Hamlet Protein CEO Erik Visser: Delivering value, building relationships in the feed industry
VIV Asia 2023, which was held on March 8-10 in Bangkok, Thailand, marked a return to face-to-face meetings between industry players in the livestock and feed production sectors. Interview with eFeedlink.
The chance to gather onsite with customers again is very much welcomed by Erik Visser, chief executive officer of soy-based specialty ingredients company Hamlet Protein. He emphasizes the importance of prioritizing customers and the role of knowledge transfer in driving value for them.
At VIV Asia, Visser also shared with eFeedLink his views on diverse subjects including the ways companies can succeed in a changing global market and animal diseases’ impact on the feed industry.
We have been kept abreast of your time in feed additives company Nutriad before your appointment as the CEO of Hamlet Protein. Between both organisations, what remains as your fundamental management principles?
Erik Visser: My management style can be defined as operating on the crossroads of strategy and operation. I like to develop winning strategies and build strong teams, while also staying in touch with the market and understanding what is really happening. This involves meeting with staff and customers worldwide to get a clear understanding of their needs, challenges and opportunities
A key business principle for me is customer-centricity. Understanding the customer's needs and problems is essential to offering solutions that truly benefit them. It is all about putting the customer at the centre of everything you do.
Delivering genuine value is crucial for establishing a lasting relationship. Hamlet Protein prioritises knowledge-based value creation. Whenever we impart or acquire knowledge, we consider how to transform it into value for the customer, which ultimately also benefits our company.
I strongly believe in building personal relationships, both within our own staff and with people in the market. The animal feed market may be big in terms of market size, but in terms of people, it is quite small. The people you meet today may be with a different company tomorrow. Investing in developing and maintaining these relationships is crucial.
After 2019, the state of doing business worldwide drastically changed with the COVID-19 pandemic. When it comes to engaging and servicing customers, do you see a return to the ‘old, usual way of doing things’? Or do you view a need for the further evolution and streamlining of conducting business?
Erik Visser: It is clearly visible at t VIV Asia how eager people have been to meet each other again after a prolonged period of travel restrictions Our Chinese colleagues and customers are finally able to travel internationally again. You feel that there is a need, — especially in our business — for in-person interactions.
Attracting customers is a lengthy process, and many of our customers engage with us for one to two years before making a purchase. They tend to remain loyal for a long time.
Building a strong relationship with customers requires investing time in understanding their needs by visiting them at their farms or feed mills. In general, we plan to adopt a hybrid model that incorporates travel, while also leveraging new tools to create more efficient knowledge transfer. This includes online educational seminars and training sessions which can be effective in reaching people quickly. This is a fantastic feature we will continue.
What COVID-19 has changed is that we will not hop on a plane just for a one-day meeting only, for those kind of interactions we see the operational value in meeting online. While it may be more challenging to build relationships online, these tools can still serve as valuable support for maintaining existing relationships. However, I do not believe there will be a complete shift away from human interaction.
When communicating an online platform, meetings tend to be strictly business-focused. But when meeting people face-to-face, we often take the time to ask about their families and what's been happening in their personal -and professional lives, which can lead to unexpected questions or discussions. Ultimately, I believe a hybrid approach that incorporates both in-person and online interactions will be the most effective.
Given that Hamlet Protein specialises in creating soy-based specialty ingredients, what has been the company’s challenges when it comes to sourcing raw ingredients for the creation of its products? How do Hamlet Protein and its network work to overcome these challenges?
Erik Visser: One of the main challenges faced by the industry, both in Asia and globally, is the increasing cost of feed.
For farmers, approximately 75% of the total production cost of an animal is related to nutrition. As a result, the recent surge in raw material costs, basic feed stuffs and additives has caused significant concern.
Customers tend to simplify their animal feed when faced with rising costs, leaving less room for investing in improvements such as feed additives or specialty ingredients.
Our customers are used to fluctuating prices for soybean meal, but what has been different for Hamlet Protein in the past year is the strong increase and volatility of our utility costs. Our production facilities are located in Denmark and the United States, with the latter experiencing stable energy prices while Denmark saw a significant increase in utility costs, which affected our cost of production.
Hamlet Protein relies on natural gas for heating during our production process. With prices sometimes fluctuating up to 10% to 15% in a single day, pricing became a challenging exercise. Another challenge was how to deal with the increased cost of production for existing contracts that were signed before the conflict in Ukraine began. We honoured all our contractual obligations because we believe it was the right thing to do to maintain our reputation as a dependable supplier. However, it came with a significant impact on our profit generation.
