Meeting the challenges in animal nutrition
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1 Meeting the challenges in animal nutrition Gilbert Weber Corporate Scientist Animal Nutrition & Health DSM Nutritional Products Capital Markets Days 2012
2 Safe harbor statement This presentation may contain forward-looking statements with respect to DSM s future (financial) performance and position. Such statements are based on current expectations, estimates and projections of DSM and information currently available to the company. DSM cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements. DSM has no obligation to update the statements contained in this presentation, unless required by law. The English language version of this document is leading. A more comprehensive discussion of the risk factors affecting DSM s business can be found in the company s latest Annual Report, which can be found on the company's corporate website,
3 Overview Trends and challenges in animal nutrition DSM ingredients and premix: science and technology Draft: Confidential
4 Increasing meat demand in changing context Ongoing growth Increasing global population Growing wealth and meat consumption Structural changes Small farms to large integrators Low cost production areas Pressure on animal numbers (Europe) Increasing volatility in raw materials Increasing raw material prices Competition for corn (biofuel industry) China s inability to be self sufficient for grains Control of animal diseases Better hygiene management
5 Focus on sustainable growth and feed conversion Utilization of resources Improving feed conversion Developing new / alternative raw materials Saving rare and increasingly scarce minerals / trace elements Performance and Health Maintaining health and welfare Allowing adequate immune response Sustaining performance and longevity of reproductive animals Quality and food safety Maintaining nutritive value of meat, eggs and milk Avoiding contamination with food borne pathogens Keeping sensory quality of food of animal origin Optimum feed efficiency Fast growth Strong health Animal welfare Extended longevity End products of high nutritional quality Sustainability Reducing environmental footprint Closing of nutrient cycles Waste management and water footprint
6 Overview Key issues in animal nutrition DSM ingredients and premix: science and technology
7 Market demands specialized nutritional solutions Complex field with multiple dimensions Different species Poultry Swine Ruminants Aquaculture Diversity of breeds/genetics/species Animal lifetime Few Short (broiler) Several hundreds Long (Dairy Cow) Animal life stages/phases Growing/Fattening/Laying/Lactating/ Reproducing Complete Feed Forage Diversity of feed raw materials Farming conditions Stable Free-range Pasture
8 Complexity demands broad science & technology Macro nutrients Proteins Carbohydrates Fats Minerals Macro elements Trace elements Micronutrients Amino acids Vitamins Carotenoids Other feed additives Feed enzymes Eubiotics other Focus area Impact of individual ingredient Animal specific requirements Optimum premix composition Value for the customer Animal science Biology Agriculture Nutritional science Digestive physiology Biochemistry Other science fields Immunology Microbiology Food sciences Technology Feed technology Product formulation
9 Accurate testing of proprietary ingredients Development of nutritional solutions for farm animals (internal DSM) Novel product development requires sophisticated science own research facilities represent one of the key success factors Screening phase in vitro systems with microorganisms or cell cultures Exploratory phase in vivo model trials with minimum number of animals, but maximum measurements and analytical parameters Dose-finding and efficacy phase production trials with more animals under well-controlled conditions and adequate monitoring
10 Life field trials at commercial operations Development of nutritional solutions for farm animals (external DSM) Novel product development requires validation under practical conditions a global scientific network represents another key success factor Confirmation phase production trials under semi-commercial conditions in collaboration with universities or scientific institutes Field phase: production trials under commercial conditions in collaboration with customers
11 An example: how grass turns into meat or milk Feed technology Product formulation DSM Premix : science based value add solution Biology Agriculture Immunology Food sciences Microbiology Digestive physiology Biochemistry
12 Tortuga adds technology and ruminant science Tortuga Global leader in minerals and phosphates for all farm animal applications Primary focus is supplements for pasture raised beef and dairy cattle Authority on ruminants Hands-on experience with ruminants under extensive husbandry conditions Unique knowledge on requirements for mineral supplements Ideal marketing channel for existing and novel ruminant nutritional solutions Value of Tortuga for R&D Tortuga has wide access to farms for research purposes in Latin America for poultry and swine for beef cattle and dairy cows Intense customer intimacy makes expertise and know-how of technical personnel unique
13 Minerals are unique ingredients Organic trace minerals Higher bioavailability through better absorption Maximum metabolic utilization Lower risk of deficiency or toxic overdosing Minimum contamination of the environment Tortuga s Fosbovi brand containing organic trace minerals Di-calcium phosphate Optimum supply of essential minerals Superior availability of phosphorus Tortuga has own source of raw materials Application fields Minerals are essential for life Largest portfolio of chelated trace elements Different chelates for monogastrics and ruminants Manufacturing technology kept as trade secret
14 Innovation is focused on key customer issues Application solutions Exploration of novel technologies and innovative materials Improvement of product stability, physical properties and bioavailability Objective: differentiation through product formulations Eco-friendly animal production Reduction of ammonia and methane emissions Management of manure and processing waste Objective: sustainability and protection of resources Feed Utilization Improvement of efficacy of feed enzymes Screening for new enzyme categories Objective: enzymes for better digestibility of nutrients Health for performance Modulation of intestinal microflora for improving gut health Stimulation of immune response Objective: eubiotics for prevention of infectious diseases
15 Conclusions Challenges in animal nutrition require science based solutions Specific premix compositions are needed to respond to the complexity of the animal nutrition market A broad field of scientific competences is required to develop efficacious novel feed additives Sophisticated technologies and validated evaluation models are available to critically test the nutritional solutions and to demonstrate their value to the customer Tortuga perfectly complements DSM s knowhow in the field of ruminants DSM is uniquely positioned in offering a broad range of products with a proven efficacy in the animal nutrition field
16 Contact: DSM Investor Relations P.O. Box 6500, 6401 JH Heerlen, The Netherlands (+31) internet: visiting address: Het Overloon 1, Heerlen, The Netherlands
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