Tom:                            Steve Elliott is the global director of the mineral management team at Alltech. He has 25 years of experience in the feed industry, 20 of them with Alltech. He joins us to talk about advances in the nutrition of farm animals that figure into our food chain. Thank you for being with us.

Steve:                          Absolutely.

Tom:                            Your present focus is on how organic trace minerals can improve the health and performance of livestock. What have you found?

Steve:                          Trace minerals are essential nutrients. In other words, animals must receive them every day in their diet. We found that by providing them in an organic form, we can meet the requirements and do so with much lower fortification levels in the diet. We can have a lower mineral concentration, less mineral excretion into the environment and less interaction with other components in the diet. There are a lot of advantages to looking at the natural way of providing trace elements.

Tom:                            Which trace minerals are key to improve livestock performance?

Steve:                          Most people will be familiar with zinc, copper and manganese, but there has been a lot of work on selenium over the last 15 years. Many parts of the United States are selenium deficient. By utilizing an organic form of selenium, we can raise the selenium status in the animals, thus improving their immunity, reproductive efficiency, etc.

                                    We can also fortify consumer diets with selenium by fortifying meat, milk and eggs, transferring selenium from the animal’s diet into the protein.

Tom:                            And just out of curiosity, where do you find selenium?

Steve:                          Selenium is one of those essential trace elements. It’s mined out of the earth. But at Alltech, we found a natural way of producing selenium: We take yeast and add selenium to the fermentation, and we can get the yeast to take it up and store it in an organic form. It’s much safer for the animal, safer for the people mixing the feeds and safer for the environment.

Tom:                            And which, in your opinion, is best: inorganic or organic minerals? Does it matter?

Steve:                          Yes, I believe it does matter. In nature, animals get all their minerals organically. We’ve supplemented with inorganic trace minerals for 50 or 60 years because they were an inexpensive alternative. Obviously, organic is a safer way of improving trace mineral status in the animals. We can do it in a form with fewer contaminants such as heavy metals, dioxins and PCBs (polychlorinated biphenyls) — things we’re concerned about passing into the food chain. We can avoid that by using organic trace minerals.

Tom:                            You’ve noted that research from around the world is influencing regional regulatory decision-making with the goal of improving the agrifood sector. Can you elaborate on that, and is this goal being achieved?

Steve:                          Yes, particularly on the mineral side. For example, the European Union reduced the acceptable amount of minerals fed to animals because of water pollution concerns. Japan has recently moved legislation on lowered levels of zinc and copper to address pollution concerns as well. Korea has done the same. One of the main initiatives in China is lowering levels of trace minerals in the feed. There is almost no potable water left in China due to pollution, particularly from pig farms.

                                    I think there are a lot of initiatives driving producers to look at alternatives to trace mineral fortification. That’s where Alltech is ahead of the game. We’ve been looking at organic alternatives for over 20 years. I think we have a very good understanding of the mineral requirements of animals and the optimum levels at which we can meet them. 

Tom:                            Let’s talk about the Brazilian Food Guide, which appears to be quite disruptive. What is it, and why is it noteworthy?

Steve:                         Brazil reestablished levels in what they call their Table 4. Table 4 was a system set up by the government to ensure that farmers put adequate fortification in their livestock’s diets. The government does not want feed companies to cheat producers by not providing enough nutrition in the diet. The initial acceptable mineral levels put into that guideline were exceedingly high. We can achieve lower levels by feeding organic trace minerals.

                                    So Alltech, in coordination with major universities in Brazil and professors on the regulatory board, conducted research over the last several years showing that, when you feed the organic form of trace minerals, you can feed or fortify the diets at a much lower mineral level.

                                    The Brazilian government has incorporated these levels in the new guidelines, which now say that if you’re going to use organic forms, you can go well below the old Table 4 levels, thus allowing producers to improve the performance of their animals while lessening environmental contamination.

Tom:                            The guide blatantly warns people about food advertisements, noting that the purpose of these ads is to increase sales, not to improve public health. How is that advice being received in the industry?

Steve:                          There’s a lot of misinformation that goes out in some of these ads. From a food quality standpoint or fortification standpoint, we’ve done a lot of work with the Brazilian government on fortification or enrichment of milk, for example, particularly with selenium. You feed selenium to the animal, it passes into the milk, and you then raise the selenium status of the people consuming that milk. We’ve done that with Brazilian school children, and we found that as we improve their selenium status, their cognitive ability, or their ability to pay attention in school, was improved as well as their immune status.

                                    There are a lot of good things we can do with fortifying foods, but there’s a lot of misinformation out there as well. I think the public should be careful and really look at the science behind some of these claims.

Tom:                            And how can the Brazilian guide serve as a model in the agrifood industry?

Steve:                          I think in the United States and globally, many people rely on the NRC, which is the National Research Council. The NRC reviews research every five or six years and then establishes guidelines on nutrient fortification levels for production species. Most guidelines were established using old ingredients. For example, inorganic trace minerals.

                                    Brazil and other countries are starting to accept that there is a better way of doing things by using organic minerals. By doing so, it’s going to help the environment and we can fortify diets at a significantly lower mineral level. I think because of the revised Brazilian tables that were recently published, Canada is now talking about revising their tables as well.  

                                    We’re hopeful that the next time the NRC reviews production species in the United States, they will take a closer look at organic forms of nutrients, particularly those that Alltech makes.

Tom:                            So, to bring this all the way down to the food chain, how does the adoption of the Brazilian guide affect the average consumer’s dinner table?

Steve:                          I don’t know that there is much effect on a consumer’s dinner table. Consumers should rest assured that the Brazilian government is taking a step forward by looking at natural alternatives — not just using the old standards that were used for many years — and not be concerned because the mineral levels have decreased. There’s good science for decreasing those levels: We can clean up the environment, and animals perform better at lower mineral levels in the right form. The consumer can rest assured that Brazil is taking a leading-edge approach by looking at natural feed additives.

Tom:                            Steve, what do you enjoy most about your work?

Steve:                          I’ve had the opportunity to travel the world; I’ve been to over 100 countries. I get to deal with the best food producers, the best producers of animal protein in the world. And I get to learn something new every day.

Tom:                            Steve Elliott, the global director of the mineral management team at Alltech. We thank you for your time.

Steve:                          Thank you.

I would like more information on organic trace minerals. 

Tom:                            Paul Groenewegen is the director of innovation and nutrition at Masterfeeds, Inc., an Alltech company. He’s joining us for a look into the question: more pigs, more problems? Thanks for joining us.

Paul:                            Thanks for having me.

