Feed Management - May/June 2009

Enzymes market heats up
High feed and energy costs combine to spur sales.

Feed enzyme sales are hot. All manufacturers interviewed report brisk demand over the past year, with 2009 and 2010 expected to usher in even stronger sales numbers. Enzymes have gone from being a feed additive only used occasionally in diets in the United States “to suddenly become mainstream,” says John Geuss, director of marketing & business development for Adisseo.

For the United States, enzymes reached important market penetration in 2008, Geuss states, several years later than in Europe. The reason is that European livestock producers use more wheat and barley, and vegetable proteins in their rations, and had more to gain from enzymes historically than US producers, the latter with their traditional corn, soyabean meal and animal protein rich diets. But that all changed, he says, when corn rose from $2 to $8 per bushel, and fat prices went from their long-term average of 13 cents per pound to in excess of 30 cents last year, even though prices have tapered off from that in recent months.

“Money talks,” Geuss says. “Adisseo used to say in its Rovabio MAX (combination degrading and phytase enzymes) advertisements that its enzymes saved $3 per metric ton, but last year, the saving increased to $9 and now is at $6 per metric ton, largely due to phosophorus going from $200 per metric ton to $1,000, before backing off somewhat to $700 per metric ton by early March 2009,” Geuss says.

Fast growth

For the company AB Vista, the enzyme and yeast platforms “are growing very fast,” states Richard Cooper, Managing Director. One reason for the growth of the company’s flagship new xylanase product for corn-soya diets, Cooper says, is that the enzyme is not destroyed by heating up to 95C. Thus, it can be put through a commercial pellet press and can be easily analysed post pelleting. This is important as more feed companies demand good quality control, he says. “It is essential that what we sell reduces feeding cost,” he continues. Cooper indicated that his company has increased production capacity. “We needed

to increase production to meet the increasing demand for our enzyme products.”

While the rise in commodity prices has been an important reason for the enzyme market taking off, it is not the only factor. Ingredient quality is also under pressure as corn and soyabean meal are in shorter supply and more expensive.

Haley Stomp, product manager for Kemin North America, says that that with supplies of corn and soyabean meal under pressure, livestock producers are motivated to try other feed ingredients that are less digestible. Enzymes can help break them down to make their nutrients available.

Provided by USDA

In this computer generated image, the red beads highlight the important “active site” of the phytase molecule. The active site allows the enzymes to release the phosphorus from the phytate in feed and make it available to the animal.

One possibility in using the proper enzyme formulas is that livestock producers might be able to use less costly feed ingredients through substitution, Stomp says, although carefully balancing a diet is something producers need to work out with their nutritionists.

One area of research for new enzyme products and formulas is in more heat stable products, Stomp says, as there is a trend globally for more pelleted feed. She notes that while there have traditionally been two primary methods to make enzymes more heat stable: through coating that will allow them to withstand heat or through genetic manipulation, more innovation is anticipated in this area.

The proof of the value users of enzymes have seen in the products improving feed

digestibility, Geuss says, is that even poultry companies in financial distress and trying to cut every possible corner are not taking enzymes out of their rations.

The enzyme market is not only hot in the Europe and the US, but globally. At present, some companies interviewed say the fastest-growing market is Asia.

“With increasing commodity prices, there is no better time to get the most productivity possible,” says Wendell Knehans, director of product management for Novus International. He cites a study by Frost & Sullivan that tracks the growth in the enzyme market. In 2003, the global enzyme market was over $200 million, and was projected to increase by 50% over a 10-year period. From 2003 to 2008, the increase was slightly steeper, and is projected to grow faster in the next five years than the last five. Looking at specific markets from 2003 to 2008, the US market grew from $53 million to $81 million; China from $42 million to $71 million; Southeast Asia from $43 million to $49 million; Europe from $116 million to $159 million; and Australia-New Zealand, from $9 million to $13 million.

Quality ration at lower cost

“Enzymes are becoming more popular,” Knehans says, for the simple reason that a higher quality ration can be made at lower cost, which has become a paramount concern with grain prices so high. Historically, he says, enzymes have been more popular in Europe, because without the ease and convenience of a corn/soyabean meal diet like producers in the US, “Europeans have had to be more creative. Their feedstuffs have not been as digestible.”

The dramatic growth in the global enzyme market is both good and bad, Geuss says. Good in that the market is growing but bad in that it has brought a lot of new competition. As a result, enzyme prices are under pressure. “We’ve had to hold on some price increases we planned to implement in 2008,” Geuss says. “We’ve had to sharpen our pencils.”