Demand from non-feed sectors restricting supply of US liquid feed ingredients
As non-feed sectors, such as energy operators, demand more, it tightens supplies and prices rise.
The feed industry used to have ‘first refusal’ for several ingredients including molasses, whey, glycerin, etc, but today they could go straight to ethanol or biodiesel, lactose, etc, noted John Cropley, commodity analyst for ED&F Man Liquid Products.
“Some ingredients that were discounted now attract a premium,” he added.
“The additional demand from non-feed sectors is tightening the balances,” particularly from the energy sector, where companies “can pay more than most cattle producers can pay unfortunately.”
LFS attendees, according to an AFIA summary of the event, also heard how the Russia-Ukraine war is impacting global markets for agricultural commodities, long-term challenges with growing and maintaining a stable trucking workforce, and how tracking and reporting environmental data will be increasingly important for downstream customers.
Geopolitical events are “yanking us around” and driving inflation up across the world, commented Joseph Kerns, president, Partners for Production Agriculture.
Tough weather conditions, including the current drought, will impact growing crops and future markets, he warned.
“We are going to experience a death of protein in the US for a bit,” continued Kearns. “We will produce less animals to get the feed rates to go down, leading to a reduction in global protein supplies.”
Driver shortage looming
Jason Matthews, vice president of ag services for JB Hunt Transport Services, reported that trucking labor is seeing some relief right now from the immediate aftermath of COVID-19, but he said there is still the looming threat of recruiting and maintaining a stable workforce in the future.
The US will need 1.1 million new drivers over the next decade to meet the demand that is out there. And, with a retiring older generation, a truck driver shortage looms, he added.
“We don’t have the people coming behind those 57-year-olds to replace them,” said Matthews, about the average age of private-fleet drivers. “That’s the problem.”
He said long-haul trucking is “not a desirable job” and really takes “a special kind of person,” which is why his company currently has dedicated over 600 employees who are solely focused on recruiting, qualifying, and onboarding drivers.
“Drivers today won’t be pushed the same way drivers were pushed 10 to 15 years ago,” commenting that many are asking for flexible workweeks over higher pay.
From a regulatory perspective, AFIA’s Gary Huddleston, director of feed manufacturing and regulatory affairs, discussed the US feed industry’s compliance with the Food Safety Modernization Act (FSMA), noting that the industry is seeing less recalls and food safety events from recent inspections.
“FSMA is doing what it was intended to do,” he said.
The “biggest regulatory challenge we are concerned about right now” is the injury and illness recordkeeping proposed amendment from the Occupational Safety and Health Administration (OSHA), which could unintentionally expose personal employee data, continued the regulatory affairs specialist.
The event also focused on industry sustainability efforts to keep pace with proposed climate regulations. “As long as we keep thinking of sustainability as something imposed upon us, we will lose opportunities,” said Lara Moody, executive director of the Institute for Feed Education and Research