Tom:                            What would you identify as the current big disruptor in the swine industry?

Paul:                            The big disruptor right now is keeping as many piglets alive as possible and getting them to market quickly. Our genetics companies have done an incredibly good job at allowing us to have prolific animals. Sows can now have lots of baby pigs. The key is how we get those pigs to market and how we make sure those pigs are of the best quality for consumers.

Tom:                            What does increased pork production mean for the global industry in 2017?

Paul:                            Increased pork production means a greater supply of high-quality protein in the form of bacon, ham, sausage — anything you can get from a pig — for an ever-increasing population and a more affluent society.

Tom:                            Are more piglets per sow sustainable?

Paul:                            Absolutely. When I started in the industry 30 years ago, if you could wean 20 pigs per sow per year, you were doing an excellent job. You were an industry leader.

                                    Now, if we look at countries like Denmark, their industry average of pigs per sow is in the mid-30s. Suddenly you’re producing 50 to 60 percent more pigs per sow per year than were produced a mere 30 years ago. So, that is extremely sustainable. Where the end is, we’re not quite sure. As of right now, it’s very sustainable, and it is an industry necessity to continue producing more and more pigs per sow per year.

Tom:                            What are the consequences of more piglets per litter?

Paul:                            Variability. One of the largest challenges we have in animal agriculture today is variability of animals within a group. So, if you have 16 to 18 piglets in a litter, you’re going to have ranges in weight from 500 grams to about 1.5 kilograms. The average may be 1.1 kilograms to 1.2 kilograms, but you have some very small pigs.

            The real challenge is not only from the survival perspective of those piglets, but also how we allow those piglets to survive and make it to market economically.

                                    We are also concerned with how the piglets are raised in utero, making sure that muscle fiber development is ideal for product quality when they go to market.  

Tom:                            How do producers find a balance between quantity and quality?

Paul:                            It’s a fine balance. As management and nutrition have continued to improve along with genetics, producers are learning ways to increase the number of piglets weaned per sow per year. They are always driving for more piglets, obviously, but the key is management, housing, sanitation and the health of these animals. Improving on those attributes is key to allowing those piglets to survive.

Tom:                            Why is weaning such a critical time?

Paul:                            Well, it’s a critical time because you’re going to change the diet of the baby pig from a milk-based diet to a dry feed-based diet. And there are big implications on the gut of the pig and the gastrointestinal tract. We get villous atrophy. We get different things happening as feed intake drops.

                                    It’s a whole social order as well. So, you have 12 to 14 piglets in a litter. Everyone knows one another. They get weaned. They get taken to a facility where all of a sudden they could be with 30 or 40 others. They’re mixed by size because it helps from a production perspective. So, there’s a whole new social order that’s required.

                                    Mom is no longer there. It’s a fact of life. And they have to learn to eat out of a feeder. They have to learn to drink out of a water bowl. They have to learn to do things differently, and that’s why it’s such a huge challenge for these pigs. In some cases, they’re trucked a long way. In the old-fashioned farrow to finish operation, you would run the piglets down the hallway to the nursery. Now, you put them on a truck and you may truck them one or two hours to the barn. That’s a huge stress on those pigs. But, from a nutrition management, health and welfare perspective, farmers are doing an excellent job to make sure all those pigs survive and do the best they can.

Tom:                            What should producers be paying attention to during this critical time?

Paul:                            I would say one of the most critical things is making sure mom is looked after. Everything that you want the piglet to receive comes through mom in the first three to four weeks of life, before weaning. Make sure the sow’s nutrition program is fully implemented and that the sow can transfer trace elements like selenium to the baby pig, which they really require around weaning time.

                                    Make sure technologies in the feed increase immunoglobulins in the colostrum. As litter size increases, we want mom to produce more colostrum so that all piglets get the same amount and quality. Start with how the sow is treated, from gestation to lactation, to give the piglet the absolute best start. Look after the other details once they get to the nursery.

Tom:                            What lessons can we learn from human infant formulas for pork feed formulas?

Paul:                            That’s a great question because pigs have been used as a model for human infants for years. In fact, I worked with a university professor who spent his whole career using baby pigs as models for human infant formula development. As we enhance human infant formulas and look at technologies such as different types of structural carbohydrates or DHA and selenium, we can learn from those formulations and apply them to baby pigs.

                                    We want the diet that piglets receive after weaning to deliver nutrients in the most bioavailable form, enhance gut development and overall performance, and to increase survivability.

Tom:                            You’ve brought up colostrum. How do we ensure for piglets that they receive an adequate supply?

Paul:                            There are on-farm techniques that can be used such as split-suckling, analyzing litter size and the duration of farrowing time. Obviously, the first pig born has a better opportunity for receiving colostrum than the last pig born. But, there are management techniques that ensure each piglet gets the same amount of time with mom to access as much colostrum as they can.

                                    Also, technology can be used in sow feed to enhance colostrum production. Research shows that by using some Alltech technologies, we can increase colostrum production and also increase immunoglobulin concentration of that colostrum. We’re ensuring that even in bigger litters, all piglets are getting the same amount of higher-quality colostrum, which leads to increased survivability and increased weaning weights.

                                    Pigs never overcome a bad start. If we can get the baby pig off to a good start with colostrum via the mother sow, then we’re off to the races!

Tom:                            What is lactoferrin, and why is it important?

Paul:                            Lactoferrin is a protein that’s required for iron absorption and gut development within the baby pig. It’s one of the proteins found in milk.

                                    New research shows that when lactoferrin is available in the post-weaning diet, it continues to enhance gastrointestinal function. When you enhance gastrointestinal function and development, the baby pig will absorb more nutrients of high-quality feed.  

Tom:                            What about DHA?

Paul:                            Again, since baby pigs are used as models for humans and vice-versa, we know that human infants and baby pigs both require DHA for overall health. DHA enhances the function and development of central nervous system tissues and promotes the general welfare of pigs.

Tom:                            We’ve talked about colostrum. We’ve talked about lactoferrin. We’ve talked about DHA. What about nucleotides? Why are they important?

Paul:                            Nucleotides are the building blocks of DNA. We know that the baby animal already produces some nucleotides. But to support fast-growing intestinal cells, we should also provide nucleotides.

                                    As intestinal tissue grows very rapidly in a young animal, we need to supply enough nucleotides to build the DNA, to build the tissue, to build a more functional gastrointestinal track so that the pigs can absorb more nutrients from their diet.

Tom:                            What would you say is the ideal starter diet for piglets?

