Nutreco inks Marine Harvest feed deal

14-May-2015 - Last updated on 18-May-2015 at 07:36 GMT

Nutreco has extended its feed sales contract with Marine Harvest and has managed to reduce its exposure to the loss of business from Mercadona in Spain, said CEO Knut Nesse.

The CEO spoke exclusively to FeedNavigator this week.

“We are very pleased with the Marine Harvest development – the agreement was signed off last week - it is good news for Nutreco and reflects our long standing relationship with that producer. We will continue to supply salmon feed to cover the clear majority of Marine Harvest’s salmon production operations outside Norway for the next few years,” he said.

Marine Harvest is the world's largest producer of farmed salmon, with a presence in 22 countries.

It has been weighing up the viability of establishing feed plants in farming regions beyond Norway, so securing this supply contract to cover that salmon company’s "free feed volumes" is important for Nutreco.

Mercadona volumes replaced

Nesse said Nutreco has also found new clients for its Spanish poultry arm, Sada, following on from the loss of a supply contract it had with supermarket chain, Mercadona – the retailer rejected new pricing arrangements, which had seen higher feed input costs for the poultry meat products being passed on to it.

“We have replaced the majority of the Mercadona volumes, distributing them across five regional retailers. We have also confirmed our intentions to hold onto all our Iberian assets – a development that has been well received inside the company,” said the CEO.

Nutreco had put its Iberian unit up for sale last year but announced in June that it had scrapped the divestment process after talks with several potential buyers indicated "no fair valuation could be obtained".

Strategic alliances

Last year saw the feed group also renew its ‘strategic alliance’ with Dutch counterpart, ForFarmers. “That is working very well and is pushing us to really develop our know-how, our competences in all areas, particularly in young animal nutrition,” said Nesse.

He said such collaborative partnerships are the cornerstone of its R&D strategy:

“We can’t do it all alone. In terms of identifying ingredient challenges that could hinder future growth prospects and finding replacements for certain commodities, it is critical to align with other players.

We are currently evaluating substitutes for fish oil, particularly EPA and DHA alternatives, and, in this context, we are assessing the potential of algae technology, but we are also focused on developing products to support a reduction in the use of antibiotics and prevent antimicrobial resistance in animals.”

And Nesse said Nutreco’s LifeStart program, now also being applied to piglets after an initial focus on perinatal dairy calf diets, will be introduced in the developed and emerging markets in which the Dutch feed giant operates, allowing the feed company to “close the livestock productivity gap” between developing and developed countries.

Shrimp feed

He also said the animal and fish feed producer would be bringing out a new product for shrimp in the autumn with a preventative health focus.

Meanwhile, in February, Nutreco said results from field trials on its MicroBalance concept for shrimp feed showed significant success in reducing fishmeal inclusion rates to 15%, with efforts ongoing to bring that down further.

Gerard Rijk, an analyst at SNS Securities, last year questioned if the roll-out of that product would be successful: “We have some doubts as it is a fragmented market with mainly small scale farmers who may not be able to afford more expensive products.”

However Nesse said Nutreco, which targets shrimp farmers in Brazil, China, Ecuador and Vietnam, does not have “a specific view of the customer type for MicroBalance” but that the product aims to make shrimp farming more sustainable in terms of feed formulation flexibility and thus more cost effective as well.

He said shrimp production is mainly made up of small farmers in Brazil but is becoming more concentrated in Ecuador. Shrimp farming in Vietnam, he added, is more fragmented but there are some big players.

Asset building

In line with its goal to expand into growth geographies, December last year saw Nutreco acquire Fatec, a producer of premixes and animal health products for broilers, layers, swine and dairy cows, and BRNova, a producer of premixes and feed specialties, mainly for poultry and swine.

And Nesse said the Dutch feed group is still eyeing two to three potential acquisitions over the next 12 months:

“In the past ten years we have more than doubled our business, with acquisitions playing a key part in that, so we intend to continue with such a growth strategy.”