There is an old saying, “You win some, you lose some,” which the animal feed industry could use to describe 2023. While the industry has made great strides in pushing for a modernized feed regulatory environment that keeps pace with scientific advancements in animal nutrition and international competition, hurdles remain.
The concept of winning as not losing has been an underrated tenet of risk management. With the industry continuing to be hamstrung by supply chain challenges, political headwinds and uncertain trade policy, managing these risks has been key for companies to chart their businesses long term and keep input costs affordable for farmers and ranchers.
Need for Innovative FEED Act
In 2023, the FDA publicly acknowledged it needs to modernize an outdated policy that has slowed the approval of novel animal food additives that work solely within animals’ gut microbiomes to bring about food safety, animal welfare, production or environmental benefits.
Due to a 25-year-old U.S. regulatory policy, many of these feed ingredients have endured years-long safety reviews and approval processes as drugs, not feeds. On the other hand, across Europe, Brazil, Australia and elsewhere, farmers and ranchers are already reaping the benefits of using these ingredients to improve food safety, increase production and reduce emissions, since their regulatory systems review them more appropriately as feed ingredients.
In a meeting with the American Feed Industry Association’s (AFIA) board of directors in May 2023, Tracey Forfa, director of the FDA Center for Veterinary Medicine (CVM), said, “We have pushed very hard to recognize that there are a lot of novel feed ingredients coming down – that is the future. We recognize that, and so we have been really working very hard to figure out how to make the process for reviewing those keep up with the times.”
In September, the FDA released its Animal and Veterinary Innovation Agenda, directing the CVM to “foster product development and implement smart, risk-based approaches to regulating modern animal and veterinary products,” including a new approach to the regulation of the feed additives. This is a positive development, considering that in the U.S., policymakers in 2021 set the ambitious goal of reducing methane emissions by 30% below 2020 levels by 2030. Doing the math, this would mean that some of these additives must be approved for use and marketed to farmers within the next two years to be used on farms and make any noticeable difference by that time – no small feat.
The country is looking for solutions to improve animal production to meet growing demand for meat and poultry and ensure a safer food supply, all honorable endeavors the industry is working to achieve. The feed additive industry has developed products that, when fed to animals, act solely within the gut to reduce the incidence of food safety pathogens on the resulting carcass or enhance the efficiency of the production of meat, milk or eggs. Less salmonella and more human food are good outcomes from feeding additives.
A collaborative effort of the AFIA with 135 scientists, private sector innovators, representatives of farmers and agribusinesses who have joined in the effort has led to the Innovative Feed Enhancement and Economic Development (Innovative FEED) Act that would correct this issue being introduced in Congress. Essentially, it would amend the Federal Food, Drug and Cosmetic Act to establish a new category of animal food additives – zootechnical animal food substances – to cover these non-nutritive feed ingredients, so they would be reviewed more appropriately.
As of press time, the AFIA is working to get the bipartisan-supported bill attached to a legislative vehicle, such as 2024 agricultural appropriations or the upcoming farm bill discussions, in the coming year.
Evidence-based regulation, a pathway for innovation and more tools available to farmers and ranchers – this bill makes sense, but getting it over the finish line will be contingent on farmers and ranchers calling upon their members of Congress to support this legislation. Should this bill get signed into law, the FDA maintains its commitment to expeditiously make the necessary changes the industry needs to enable these ingredients to come to market more quickly.
Supply chain challenges loom
While there have been some supply chain improvements over the past year, with food prices and inflation finally coming down a bit, the ripple effects of the initial metaphorical tsunami that hit during the COVID-19 pandemic continue to overtake us.
Labor disputes at the nation’s ports and on our rail systems have added volatility to the supply chain. The question for our member companies is no longer about how long it will take to resolve these disputes, but what added costs and delays it will require to ship via other channels to deliver products to customers. Compound these challenges with the fact that drought along the Mississippi River has reduced water levels, making river transport more difficult. We’re also seeing higher energy and capital costs across the board, while the need to pay competitive wages and find dedicated labor within our own industry aren’t going anywhere, and we are therefore seeing spikes in costs to doing business.
We hear from our members that they have developed multilayered yet costly contingency plans for reducing supply chain impacts. They are making difficult decisions about future research and development, which over the long term impact their ability to bring novel ingredients to the marketplace. The AFIA has been active in joining its agricultural counterparts in pressing the Biden administration and Congress to quickly intervene in these labor disputes and supply chain challenges before they exacerbate an already tough operating environment.
Reducing dependency on singular, foreign markets
The AFIA is also working diligently to identify areas where the animal feed supply chain could be left vulnerable in the event of heightened political tension. As we saw with Russia’s unprovoked invasion of Ukraine in 2022, political conflicts around the world threaten to stymie U.S. access to supplies needed to produce complete diets for U.S. livestock and poultry.
One growing area of concern right now for our industry is the U.S.’s reliance on China for vitamins. Over 78% of all U.S. vitamin imports used in animal feeds come from China, and that reliance is even greater when considering that a staggering 94% of vitamin B6 and over 91% of vitamin C is imported from that country. Vitamins are necessary to make complete and balanced diets for animals.
Equally concerning is the lack of alternative suppliers. China produced 73% and 62% of the world’s total feed-grade vitamin A and E, respectively, and 94% of total feed-grade vitamin B2 in 2022. There is simply not enough global production capacity outside of China to meet U.S. demand should political tensions rise, raising important questions about the role the Asian country plays in the nutritional landscape of American animal feed and food security.
The AFIA is currently working with members to develop a multifaceted strategy that would balance the U.S.'s economic interests with that of its broader strategic aspirations to derisk and diversify the U.S. vitamin supply chain. Solutions could range from investing in domestic vitamin production to exploring opportunities to invest in the production capacities of allied and similarly dependent countries. Such strategic steps would not only diversify our supply base but also insulate us from potential disruptions.
The delicate trade balance is also of great concern to AFIA’s members, given that the current Biden administration policy eschews traditional free trade agreements in favor of “economic frameworks.” The AFIA stands firm that free trade agreements would give U.S. companies certainty that other countries would adhere to the same scientific-based policies and standards we enjoy in the U.S. when exporting products. They also put the U.S. in a better position to dispute when trading partners renege on their policies, as is the current case within the U.S.-Mexico-Canada Agreement, with Mexico moving away from imports of genetically modified corn for human consumption.
Long-term views for feed industry
Globally, discussions continue to swirl around transformative change across the food supply chain. Caution should be observed when listening to this rhetoric, as we know in the U.S. that our modern agricultural system has made it possible for Americans to have one of the most affordable, abundant and safe food supplies of any country in the world.
2024 will be clouded with talks about the presidential election, but those should not overshadow the real work that needs to get done. The industry needs a new farm bill to secure funding for needed agricultural research and development, animal disease mitigation efforts, infrastructure investment and growing market development opportunities.
The U.S. animal food industry is a more than $267 billion industry – and it will be incumbent on all of us to use every opportunity in the new year to speak up for agriculture at town halls and in congressional district meetings to explain to legislators how they can act now to support farmers by improving the environment for input industries.
In 2023, the U.S. animal feed industry made some gains but, more importantly, it held its own. And with the array of challenges facing the animal food sector, that is a win!