Paul:                            The ideal starter diet is high in digestibility, contains functional proteins and contains nutrients like nucleotides and glutamic acid, which is the primary energy source of the developing enterocyte. We want to make sure we support gut development as quickly as possible. We’re looking for diets with highly palatable ingredients and diets that contain other functional nutrients like lactoferrin to drive absorption and the development of the gastrointestinal tract.

                                    An overall ideal diet should improve intake and digestibility while reducing nutritional inadequacies and disorders.  

Tom:                            Given everything that you’ve just discussed, can producers continue to decrease production cost without affecting performance?

Paul:                            To a point, I believe we can. As we increase pigs per sow per year, our cost per piglet weaned will go down. You’re going to spend more money to have a better sow diet, but your overall cost of production per sow or per piglet weaned per sow will go down.

                                    Then, as we enhance the starter diets post-weaning, we are going to improve nutrient absorption. It becomes a cycle: As we provide functional nutrients in a diet to drive gut development, that enhanced, developed gastrointestinal tract then absorbs more nutrients out of the diet.

                                    Subsequently, we know that the faster a pig starts post-weaning, the faster they go to market. That will reduce cost of production overall.

Tom:                            Based upon that, as the global population increases and as parts of the world such as India and Africa enter the middle-class, how are we going to meet the increased demand for pork? You’ve addressed efficiency. Are there other ways to meet that demand?

Paul:                            When you think about it, there are approximately 100 million sows globally. If a sow has two litters per year and we save just one pig per litter from dying of inadequate nutrition, we’re talking about 200 million more pigs available to consumers.

                                    By enhancing nutrition to allow for increased survivability of piglets, those 2 million additional pigs provide high-quality protein to the ever-growing population.

Tom:                            Bringing this home and considering all the aspects of the life cycle of a pig, how do these changes affect the average consumer’s kitchen table?

Paul:                            What we’re going to have is high-quality pork raised with the utmost humanity at a very affordable rate for our consumers.

Tom:                            Are there any other trends, any other things that we should be paying attention to in the swine industry?

Paul:                            I think the big trend to focus on is the advancement of nutrition, management and genetics. We have to make sure nutrition management keeps up with the ever-changing acceleration of genetics. By utilizing technologies like we’ve discussed today, we’ll provide the nutrients required by faster-growing, more efficient pigs and continue to produce that high-quality protein that the consumer demands.

Tom:                            Paul Groenewegen, director of innovation and nutrition at Masterfeeds, Inc., an Alltech company. Thanks for joining us.

Paul:                            Thank you.

Paul Groenewegen spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab.

Tom:                    As a registered dietitian/nutritionist and a nutrition solutions specialist at Alltech, Nikki Putnam helps farmers and producers apply the lens of human nutrition to agricultural practices for the improved nutrition of plants, animals and consumers. We thank you for joining us, Nikki.

Nikki:                   Thanks for having me.

Tom:                    So, what role do you play in the chain of events that happen from farm to table?

Nikki:                   I have a really interesting role within Alltech. I actually came from a larger supermarket chain based out of the Midwest. And what I was doing there was acting as a health and wellness spokesperson, helping consumers to understand a bit more about what was in their food, where their food was coming from and what types of food they should be purchasing for prevention of chronic disease or specific diets like food allergies.

                    So, what I’m doing is bringing that to Alltech now and helping our producers explain to consumers, explain to retailers what they’re doing on-farm and how they’re using feeds to improve the nutrition of their animals to then improve the nutrition of that food product they’re bringing to the consumer and to the retailer.

Tom:                    I think we all watch trends in our respective fields. How about you? What noteworthy trends are you keeping an eye on?

Nikki:                   A few things that I think have been really popular as of late is what I like to call the “free-from” diets — gluten-free, dairy-free, soy-free.

                    Also, paying more attention — consumers are paying more attention to food sensitivities. Are they reacting to certain types of foods? Is it an actual allergy? Is it an intolerance? Or is it maybe just more of a preference?

Tom:                    What about consumer perceptions? Let’s start with “free-from.” Is it recognized on the consumer end, and are sales of “free-from” items on the rise?

Nikki:                   I think a lot of consumers are starting to look for these types of products. They’ve been out for quite some time. I mentioned gluten-free, dairy-free, soy-free were available for people who had legitimate allergies to these products. Now, more consumers are looking for these products on supermarket shelves, and, yes, I think that specialty category is continuing to grow. We’re seeing more of that in the supermarkets, and more consumers are looking for it just to feel better. Maybe they don’t have an allergy, but they are looking for new things to help them feel better and improve their well-being.

Tom:                    And what about paying attention to the number of ingredients? Does that seem to have an impact on the consumer end?

Nikki:                   I think those two things tie in together very well. A lot of consumers are perceiving these free-from products as healthier, mainly because they contain fewer ingredients. Many of those products that are included in that specialty format or specialty aisle in the supermarket have fewer ingredients than those that may have included the gluten, the soy, the dairy, etc. 

Tom:                    Would you consider these diets something of a disruptor?

Nikki:                   Absolutely. I think it’s changing the food industry. I think it’s changing the way that producers of food, food companies, the big food industry and retailers are starting to talk to consumers, the way that they’re marketing the products. They’re also changing a lot of product lines to be able to reach these consumers looking for specialty products.

Tom:                    Anything coming along that might disrupt the disruptor?

Nikki:                   Yes, I think so. I think right now the consumers are considered the disruptor, if you will. They’re the ones demanding these different types of food products and asking for things that producers and retailers aren’t offering yet, but we’re seeing producers and retailers really catch up. They’re the ones trying to get ahead of the curve now. We’re seeing a lot of them going out and taking new leaps and forays into different types of products and specialty goods. So, they might be the next disruptor.

Tom:                    So, the potential is definitely there. What are some good ways to get involved?

Nikki:                   A good way to get involved from the producer side is really listening to the consumer. I think this has been something we’ve talked about time and time again over the years at many different events and meetings. I’ve spoken with producers about getting involved or listening to the consumer. What do they want from us? They are out there telling us specifically what they want to buy on supermarket shelves. Whether or not you can meet that exact need that they’re asking for, listen to what’s behind that exact demand. Are they asking for less processed products? Are they asking for more sustainable products? Are they asking for functional foods, maybe added selenium or DHA? They’re telling us what they want.

Tom:                    Are food allergies on the rise? You mentioned sensitivities a few minutes ago, but are we becoming increasingly food sensitive? And if we are, what’s going on?

