EUROPEAN BUSINESS: Richard, tell us more about Anpario and your latest activities and innovations.
Richard Edwards: Anpario plc is a London Stock Exchange company listed on the AIM market. It has been a public company since 2005 when it started as an R&D company developing a novel fish stimulant and palatant for improving feed efficiency and the water environment in global aquaculture. In 2006 we set out on a ‘buy and build’ strategy in the natural animal feed additives sector for livestock production, raising funding from UK and European institutions.
Our strategy was to acquire ‘best in class’ companies which already had an established global distribution footprint and proven technology to meet the challenges occurring in the animal meat protein industry. Between 2006 and 2012 we executed three key deals which gave us some of our leading product brands namely: Orego-Stim®, pHorce®, Mastercube® and Optomega™. Our gut health product range helps livestock to achieve their genetic potential, supporting producers in optimising profitability and animal performance, as well as responsibly reducing reliance on antibiotics. In addition, our products support feed and livestock producers in the absence of banned or potentially harmful substances, such as therapeutic zinc oxide in piglet diets and formaldehyde in animal feed hygiene.
Our philosophy is to leverage nature and therefore we use natural compounds such as oregano oil, omega-3 from sustainable plant sources and natural gums for our leading livestock and aquaculture feed pellet binder range, Mastercube®.
Anpario is a unified culture blended from independent companies that were specialists in several technology areas. We consider ourselves as a team of experts, so metaphorically speaking, heart surgeons, neurosurgeons, oncologists, etc. rather than a general practitioner. Our global sales and technical teams want to understand a customer’s needs before offering an appropriate solution. Another element of our customer value proposition is our production facility in the UK. Regardless of where our products are sold around the word, our leading feed additives are manufactured at our state-of-the-art facility. This centralisation ensures the highest integrity supply chain, consistent product quality and optimum performance, using only approved processes and raw material sources at our FEMAS and UFAS accredited facility.
EUROPEAN BUSINESS: What are some of the top challenges of sustainability you see livestock industry face today? How can Anpario address the challenges?
Richard Edwards: There is a lot of negative press emanating from those with a vested interest in curtailing the production of animal protein. However, the agricultural industry is working towards reducing its greenhouse gas emissions and being more sustainable, and the industry recognises that it will take a combination of solutions to address the situation.
It is worth pointing out there is new evidence that pasture-fed cattle, for example, can act as a carbon sink over time i.e., carbon negative. However, not all cattle can be reared on pasture, so we believe there are innovative methods to help reduce carbon or methane emissions from livestock by improving the efficiency of the rumen. In fact, there are already products on the market including Anpario’s Orego-Stim® and our Optomega™ range of omega-3 supplements, which have been shown to reduce methane output by 10.8%.
Anpario has also been working to determine the effect of Orego-Stim® on nutrient absorption in poultry and the impact this can have on protein levels in the diet. Feedback from customers based in the US is positive, indicating protein reductions in formulations is possible with no negative impact on animal performance. Reducing protein not only reduces emissions but also has the added benefit of a reduction in raw material use and with raw material prices continuing to increase, improved feed efficiency is more important than ever before. Small percentage improvements can make a significant beneficial impact given the huge volumes required to feed a growing world population.
In aquaculture too Anpario has proven trials and customers benefiting from improved liveability and biomass in production, enabling regions around the world to return land and water resources to their natural habitat.
EUROPEAN BUSINESS: In Europe, we are facing several challenges (inflation, energy and war), can you share some insights about the business outlook in Europe and international markets? In which markets do you see the greatest potential for Anpario?
Richard Edwards: As is widely recognized, although rarely admitted, ultra-loose monetary policy in the form of zero to negative interest rates and quantitative easing after the pandemic has led to general and asset price inflation. Western governments are now caught between a rock and a hard place given there are limited options in which to prevent what could be a significant downturn. At some point economies must be rebased on fundamentals and I do believe a recession will help to curb inflation, but the extent will depend on how well Europe can solve its energy crisis.
We are expecting a tough period across Europe for businesses but those that are well managed with strong balance sheets should be able to take advantage of the situation and emerge stronger and bigger. Loose monetary policy has kept weak businesses alive for longer than would have been normal. So, the key is to get to the bottom of this cycle as soon as possible and rebuild from there with stronger foundations.
There is a fundamental question that European governments need to ask themselves. Do they want to have a low tax low social benefit society like the US, for example, or a high tax high social benefit economy. Opting for the latter may require some form of protectionism whether financial or technical tariffs to look after the indigenous business community in a globalized world which has to compete with lower cost and often government supported industries in other countries or an element of de-globalization where regions tend to trade with each other rather than further afield i.e., with your neighbour rather than a stranger.
