Pig Production Focus on the Global market

5.October 2017

“It is about Pork choice”

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SwineIndustry today...

Regional trade – 2016 (cwe)

Steady production growth; China is the largest market

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Source: Estimates from Nutreco Market Intelligence model, OECD-FAO Agricultural Outlook 2016-25, Wattaget.com survey

118 118120

122123 124 126

2015 2016 2017 2018 2019 2020 2021

GLOBAL PIGMEAT PRODUCTION (unit: ‘000 cwe)

CAGR: 1.2%

• China: ~50% of the total pig meat production worldwide

• APAC, specifically Japan, is a key import market

• Mature markets (North America & West Europe) are heavily export dependent

• Brazil’s production is fast growing

417mil.MT complete feed

54.7

10.6

23.9

4.9

14.5

3.7

2.7

1.4

China

APAC

West Europe

Rest of Europe

North America

Brazil

Latin America

Africa & ME

CAGR16-21

1.6%

1.3%

-0.1%

0.9%

1.4%

2.5%

1.4%

2.3%

928

3,546

33

481

1,556

20

402

348

282

270

2,187

110

3,736

480

188

62

Imports

Exports

2016 Regional production (‘000 cwe)

Despite sow herd declining, integration & professionalization continues to drive growth

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Source: internal estimates, collated from multiple sources

37,989

6,002

4,060

2,940

2,434

2,466

1,973

1,649

1,237

1,220

China

USA

Vietnam

Brazil

Russia

Spain

Germany

Philippines

Denmark

Canada

Top 10 countries by sow population (2015)

-17%

Changes vs. 2014

0.6%

3.6%

1.7%

2.5%

4.6%

-3.8%

0.7%

3.3%

-0.6%

Growth trends

Estimated share of production

Integrator Prof. farmers Other

5%

54%

7%

42%

65%

2%

60%

40%

45%

8%

46%

40%

55%

1%

85%

60%

52%

71%

29%

0%

58%

40%

35%

29%

71%

Estimated CAGR 2015-20:INTEGRATOR: ~20%; PROFESSIONAL FARMERS: 5%; other: -4%

Historical growth: CAGR 2007-12:INTEGRATOR: 3%; PROFESSIONAL FARMERS: 2%; other: -17%

It is estimated that commercial farms may grow as fast as 20% per year; and that the top 20 companies will control ~75% total production

Largely individual farms, however, many sell their productions through cooperatives, who in turn have contracts with processing companies

The industry is under-going rapid modernization, especially with foreign investments

Strong growth is expected for commercial farms, driven by export to China

Integration process to be continued into fully integrated model

Piglet production expected to grow due to genotype development

Highly integrated market, grouwth expected due to productivity increase

Backyard is shrinking and B2F professional segment is growing

-10%World: Est. Growth: ~3%-20% y-o-y

Global complete feed market 2016

China; 31%USA; 14%

Brazil; 6%

Germany; 3%

Russia; 2%

Japan; 2%

Mexico; 2%

Spain & Portugal; 2%Canada; 2%

Turkey; 2%Others; 34%

Source: Nutreco Market Intelligence model – updated estimatesDisclaimer: Worldwide market size was extrapolated from market sizes for Trouw Nutrition 20 key countries, which in turn represent ~80% of the total swine population, ~60-70% of poultry, ~50% of beef & ~20% of dairy cows/ buffalos

Poultry39%

Ruminants18%

Swine43%

Estimated total complete feed equivalent for the 3 animal species in 2016 was ~ 974 million MT

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974million MTs

What are macro trends & industry drivers?

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1. Macro trends-

Integrated solutions to match value chain challenges

Integrated solutions across the value chain• Maximizing utilization of genetic potential• Antimicrobial reduction (AMR)• Salmonella control• Lifetime production and efficiency• Transition Management• Sustainable use of resources

What are the opportunities and challenges?

• Unlocking genetic potential

• Efficiency / economics

• Sustainability & traceability

• Value chain requirements changes

• Big data processing

• Capability of resources

• Unlocking genetic potential

• Preparing for lifetime production

• Increase sustainability

• Welfare requirements

• Environmental regulations

• Public opinion

• Reduce AMR

• STOP using antibiotics for growth promotion and preventive use

• Supported by Feed-Farm-Health approach

• Welfare requirements

• Legislation changes

• Multistakeholder integrated solution

Life Start Healthy Life Precision Nutrition

Farm animal productivity is on average 30-40% below their genetic potential because of suboptimal management, nutrition and health.

Closing the gap

Dedicated to closing the gap between genetic potential and performance on farm from 40% to 20%

Bigger litters, smaller piglets

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2

4

6

8

10

12

14

16

< 9 10 - 11 12 -13 14 - 15 > 16

Tota

l bo

rn

Litter size

> 1.8 1.4 - 1.8 1.0 - 1.4 < 1.0

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• More smaller and weak piglets

• Larger litters have more lighter piglets < 1.4 kg

Quesnel, 2008

Larger litters; less milk per piglet

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Milk deficit is future reality

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10.5

11

11.5

12

12.5

13

13.5

14

1990 2000 2002 2005 2007 2009 2011 2013 2015

Milk production per sow

Trouw Nutrition, 2015

Suckling piglets per litter

Window of opportunity

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Trouw Nutrition, 2014

Farm management• Biosecurity & cleaning • Water & Climate control • Housing & Stock density • Data Management• And others

Quality nutrition• Digestibility and feed quality • Raw materials and feed composition• Physical properties of feed• And others

How LifeStart makes the difference

Good health• Feed and water additives • Vaccination / Antibiotics• Hygiene

Benefits LifeStart

1 kg extra weight at six weeks of life

2-3 kg of extra slaughter weight

3-4 days earlier to slaughter

More meat produced per square meter

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Precision Nutrition

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Feeding strategy for Sows

The NutriOpt Sow model is a flexible, user friendly tool to

optimize feed management in order to achieve longevity

of high prolific sows in a predictable way.

