Investment opportunities in a fast changing world · 2,000 4,000 6,000 8,000 10,000 12,000 14,000...
Transcript of Investment opportunities in a fast changing world · 2,000 4,000 6,000 8,000 10,000 12,000 14,000...
Investment opportunities in a fastchanging world
Nan-Dirk Mulder, 26 June 2019
Global protein market outlook
Rabobank: The financial link in the Food and Agriindustry with animal protein as a key focus industry
•
Toronto
New York
Mexico City
Sao Paulo
Buenos AiresSydney
Santiago
Willemstad
Calgary
Nairobi
Chicago
Atlanta
Dallas
El Centro
San Francisco
Tasmania
Melbourne
Wellington
Cedar Falls
St Louis
London
MadridMilan
Frankfurt
Utrecht
Hong Kong
Singapore
Mumbai
Shanghai
Jakarta
TokyoBeijing
Delhi
Kuala Lumpur
Moscow
Istanbul
Dublin
Labuan
Amsterdam
Paris
Perth
Antwerp
Bangalore
Kolkata
Clients around the globe
14 of the Top 20 global Animal Protein companies are Rabobank clients
135
14/20
53Pork & Beef
40Poultry
42Seafood
# of Rabobank relationships with global Animal Protein
companies:
3
Worldwide 35% more demand for animal protein in next 20 years
Global animal protein demand projections 2017-2037f
Seafood: CAGR +1.2%
Poultry: CAGR +2.0%
Pork: CAGR +1.0%
Beef: CAGR +1.1%
Eggs: CAGR +1.6%
CAGR: 2017-2037f
Aquaculture is the fastest growing animalprotein industry and 2/3 Asia based
Poultry and aquaculture: key drivers
Source: Rabobank analysis based on FAO, USDA and local statistics, 2019
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Mill
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s M
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China Other SEA producers Rest of world
Global aquaculture1 supply by region
Consumer demand is changing when economies develop further
ECONOMIC CONSOLIDATION Food as nutrition/well-being
ECONOMIC REINVENTION
Food as stimulation
ECONOMIC TAKE-OFFFood as a need
ECONOMIC DEVELOPMENTFood as a social occasion
Income: < $ 5,000
Income: $ 5,000 - $15,000Income: $15,000 - $40,000
Income: > $40,000
Time free
Location Bound
Time bound
Location free
Source: Rabobank analysis, 2019
The expansion of the new mega citiesGlobal urbanisation:
many of the leading cities in AsiaIndia’s mega city 2030 economy
compared to mid-income ecomies
Source: FAO, Rabobank projection based on FAO and McKinsey, 2019
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
poultry Pork Beef
90% of global growth is in emergingmarkets; 60% in Asia
Projected change in meat consumption 2017-2027fX 1,000 tonnes
Source: Rabobank analysis based on USDA, FAO and local statistics, 2019
Subcontinent excluding IndiaOther Africa
South-East Asia
Middle East
North AfricaMexico
China
South America
Caribbean and Central America
Canada
Japan and Korea
Russia
Other CIS
Oceania
US
EU-28
India
-10
0
10
20
30
40
50
60
-1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%
absolute growth in billion litres
CAGR (volume growth 2016-2022)
Dairy demand growth is very much Asia focussed
Size of bubble represents estimated 2016 demand
Global dairy demand outlook 2018-2023
• Source: Various sources, Rabobank• China include Taiwan and Hong Kong
Global agricultural land use is declining; while especially Asia has limited resources
Available land and water per capita
Source: FAO/Rabobank analysis 2019Source: Rabobank, FAO 2019
Worldwide land use 1961-2015Million hectares
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10,000
20,000
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70,000
80,000
90,000
100,000
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2
4
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20
Acre per capita Water availability per capita
3.5
4.0
4.5
5.0
5.5
6.0
1961 1967 1973 1979 1985 1991 1997 2003 2009 2015
1961-1997Ongoing global land expansion
+11%
1997- nowGradual decline?
