One of the world’s leading suppliers says the demand for feed is higher, for now.
Last week, SalmonBusiness reported on the feed giant’s latest financial results. While most salmon farmers have been emerging bloody-nosed, Biomar posted a rare jewel in the coronavirus, an increase in revenue and earnings.
CEO Carlos Diaz told SalmonBusiness that COVID-19 will most likely impact demand for seafood and aquaculture feed around the world.
For salmon feed, BioMar has two factories in Norway, one on Karmøy and one on Myre. These have a production capacity of 340,000 tonnes and 260,000 tonnes respectively. BioMar has a factory in Denmark, formerly Dana Feed, and one in the Grangemouth, Scotland. Each has a capacity of more than 100,000 tonnes each.
COVID-19
The Chilean, a trained veterinarian, took over the helm of the Danish conglomerate in 2014, with the aim grow BioMar as a “global leader in fish feed”.
In crisis times, Diaz still seems motivated to do so. “We are supporting our customers to prepare for an unknown future, where COVID-19 could impact our industry even further,” he said.
“Restaurants are closing for a while and social dining is kept at a minimum, while consumers are buying food supply to prepare for longer periods at home. For now, the demand for feed is higher, as many farmers are striving to ensure sufficient stock of feed at the sites and taking steps to prepare for any disruption in supplies. Furthermore we see in other cases that fish and shrimp are being kept longer time in the farms. It is still too early to conclude upon how or if this will impact our value chain in the long run,” explained Diaz.
BioMar has a plan to mitigate risks. “However,” he said that “it is very difficult to predict now how the virus will impact us, the industry and the world around us in the time to come.”
Changes arising
Diaz would not respond if there any issues, foreseeable or current, from sourcing soy in Brazil. And not comment on if any sites running at a lower production capacity.
“We can unfortunately not comment on individual sites, but as you can see from the quarterly reporting, the Mediterranean area, especially Spain, has been impacted by windstorms and there is a general uncertainty in this area,” he said.
Looking ahead, Diaz said “there will for sure be changes arising from this crisis” that will affect the entire process, from production-side to consumer.
“There will for sure be changes arising from this crisis. We see an impact on the entire value chain and consumers buying patterns are changing, and we discover new ways of working internally as well as towards the customers. Those who can manage to create value out of the changes will be a lot stronger meeting the new normal. In BioMar, we are taking those strategical discussions at a management level to evaluate possibilities emerging,” he added.
Logistics
“So far logistics have only changed to a limited degree,” the CEO elaborated. “We have experience some delivery challenges on raw materials due to closed borders and lock-down of countries, but it has not impacted our ability to deliver to the customers. We have ensured business continuity through higher levels of stock, but in general there has been no major changes”.
How long do you think the disruption will go on for?
“We do not believe that anybody can answer this question at the moment. Fortunately, we see more and more countries opening up for their restrictions, but there might be an impact on consumer preferences and choices reaching far into the future, and we actually expect to see some of the changes being permanent, such as the demand for healthy and safe food with full traceability” said Diaz.
A big and solid ship
In the face of the pandemic, the boss said he was using his company’s experience (“a big and solid ship”) in dealing with number of crisis in the history of aquaculture, both within salmon, Mediterranean fish and shrimp. “From every crisis you take some learnings and for sure all crisis bring opportunities,” he said.
Last week, BioMar posted healthy earnings in troubling market conditions. In this sense, a solid global set-up is proving to be a strong competitive advantage. This in part is demonstrated by the recent opening of its EUR 40 million 110,000-tonne feed plant in Australia, to serve the Tasmanian salmon farming industry. Could there be an opportunity for salmon feed here?
“There are for sure opportunities for salmon feed. Increased consumer awareness on food, health, environment and social responsibility will impact the possibilities for value-add products with a strong sustainability profile. More home-cooking might also lead to spending more money on quality food with a wholesome profile. At the same time requiring different presentations that could require more sophisticated processing and most likely different sizes, volumes and qualities,” concluded Diaz.
