We caught up with Ruud Tijssens, director corporate affairs, strategic R&D and CSR, at Agrifirm to hear more.
Market demand for regional raw materials is growing in Europe and elsewhere. Agrifirm is regularly asked to participate, or to think about the impact for chain, he said, given the fact it supports a Dutch soy cultivation project.
In 2016, Agrifirm established the Green Deal Soy in the Netherlands, which is backed by national and regional governments. The goal is to enable the cultivation of soy in the Netherlands to grow significantly to at least 10,000 hectares. Green Deal is focused on improving yields and developing the market for Dutch soy.
“There is a clear regionalization trend. We see it in Belgium, France and the Netherlands; it is a global trend really.”
He said that trend is partly arising out of increased interest in closing the mineral cycle - the local recycling of excess nutrients in livestock wastes such as manure for subsequent cereal crop production. Also other drivers, like geopolitical considerations, play an important role.
However, demand for feeds of EU origin needs professional support, said Tijssens “Beyond the sourcing of raw materials, there is also a huge amount of know how needed around what it takes to manufacture new feeds.”
Demand for regional raw materials needs proper guidance, because improper implementation leads to uncontrollable processes, the unavailability of raw materials and unwanted and unnecessary cost price increase, he explained.
NGOs and other downstream parties like retailers or dairy companies often consult Agrifirm about the development of EU origin feeds, he said. The line of questioning often relates to whether European soy is available, he added. “However, I always say availability of European soy is not the problem. Supply will increase based on market demand. The cost of European grown soy is the issue. It is double the price of soy on the world market – we see a price premium of around €150 to €200 attached to European soy.”
What’s in, what’s out?
Tijssens said often interested parties only concentrate on soy and do not consider the other inputs. In that context, Agrifirm decided to nail down exactly what interested parties meant by feed of EU origin only.
“We asked them a series of question to narrow down the definition – firstly we asked whether they intended that vitamins and minerals originate in the EU. It appeared that this is not a subject of interest to them and such microingredients can be sourced globally.
“We discussed how to define Europe, and the long term consequences of sourcing of raw materials more regionally – it was concluded that continental Europe, up to the Ural Mountains, including Belarus and the Ukraine and incorporating the European parts of Russia and Turkey, would be the defined region.
“Protein was their main point of concern. We also discussed the logic of feed manufacturing: Because of least cost optimization, a consequence of the increased costs of European soy is the amount of soy use will have to be reduced, and, in that case, we queried whether they would allow the inclusion of more palm kernel expeller from Indonesia, for example, to supplement. This was clearly a sensitive subject, which informed the guidelines we developed.
“GMP+ certification of raw materials was determined to be ample.”
Soy, of course, is one part of the discussion. Agrifirm, he said, also weighed up the incorporation of rapeseed and sunflower meal from European based crushers that are 80% mass balance, i.e. that may have a limited amount of such raw materials sourced outside of Europe – with the interested parties. "They did not have an issue with such protein sources. Local wheat gluten products could also form part of the complex," he added.
Beyond meeting the requests of NGOs and downstream partners, Tijssens said Agrifirm decided to address the fundamentals of EU origin feeds to make politicians and government aware of the pros and cons of sourcing regionally, so that they were up to speed on what is involved.
He cited the fact that 11 European countries supported the joint German-Hungarian initiative on the signing of the European Soy Declaration during the Agriculture and Fisheries Council held in Luxembourg earlier this month – 12 June. The declaration supports a reduction in soy imports.
“We have defined and costed feedstuffs of EU origin. We are willing to deliver them if the market so demands them,” he added.