The year in focus for Animal Nutrition & Health
Poultry production performed well overall despite multiple challenges
The poultry industry continued to face multiple challenges in 2022 with increased feed costs driven by raw material cost and shipping challenges, on top of COVID-19 and inflationary pressures. Production volumes rose in the US due to increased market demands. Meanwhile, production in China did not recover as expected due to the pressure placed on margins by feed costs and stringent COVID-19 lock down measures. Margins in Brazil and EMEA, however, were favorable due to increased exports and stabilization of broiler meat prices, respectively.
We launched our ‘Protect, Perform, Promote’ campaign in 2022, showcasing the benefits of our feed enzyme solutions for saving on feed costs, our mycotoxin risk management solutions for improving raw material quality, and our eubiotics solutions for protecting bird health. We also launched an updated edition of our OVN Optimum Vitamin Nutrition® Guidelines 2022 for Poultry, while the launch of our Verax™ precision service created collaborative opportunities with the world’s two largest broiler producers, in the area of helping to predict performance challenges.
Championing sustainability in egg production
Egg consumption increased in 2022, reflecting the fact that eggs are a relatively cheap protein option in times of high meat prices, and our business in this sector performed well overall. Increased feed costs, COVID-19, inflationary pressures, and avian influenza challenged margins, although egg prices increased in the US and EMEA. Our ‘Protect, Perform, Promote’ campaign outlined how to make egg production more sustainable by lowering emissions. Our intelligent sustainability service Sustell™ was introduced by Cal-Maine Foods and CP, two of the world’s largest egg producers, to quantify ammonia and phosphorus emissions.
We established ourselves as a sustainability thought leader in the industry through our role as a founding sponsor of the Vision 365 campaign. A new international initiative launched by the International Egg Commission (IEC), Vision 365 initiative involves a 10-year plan to accelerate global average egg consumption to 365 eggs per person, per year.
Pick-up in pork sector during challenging year
The beginning of the year 2022 was challenging for pork, with producers in the world’s main markets, China and Europe, losing significant money per head of pig, especially as demand for pork was impacted by COVID-19 lockdowns in China, causing lower out-of-home consumption. Business conditions improved in the year, helped by the normalization of the swine market in China. Pork prices saw an increase as of the third quarter but rising energy prices and softening pork prices affected profitability in Europe and led to a reduction in sow numbers in many key countries including France, Germany and Poland.
African swine fever (ASF) continued to be problematic in China and parts of Asia and disrupted markets in other parts of the world too. It led to a ban on pig exports from Germany, consequently depressing prices in Europe, and posed a constant threat to markets such as Brazil and North America. As a result, VevoWin® experienced considerable growth in North America as a viral mitigant strategy against porcine reproductive and respiratory syndrome (PRRS) and the threat of ASF. The power of the VevoVitall® brand as the cornerstone of piglet gut health programs was demonstrated very effectively, with customers continuing to support this proven solution in the face of significant price rises by sticking with the product.
This year saw the launch of two dedicated swine campaigns, ‘Shaping the Future of Piglet Care’ and ‘Sow Protection You can Trust’, as well as our updated new OVN Optimum Vitamin Nutrition® Guidelines 2022 for Swine. These campaigns created a strong narrative for our customers, outlining how we can support them with our comprehensive portfolio of solutions and services, helping them to reduce reliance on antibiotics and therapeutic zinc oxide in their piglets and improve sow retention by mitigating the risk of mycotoxins.
Challenging conditions in beef sector
The global beef market faced increasingly challenging conditions in 2022 due to the relatively high price of beef and the weakening of consumer purchasing power during the year.
Brazil saw export volumes fading during the year combined with a weak domestic demand driven by inflation, among other factors, which started to put pressure on live cattle prices during the second half of the year. The prices of beef and milk that farmers could charge fell, while at the same time production costs rose due to the effects of global inflation and the war in Ukraine. Brazilian beef production saw a decline in 2022. In the US, beef production grew slightly in 2022, while cattle prices performed positively. In China, beef consumption and imports continued to increase, although at a slower pace, benefiting Brazilian exports. In Europe, by contrast, beef production and consumption have both gradually declined over the past decade.
In dairy, we updated our portfolio in 2022, including more products with Performance Solutions and exchanged the vitamin D3 content in some of our products for Hy•D®. Our pure and proprietary vitamin D3 metabolite, Hy•D® enables more efficient uptake of calcium from the diet, leading to improved skeletal health and performance in dairy cows. We also launched Mycofix® Risk Management solutions in the dairy and feedlot markets for improving raw material quality and combating high raw material costs.
Continued commercialization of Bovaer®
Bovaer® is our novel methane inhibitor solution for ruminants and is currently authorized and available for sale in more than 45 countries, including the EU/EEA, Argentina, Australia, Brazil, Chile, Pakistan, Switzerland, Turkey and Uruguay. Across the globe, we continued to work with partners from the beef and dairy value chain in 2022 to introduce Bovaer® into the market. These activities included large-scale programs to gain further practical on-farm experience.
In the EU, Bovaer® received landmark market approval at the start of the year, confirming its capacity to reduce methane emissions and its safety for animals, consumers and the environment. This positive momentum continued during the year, with numerous pilots being established with organizations such as FrieslandCampina, the world’s largest dairy co-operative.
