The Big Interview
Wilbur-Ellis Nutrition sees acquisition prospects ahead
“Since we acquired Rangen [US livestock and aqua feed producer] in autumn 2019, we have focused on integrating them. Obviously, when COVID-19 hit, dealing with the impact of that became our main priority. We have had plenty of people come to us with [potential acquisition] opportunities, even during this year, though. I do think some companies pulled back [on M&A activity] in 2020, and so there may be pent up demand that we could see pick up in the first half of the year. Perhaps, some businesses that have struggled through the pandemic will be looking to exit for various reasons.
“We are still very active in the market and looking for new opportunities, particularly in the livestock [feed] space. Our company and our board are very supportive of us bringing good opportunities to them,“ Andrew Loder, president of Wilbur-Ellis Nutrition, told us.
He also sees no let-up in investor interest and support for agtech and innovative animal nutrition startups.
“Our Cavallo Ventures team [the venture capital arm of Wilbur-Ellis] has been as active as they ever have been. This year we added [endomicrobial feed additive producer] Native Microbials, formerly known as Ascus Biosciences, to our portfolio, [which also includes mastitis sensor tech provider, SomaDetect, and insect feed company, Beta Hatch]. We want to invest in those technologies that we think will give our customers a competitive edge and help them be more successful.”
But the pandemic has meant the company had to remain highly attentive to evolving customer needs since March.
The Wilbur-Ellis Nutrition teams have spent the past 10 months supporting their dairy and aquaculture customers hard hit by food service sector closures, said Loder.
“We went from the expectation that 2020 was going to be a very good year for dairy prices and for dairy producers, then COVID-19 came along and essentially the supply chain just got completely disrupted – food service went to zero – and the supply chain was not prepared to shift everything to retail. So the rations we had to produce for our dairy producer customers had to change continually. Because if milk prices collapsed, they weren’t looking to add any element to the ration that might increase production – it was all about maintenance.
“But then the market dynamic shifted, the price of milk and cheese subsequently went back up, and the producers suddenly needed to go back to performance rations. So it has been just a whipsaw all year on the dairy side. We were constantly making the adjustments needed to help our customers get through that kind of volatility.”
Again, the majority of the company’s aquaculture customers sell into food service, and they also faced tough decisions throughout the year. “They got through the first wave but they now face a second wave, with restaurants being forced to close again, and some of those restaurants will not come back. I would say the biggest challenge for us on the aquaculture side has not been around rations or new production systems, it has been about helping customers get through this, and being understanding from a credit standpoint, and realizing that their pull from us is going to be extremely variable,” said Loder.
Generating new business was somewhat challenging for the Wilbur-Ellis Nutrition sales teams during the past year given the fact they could not get out to visit prospects’ operations to make recommendations, said Loder. “It made it difficult to land a lot of new business.”
But the company did get creative in how it leveraged technology, such as Microsoft Teams, to enable sales - supporting forage purchases by clients from large dairies and cooperatives in Japan, for example, in allowing clients to inspect lots of hay remotely. “That could yet be an option in the future, for those customers unable to travel or for clients who were time pressured.”
So when does he anticipate business rebounding?
The price of feed in the US, according to a recent report from CoBank, is forecast to increase 12% in 2021, which is going to make it extra challenging for animal protein producers there to recover, added Loder.
“We are in the process of putting together our budget for 2021. I think the first half of next year is still going to be tough. If someone could tell me how quickly demand from restaurants will get back to normal, then that will be a huge benefit to us, for our entire livestock and aquaculture business. If the restaurant industry comes back and is pulling the way they were pre-COVID-19, we could end up balancing out the year potentially, but that is hard to predict.”
Andrew Loder serves as president of the nutrition division of Wilbur-Ellis, a role which he assumed starting January 2017. Prior to his current position, he joined Wilbur-Ellis Nutrition as senior vice president in October 2016.
Loder spent over 30 years at Cargill before joining Wilbur-Ellis, most recently as vice president, global risk management for Cargill’s aqua nutrition group. In this role, his aqua nutrition team provided commodity risk management guidance to the aqua businesses in 35 countries.
Prior assignments were in various commercial, general management and risk management leadership roles with Cargill’s global animal nutrition and food businesses.