Nikki:                   I’m not sure that we’re becoming increasingly food sensitive. I think our awareness of food sensitivities, intolerances and allergies is growing. Only about 4 to 6 percent of the population has an actual food allergy. A larger number has intolerances and an even larger number has what we call a “food sensitivity.” So, this is something that an estimated 30 to 40 percent of the population is dealing with. It might be even coming from seemingly healthy foods like whole wheat toast or broccoli.

Tom:                                   Is it often surprising to find out that a rash or some sort of physical response that you might have attributed to any number of other things turns out to be a response to food?

Nikki:                   Yes. I think it’s often very surprising to consumers and patients alike when they find out that something they thought was very healthy like a piece of salmon or an apple is actually causing a negative reaction in their body. Everyone’s bodies are different. So, it’s very difficult for us to give a blanket “these foods are healthy” statement when we don’t know exactly how that person’s body is reacting.

Tom:                    We’ve heard throughout our lives that “we are what we eat.” What’s that implying for human health and for the way the food industry should respond?

Nikki:                   I think we’re going to see some big changes in human health. We’ve been hearing for years about eating for prevention of chronic disease and improving our health and well-being through food. I think we’re going to see this increase even more as we find out more about what foods are specifically good for each individual person. I think we might see some diets evolve into more specific programmed nutrition for each person rather than, like I mentioned before, these blanket healthy food diets.

Tom:                    Would it be a stretch to call food the new medicine?

Nikki:                   Absolutely not. I think food is definitely something we can use for preventative care. You know, Hippocrates said, “Let food be thy medicine.” That’s becoming truer day in and day out.

Tom:                    What are some autoimmune diseases that respond well to nutritional solutions?

Nikki:                   A couple of the autoimmune diseases that we’re finding more of, not necessarily because there are increased incidents, but because, again, our awareness of these diseases is increasing — celiac disease and irritable bowel syndrome are two autoimmune diseases or conditions that are greatly affected by nutrition.

Tom:                    When you think about it, how do free-from diets and attention to food sensitivities, in the end, affect the average consumer’s dinner table?

Nikki:                   I think we’re going to see more changes on the dinner table. We’re seeing more foods that have less processing. People are going back to freshness again. They’re looking for less packaged foods. Or, if they’re eating packaged foods, they’re eating them with the lowest number of ingredients they can find.

Tom:                    Nikki, what about your work do you like the most? What’s the most fun?

Nikki:                   The most fun I have with my job is meeting the farmers and producers. I’m an Iowa girl. I grew up in Iowa. I’m living in Texas now. I’ve always been interested in human nutrition, but I’ve had a soft spot in my heart for agriculture. The best part about my job at Alltech is I get to marry those two things together.

Tom:                    Nikki Putnam is a registered dietitian/nutritionist and a nutrition solution specialist at Alltech. Thank you for being with us.

Nikki:                   Thanks so much.

Nikki Putnam spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech  Idea Lab. For access, click on the button below.

To listen to our entire conversation with Matthew, click on the player.

Tom:                      Where is the world’s most exciting animal nutrition market? Matthew Smith is here to tell us about that. Hint: Matthew is Alltech vice president of Asia-Pacific. Thank you for being with us, Matthew.

Matthew:                It’s a great pleasure.

Tom:                      Let’s go to that question. What country is home to the most exciting nutrition market?

Matthew:                One word: Vietnam.

Tom:                      And why is that?  

Matthew:                I would describe Vietnam as the most dynamic marketplace for agribusiness and agri-food currently within the Southeast Asian region. It’s probably best to put Vietnam in context with the Asian countries: It has the second-highest population density of the Asian countries. Of course, number one is Singapore. Singapore is a completely different model. Food security is the main concern in Singapore. But in Vietnam, we have many hidden treasures that are yet to be discovered globally, which are making a big difference in the industry in Vietnam. They have the potential to change the way in which other countries produce protein by adopting the right technology and the right platforms to get to the consumer.

Tom:                      What are the dynamics in Vietnam? What’s driving this?

Matthew:                The consumer. It’s very much a move toward growth in the middle-income bracket and the desire to westernize. Food is very much about culture in Asia, and culture is about food. The two are inseparable.

                              We do see a significant shift toward well-being and wellness and a more informed choice about food, maybe food with a story.

                                Clearly, the dominant segment of the industry — the highest consumption — is pork. When we look at that as a metric in the feed industry, pork or swine feed would account for about 64 to 65 percent of the 19 million tons of feed consumed annually in Vietnam. The majority of the remainder is poultry feed, so it’s really very conventional.  

                               However, we’re seeing big growth now in the move toward packaged and processed food. And, ironically, the biggest segment of the packaged food market is milk. I would describe milk as probably the real disruptor at the moment within the Vietnamese industry.

Tom:                      Can you elaborate on that?

Matthew:                I say the biggest disruptor because, where is the largest centralized dairy in the world?

Tom:                      Vietnam?

Matthew:                Good answer. That wouldn’t be apparent to most people. When we say centralized dairy, there is a business in the central part of Northern Vietnam that was originally a joint venture with an Israeli conglomerate and the Vietnamese government. They decided that they were going to produce milk in what effectively is a desert. And they now milk 42,000 cows on one farm, with the majority of the feed being produced on the farm in terms of total mixed rations.

                              The business is called TH Milk. It’s a fully integrated operation, a runaway success story in terms of the utilization of technology, whether it be milking technology or feeding technology or technology that they use to purify the water for the cows to drink. Also, the way in which they process all of the effluent and waste from the dairy farm so that you will have an entirely sustainable unit.

                               But, when we talk about disruption, it’s the way in which that milk is sold. Milk is very much seen as a premium drink. Domestically, the dairy industry within Vietnam only produces about 28 percent of demand. So, that creates a huge opportunity. The business, TH Milk, and other businesses that operate in a similar fashion have really made the purchase of milk into a consumer experience. 

Tom:                      Is dairy a relative newcomer to the Vietnamese diet?

Matthew:                No. There would have been a lot of what we would describe, maybe, as backyard farming in terms of dairy production. So, it would have been sustenance. We would have two, three cows, and we would produce for the family and the neighbor. We would share the milk. However, given this huge increase in demand for the consumption of milk, that’s prompted much more cohesive dairy farming and has attracted a huge amount of investment. That sums up Vietnam’s move away in the 1990s from a centralized approach to agriculture and food production and much more toward primary production and integration.

Tom:                      What are the opportunities for emerging technologies, innovation in the Vietnamese market?

Matthew:                One of the biggest trends that we see within the Vietnamese market is the use of technology on the horticulture side. There is a lot of investment from engineering industries, from car manufacturers, from businesses that would not historically have been related to agriculture in terms of them utilizing distribution mechanics.