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Background

Pig Production 2025

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10

12

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1990 1995 2000 2005 2010 2015 2020 2025 2030

Litter size

Total born Weaned

5.0 piglets

4.0 piglets

2.2 piglets

Danish Pig Production 1992 - 2015

Total born Weaned

Litt

er

size

Danish Pig production 1992 - 2015

Weight loss during lactation affect reproductive organs

0

1

2

3

4

5

6

7

8

9

10

7% 16%

Nu

mb

er

folli

cle

s (>

3.5

mm

)

Sow weight loss during lactation

Clowes et al., 2003

Transition feed

First gestation feed

Lactation feed

Second gestation feed

Enter farrowing room

Birth

Weaning

Insemination

Precision feeding in sow production cycle

Flush feed

Sow model

Benefits of Sow Model

€ 3.0 - € 6.0 per sow per year due to

Reduced gilt replacement costs

Better sow condition management leads to a reduced culling rate

Increased litter size

Reduction of body weight loss in previous lactation leads to more piglets per litter

Lower feed costs

- Lower percentage of fat sows

- Blending diets during gestation

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Swine economic performance modelling

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Swine model

Management support trough real time modelling

Guides management decisions

● improves profitability

● no need for a costly trial-and-error process.

Real time modelling - enables you to react rapidly to changing

● commodity prices

● pork prices, slaughter house grids

● health changes

● Genetics

Herd and shipping management

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Benefits of Swine Model

Saves on average € 2 - € 8 per Mt CFE

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Feed, Farm, Health approach in practice in antibiotic reduction

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Why antibiotic reduction?

Source: amr-review.org/infographics, 15 December 2016

Annual deaths attributable to antibiotic resistance by 2050

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105,596tons

Poultry & Swine 68% responsible of antibiotic usage

Source: Transparency Market Research. All About Feed HK News

5 3.7

31.2

22.9

37.2

Aquaculture

Others

Swine

Cattle

Poultry

Importance of Gut Health Antibiotic % used in livestock (2011)

68% of Antibiotics are used in Swine & Poultry:

40 – 60 % of used antibioticsrelated to gut health issues

Business drivers to reduce antibiotic use

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Legislation & sector agreements

Antibiotic resistance in animal production

Market demand (licence to supply)

Distinguishing factor in the market (to increase market share)

A drastic reduction of antibiotics in food production can be achieved if we move to a new farming model based on integrated and multi-stakeholder collaboration based on Feed; Farm & Health management

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Robust animals due to genetic development

Effective vaccines supporting strong immune system

Healthy nutrition resulting in healthy animals

Improved hygiene and safety at farm level

Reduced Antibiotics / Functional levels of Cu/Zn

Ambition levels vary per market (segment)

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Raised Without Antibiotics (RWA)

From

Up to

Different levels of ‘reducing antimicrobial resistance’

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1. Reducing AGP and antibiotics to legal levels, respecting withdrawal times

• Number, dosage

2. Without AGP

• Eg. EU since 2006

3. Without antibiotics critically important for humans

• Eg. colistine

4. Without preventive (broad spectrum) antibiotics // zinc oxide // Cu

• Eg. Amoxycillin, broad spectrum antibiotics, 3000 ppm ZnO > trend and legislation EU

5. Healthy animals raised without antibiotics

6. Healthy animals raised without antibiotics and ionophores (poultry)

Market evo

lutio

n

Red

uced

RW

A

Farm management

Health management

Feed Management

Customer specific solution: based on Feed, Farm & Health approach

1. Feed Management

• Precision Nutrition

• NIR & Nutritional database

• Reactive lysine: Protein digestibility

• Swine & Sow model: Feed optimization

• Feed physical structure

• Pellet quality, pellet diameter, pellet hardness

• Mineral nutritional management

• Calcium, Phosphate, Sodium, Chlorine, Cupper, Zinc

• Total Feed safety & hygiene

• Enterobacteria, Mycotoxins, Salmonella, moulds

• Raw material, feed production, storage, transport

• Young Animal Feed

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2. Farm Management

• Management data analysis

• SOP assessment

• Drinking water hygiene

• Microbial quality, buffer capacity

• pH

• Biosecurity, cleaning disinfection

• On-site testing tools

• Hygiene & management advice

• Colostrum management

• Water consumption, colostrum production/uptake

• Birth rate speed, vitality, piglet survival

• Weaning strategy

• Ventilation strategy

• Capacity/kg piglet, CO2 levels, ventilation speed

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3. Health management• Health status

• Recent diagnostics/pen-side testing

• Gilt adaptation strategy

• Infection pressure

• Horizontal & vertical transmission

• Vaccination strategy

• In cooperation with veterinarian

• Digestion enhancers, water acidifiers

• Gut health feed additives

• Gut integrity, microbial management, immunity

• Maternal immunity

• Milk quality

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• LifeStart sets life performance

• Precision nutrition improves profitability and financial benefits

• Antibiotic use reduction with no negative effect on optimal growth and lifetime performance

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Creating more value together

Trouw NutritionNutrition-based business optimization

Creating more value together by:

• Enabling customers to optimize their business by gaining better insights and making better decisions

• Turning science-based expertise into practical, applicable nutrition solutions

• Offering a broad range of innovative products, models and services

Thank you

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