Written by: Victoria Broehm | September 21, 2022
I always heard the members who attend Liquid Feed Symposium (LFS) are a great group of people – heck, I even remember Leanna Nail telling me about them during my orientation five years ago – and the collegiality and fun at this year’s conference was palpable.
I learned quite a few things this past week:
Everyone thinks they know the best combination of toppings for the greatest ice cream sundae.
Randy Davis and Paul Davis (a.k.a., the unrelated “Davis brothers”) make excellent live auctioneers, a talent many of us will never come close to in a lifetime.
Bourbon is better when shared with friends.
In all seriousness though, this conference boomed with positive energy, despite some of the difficult headwinds facing many liquid feed members’ businesses.
For instance, one such challenge the presenters mentioned is the increased competition for ingredients.
“The feed industry used to have ‘first refusal,’” for several ingredients, such as molasses, whey, glycerin, etc., “but now, we are seeing it could go to ethanol or biodiesel, lactose, etc.,” said John Cropley, commodity analyst for ED&F Man Liquid Products.
He said that the supply for many liquid feed ingredients is inelastic, meaning that as non-feed sectors, such as the energy sector, demand more, it tightens supplies and prices tick up, more than most cattle producers can afford.
“Some ingredients that were discounted now attract a premium,” Cropley said.
To make matters worse, geopolitical events are “yanking us around” and driving inflation up across the world, added Joseph Kerns, president for Partners for Production Agriculture. As the costs for many energy-intensive industries (e.g., steel, aluminum, soy processing) are impacted, it alters the buying side of things (e.g., for animal food), where infrastructure and the overall operating environment will continue to be challenged.
Not only that, tough weather conditions, including the current drought, (which has consumed 40% of the U.S. for the past 101 weeks) will impact growing crops and future markets.
“We are going to experience a dearth of protein in the U.S. for a bit – not going to be producing more protein,” Kerns said. Over the next three years, he expects the U.S. “will produce less animals to get the feed rates to go down, which leads to a reduction in global protein supplies.”
He also believes that there will be a continued focus from the Biden administration toward making deals with Latin American countries, given Putin’s invasion of Ukraine, continued distrust of China and ongoing supply chain disruptions.
Jason Matthews, vice president of ag services for J.B. Hunt Transport Services, is well-versed in supply chain issues, commenting that the U.S. base rates and spot markets have fallen because overall shipping volumes have fallen.
“We are getting back closer to equilibrium,” he said, with roughly 93% truck utilization, but challenges with shortages in parts, manufacturing capacity, diesel prices, labor and more mean companies should be prepared to make contingency plans for shipping their products, should the situation warrant.
Although Matthews commented that trucking labor is seeing some relief right now from the immediate aftermath of COVID-19, he said there is still the looming threat of recruiting and maintaining a stable workforce in the future. Matthews said the country will need 1.1 million new drivers over the next decade to meet the demand that is out there, according to the American Trucking Associations.
With a retiring older generation, a truck driver shortage looms.
“We don’t have the people coming behind those 57-year-olds to replace them,” said Matthews, about the average age of private-fleet drivers. “That’s the problem.”
Matthews said long-haul trucking is “not a desirable job” and really takes “a special kind of person,” which is why his company currently has dedicated over 600 employees who are solely focused on recruiting, qualifying and onboarding drivers. J.B. Hunt has found that employee retention increases greatly with each passing day a driver stays with the company, and that the ways of the world have changed and they must adapt right along with it.
“Drivers today won’t be pushed the same way drivers were pushed 10 to 15 years ago,” commenting that many are asking for flexible workweeks over higher pay.
His commentary came in stark contrast to the question: “Does anyone remember when we had more applicants than we knew what to do with?”
Kristen Ireland, co-owner of People Spark Consulting, asked LFS attendees to ponder that question in her presentation on maintaining a good corporate culture, saying that “things are cyclical,” and now is the time for companies to reset and ensure their corporate cultures are set up for future success.
“How many of you are seeing poor performance problems, but you don’t hold the people accountable because you’re afraid they will leave?” she asked. She discussed her company’s approach to helping corporate leaders be more specific about their behaviors, clearly define values and hold staff accountable, so that their culture can withstand momentary blips on the radar (see this Feed Strategy article for more on that).
From a regulatory perspective, AFIA’s Gary Huddleston, director of feed manufacturing and regulatory affairs, discussed the animal food industry’s compliance with the Food Safety Modernization Act (FSMA), noting that the industry is seeing less recalls and food safety events from recent inspections.
“FSMA is doing what it was intended to do,” he said.
The “biggest regulatory challenge we are concerned about right now” is the Occupational Safety and Health Administration’s injury and illness recordkeeping proposed amendment, which could unintentionally expose personal employee data.
Among other things, he also discussed the Environmental Protection Agency’s goal of “getting rid of formaldehyde,” a naturally occurring substance that at high levels can be carcinogenic; however, the agricultural community uses it as a safe tool to destroy viruses, such as salmonella.
“If African swine fever reaches our shores, formaldehyde would be a good tool to get rid of it,” Huddleston said, cautioning the EPA against this zero-tolerance approach.
LFS also focused on industry sustainability efforts to keep pace with proposed climate regulations.
“As long as we keep thinking of sustainability as something imposed upon us, we will lose opportunities,” said Lara Moody, executive director of the Institute for Feed Education and Research, commenting on the industry’s efforts to help all members of the feed industry advance their sustainability journeys through benchmarking and understanding customers’ needs.
Kim Stackhouse-Lawson, Ph.D., director of AgNext, said the “climate movement” started about one-and-a-half years ago, when companies started making net-zero commitments, and now, there are more than 1,500 corporate net-zero commitments worldwide.
“People were making net-zero commitments without knowing what that is,” she said. “This ship has sailed.”
She explained the differences between scope 1, 2 and 3 emissions and how companies are now making goals, with the intention that they’ll be making progress and reporting out on them to their investors in the future. This is an area she expects will continue, and one reason why the industry should take it seriously and begin to take steps toward improvement (learn more on this topic in my related blog).
I’ll leave you with this final thought, which I gleaned from the presentation by Matt Makens, meteorologist and atmospheric scientist, Makens Weather, LLC.
Just like the weather, some of these issues can seem “chaotic,” if you take them at face value and look at them as they stand right now. However, if you slow down the noise, calm cycles may be revealed, where you can see history repeat itself. By understanding the cycles, you can better plan for the future.
“We can’t try to be perfect, just like no [weather] forecast is perfect,” Makens said. “We just have to try to reduce the amount of error.”