                               We’re talking about growing vegetables in an enclosed environment: hydroponics, etcetera. And those other industries see a lot of overlap with their technologies in terms of assisting in a huge increase in vegetables, which would be grown very close to the cities, which obviously are the primary markets.

Tom:                      I’ve read that Vietnam’s aquaculture market has nearly doubled in only a few years. If that’s true, what’s driving it?

Matthew:                One of the most recognized brands in the U.S. and Europe would be barramundi. Barramundi would be the Asian sea bass equivalent. The brand is actually called Australis. Most consumers would buy that to fillet. Very nicely packaged and very heavily branded, believing that it’s come from Australia. But it hasn’t. It’s from a very progressive operation, which grows the barramundi offshore in cages, in an extremely isolated environment that has incredible water quality, which is what’s needed for sustainability and to grow the fish and have a good feed conversion rate.

                              That’s just one example of people using a brand that doesn’t necessarily present itself as coming from Vietnam, but that is utilizing the environmental assets Vietnam has. You do have to contrast that with some of the challenges that Vietnam has in terms of the environment, the recycling of waste, areas the industry is attempting to tackle. That’s another opportunity for technology.

Tom:                      We’ve been focusing on Vietnam, but what about other countries in the region such as Myanmar, Cambodia, Mongolia?

Matthew:                All of those countries represent a huge opportunity for technology for a number of different reasons. Cambodia is wedged between Vietnam and Thailand, two countries that have much greater recognition in terms of the food chain and primary production. But Cambodia itself is a natural resource, a very clean environment where crops can be grown, particularly in the south. As you move up to the north, you start to see the opportunity for fruits and vegetables to be grown. Cambodia is the world’s largest exporter of mangoes, a fact that is not necessarily at the forefront of people’s minds when they consume a mango.

                               We have to embrace the local regulations, which, until recently, has been a challenge for businesses going into those countries to set up operations. But there is a growing industry in Cambodia on the aqua side, a growing industry on the poultry side.

                               Myanmar, for many, many years was a closed market, but now government policy is changing. Myanmar is dominated by the poultry industry. And that poultry industry has the potential to grow with technology, to scale up and be in a stronger position to supply the export markets.

Tom:                      What disruptors do you expect to see in this emerging market?

Matthew:                I guess the implementation of a more cohesive food chain, more cohesive supply chain and retail outlets.

                                Thailand and Vietnam are not well-known for having big supermarkets, but they have an increasing number of smaller retail outlets, which are generally owned as part of integrated operations. So, whilst we still have a big wet market where food is bought on a daily basis and consumed that day, there is a much greater move toward processed and packaged food, and that has big implications. It requires a supply chain. It requires refrigeration. It requires speed. But with growing affluence in that middle class, the opportunity for the consumer to purchase packaged food is a clear opportunity and will be a disruptor moving forward.

Tom:                      How is Alltech fitting into the Vietnamese market? What’s going on there?

Matthew:                We opened our Vietnamese office in 1993. So, we’ve been there for some time now. As with all of the Alltech businesses, we really look to localize our approach in terms of the makeup of the team from a production point of view, from sales, from a marketing perspective. People who really know and understand the industry.

                              Vietnam has been a very successful marketplace for us in the past 24 years, and we just see our business going from strength to strength as we are now in the position to offer more feed solutions to a growing feed industry.

                               Across the Asian countries, we’ve had a presence for a minimum of 20 years. Myanmar is new. Cambodia is new, and Mongolia will be very new for us. A very small market, but it represents the opportunity for us to localize our business and takes us into more of those countries. 

Tom:                      Matthew Smith is Alltech vice president of Asia-Pacific. Thank you so much for joining us.

Matthew Smith spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. 

To listen to our entire conversation with Mary, click on the player.

Luther:                        Mary Shelman is the former director and is currently an advisor to the agribusiness program at Harvard Business School. She is an internationally recognized thought leader on the future of the global agri-food industry. A native of Kentucky, where she still owns a farm, Shelman received her bachelor’s degree in chemical engineering from the University of Kentucky and her master’s degree in business administration from Harvard Business School. Thank you for joining us.

Mary:                          Thank you.

Luther:                        Do millennials really see the supermarket as a daycare center for the elderly?

Mary:                          You know, that’s a great introduction, isn’t it? It really gets people’s attention.

                                    If you stop the millennial walking down the street — and for those who might not know, a millennial is someone born between 1980 and 2000 —that’s not the answer they give to you, but the idea came from my good friend, Aidan Connolly of Alltech. He was running a training program in Lexington with a group of young people from all over the world in their early twenties, and he took them out on this visit to a number of supermarkets here in town. They went to Kroger, and Whole Foods, and I’m sure some others. And he came back and was doing a debrief with them. He said, “Well, what did you think?” “Oh, yeah, those were great. Those were really, really nice.” And then he asked, “Would you shop there?” “Oh, no, we’d never go there.” “Well, why not?” “Well, that’s not the way we would expect to get our food. We’re going to order it online. Somebody is going to bring it to our house, you know.”

                                    So, that led him to the question, “Well, then, there’s no future for supermarkets, right?” And they said, “No, no, we didn’t say that at all.” “Well, what is it then?” “Well, supermarkets are really important because, you know, old people need some place to go, and to get some exercise, and to have some interactions, and be able to get out of the house and move around.”

                                    Aidan just paused and said, “Oh, wow, it’s like a daycare for the elderly.” And that’s where that idea came from. This thing that we’ve been used to all of our lives might not be relevant for this next generation of consumers.

Luther:                        Speaking of consumers, those aged 18–34 are the largest buyers of organics, and they’re the most likely to consider themselves knowledgeable about their food. Is this the newly engaged and empowered food consumer you’re referring to?

Mary:                          Well, they do consider themselves very food aware. They are very interested in cooking and sharing what they eat.

                                    It’s also an incredibly large demographic group. It’s the largest demographic group now in the United States. There are 83 million millennials. There are only 77 million of us baby boomers.

                                    So, when you think about this millennial group, now they’re having families, they’re moving into some portion of their earning power. It’s a very compelling-sized group for the food industry to look at.

                                    However, that’s not the only thing that’s behind this engaged and empowered consumer. I think, overall, the whole country, and perhaps the whole world, is in the midst of this food movement. People want to know more. They care more about their food. They want to know where it comes from. They want to know where it’s produced. And the availability now of information and where they can get that from and how quickly they can get it has really changed their behaviors. I was just looking up the numbers before I came down here to do this with you. There are almost 4 billion internet users in the world now. There are almost 2 billion Facebook users in the world. So, information travels radically (fast).

