The global pandemic has fundamentally changed our lives in many ways. However, the impact on global financial markets and on the performance of business has been less than anticipated last Spring. Many companies are making record sales and the stock market in New York Stock Exchange had the best November since 1928!
Even though animals are eating and growing, changes in consumption patterns have an effect on the food and feed markets. In many countries tourism has declined to close to zero and restaurants and hotels are or have been closed due to lockdown. Online shopping in supermarkets has grown dramatically and people are eating at home instead of restaurants.
As sales to the catering sector have declined, the consumption of certain products has changed. In some countries poultry products are primarily consumed by tourists, and slowdown in travel has resulted in difficulties for the poultry industry. Consequently, feed industry is struggling especially in the sales of higher value ingredients.
Also African swine fever is having an effect on the market. In countries affected by ASF the swine industry is suffering, with the adverse effect in countries not touched by ASF. The European feed market is feeling the effects, as feed production in Europe this year will be 2.2 % lower than in 2019.
These dynamics bring in many cases price pressure on the market. Reducing prices may initiate the temptation to reduce costs by cutting out the more valuable ingredients from feed recipes. This change may have results not wished for. When the ingredient has been proven to have a positive Return On Investment, the abolition of it will have a negative impact on overall profitability: short term cost reduction results in bigger loss in revenues. Our business at Hankkija FFI is always based on proven results and long term effects. Our groundbreaking products, Progut® and Progres®, offer scientifically proven results on promoting animal gut health and performance. With Progut® and Progres® you can also count on positive, even surprisingly high Return On Investment.