Population, wealth drive feed additives demand

15:59 PM | January 20, 2020 | Michael Ravenscroft

Increased appetite in developing countries for animal protein

The worldwide market for feed additives in 2019 was estimated to be worth $18.3 billion, according to a recent report by IHS Markit. The market is forecast by IHS Markit to grow at an average annual rate of 3.6% during the period 2019–24, higher than the world’s GDP growth per capita. That growth is being driven by the growing population and by the increasing wealth in developing countries, where people want to eat animal protein.

The world’s population is increasing by about 80 million each year, and is estimated to reach 10 billion by 2050, according to the United Nations. The number of people with a daily disposable income of $10–100 is expected to almost triple, from 1.8 billion to 4.9 billion. Food habits will change with increasing prosperity and urbanization, and more people will be able to afford milk, eggs, and especially meat.

Improving animal yield, health, diet.

Feed additives are industrially-made products designed to address the nutritional requirements of a specific animal that is reared for human consumption. Each additive is composed of a macro ingredient such as grain or soy, and additives such as vitamins, minerals, or amino acids. Feed additives help maintain the animal’s health, provide optimal growth, enhance its productivity, enable better metabolism of feed, and broaden the type of food that the animal can digest.

The largest regional market for feed additives is China, worth $5.1 billion, or 28% of the world total, according to IHS Markit. China is followed by North America, at $3.0 billion, and Central and South America, at $2.4 billion (chart). The market is expected to grow at an annual rate of 3.4% in Central and Eastern Europe. In the rest of the world, the rate will be lower than the world average, and in Japan the market will shrink by 0.4%.

The worldwide feed additives market by volume is dominated by phosphate supplements followed by amino acids, with the two segments together accounting for about 84% of the total market volume (chart). In terms of value, the market is dominated by amino acids, which alone account for 44% of the total feed additive market value, almost double that of phosphate supplements at 23%, closely followed by vitamins at 18%. The rest of the market’s value is accounted for by carotenoids, enzymes, and nonprotein nitrogen (NPN) supplements.

The fastest-growing segments of the feed additive market in terms of value are enzymes and amino acids, which are forecast to grow at an average annual rate of 4.6% and 4.4%, respectively, during the period 2019–24, IHS Markit says. Carotenoids are set to grow at a rate of 3.5%/year during the next five years, marginally above the world average for feed additives. However, worldwide consumption of vitamins and phosphate supplements will grow at a more moderate rate, and NPN supplements will see only sluggish growth, according to IHS Markit.

Amino acids and carotenoids are major growth sectors in Asia outside China and Japan, with demand driven by increased consumption in the poultry industry. Consumption of feed additives for aquaculture is also expected to see strong growth as a result of higher consumption of fish and seafood products in Southeast Asia.

Market drivers include macroeconomics, population growth, rising living standards in developing countries, improved skills in animal nutrition, and the penetration of compound feed as a source of animal nutrition. Drivers specific to certain feed additives include cost savings and environmental benefits in the case of enzymes; the desire for consistent, on-target pigmentation; growth in aquaculture, especially in Asia; and a trend toward natural products.

The addition of enzymes to feed allows the animal to digest more of its rations. The addition of phytase to feed allows poultry and pigs to metabolize the phosphorus in plant cells, reducing the cost to the farmer, since no additional phosphate is required. Less phosphate is also subsequently excreted, reducing the risk of eutrophication in regional water bodies, which has an environmental benefit. Consumers perceive animal pigmentation as a key indicator of quality in poultry, egg yolks, and salmon, which has benefited the carotenoid business. The trend toward natural products has created opportunities for feed additives such as enzymes, amino acids, and carotenoids, which can be produced using biotechnology.

Demand for amino acids specifically designed for use in aquaculture is driven by the rising cost of protein-rich fish feed, which has subsequently increased demand for cost-competitive additives to replace fish meal and fish oil. Shrimp farming currently consumes about 100,000 metric tons/year of fish oil, says Corbion (Amsterdam, Netherlands). Fish oil contains docosahexaenoic acid (DHA), a key ingredient in the growth and development of shrimp. Worldwide demand for omega-3 fatty acids like DHA is growing rapidly, but the availability of omega-3s from their current source—wild caught fish—is limited. DHA was developed to reduce the dependency on marine fisheries and provide a new source of long-chain omega-3 fatty acids for the aquaculture industry.