You might say that 2022 was a perfect storm, as we also faced high logistics costs to export markets, particularly in container freight shipments, and general inflation while animal numbers were under pressure in several markets.
How can livestock producers maintain sustainability in their business with rising costs?
Erik Visser: With rising costs, feed efficiency and farm management have become increasingly important for livestock producers.
At the same time , customers are seeking efficient ways to replace medication in feed while still delivering a strong performance of their animals.
One way to drive performance is through early life nutrition, the focus of Hamlet Protein. We strongly believe that investing in starter and pre-started feeds can drive increased animal performance throughout their lifetime.
When you considered the overall feeding cost throughout the life cycle, the investment in young animal nutrition is relatively small and delivers a high return. That is why producers increasingly focus on early life feeding.
Next to that the Hamlet Protein portfolio successfully replaces fish meal and blood plasma in diet formulations at a lower cost while matching their performance, without the supply and bio-security concerns from these other protein sources.
There is a growing and persisting concern about increased antibiotic use in livestock production. Please tell us about Hamlet Proteins’ evaluation of this development, and the plans and actions it has implemented to further reduce the use of antibiotics in livestock production.
Erik Visser: In most markets we serve, the use of antibiotics as a growth promoter has been banned or restricted. While antibiotics can still be used in animal production when animals exhibit signs of illness, our focus is on supporting a healthy gut system through nutrition and in that way reduce reliance on medication. This approach has shown positive results.
Our products are made with natural ingredients and are designed to support antibiotic-free diets to animals in their early life stages when their gut systems are not yet fully developed.
Our company's purpose is to improve the well-being of livestock through nutrition, which is why we focus on promoting health through nutrition. Improving the health status of the animals results in an improved performance throughout their life cycle.
In anticipation of the ban on zinc oxide that is currently in place in Europe, we developed a fiber portfolio that promotes gut health to prevent diarrhoea and improve the health status of the animals.
Customers highly value the consistency of our product performance. This is because we.
As producing in batches can result in many variations in quality between batches produced on different days, we produce continuously, 24 hours a day, seven days a week, rather than in batches That is how we can guarantee a consistent product quality, which is highly valued by our customers.
We not only invest in research and development on the animal level but also continuously invest in enhancing our production methodologies and factory efficiency.
At the start of the year, you delivered a forecast of the developments that could happen in the animal nutrition industry? What are some of these predictions that have come to pass so far? Do you discern other factors that may keep the rest of the predictions unfulfilled?
Erik Visser: Regarding my predictions, I have to admit that it's always challenging to forecast what will happen in the next 12 months, as it can vary significantly by geography, species and other factors. Yet, I always like to look ahead on what the markets will bring.
Feed costs remain high and present a challenge for feed and animal protein producers. Utilities costs in Europe decreased in Q1 but are expected to increase later in the year, and the impact of the war in Ukraine on these costs is unknown.
Animal diseases, including African swine fever (ASF) and avian influenza, continue to affect important markets. For example, in Thailand, we have seen a resurgence of ASF, as well as in China, the Philippines and Vietnam, where they have not been able to declare themselves ASF-free. In Europe and North America, there have been cases of avian influenza.
Sustainability, especially in Europe, is a topic that is becoming more and more important, and we will see these trends followed in the rest of the world over time. This will apply to the entire supply chain, not only focusing on sustainable production by suppliers but also how products are used by customers and their supply chain all the way to end customer level.
We have also noticed an increase in regulation in various markets around the world, especially in northwest Europe, where there is political pressure to reduce the number of animals for sustainability purposes. It is crucial for our industry to stay well-informed about these sustainability developments and address them in a timely manner. It won't be a sudden change, but we need to be prepared, in terms of production and farm management, to adapt to the changes that are coming.
I also want to emphasise that factors such as production efficiency, biosecurity, farm management and cost control are more crucial than ever. I firmly believe that there is a case for this.
One prediction I made was related to soybean meal. I anticipated a 5% to 10% decrease compared to last year's average, but the prices so far have been trending upward due to meteorological developments in South America leading to lower harvest predictions. While I am still confident that we will see a decline in the near future, it has yet to materialise.