-2%
Global food supply challenge: more focus on yield and efficiency
Animal protendemand
Biofueldemand
Grains and oilseed supply
Meat supply Food supply Fuel supply
Land use
Food demand
Livestock/poultry supply
+60% in 2050
Further decline
ExpansionEfficiencyYield
EfficiencyCultivationYield
Source: Rabobank, 2019
Emerging market growth and challenges are driving to modern farming
High feed prices/limited resources
Food safety
Higher incomes and welfare
Modern distribution
Modern value chain
Larger companies
Vertical integration
Efficiency
Yield
Value chain management
Sustainability
Animal disease threat
More modern compound feed demand
Efficiency improvement is and will remain a key focus of the industry
Benchmark costs in broiler production in 2017
Feed price
(EURct/kg)
DOC(EURct/
kg)
Feed conversion
Weight WageEUR/hour
Processingcosts
Total costwhole
chicken
China 37.5 23.5 1,85 2.0 3 19 154
France 29.2 30.3 1.67 1.9 20 31 154
Netherlands 31.1 31.1 1.58 2.4 22 33 147
Spain 31.5 32.0 1.72 2.6 14 27 144
Hungary 30.2 30.9 1.63 2.3 5 21 136
Poland 31.4 31.5 1.62 2.3 6 22 134
Thailand 29.6 28.9 1.68 2.4 2 17 120
US 24.1 27.0 1.83 2.7 14 25 117
Ukraine 24.2 32.0 1.74 2.5 2 18 112
Brazil 24.4 22.3 1.79 2.6 3 17 108
Source: Rabobank analysis based on WUR/LEI, 2019
Upside in milk yield comparison
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5
10
15
20
25
30
35
kg/day, average
More West – East trade flows to supplyAsian markets
Rabobank 2018 global poultry trade map
Source: Rabobank, 2019Source: Rabobank, 2019
Rabobank 2018 global pork trade map
Global grains and oilseed markets: China ASF, US-China trade war, improved supplyGlobal soybean imports
Source: Rabobank analysis based on USDA, FAO and local statistics, 2019
China imports62% of global
Soybeans trade
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2011
/201
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2016
/201
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Brazil United States Other
Global Soybean exportsX 1,000 tonnesX 1,000 tonnes
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2,000
4,000
6,000
8,000
10,000
12,000
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16,000
Asia Pacific North America Europe Middle East andAfrica
Latin America
2010 2011 2012 2013 2014 2015 2016 2017 2018
Social changes can impact the outlook for animal protein markets
Source: Rabobank analysis based on Euromonitor, 2019 Source: Rabobank analysis based on WUR, 2019
Carbon footprint of food productsMeat substitutes retail sales
Meat substitutes share <0.5%
in global protein markets
Global CAGR: +4.4%
X 1,000 USDCAGR: +3.5%
CAGR: +10.2% CAGR: +10.1%
CAGR: +3.2% CAGR: +10.2%
Kg CO2 eq. per kg product
Social concern driven changes are rising globally and impact industry
CaliforniaJan 2015 cage ban
EU: 2012 conventional cage
ban, 2012, sow houses
D: GermanyInitiative Tierwohl
ACT, WA:Bans on
cage houses and sow
stalls
China: Antibiotics, melamine scandals
Baby milk
Canada: ban on pig gestation
Alberta: Phase out of
battery cages
Europe: chicken concepts
Brazil discussion about cage
ban
Client based push to non cage eggs
US – EUAntibiotics
Selected regional social concern driven changes Themes with big global impact
Source: Rabobank analysis, 2019
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50
100
150
200
250
300
2013 2014 2015 2016 2017 2018
Online is changing the food industrymore than ever
On-line food sales
in China (CNY million)
On-line food sales
in United States
USD 40 billionCAGR: +40%
USD 16 billionCAGR: +21%
Source: Rabobank analysis, 2019
Confidence in opinion
leaders in Germany, 2017
0% 20% 40% 60% 80% 100%
Politicians
Business
Journalists
Scientists
NGOs
Affected
Independent experts
Top box Bottom box
Market demand is changing; more concepts and higher standards
Source: Company Announcements, Rabobank Estimates, 2019
US: Customer driven shift to conceptsEurope: animal welfare driven change; NL example
Slow Growing
Organic
Antibiotic Free
No antibiotics for human health
Traditional
Sp
ecia
lised
pro
du
ctio
n p
ract
ice
Pri
ce p
rem
ium
