Summary of the Study on the Implementation of Animal Feed Additives Industry in Brazil

Transcription

1 MINISTÉRIO DO DESENVOLVIMENTO, INDÚSTRIA E COMÉRCIO EXTERIOR SECRETARIA DO DESENVOLVIMENTO DA PRODUÇÃO DEPARTAMENTO DE INDÚSTRIAS INTENSIVAS EM MÃO-DE-OBRA E RECURSOS NATURAIS COORDENAÇÃO-GERAL DE AGRONEGÓCIOS Summary of the Study on the Implementation of Animal Feed Additives Industry in Brazil This text contains some excerpts from the study 1 entitled Estudo de Viabilidade Técnica e Econômica Destinado à Implantação do Parque Produtivo Nacional de Aditivos da Indústria de Alimentação de Animais de Produção, available at: 1. Introduction World consumption of animal protein has increased due to growth of population and per capita income in developing countries. This growth is especially important in so-called "emerging economies" such as China, India, South Africa, Middle East and Latin America. As a result, we observe an increase in production of various meat supply chains (table 1). Table 1. World production evolution of main types of meat (million tons). Meat Participation in 2010 Swine % Chicken and Turkey % Bovine e buffalo % Sheep and Goat % Total % Source: FAO, Obs.: The presented types of meat represent about 95% of world production. 1 Development Team: Metrópole Soluções Empresariais. 1

2 Brazil has a growing domestic consumption of meat, driven by the improvement of the population's income. Still, the agro-industrial system has been competent to generate exportable surpluses aplenty in a remarkable rise in recent years. Table 2. Evolution of Brazilian production and exports of main types of meat (million tons). Meat Production Export Swine Chicken and Turkey Bovine Total Source: FAS, 2011; FAO, 2012; ABIEC, 2012; ABIPECS, 2012; ABEF, Despite this significant increase in production and export of meat, Brazil is seen as having huge potential to be explored and should become the major world supplier of meat in the future (OECD, 2012). The Brazilian performance reflects simultaneously all local advantages in relation to livestock production (genetics, nutrition and management) and the slaughter and processing (Miele; Waquil, 2006). Increasing productivity has been a major concern for animal breeders worldwide. This search has followed several routes, including increasing the quantity and quality of the final product, reduce the slaughter speed and minimize the environmental impact of the production. One of the methods used to achieve these goals is the use of feed additives that increase the use efficiency of feed by animals. The intensification of livestock production with improved genetics and animal performance requires high concentrations of nutrients, which often grains (maize, soybeans, sorghum, sunflower etc.) cannot meet. Therefore, the use of additives becomes important within the meat supply chain as a fundamental part of the incessant search to make primary production more efficient and food more accessible to the population. The major consumers of such products in Brazil are still poultry and swine, although the beef cattle have increased their importance to the food additives market in recent years. In 2011, 64.5 million tons of ration were produced in Brazil, moving R$ 40 billion only in raw materials. The additives account for only 0.6% of the volume, but mean 7% of the value totaling R$ 2.8 billion (Sindirações, 2012). In Table 3, can be viewed the volume of external trade of additives: Table 3. Evolution of Brazilian exports and imports of feed additives (US$ millions) Additive Imp. Exp. Imp. Exp. Imp. Exp. Amino Acids

3 Methionine Lysine Growth promoters and anticoccidials Vitamins Enzymes Other preparations for animal feed Total Source: adapted from MDIC, 2012a. Brazil produces in large scale some amino acids, trace minerals and enzymes and even export part of production. However, in other additives, we are plainly importers. In Brazil, producers of ration and feed additives are formally organized in several entities. At the same time, there is a capacity for scientific development in the area, through some universities and research centers that hold capacity of development of drugs and fine chemicals. 2. Investment scenarios and costs For purposes of economic analysis, two reference products were chosen due the importance of their use volume within the Brazilian industry of rations. One obtained chemically, the amino acid methionine, the other for biochemical pathway, the enzyme phytase. Brazil imported all its consumption of methionine, almost 90 thousand tons in Although it is not possible to specify the import and consumption of each of the enzymes, more than 3 tons of enzymes for animal feed were consumed in 2010 and US$ 77 million dollars were imported in 2011 in various NCMs that can encompass enzymes (Sindirações, 2012; MDIC, 2012a). Among the enzymes, phytase is one of those that have the largest current relevance and potential use in the future. As Cowieson (2011), the world market for phytase is currently estimated at US$ 370 million. At the same time, Politzer and Bon (2006), recommend that Brazil invests more heavily in the production of industrial enzymes in general, specifically citing cellulase, xylanase and phytase, as crucial to the ration production sector, which would have estimated market about US$ 200 million in Brazil. 2.1.Fixed Capital Value The analysis was performed for two scenarios for each product. Building up small or large plants. Thus, for methionine, production capacity was estimated in 9 to 45 3