I believe that the market has learned how to deal with difficult situations based on the experience of 2022. Last year, we were facing challenges with high utilities, high material costs, high transportation costs, animal diseases, COVID-19 restrictions in one of the major markets, foreclosures, and irregularities in the supply chain. Hamlet Protein learned a lot from these experiences, and while we were slow to respond in some areas, we did very well in others. We believe that these experiences will make us and other companies in the industry more robust and better prepared for this year.
Based on your presentation of key market trends in 2023, you appear to place much value in the power of foresight in guiding the actions and decisions of Hamlet Protein. Has Hamlet Protein made foresight a key principle in its decision-making process or adopted additional practices and technologies — like big data analytics — in this regard?
Erik Visser: Big data analysis is being used on farms and Hamlet Protein works closely with leading universities to conduct research.
When I joined Hamlet Protein almost four years ago, the focus was primarily on digestion, but we have since expanded our research to include studying the health impact of our products. Through our research, we have discovered interesting new data that we share with our customers. While some of our customers use artificial intelligence and big data to evaluate their flocks’ performance, our research is more in-depth and focused on understanding how our products function within animals and their impact on animal performance, allowing us to better predict outcomes.
We have seen companies adopt artificial intelligence to improve the efficiencies in their operations. Is Hamlet Protein open to a partnership in this regard, where different players pool their resources together to develop content data to improve efficiencies?
Erik Visser: In our industry, some companies tend to be reserved; if they come across something useful and effective, they prefer to keep that advantage to themselves.
However, knowledge sharing is one of our core values at Hamlet Protein. We believe in sharing knowledge not only to create business relationships but also to develop alongside industry partners. We can learn a lot from one another. If we want to increase food production in a sustainable manner with the scarce resources available, we need to continually optimise animal feed efficiency.
Collaboration is crucial for achieving our goals, and sitting in a closed room and dreaming big is not enough to bring about meaningful change. That is why Hamlet Protein is open to collaboration with academics and industry professional alike.
For instance, we collaborate closely with genetic companies to create nutritional manuals on improving the performance of genetics through better nutrition. This mutually beneficial partnership allows us to gain insight into how the animals perform while ensuring that their genetics provide customers with the best possible performance.
Technology has driven innovation in the tech sector and other major industries. Can we say the same for the animal protein production sectors? What would you consider to be the major innovations of the industry in the past decade?
Erik Visser: Over the past decade, there has been a significant shift away from antibiotics and medication in animal farming, which has led to various innovations in the field of nutrition. This shift has been essential as there is no single substitute for antibiotics, and it requires a combination of additives to achieve comparable results.
Although farming has been around for a long time, the use of data in farming has become increasingly important and impressive progress has been made already
I believe that there is still ample opportunity for further progress worldwide, particularly in relation to antibiotics; not just artificial intelligence, but also advancements in information technology that enable monitoring and tracking of production performance. These two advancements have progressed rapidly in recent years. While it is challenging to predict future innovations that do not yet exist, I anticipate a continued focus on producing more with less.
With the growth in the world's population and an increased demand for food, it is important that we become more efficient in dealing with our scarce resources. We need to focus on feeding and production efficiency while also maintaining sustainability. This requires a combination of factors.
Some people ask me if alternative proteins are a threat to our business, but I believe we need all protein sources available to feed a growing world population. I can envision a future where our diets consist of a combination of meat and vegetables. The animal feed industry will continue to grow as the world's population grows, and as more people rise out of poverty, they will want to include animal protein in their diets. Animal welfare is the one aspect that will see increased scrutiny, which is not restricted to nutrition or health alone. The pressure to treat animals well will only rise, and this trend is already visible in Europe. There will be discussions on how many chickens or pigs can be kept per square meter while ensuring profitability for farmers.
Creating a level playing field under changing conditions is another challenge. If a country has strict welfare regulations, how can it compete with protein sources from markets where such regulation is absent or less strict?
Finally, we need to make sure that farmers generate a reasonable income, so they can make the necessary investments to continue to innovate. I strongly believe in the collective capacity of our industry to develop new and more efficient ways of working, and history has proven that.
With the things that have happened in the livestock and feed market in the past months, please tell us the developments you would expect to see in the Asia-Pacific market and here in Thailand. What is Hamlet Protein’s plan for engaging the Thai market and the region?