Producers End Users
Production Practice
0%
20%
40%
60%
80%
100%
2013 2014 2015 2016 2017
Better life Organic
Chicken of tomorrow Regular
Startup Funding Protein industry investor
2011 $387 m
2011 $220 m
2012 $ 85 m
2009 $ 72 m
2015 $ 20 m
2015 $ 4 m
Rising investment opportunities in alternative protein segment
Altenerative proteins market segmentation Alternative protein investments
Source: Rabobank analysis, 2019
Traditional meatreplacers
Start up meatreplacers
Meat ingredientreplacements
Feed ingredientreplacers
The move to concept poultry andother proteins leads to different costs
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Broiler concepts cost price comparison in NL
100
119 125142
215
0
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100
150
200
250
Regular Retail 1 Retail 2 Better Life 1star
Organic
Index:regular= 100
A smarter food chain: more circular
New technology will help to solve key supply and social challenges
Online, internet of
things
Genomics and gene
typing
Novel feed additives
and ingredients
Robotics
Artificial intelligence
Blockchaintechnology
Smart farming and big
data
Upcoming new technology
Source: Rabobank analysis, 2019
•Tracking & tracing
•Value chain ` co-ordination
•Benchmarking
•Foot print
•Efficiency
•Energy
•Water usage
•Mortality rates
•Density
•Diseases
•Stress
•Growth rates
•FCR
•Yields
Financial and technical
performance
Animal health and welfare
Quality management, horizontal and
vertical communication
Environmental impact
From intuitive to factbased decisions
From intuitive to more fact based decisions
Animal protein supply chains willchange fundamentally in next decade
Food distribution: a future revolution Value chain models need to change
Grains and
oilseedsFeed Breeding Farming Processing Customer
Grains and
oilseedsFeed Breeding Farming Processing Customer
Grains and
oilseedsFeed Breeding Farming Processing Customer
Grain and
oilseedsFeed Breeding Farming Processing Customer
Horizontal specialisation model
Semi-Vertically integrated value chain
Full vertically integrated value chain: feed to poultry
Multisector –Fully vertically integrated value chain: grains to poultry
New distribution models
Technologic innovationSource: Rabobank analysis, 2019
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18,000
NAFTA Latin
AmericaEurope Asia MEA
Conventional Seed GM seed
16% 27%99% 85% 60%
45% of global
seed market is
GM free
How to supply adequate protein crops to feed rising population?
Million USD
Global GM/GM free seed market by region
Source: Rabobank analysis, Philip McDougall, 2019
Global protein crop production: alternatives for soy bean?
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100,000
150,000
200,000
250,000
300,000
350,000
400,000
2010/2011 2011/2012 2012/20132013/2014 2014/2015 2015/20162016/2017 2017/2018
47%
X 1,000 tonnes
Alternative protein sources are promising, but not competitive yet
Field crops
Synthetic AAs
Concentrates
Future alternatives
Biofuel by-products
• DDGS
• Rapeseed meal
• Sunflower seed meal
• Soybean meal
concentrate
• Expensive?
• Six key limiting
amino acids that can
be synthesised
• Legumes (pulses)
• Hemp
• Leafy crops
Alternative proteins
• Algae?
• Yeast based
ingredients?
• Insect based
ingredients?
• Single cell proteins?Source: Rabobank, 2019
Closer linkages between G&O production and (animal) protein
Grains & oilseeds trade
Feed additives
PremixCompound
feed
Animal protein
production
Source: Rabobank 2019
Global
Europe Europe
Global
Europe
Global
Europe
Global
Europe
Global
Conclusions
Markets• 35% global growth; 90% in emerging markets• More poultry and aquaculture• On-line will change industries• Alternative and concept protein market to grow significantly
Supply• Feeding the world requires efficient supply• Social concerns to drive concept poultry growth• Need for alternative feed protein sources• Global reduction of antibiotics use
Technology• New technology to support industry challenges• Big new pending innovation can support industry to solve social challenges
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