4 thousand tons per year, for purposes of comparative calculation. For the phytase, it was used 300 tons or 3000 tons per year for comparison of investment cost. As a direct social benefit, it is interesting to note the potential for employment generation. For the 45 thousand tons of methionine factory, permanent employees are needed. For the 3000 tons plant of phytase are needed from 80 to 100 full-time employees. To produce the first estimates of investment of an industrial chemical, a method where two pieces of information are required was used: costs of major equipment required and the annual production capacity chosen (Peters; Timmerhauss, 1991). The main equipment needed for a methionine plant are four reactors (refrigerator; heater, isothermal reactor; neutralization reactor); four vessels (container cooling; discoloration container; two containers of evaporation); two heat exchangers; partial condenser; carbon filters and waste; pumps and lab (College of engineering and Mineral Resources, 2012). For the manufacture of phytase, the main equipment items are: filter-tubes; defoamer; controls indication of flow, ph, temperature and pressure; boiler; refrigerator; bioreactor and feed tank. The bioreactor represents 70% of the cost of equipment (Oka, 1999). Thus, the estimated costs for the construction of methionine industrial plants can be seen in Table 4. It is analyzed the machinery options considering the maximum possible automation. To build up a plant considered small, with production capacity of 9000 tons per year, it takes more than U$$ 17.5 million dollars. For a chemical plant considered large, 45 thousand tons annually, the required investment is nearly $ 66 million. Table 4. Estimated cost of fixed capital investment methionine. Cost Production Capacity 9,000 t/year 45,000 t/year Direct US$ Value of equipment 21% 3,702, ,883, Installation of equipment 7% 1,295, ,859, Instrumentation and control 4% 740, ,776, Tubing 11% 1,851, ,941, Electrical system 5% 925, ,470, Building infrastructure 9% 1,665, ,247, Peripheral equipment 11% 1,851, ,941, Land 1% 185, , Indirect US$ Supervision and 11% 1,943, ,288, engineering Cost of construction 8% 1,480, ,553,455,08 Outsourced services 3% 555, ,082, Contingency reserve 8% 1,388, ,206,364,14 Fixed capital investment 17,584, ,947, Source: Prices survey with potential suppliers, May Adapted from Peters and Timmerhauss (1991). 4

5 In Table 5 are shown the estimated construction costs of industrial plants for the production of phytase. To construct a biochemical plant considered small, with a production capacity of 300 tons per year are needed almost US$ 6 million. For a plant considered large, 3 thousand tons per year, the required investment is nearly US$ 45 million. Table 5. Estimated cost of fixed capital investment phytase. Cost Production Capacity 300 t/year t/year Direct US$ Value of equipment 21% 1,262, ,465, Installation of equipment 7% 441, ,312, Instrumentation and control 4% 252, ,893, Tubing 11% 631, ,732, Electrical system 5% 315, ,366, Building infrastructure 9% 567, ,259, Peripheral equipment 11% 631, ,732, Land 1% 63, , Indirect US$ Supervision and 11% 662, ,969, engineering Cost of construction 8% 504, ,786, Outsourced services 3% 189, ,419, Contingency reserve 8% 473, ,549, Fixed capital investment 5,994, ,959, Source: Prices survey with potential suppliers, May Adapted from Peters and Timmerhauss (1991). The installation costs of these reference plants are agreement with the news announcing the construction of new plants around the world. For example, Adisseo/BlueStar is building a methionine plant in China with capacity of 70 thousand tons per year and Novozymes inaugurated an enzyme industry in the U.S., with an investment of US$ 200 million. 2.2.Production Costs In the chemical industry, a major cost of production is related to raw materials involved in the process. In many cases, some materials only serve as coadjutants and are recoverable at the end of the reaction. The percentage of the value of raw materials over the production cost will naturally vary considerably between the types of industrial plant. In the case of chemical plants, it is expected that this variation range is between 10 and 50% of total production costs (Peters; Timmerhauss, 1991). Therefore, for calculating the production cost of the plants analyzed in this study, a cost estimate based on the primary raw material was used, ranging between 10 and 50% of the total cost of production, according to the size of the industry analyzed. 5

