Opinion
COVID-19: Lessons learnt from L-Threonine supply challenge
“The animal feed industry is, without a doubt, necessary for the continuation of our most basic way of life. But while the public may use a simple dichotomy in labeling businesses as essential versus not, we know that not all essential businesses are created equal.
“To illustrate this point, we only have to look as far as the recent case of L-Threonine. When Chinese ports failed to reopen after the New Year, a great chasm emerged between suppliers who were able to supply L-Threonine stock outside of China and those who could not.
“Around the world, customers who got the word too late, found themselves frantically searching for a new source for L-Threonine in this time of crisis. By mid-March, the global price of L-Threonine had spiked, and those same customers were now lucky to find supply priced 70% higher.
“Your customers’ inability to pay or your suppliers’ inability to maintain supply can bring even the most essential business to its knees,” he argued.
The lesson is simple, continued Soreq. In moments of crisis, companies are only as strong as their weakest link.
“As a company that must continue to work through a lockdown, you will always either pay the price now or really pay the price later.
“Short-termism has proven toxic. Invest in the right relationships today, so that you can still buy L-Threonine tomorrow.”
Earlier this week, we reported on how the price of L-Threonine spiked due to shortages in stock outside of China. As of April, spot buyers are seeing some relief with a drop of 27% in the global price. The current price is estimated at $1.56 per kg with the lowest price recorded reaching $1.25 per kg.
