamlet Protein services customers around the world through a network of own sales offices and distributors. Find out more www.hamletprotein.com
