22 January 2018 – The start-up of BASF’s citral plant is not expected before March 2018 at the earliest. And the company’s vitamin A and E plants in Ludwigshafen will only be able to restart once supply of citral is re-established and the corresponding intermediates for vitamin A and E become available. Vitamins are expected to become free for shipment 6 to 12 weeks after the start-up of the citral plant.

 

Factoring in vitamin A output in China which was significantly disrupted during the summer as a result of inspections relating to environmental issues and new regulations, and various announced plant maintenance shutdowns during 2017 and late 2018, the global vitamin A feedgrade market is expected to remain extremely difficult until at least end of the first half of 2018.

BioZyme® Incorporated, a Missouri, USA-based supplier of vitamins, minerals, trace minerals, and protein supplements, is also seeing knock-on consequences of the vitamin situation on the U.S. mineral feed market.

Feedinfo News Service spoke to Kevin Glaubius, Director of Nutrition & Regulatory Support, to discuss the impact of higher vitamin prices on mineral feeds and what his company has put in place to offset the situation to some extent.

[Feedinfo News Service] Mr. Glaubius, you argue that the current shortage of vitamin A and E may significantly spike the cost of certain mineral feeds in the U.S. in the upcoming months. Can you talk about the relation between vitamin costs and mineral costs?

[Kevin Glaubius] Free choice minerals are widely used in the U.S. for beef cattle grazing to improve health and reproduction. These free choice minerals are mixes of vitamins A, D, and E, trace minerals such as copper, zinc and manganese, and macro-minerals such as calcium, phosphorous, magnesium and salt. Historically vitamins accounted for 3-8% of the formula cost on these types of products over the last 5 years. That has certainly changed this winter due primarily to vitamins A and E. 

[Feedinfo News Service] According to your figures, mineral feeds (200,000 – 400,000 IU/lb) had an estimated vitamin A cost per bag of $.44-.84 cents per bag in April compared to $4.44 – 8.40 per bag by late-November. That’s 10 times higher. What is the situation today?

[Kevin Glaubius] As an example, in April one of our products had a vitamin A and E cost of 5% of the formula cost. Looking at that same mineral in August the vitamin costs represented 10% of formula cost and finally by late December it represented 60% of formula cost. Realistically the situation has not gotten better and the 10X is a reality for companies that didn’t have much inventory on hand going into the situation.   

[Feedinfo News Service] To what extent are U.S. feed mills reducing levels and/or restricting purchases of mineral feeds containing vitamins?

[Kevin Glaubius] What I have heard in the Midwest has been a combination of approaches. Some plants have coordinated inventories between manufacturing locations to maintain production. Some plants have maintained formulation levels and simply passed on increased prices while yet others like ourselves have taken a more proactive approach reducing levels and building inventory so that they can maintain basic NRC vitamin supplementation through this period.  As we get further into the the shortage this spring I do expect more companies to reduce levels as supply dwindles and price impacts curb usage.  

[Feedinfo News Service] Is the current vitamin A & E shortage having any significant impact on mineral feed supply and demand in the markets in which BioZyme operates?

[Kevin Glaubius] The impact on supply has challenged purchasing and manufacturing but product seems to be moving a few bags at a time through distribution. BioZyme has not experienced a slowdown in production or sales at this point but we were quick to react and reduce levels in our products as well as purchasing additional product needs very early on. Due to the nature of the business with manufacturers selling to distributors, and distributors selling to feed dealers, some producers are only now beginning to see the impacts on pricing. Demand, however, remains strong as we are entering a critical period for mineral supplementation which is calving and breeding season.

Kevin Glaubius
Director of Nutrition & Regulatory Support
BioZyme® Incorporated

[Feedinfo News Service] BioZyme has been proactive by reducing inclusion rates of vitamin A & E on various products to stretch current inventories. How successful has this strategy been? 

[Kevin Glaubius] It has allowed us to greatly stretch our supply and limit the need to purchase very much of the high-priced vitamin A. We have also built in choices for producers who really need the full vitamin levels by keeping some products with full levels of vitamin E. Right now, our vitamin A and E costs are extremely competitive compared to market prices and we are passing all of that savings on to our customers. However, we are counting on BASF production to be back in place by June at the latest as they have communicated and prices to retreat. 

[Feedinfo News Service] In the coming months, how does BioZyme intend to continue to provide products that meet the base vitamin requirements?

[Kevin Glaubius] Starting last fall we have worked on strategies involving our purchasing, inventory, forecasting, accounting and nutrition teams. Because of this proactive approach and avoiding out of stock situations, we believe we should have no problem meeting the needs of our existing customer base. One challenge that we do face is that we have been growing sales at a pace of 20-30% annually for the past 5 years.  Predicting our 2018 growth not just looking at how we can buy to the previous year’s amount was a big factor in our decision to reduce levels in our products to the base vitamin requirements early in this vitamin Force Majeure declaration.

[Feedinfo News Service] The vitamin A feed grade market is expected to remain extremely difficult until at least late H1 2018. When do you foresee some stability in the vitamin A cost per bag of mineral feed?

[Kevin Glaubius] Short term: as soon as production comes back on line so potentially April or May. Long term: I don’t think we will see stability we saw in the past. When only one or two companies control as much market as we are seeing with vitamins today I think we are in for more swings. To have stability in my opinion you have to have excess capacity. The current environment certainly didn’t provide for any stability. Ultimately producers are going to be faced with yet another situation where they can’t really control costs and they can’t control the sale price they receive for their production so they will unfairly bare most of the damage.   

[Feedinfo News Service] In your view, how can fresh forage and legumes be a potential alternative in these times of vitamin shortage?

[Kevin Glaubius] Fresh forage is high in vitamin A and E precursors. Unfortunately, the cost of vitamin analysis means it is not routinely tested on forage at the producer level. In addition, much of the U.S. is in winter so we are several months away from cows meeting full requirements from fresh forage and I don’t expect relief until at least April when grass is growing in the southern U.S. I have not seen a lot on this in feeding trials and believe it is an opportunity for research in the industry.

[Feedinfo News Service] What is your advice to producers who will be dealing with disruption and tightened supplies in the coming months?

[Kevin Glaubius] Plan ahead and be proactive and find out what the plan is for your mineral company. There are some small grains crops that can be planted early spring and grazed sooner than pastures. Producers calving in the spring can also consider feeding alfalfa in the gestation and lactation diet and that should give some additional confidence over and above continuing to feed a high quality mineral. Finally, I would suggest they visit with their nutritionist and look for areas where they can offset the price increase. BioZyme provides feed testing for protein, energy and minerals to our customers at no cost to the producer, and in many cases this has helped reduce total feed costs enough to offset the higher mineral prices we are seeing this winter.