Guest columnist/opinion:
Export Tool Kit

Matt McKnight is vice president of export ingredients, marketing and industry affairs for the U.S. Dairy Export Council. He contributes this column exclusively for Cheese Market News®

Feeding more than humans

Three recent signs of swine production expansion:

• Earlier this year, the Vietnamese government announced it was boosting its national pig herd by 5 million head to meet rising domestic and export demand.

• USDA’s latest Chinese livestock report projects Chinese pork production will rise 5 percent to an all-time high of 55.5 million metric tons next year.

• One of the largest users of U.S. whey in Southeast Asia, Thailand’s Charoen Pokphand Foods, is opening a new swine complex, boosting its pig output by more than 140,000 head per year.

Why should the U.S. dairy industry be excited about these and other swine industry developments halfway around the world?

Rising incomes beget higher-protein diets, and overseas farmers need better feed products to help them expand, improve efficiency and deliver higher quality meat products to their increasingly porcine-minded populations. And they are willing to pay for ingredients that deliver results. That’s where dairy ingredients come into play.

While animal feed has always been a dairy ingredient market overseas, never before has it shown such potential for growth and profit. The feed market is no longer a market of last resort for U.S. dairy suppliers, but an opportunity that is growing alongside retail dairy products and dairy ingredients for human foods.

The opportunity is robust. Think of it this way: Five million additional hogs in Vietnam represent 5 million previously non-existent consumers — consumers that need lactose.

Lactose is an essential nutrient to maximize performance of baby swine. Lactose has a prebiotic effect — helping to create an optimal microflora balance in the gut — that other carbohydrates cannot provide. That means a lower incidence of baby pig scours (diarrhea), often a major headache for swine producers that causes sanitation problems, stunts growth and increases mortality rates. Hog farmers can’t fully swap out dairy carbohydrates for another sugar source.

Farmers need feed ingredients that provide a functional advantage, like lactose. But as is the case in many overseas markets that don’t traditionally use dairy products, some education is necessary to convey the benefits and maximize the positive effects of whey derivatives in feed. Some farms are using lactose, for example, but trying to economize by not providing enough. (One feeder pig needs to consume 1 kilogram of pure lactose equivalent, most of it during the weaning phase in the first several weeks of its life.)

The U.S. Dairy Export Council (USDEC) is working to demonstrate the advantages hog farmers can gain by incorporating lactose and whey derivatives into their feed systems. (Less than a week after Vietnam announced its intention to expand its pork industry, USDEC conducted seminars in Ho Chi Minh City and Hanoi focusing on whey derivatives in pig diets and emphasizing that the United States is a high-quality supplier and a presence in the Vietnamese market.) The broader message is to explain how whey derivatives are produced, their functionality, where to buy them, and how to optimize their use in programs like phased feeding.

Such information is especially important as farms strive to become more efficient, bigger, commercial operations — an inevitable result of a population moving to higher-protein diets. As more people demand pork, it puts pressure on the agriculture sector to meet the rising demand for quality food.

To capitalize on this opportunity, suppliers need to take care to deliver products to user specs. It’s the U.S. supplier’s job to produce for the markets, meaning feed ingredients might need some tweaking to stand up to different weather or handling conditions. Flowability, for example, needs to be better for feed ingredients in Vietnam, China and Thailand. Farms and feed manufacturers can’t have whey and lactose products that form hard lumps.

Going the extra mile is increasingly worth it. Market pressures are making feed more attractive. We are starting to see animal agriculture applications competing up the value chain, and prices rise due to limited supply. Trade agreements are creating opportunities for a number of Asian countries to export pork into neighboring markets, boosting the local hog industry all the more and creating more demand for feed. We are starting to see competition for these products that wasn’t previously there as demand reaches new heights.

And the pig market could be just the start. USDEC is evaluating other potential high-value non-human opportunities, such as the pet sector. As economies grow, historically so does a population’s interest in companion animals.

Feed has never been seen as a glamorous market. But as customers are willing to pay higher-then-traditional prices and demand steadily grows, particularly in the case of swine, it’s starting to look more and more like the proverbial silk purse.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.