                                    I was teaching in a program yesterday, and we were having this conversation about this one group that was having a lot of influence, and it sounds like a very rich population, but someone from Honduras was there. He spoke up and said, “No, no, no. In our country (which has very different socio-demographics in terms of economics), people get information very quickly now.” He talked about this idea of engaged eating. So, this consciousness is not just here in this young person group, but that is a group that’s very important because of their purchasing power.

Luther:                        So, we’re talking about millennials and how they’re rejecting the typical grocery store. Can you give us maybe just a summary of why they’re rejecting the grocery store?

Mary:                          I think it’s very simple. It just doesn’t meet their needs, or it doesn’t meet their expectations. I mean, how do they get their food? They order it online. They have it show up to their house. It’s the same way they get their music. It’s the same way you get your taxi now to go to the airport. You call Uber.

                                    They have grown up in a different world, and they don’t understand why they should have to go and wait in line to pay for something, to wade through a store that has aisles and aisles of things that they don’t need.

Luther:                        I think many people view millennials as this enigma, right? “They’re demanding; they’re lazy” are a number of terms. I wonder if that’s your view or more the fact, as you said, the way they grew up is different than the way that you and I grew up. It’s really a generational difference, and the fact is that change is happening faster; it’s just that that change has happened faster than it has in the past.

Mary:                          I think that’s very true. What they have grown up with has been different. Maybe not the way they’ve grown up, but what they’ve grown up with.

                                    The Apple iPhone was introduced in 2007. So, think about how fast that’s changed our behaviors. They’ve just had access to this, a part of this digital economy there.

                                    My son, who is 25, so clearly in this group, is much more vocal in his beliefs, and his friends are as well. But I think what’s interesting is that there are some very good aspects about them. You use the term “kind of lazy,” and I don’t think that’s true at all. I think they just have a different idea about what’s important compared to maybe what you and I grew up with.

                                    Many of them seem to be much more interested in health than other generations. They’re very conscious of their diet and that link between diet and health. They’re much more likely to exercise. So, they’re making food choices based on what they perceive as being healthy, fresh, clean, “free from” these different ingredients. We’d like to go to farmer’s markets where we can see things and engage with farmers.

                                    I think they see food as adventure as well. I grew up in Elizabethtown here in Kentucky and in, basically, a very traditional family. My dad liked beef. So, we’d have beef four or five nights a week and then maybe have a couple of other things. But, you think about the diets now and the diversity that shows up, so one night it’s Chinese, the next night it’s Thai, the next night is sushi. I think these millennials would eat sushi five, six, seven, eight times a week if they could. You know, it’s Italian, it’s Ethiopian, it’s Moroccan. So, that’s just a fundamental change in what they consider as part of their eating habits. They’ve been described as “food thrill seekers.” Maybe you’re at a stage that you can’t travel because of family economics, but you can get some thrill out of your food, and you can share this thrill with your friends.

                                    Seventy percent of this age group takes pictures of their food before they eat it, and many of them put that on Facebook. They share it on Instagram. So, food has become part of their identity, well beyond just fuel for the body and something that’s linked to health. It’s actually part of who they are. And because of that, they want the food they eat to have the values that they have themselves.

                                    They want to be individuals. Think about the craft food movement, the craft beer movement, which was one of the first harbingers of this, how successful that’s been because, hey, if I can have on my iPhone exactly the music that I like, why can’t I have exactly the same kind of curation of food that I like?

                                    The other thing is, they want to buy products that share these values. They believe in the purpose of these companies. So, something like 37 percent of millennials buy products for a cause, so something like Rainforest Alliance. Even if they have to pay more money for that, that’s important to them.

                                    Forty-two percent of this group say that they don’t trust “big food” companies. They feel like those companies, even kind of “big farming” as well, have violated their trust, that they haven’t made good responsible choices, and they push products onto consumers that really have ended up not being good for them. Too much sugar, too much fat, too many unnatural ingredients in there.

Luther:                        So, hitting on that point, it sounds like there are some big implications for the food industry, as you said, that perhaps some of the power is moving to the consumer, where before it was in the producer’s hands.

Mary:                          Right. I’m not sure it’s ever been — So, a producer in the sense of a manufacturer, a big food company.  It’s never been in the farmer’s hands.

Luther:                        I think that’s important to clarify.

Mary:                          Exactly. The big food companies: the Nestlés, the Krafts, the General Mills.                                  

                                    This is creating tremendous uncertainty for them, these changes in the consumers. The models they have used in the past — putting it on product shelves, getting distribution in every store, advertising on mass media, big promotions at the supermarket — they just don’t work anymore in order to drive sales. Those old models are broken, and they’re really struggling to find out what the new models are and what the new products are that satisfy this group.

                                    Just to give you some idea of how serious this is, in the last 10 years, big brands have lost share in 42 out of 54 product categories. Between 2005 and 2015, the top 25 firms have lost $18 billion in market share.

                                    It’s extremely difficult now for these firms to find growth. And so, what they typically do, the first thing they say is, “Oh, you know, our products don’t meet consumer expectations anymore, so let’s reformulate. Let’s take out the sugar. Let’s take out the salt. Let’s make them healthier.” Well, that’s great, but it doesn’t increase sales. It might stop a decline, but it’s not increasing sales.

                                    They say, “Well, let’s introduce our own version of organic, or GMO-free, or gluten-free.” But it’s not getting back to sales growth because when you look underneath, it gets back into this distrust of these companies. And so, that’s forcing them to look at who is being able to grow.

                                    The opportunities that these changes have created are actually for the younger and the smaller companies. These big companies are needing to look to them and say, “Well, I can’t do this myself, I’m going to go out and buy somebody.” So, General Mills bought Annie’s, the maker of all-natural mac and cheese. Perdue bought Niman Ranch. Campbell’s bought Bolthouse Farms just in order to get there.

                                    But think about the disruption that’s being created. Go back in your mind to the yogurt category in 2008. You had products like Trix yogurt and Dannon yogurt, and they were basically all of it. It’s either targeted at women on a diet or kids. The products, honestly, they were disgusting. I just thought they were either too sweet, or they had all these artificial sweeteners and artificial things.