I believe regionalization is what the world is now adjusting to and where policies will be defined more on a regional basis rather than global; it may also help to limit climate change. At Anpario we see the following regions emerging: Americas, Europe, South East Asia, China and the Indian sub-continent. The ASEAN group of countries will form a strong trading area which we believe will be limited to trade and exclude any political union.
Given our thoughts on regionalization the greatest potential for Anpario are the Americas and Asia. The Americas have an abundance of agricultural commodities and energy from which to support animal protein production and Asia has the consumers. Europe needs to address its cost of production issue which can be achieved through innovation and automation, but this does mean building larger and more efficient producers. Sadly, the common agricultural policy serves to preserve the status quo, but if Europe wants to reduce food inflation there needs to be a change in mindset, and we believe this will become evident in the next 12 months. As highlighted in my answers above Anpario has products to help society achieve a more sustainable approach yet improve productivity to ensure meat protein is affordable for all.
EUROPEAN BUSINESS: COVID-19 is still a worldwide threat, can you talk about how has COVID-19 impacted the industry and your business? Challenges or opportunities?
Richard Edwards: Our industry fared quite well during the early stage of COVID-19 as people still had to eat and the livestock industry in terms of animal feed production was less impacted than other industries by the pandemic. The initial challenge was the increase in demand as consumers stocked up on food and farmers on animal feed around the world; as such we were flat out during the second quarter of 2020. We isolated the production facility and very quickly set office staff up to work remotely. We were able to ensure continuity of supply for our customers by increasing our global inventory, which although increased our working capital our strong balance enabled us to do this.
The ensuing disruption to shipping and supply chains has caused our industry to build up excess stock which will need to be worked through over the coming months. These supply chain disruptions and raw material price inflation initially caused by COVID-19 are our biggest challenges, but we are hopeful and see some early signs that these pressures will unwind in due course. Prior to COVID-19 we would have been travelling a lot internationally, we are now much more conscious of simply getting on a plane and jetting off somewhere. Although face-to-face interaction is still key to doing business, we are finding that video calls can be used effectively to do product training activities and internal management meetings.
EUROPEAN BUSINESS: Richard, tell us about yourself, your personal experience. What inspires you in the livestock industry?
Richard Edwards: I qualified as a Chartered Civil Engineer having worked on major tunnelling projects around the world including the Channel Tunnel in 1987. I later studied for an MBA before joining a UK quoted building materials distribution company in their mergers and acquisitions (M&A) team undertaking several transactions including managing post-deal integrations.
I joined Anpario plc in 2006, when the Board of Anpario decided the best way to develop the business would be to acquire a cash generative animal feed additive business with a global distribution footprint. So, I was appointed Chief Executive and tasked with raising funds from institutional investors pitching our ‘buy and build’ strategy for this sector. Since then, we have completed several acquisitions, integrated them successfully and combined this activity with an organic growth plan. This strategy and our successful execution of the plan has created significant shareholder value since then.
Everyone needs to eat and there are many regions in the world where malnutrition is an issue. If you take the western economies fifty years ago, chicken was considered a luxury to be eaten at Sunday lunch perhaps. Now, many people can afford and do eat chicken most days. This change has only been possible by the innovation and developments within the industry which range from an improvement in genetics through to gut health products like Anpario’s which support the health and performance of the animal; whether it’s laying more eggs or converting feed more efficiently. I believe one key factor for people living more healthy and longer lives is because of the advances made in bringing nutritious meat protein to feed an ever-growing population.
One study carried out in Ecuador with young children who consumed an egg a day showed they were nearly half as likely to suffer from stunting, a condition that includes not only diminutive height and unhealthfully low weight, but impaired brain development, weak immune systems, and other problems. It is one reason why Anpario signed up as an early supporter of the new “Vision 365” global initiative launched by the International Egg Commission which aims to accelerate global average egg consumption to 365 eggs per person per year. The 10-year plan will focus on promoting the egg as an affordable, nutritious, and low impact food source, developing the nutritional reputation of the egg on an international scale and aims to double global average egg consumption by 2032.
There is still more work to do, especially in developing economies where meat protein consumption is low. This inspires me to ensure that Anpario is part of the solution in driving global protein production and supporting producers to build strong, sustainable businesses, without negatively impacting future generations whilst continuing to feed the world’s growing population.