In April, we entered into a strategic alliance with Elanco, a leading animal health company, granting it exclusive licensing rights to develop, manufacture and commercialize Bovaer® in the US. This enabled us to maximize the opportunity for Bovaer® in the US market. Elanco assumed responsibility for the US approval process, commercialization strategy and product supply, as well as supporting DSM supply in markets outside the US.
In November, we began construction of a new manufacturing facility at our site in Dalry (Scotland). The plant will significantly increase global production of Bovaer®, with first production expected in 2025. In an official groundbreaking ceremony, attended by the First Minister of Scotland, Nicola Sturgeon, and our Co-CEO Dimitri de Vreeze, we marked the next step in our plan to use Bovaer® to reduce global methane emissions and contribute to worldwide methane reduction targets.
Further development of sustainable aquaculture solutions
Aquaculture saw somewhat challenging conditions, as inflationary pressures caused a cool-down in major import markets including the US and the EU in the second half of the year. Feed millers also faced unprecedented price pressures, primarily as a result of increased raw material and energy costs.
To support our customers, we focused strongly on our enzyme portfolio for optimizing feed costs and launched a ‘Protect your profits’ campaign. We also positioned mycotoxin risk management as a feed insurance policy that combats the increasing risk of inferior-quality grains entering the feed chain. The 2020 acquisition of Biomin was central to the development of our ‘Shrimp Robustness’ program, making DSM a one-stop-shop for aquaculture solutions. In 2022, we also launched revised OVN Optimum Vitamin Nutrition® Guidelines 2022 for Aquaculture to maintain our leadership position in the vitamin and premix space.
Significant increase in sales of Veramaris® algal-based omega-3
Despite the challenging economic environment in 2022, our algal-based omega-3 Veramaris® enjoyed significant growth, particularly in the second half of the year. Veramaris, our 50:50 partnership with Evonik, saw a strong upswing in demand for sustainable algae-derived omega-3 for salmon farming, while also benefiting from increased interest for applications in pet food and human nutrition.
Observing increasing interest in our sustainable omega-3 proposition, we further expanded in all geographies and species, expanding our presence in warm water fish, shrimp, salmonids and pets. Output at our Veramaris facility in Blair (Nebraska, USA) ramped up, with yield and potency improvements. We also witnessed a strong response to our Optimum Omega Nutrition (OON) guidelines, a thought leadership protocol prepared by Veramaris experts to help fish farmers meet the appropriate omega-3 requirements and improve product quality while lowering the negative marine impact of farmed shrimp, salmon and other marine species.
Sustell™ launched for aquaculture
Sustell™, our intelligent sustainability service that supports precision animal farming, introduced its digitally-enabled farm-level solutions offering to the aquaculture industry. Sustell™ can help producers meet the increasing need to demonstrate that they have accurate, reliable and transparent methods to measure and credibly reduce the environmental footprint of farmed animal protein, thereby assisting the aquaculture industry in its efforts to protect marine biodiversity.
Vitamin E production by Yimante
Having reached our targeted utilization rate by the end of 2021, our vitamin E plant in China, Yimante (owned 75/25 with Nenter) operated fully as planned in 2022.
ISO standard lifecycle assessment assurance for Sustell™
Our Animal Nutrition & Health business brings together digital tooling, consultancy services, and innovative farm-level products in the form of our Verax™ animal health management system and our Sustell™ sustainability service, as well as our risk management solutions. In 2022, we received International Organisation Standard (ISO) assurance from accredited third-party certification body DNV for our intelligent sustainability service Sustell™.
Next step in Precision Services with acquisition of Prodap
In September, we completed the acquisition of Prodap, Brazil’s leading animal nutrition and technology company. Prodap combines technology offerings, consulting services, and customized nutritional solutions to drive efficiency and sustainability in animal farming. Harnessing the power of Prodap’s digital solutions allows us to take another step forward in our Precision journey, enabling smarter nutritional decision-making thanks to Artificial Intelligence and other tools. Prodap also complements our deep knowledge of animal nutrition and our advisory capabilities with its extensive consultancy capabilities, facilitating an even higher level of customer experience.
Mycotoxins
Mycotoxins naturally contaminate feed crops, posing threats to farm animal health and decreasing the sustainability of food production. The threat of mycotoxin contamination to livestock globally remained high, as documented in the DSM Mycotoxin Survey data of feed and crop samples. The disruption of some raw commodity markets due to the conflict in Ukraine led many feed and animal protein producers to include lower quality or alternative ingredients into livestock feed, raising the risk of livestock exposure to mycotoxins, while high feed prices reinforced the economic rationale for animal protein producers to apply mycotoxin deactivators.
In 2022, we extended the availability of our market-leading mycotoxin deactivators by securing US FDA approval of our fumonisins esterase for poultry and swine. As a result, FUMzyme®, the only purified enzyme that detoxifies fumonisins, became the first product ever approved for mycotoxin degradation in the US.
In recognition of the scientific merit of our commercial mycotoxin degradation capabilities, DSM was awarded the Austrian State Prize for Innovation 2022 for our ZENzyme® technology. ZENzyme® is the only purified enzyme that degrades zearalenone, a mycotoxin associated with health and reproductive challenges in livestock, fast, specifically and irreversibly into non-toxic and non-estrogenic metabolites, thereby protecting farm animals and helping to ensure sustainable, profitable food production.
Commitment to enable double-digit on-farm livestock emission reductions
Food systems and the climate crisis are intrinsically linked. Our strategic Food System Commitments therefore contain a commitment to enable a double-digit on-farm reduction of livestock emissions by 2030.