                                    We’ve got this Turkish immigrant who comes in. Hamdi Ulukaya bought this old yogurt plant in upstate New York and introduced this product to the market after spending like two years working on packaging and product quality, but introduced Chobani and basically said, “Hey, we want this product. It’s going to be a great product. It’s going to be great-tasting. It’s going to be this Greek yogurt style. And I don’t want to have it as a special product. I want to make it very accessible to the masses.” So, he was on the protein trend. He was on natural even though it wasn’t organic. It wasn’t non-GMO, but it was natural ingredients. He was riding the social side of it, using social media. He didn’t have any money to advertise. And five years later, that company, Chobani, had $1 billion dollars in sales. In 2012, it was a sponsor of the U.S. Olympic team at the London Olympics. Now, Greek yogurt has gone from nothing to 36 percent of the yogurt category. Walk in the store, it’s almost all Greek yogurt. That category has doubled in size because you’ve got this better product quality there.

Luther:                        Well, I think that fits really well into another news item I saw that Whole Foods has had six straight declining quarters of revenue. In response, they created what they’re calling a 2.0 version: 365 by Whole Foods. They’re actually targeting it at younger, budget-conscious consumers. They claim that it provides easier use, a better grocery experience through a blend of design, technology and experience. Do you think there’s going to be some success out of that? 

Mary:                          I haven’t been in a 365. I’m really anxious to. But, just from what I’ve read about it and what I have read of other people assessing it, I don’t think they have the answer yet. I think they’re just reshaping.

                                    I think getting the size down is good. They can put it in more urban settings.

                                    We have young people now, they want to live back in urban areas again, where they can walk. A lot of them don’t even want cars anymore. So, it’s important that it’s some place that they can get to and shop easily and then get back again.

                                    The format that I think is much more interesting to watch is what Amazon is experimenting with out in Seattle. They started it just after the first of this year, a store called Amazon Go. Basically, it’s a store without lines. The worst thing about going to the grocery store is waiting in line to check out. The way that Amazon Go works is, you walk in, and you scan your phone over a reader. Then, you walk around and you put whatever you want into your basket, and you walk out of the store and go home. They send you a receipt afterward showing everything that you purchased. And there’s also a lot more prepared foods there, which is another aspect of what I think everybody is looking for now. It’s like we need help with thinking about what to eat. So, that’s a more evolved concept of 365.

                                    I think that it’s really hard if you’re an established player in an industry to disrupt yourself. When Whole Foods came in, they came in from outside the industry, brought in something new. What they brought in were all these natural, specialty and organic products. Those have all rolled out into Kroger. You can buy almost the same product quality there, but Kroger wasn’t the one to introduce that to start with. So, I think the format’s like that.

Luther:                        So, what about ClickList? Do you think that’s enough to appease the millennial?

Mary:                          I think it’s definitely a piece of it, online shopping, being able to pick it up. I think that’s helpful, but I think that evolves.

                                    With ClickList, I still have to go to the store to get it. If I click AmazonFresh, it shows up at my house.

Luther:                        I probably should have specified. Kroger ClickList allows you to shop online and then go and pick the groceries up. They’re ready for you.

Mary:                          That’s right. So, you order online and then you make the trip there, and they put it in your car. That’s been successful.

                                    Again, that next evolution of it that’s playing out is where it comes to your house. In this case, it could be Kroger making that delivery, even though I think they’ve chosen not to, but in the Northeast, it’s Stop & Shop, and Peapod is part of a division of Stop & Shop that makes the delivery.

                                    Or is it Amazon? I mean, everybody’s very comfortable now with Amazon. So, do you trust Amazon more to bring you fresh produce than you trust Stop & Shop?

                                    If you look overseas, if you look to the U.K., there’s a supermarket company called Ocado that you buy from online. It shows up at your house. It’s the largest online grocery company. They have no stores at all. So, it’s basically the supermarket without the store. And because of that, they can manage their inventory better because the products make one stop.

                                    Think about fresh foods. They come into the Ocado warehouse. Or you think about fresh foods coming to Kroger. Often they come into the Kroger distribution center. They get split again, and they go out to the different Kroger stores. You go in as a consumer and maybe it’s been sitting there for a few days, but you buy it and take it home. It spends another few days in your refrigerator and then maybe the quality is not so great. With Ocado, it comes into their distribution center. You order it. It immediately comes to your house. So, it’s bypassing that trip to the supermarket plus sitting on that supermarket shelf. So, Ocado says we actually have a higher purchase of fresh products even though here we typically think, “Oh, I’ll never buy a fresh product from an online experience because I can’t see it myself.”

Luther:                        So, continuing the theme of convenience, the millennial doesn’t look at food the same way we do where you go to a grocery store, you buy the parts, you go home and then you have these variable parts that you can assemble via a recipe into X, Y or Z. Are the millennials actually also potentially looking at just skipping that part and going straight to, “I just want a meal sent to me and I’ll choose what meal I want and it’s already assembled, or maybe all the ingredients are there and I just put it all together at that point?”

Mary:                          I think there are a couple of different cuts at that that are very interesting right now.

                                    First, we see the rise of these meal kits that you can order online, and it shows up at your door. And, in many cases, it shows up at your doorstep, and what you’re getting in that box is exactly the amount of ingredients that it takes to prepare the meals. So, if you have a recipe that calls for two stalks of celery, you don’t have to buy the bunch of celery and then have the other six stalks rot in your refrigerator until you throw it away because you have no idea what to do with it.

                                    One in four households in the U.S. have tried meal kits now. There’s like 150 companies operating in this space. Unilever just made a $9 million investment into one of these companies earlier this month. So, they’re getting some serious traction. The retention rate is very high once you try because it turns out the product qualities are good.

                                    You think, “Well, wait a minute, this seems all very expensive to have this come to your house,” but the cost of that meal that they’re sending you is $10–$12. It’s not really that much. Maybe if you have a family of six or eight or 10, that’s too high, but certainly there’s a lot of one- and two-person households out there. So, you get the convenience that it shows up at your house.

                                    You get the fact that you’ve really cut down on food waste, both on the ingredient side, but also you don’t have all these leftovers that then you have to throw away.

                                    The other thing it cuts down on is choice. We always think choice is good. But if you’re pressed for time or if you don’t know how to cook and you’re looking maybe to learn, then you want a recipe already there rather than having to look to a cookbook, right? Everybody says, “Oh, we’re offering all these recipe solutions.” Well, I don’t want to have to look through those recipes and decide. Here, it just shows up, and you’re getting your cooking lesson on top of it. So, I think there’s a lot of interest in that space.