6 To capture the difference in production scale among different plants that are being simulated, two costs composition scenarios were used in relation to the total cost (excluding depreciation and taxes, which will be added later), both based on Peters and Timmerhauss (1991). Table 6. Estimation of the relative price of the raw material to the production cost according to the size of the plant. Production Scale Low High Bound Raw materials and production costs relation Lower 10% Upper 20% Lower 40% Upper 50% The main raw material for methionine is acrolein that can be obtained from propylene arising from oil, or from glycerin, a byproduct of the biodiesel production. According to Corma et al. (2008), obtain acrolein from glycerin is a safer industrial process and use less energy than the acrolein obtained from propylene. The acrolein from glycerin has a competitive cost from US$ 300/t of glycerin. The price charged by biodiesel plants in Brazil, in May 2012, is between US$ 175 and 250 per ton of glycerin, which should result in an acrolein costing no more than US$ 1,120 per ton. For the phytase production, various agricultural byproducts can be used. In the study, the choice was made by wheat bran, a byproduct of wheat flour mills. The cost of wheat bran was US$ 201 in May The estimated production cost of methionine and phytase are shown in Tables 7 and 8. In all simulations the straight-line depreciation method with 10% a year was used. Table 7. Estimated production costs of methionine. Plant capacity (t/year) 9,000 45,000 Raw material cost in relation to total cost Production Cost (US$) Depreciation (US$) Average Cost 10% 100,800,000 1,758, % 50,400,000 1,758, % 126,000,000 6,594, % 100,800,000 6,594, Source: Prices survey with potential suppliers, May Phytase is commercialized using the FTU parameter (unit of phytase activity) which determines the ability of releasing phosphorus in a given unit of time. The various commercial products based on phytase are always sold stating the amount of FTU/gram. Looking up, after the mixtures, the feed fed to poultry and swine contains between 300 and 750 FTU/kg of feed, according to animal category. 6

7 For calculus purposes, it was adopted the standardization of 5,000 FTU phytase per gram. Following the calculations described in Salmon (2011), citing several authors, it was obtained the efficiency of production of kg of phytase per ton of wheat bran as substrate. Table 8. Estimated production costs of phytase. Plant fermentation capacity Phytase produced (t/year) , Raw material cost in relation to total cost Source: Prices survey with potential suppliers, May Production Cost (US$) Depreciation (US$) Average Cost 10% 603, , % 301, , % 1,507,500 4,495, % 1,206,000 4,495, Methionine and phytase are exempt from Tax on Industrialized Products (IPI). The Import Duty for methionine is 2%, while for phytase is 14% (knowing that this product has no specific position of NCM). However, on the sale of both products, will be charged the PIS/COFINS rate of 9.25%. Thus, the probable minimum price for the sale of methionine and phytase by sizes of industrial plants are shown in the following tables. Table 9. Estimated minimal prices for methionine. Plant Capacity (t/year) Raw material cost in relation to total cost Average Cost PIS/COFINS Minimum price 10% % % % Table 10. Estimated minimal prices for phytase. Plant Capacity (t/year) 300 3,000 Raw material cost in relation to total cost Average Cost PIS/COFINS Minimum price 10% % % % For comparison, Table 11 presents the approximate value of the acquisition of methionine imported by distributors, after the incidence of Import Duty and PIS/COFINS. 7

8 Table 11. Estimated final values of imported methionine, according to the origin (2011). DL- Methionine NCM (Import Price) Methionine HMTBA NCM (Import Price) Import Duty PIS/COFINS Minimum Price Germany China Russia Spain USA Thus, the price obtained at the hypothetical plant of 45,000 tons of methionine per year (Table 9) could be competitive with the product coming from any origin. Phytase also only be competitive by larger plant. This shows the importance of scale in the chemical industry. Concluding Remarks As mentioned in the study, the Brazilian animal feed market is large (R$ 40 billion only in raw materials in 2011) and demands a supply of additives that is still partially dependent on imports. Brazil imports currently more than US$ 1.1 billion in additives. Moreover, Brazil has a plentiful supply of raw materials needed for animal feed additives production. All products evaluated in the study have their process of obtaining on industrial scale well documented and many of them are or have been produced in Brazil. It is clear that there is local availability of the main raw materials, some of which can still be relatively easily replaced by new chemical pathways, as is the case of Methionine obtained via glycerin. All additives studied here do not rely on patents that may prevent their manufacture and are already widely used in animal production. Therefore, there is a consolidated market and a great growth in the coming decades is expected. Contact Information: General Coordination of Agribusiness (Coordenação-Geral de Agronegócios) Phones: +55 (61) /8092 s: rita.milagres@mdic.gov.br / paulo.alencar@mdic.gov.br 8

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