Erik Visser: When considering Asia as a whole, the main markets are Japan, Vietnam, Philippines, China, Indonesia and Thailand. In these markets, a lot has happened in terms of swine production and the impact of ASF. Some countries denied or downplayed its effects, but it the effect can be seen in the production numbers. Speaking to customers and observing the amount of feed they produce can also provide further insight. At the same time ASF outbreaks have created favorable market conditions for poultry.
It is important to focus on the recovery of the markets affected by ASF and to maintain control over the disease. In the absence of an effective vaccine, farmers who practice strong farm and biosecurity management are better equipped to handle the situation than smaller, backyard farmers. This has resulted in a trend toward the disappearance of smaller farms in various countries.
Additionally, there is a growing concern about the use of animal protein in the diet, with blood plasma and fishmeal being the primary sources.
The availability of these protein sources are becoming limited, irregular in quality and expensive, especially blood plasma which poses a biosecurity concern for African swine fever. While fishmeal is still available, its quality varies greatly. Hamlet Protein can address this issue by replacing blood plasma and fishmeal with a lower-cost alternative that performs similarly or better without the biosecurity concerns. This presents an interesting opportunity for us to offer a solution in this space.
As for Thailand, the main challenge is the government's restrictions on feed prices. If feed prices rise and the government limits the sales price, it creates a difficult situation for producers. When governments intervene in markets, it can cause friction and risks. If it becomes unprofitable for feed producers to operate in Thailand, feed production may decrease, and the country may have to import feed, which ultimately could be more expensive. If companies are unable to make a profit, they may choose not to ship to Thailand.
Therefore, it is important that the maximum sales price for feed here moves along with the volatility in cost.
I also believe that there is a significant opportunity for knowledge transfer regarding antibiotic use in feed production and farm management in the Asia Pacific markets.
Given our extensive expertise in young animal nutrition, particularly with regards to vegetable protein diet sources, Hamlet Protein is uniquely positioned to offer valuable insights to customers.
You brought up an interesting fact about backyard farms. In China, we noticed that more backyard farms are phasing out as there is more consolidation among the farms. Do you see consolidation as a way forward for Southeast Asia?
Erik Visser: Consolidation is happening at all levels. Especially in disease-prone areas, it is being accelerated on a farm level.
At the same time, you also see feed mills getting bigger. There are fewer feed mills while the major ones are getting bigger.
At VIV, you see so many different companies, and all seems to be able find a specific segment or niche to focus one. Even though consolidation has been ongoing in past years, you may still consider the market fragmented. Consolidation to achieve efficiency is happening on all levels and I expect it to continue all along the supply chain
Small farms will not completely disappear but there will be a strong reduction in them. That also means larger integrators are the producers of the future that can invest furtherin biosecurity and achieve better efficiency. The technical buyers at the integrations typically value the solutions that Hamlet Protein can provide in young animal nutrition.
We would like to ask if you could provide us with one more prediction: what will be the new, key trends that will drive the growth of sustainable agriculture? How is Hamlet Protein utilising opportunities based on these trends?
Erik Visser: In addition to sustainability, animal welfare, feed and farm management, there is another trend that should be mentioned: localised production. This means that you will see fewer exports of complete feed and premix coming from Europe, as many companies are now investing in local partnerships and production plants that are closer to the markets they serve.
There are three reasons for this: sustainability, cost and the limitations of globalisation during the pandemic, resulting in a struggling supply chain. As a result, you will see more satellite production of feed happening in the local markets.
Lastly, what would be the kind of legacy that you hope Hamlet Protein would be remembered for?
Erik Visser: Building trust with customers and creating long-term partnerships is a key priority for Hamlet Protein. We don't aim for quick wins, but rather seek to establish lasting relationships based on openness, transparency and adding value through knowledge.
We strive to earn our customers' trust by providing value to them. We don't attempt to sell something that doesn't work, nor do we try to force them into a one-sided contractual relationship. Instead, it needs to be mutually beneficial for both parties.
We aspire to be recognised as a provider of top-notch quality products. As a global leader in specialty ingredients for young animal nutrition, we take pride in our reputation.
However, it's not just about how we see ourselves, but how our customers and the markets perceive us. We want Hamlet Protein to be synonymous with trust and value, and this is a legacy that should endure beyond my time at the company.
It gives me great pride that Hamlet Protein recently marked its 30th anniversary, and I am honoured to be a part of this journey.
- Nicholas Yong and Terry Tan, eFeedLink