December 15, 2021
Alltech: Becoming a more reliable partner in Southeast Asia's agriculture industry (Part 1)
An eFeedLink Executive Talk
COVID-19 made 2020 a distinctly troubled year for the world, as it curtailed what used to constitute normal life and sent economies and supply chains globally into a tailspin.
Cities went into lockdown and residents were forced to work from home during the early days of the pandemic — as it worsens, the coronavirus later hit employees of meatpacking facilities, threatening food supplies in some countries.
"COVID-19 resulted in the movement restrictions of workers, changes in demand of consumers, closure of food production facilities, restricted food trade policies, and financial pressures in food supply chain," notes Serpil Aday et al of Turkey's Çanakkale Onsekiz Mart University in the academic report, "Impact of COVID-19 on the food supply chain".
Describing those tumultuous days — the impact of which persists to this day — Matt Einarson, Alltech's Southeast Asia regional director, tells eFeedLink the difficulty competitors faced in accessing export markets (specifically, Southeast Asia) amid the mounting uncertainties of keeping supply chains running.
"There were a lot of pressures on producers and profit margins at that time… we were seeing a reduction in protein consumption," he says.
These and other challenges, including impaired profitability suffered by various players in the agriculture industry and sourcing quality feed additives, should be acknowledged. But, first, Alltech's partners need to have "confidence in the supply chain" as they resolve the relevant issues, Einarson says.
To aid them along, the US crop science, animal health and nutrition company offered "a small cost reduction" in its products to feed industry partners — who would then provide "a more competitive price to their customers and farmers" — "in exchange for guaranteed product purchases over a period of time," he says.
"This allowed us to secure our supply chain, allowing our partners to do what is necessary; to be able to produce high quality feeds to their customers."
On the basis of such developments, Alltech's "To Thank A Farmer" campaign was created and honored farmers as heroes for keeping the world fed. Explaining the rationale behind the campaign, Keeratiya Poolsap, marketing manager at Alltech Thailand, says Alltech wants to show that it is ready to support its customers during difficult times.
"We don't want to leave (our partners behind), and our products are ready for them," she adds.
A valuable partner in Southeast Asia
Partnership is the cornerstone of Alltech's conduct of business in Southeast Asia, a crucial point brought up by Einarson.
"Recently, Alltech saw an opportunity to increase its market share (in Southeast Asia)," Einarson says. Hence, more than five years ago, the company was exploring several opportunities — "in terms of accessing new markets"— in the region, leading to expansions in Myanmar and Cambodia. As of today, Alltech has already spent seven and five years in both countries, respectively, as well as close to 25 years in Vietnam, and more than two decades in Thailand and the Philippines.
Among the opportunities considered was diversifying Alltech's approach "in terms of a targeted approach towards different species, primarily swine and poultry. We wanted to break into the markets for dairy, aquaculture, pet food and crop science," Einarson says.
Recognising Southeast Asia as "a significant growth market for livestock and feed productions", Alltech aimed to enhance its footprint in the region through the localisation of production.
"Alltech is bullish about the market and we are investing for growth and development. We are pushing our footprint in our contributions locally. Throughout that period, we made some big investments, and this year, we are making one significant investment in Southeast Asia," Einarson says.
In Thailand, Alltech has worked with the Dairy Farming Promotion Organization of Thailand (DPO) and local universities to further develop the Thai dairy industry, as Thailand seeks to offset milk imports with more domestic production. The company is also involved in collaborations backing the acquisitions and subsidies of mixture wagons that are employed in distributing total mixed rations (TMRs).
"Currently, in Thailand, the majority of dairy cows are still not fed with total mixed rations," due to lack of capital, Einarson notes. In fact, it is only "major commercial enterprises that can withstand the cost of purchasing and utilising mixer wagons and total mixed rations.
"Research dating back to 60 years suggested that feeding total mixed rations benefits not only cow health but production efficiency as well. We see this as the necessary next step in the development of the dairy industry. In Thailand, it is migrating towards feeding total mixed rations."
At the moment, one concept would be to work with local cooperatives to "centralise the production of TMRs and to distribute and sell them to smaller farms that are part of the cooperatives," Einarson reveals.
He adds: "When we look at the daily routines of dairy farms, it is the search for raw materials, that are inconsistent in terms of nutrition supply and so, that leads to inefficiency. Having a consistent flow of nutrition is certainly contributing to increases in milk production and profitability.
"Obviously, the cost of feeding increases as a result but it is certainly offset by improvements in milk production, quality and efficiency."
In Vietnam, Alltech took over the distributorship of aquafeed producer Coppens (which was renamed Alltech Coppens following Alltech's acquisition of the company) in 2019.
"Today, we are importing nearly a thousand tonnes of fish aquafeed into Vietnam, majority of which are going both to storage or to farms, mostly in the country's north and south," Einarson says. "We have been able to scale our presence and use that to sell premixes to a number of pangasius and trout farms in Vietnam, specifically in the south."
More than just selling premixes and feed additives, Alltech is working with farms and feed mills in Vietnam "to solve problems, set collaborative goals and deploy value-added support solutions."
Alltech Coppens is one factor in its parent company's success in the country, and it provides Alltech with "products and services that we can leverage to deeply penetrate the aquaculture market in Southeast Asia," Einarson says.
In the Philippines, Alltech helps pig farms to rebuild their pig numbers through its Repigulation repopulation programme. Prior to this development, the company entered into a partnership with US-based swine consulting firm Pipestone Management and created an "in-feed hygiene product that eliminates feed as a potential vector for transmission," Einarson points out.
Together with partners in the feed industry, Alltech also conducted numerous forums educating backyard raisers and formed relations with hog raisers associations as a result.
"We have acknowledged the necessity for repopulation. There needs to be certain confidence that, when we repopulate, we are not going to find ourselves in situations where we are back to ASF being transmitted," Einarson says.
"(Repiglation) is a robust accreditation programme which gives confidence to farms, investors and associates of farms that we have a comprehensive collaboration with farms, looking at all potential vectors for (ASF) transmissions. "This is a programme that is unique to the Philippines, a larger part due to the difference in the industry in the country compared to other regions."
Einarson adds: "There is also a greater demand for technology partnerships to access certain information and meet strong partners, and to be able to repopulate (pig farms) on a safe scale."
This article continues in "Alltech: Becoming a more reliable partner in Southeast Asia's agriculture (Part 2)".
- TERRY TAN