ADM in joint venture to capitalize on growth in liquid feed supplement segment

06-Jul-2015 - Last updated on 07-Jul-2015 at 16:41 GMT

Archer Daniels Midland Company (ADM) and Quality Liquid Feeds (QLF) are forming a joint venture in the US to provide liquid feed supplements for certain states and to build on buoyancy in the segment.

The joint 50-50 venture, called Alliance Liquid Feed, marks an expansion for QLF and change in investment for ADM.

The JV also includes ADM’s Loomix brand name.

The alliance opens new markets in several western states for QLF, marketing manager, Sara Gabor, told FeedNavigator.

“The reason why QLF has decided to get into the venture is ADM is in areas we aren’t established in,” she said. “Having [liquid feed] plants in those locations will allow us to bring our products to those regions more economically.”

The ingredients, she said, will primarily be for cattle.

For ADM, the venture has been viewed as a way to boost profits.

“We will be increasing our returns by decreasing our invested capital in the liquid feed business. Simultaneously, by joining with a great partner in QLF, we are adding their expertise, which will help us see profitable growth in the business,” a spokesperson for the agribusiness giant told us.

In the future, ADM also is looking to capture co-products like steep water, acid oils and condensed distiller solubles from the venture, she said.

Dairy and feedlot potential

The liquid feed products, under the JV, are set to be produced at four facilities previously owned by ADM, including sites in Idaho, Colorado, Montana and Nebraska.

They are designed to meet needs such as supplemental protein, energy, vitamins and minerals for livestock producers working with range, dairy, feedlot and weanling cattle.

“There’s a lot of potential for dairy, and pasture and feedlot,” Gabor said. “And we’re hoping to capitalize on the dairies that are being built in Idaho and Colorado.”

QLF is set to undertake the management of the four facilities, she said. In addition to the plant’s current staff, the firm has brought in members of its management and technical team to work on feed formulation.

QLF continues

Alliance Liquid Feed is its own company, Gabor said. The Loomix brand will not be offered at other QLF facilities.

"It has its own board,” she said. “It has its own separate identity, that’s how we’re treating it.”

QLF will carry on producing its current products for its existing markets in the Midwest, East and Southwest United States, she said.

“QLF will continue to do business as we have for the last 38 years; we’ll continue doing what we do here, and it doesn’t affect us, besides being able to grow our brand,” she said.

Market trends

From 2012 to 2013, there was an 6% overall increase in the amount of reported liquid feed produced in the US, according to the 2014 Liquid Feed tonnage report from the American Feed Industry Association (AFIA).

In the same period, the amount manufactured for feedlot usage went from 597,548 to 740,401 reported tons, noted the AFIA publication. Though, it recorded some slight declines in the amount made for range supplementation and non-block feed mill blends. Block creation also jumped from 2012 to 2013.

In the dairy and cattle sectors, liquid feed has been used as a way to potentially increase microorganisms in the rumen and promote digestion, said the AFIA.

“Liquid feed tonnage shifts based on the nutritional value of the available forage in a given year,” an AFIA spokesperson said. “For example, beef feedlot tonnage reported in 2013 was up 24% in 2013 from 2012, which could be attributed to drought.”