                                    Blue Apron, the biggest player, is now delivering 1 million meals a month. It’s a big number, right? At $10 a meal, it’s about a $1 billion-dollar business. Valuation is probably $2 billion. And they work directly with the farmers. So, an interesting piece of their model is how they decide what recipes to offer. Some of it is based on what consumers want, but some of it is based on what’s available. They can find out from their farmers what’s in season right now and what the prices are at different times of the year. They basically come up with what they’re going to offer based on being able to meet their price points.

Luther:                        Very interesting. So, to bring this back home to supermarkets, how do they meet the expectations? How do they have authenticity, and transparency, and traceability from the producers, holding manufacturers accountable, and at the same time maintaining the convenience at a price point and profitability through all of this?

Mary:                          It’s a huge challenge, isn’t it, especially if you already have a big business model and a big footprint that operates in a certain way. It’s just like death by a thousand cuts.

                                    Think about the impact of, you know, certain categories moving online. So now people buy their diapers online. So now your supermarket is too big because you don’t need to have as big of a diaper stock anymore. Well, you have supermarkets that are too big, but yet you can’t lop off a supermarket because it still means that the supermarkets that you have left are still too big. So, how do you repurpose that space? I think it’s a real challenge.

                                    But, some of the things that I think that really need to be done are — one of them is a mindset shift. We see some of this going on. I think for a number of years, supermarkets really considered themselves as, basically, “Our role is to rent real estate to manufacturers of food products. We just display it. You work on your products and bring it in, and we’ll display it. If it happens to sell, that’s great. And if it doesn’t, we’ll kick you off the shelf. And by the way, you’re going pay us for the right to be on that shelf because we’re taking a risk putting you there because we’ve had to take something else off.” That mind shift has to shift back to, “As a supermarket, my role should be as a gatekeeper to this set of products that my customers really want. And not only am I giving them the products that fit their needs, but I’m also working in that store to create experiences for them,” because this young group now — and many of us, right? — we have too much stuff. So now we’d rather invest in experiences than we would products. So, how do you make food an experience? How do we make sure in that supermarket it is going to have to tell a story of the food product? That’s the important piece of it.

                                    In Milan, a couple of years ago, there was the World Food Expo, and there was a supermarket of the future there. And, basically, you walked around the store and you had augmented reality where every time you looked at a category, you could see visually the product information and where it came from, who grew it, whatever. I don’t think shoppers want to see that every time. To me, I’m not sure that’s the supermarket of the future. I do think people will want the experiences, the authenticity, the stories, the engagement, but at the same time, this convenience piece is really important. So, supermarkets are going to have to be omnichannel. So, you’ve got a store that has some elements of this, but it also has to come to the house. And analytics. Data analytics. You know, being able to really dig in and understand what sells, what doesn’t sell, what price points.

Luther:                        Mary Shelman is former director and is currently an adviser to the agribusiness program at Harvard Business School. Thank you for joining us.

Mary:                          Thank you.

Mary Shelman spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.

The silage we prepare this year will be a key ingredient for next year’s feeding programs. This means that a hiccup in silage preparation can lead to a year of poor forage quality, while a year of exceptional weather and silage management can offer a year of quality feed and optimal herd health. What happens now has long-range consequences, whether good or bad.  

Farmers deal with many factors on a daily basis that are out of their control, with silage being one of them. Understanding what aspects of growing, chopping and ensilaging forages we can control can make all the difference between a year of mitigating forage issues and battling marginal milk production and a year of optimum herd health and prosperity.  

Over my years of experience in silage management, I have developed four practical and proven tips for making great silage.

1. Start with quality

This means you need to make the proper seed selections from the very start! The following factors are important when selecting seeds, so be sure to consult with your seed salesman before you make a decision:

• Yield potential
• Digestibility
• Grain content

2. Proper moisture and maturity

Harvesting your crops at the proper moisture and maturity optimizes the benefit for the animals. For corn silage, the proper moisture should be approximately 65–68 percent.

It is important to remember that chop height is also important. For corn silage, the normal chop length should be 6 inches.

You can increase the quality and digestibility of the corn silage by increasing the chop length to 12–16 inches, but it is important to remember that we lose between 7–15 percent of our yield by chopping at that height.

3. Storage and filling of the harvest

With the popularity of high-horsepower, self-propelled choppers and custom operators, we can get a lot done in a very short amount of time when filling our silage piles, but being able to ensure that we get good packing and preservation of our forages is important. If you are using one of these machines, you may need to increase the quantity of tractors or weight used after placing the silage on the pile. Remember: When a tractor is compressing a pile, it can only efficiently compress up to six inches underneath the tractor tire, so layers need to be added in increments of six inches or less.

A lot of times when I am on the farm, I hear, “When the silage starts coming in really fast, we just let it all come in and spend a few hours at the end packing it down with the tractor,” and that is not something I want to hear. If you aren’t spending the time during the gradual filling of the silage pile and instead wait until the end to pack it down with the tractor, you are significantly decreasing the quality of the silage on the top and wasting time.

4. Be patient!

After harvest and when storing your feed, be patient as to when you are going to feed that silage. I understand there are times when we need to feed before we would like to on our forages, but we would like to try to keep the silage covered for at least four to six weeks before we open the pile or bunker to ensure that fermentation is completed and we have stable feed to provide to our herd. If it works for your operation, I would strongly suggest you allow three to four months prior to opening silage piles or bunkers to ensure you have quality feed for your animals. 

Have a question or comment?

To listen to our entire conversation with John, click on the player.

Tom:                           John Fargher is chief operations officer for Australia-based AgriWebb. The company is among 10 startups selected from a field of more than 180 applicants to take part in The Pearse Lyons Accelerator program. We thank you for joining us, John.

John:                           Thank you for having us.

Tom:                           What is AgriWebb? How did it get started?

John:                           AgriWebb is a farm management and herd management software. We’re specifically focusing on the livestock industry, particularly red meats, so sheep and cattle producers, based down in Australia.

                                    I’m originally a fifth generation livestock producer myself, so I identified the problem on our own family farm, which is a simple one: farmers and ranchers running their businesses off pencil and paper. They’re recording their data down in that notepad. So, we built an app to digitize those farm records. We can now track all the inputs and all the outputs across that business and then facilitate data-driven decisions through reports and insights.

Tom:                           Does this enable you to carry a device throughout the operations and record data and so forth?

John:                           That’s absolutely right. We’ve built an app that you can run on your mobile device. It works right in your pasture, in the field. You can be recording all of your business information. And then when it hits that connection, it’s going to sync to the cloud. And through the portal, you can actually then start doing some insights and some reporting. We present that data back to make those data-driven decisions, increase the efficiency and productivity of that business.

Tom:                           You know, a number of the folks who have come in for an interview for these podcasts have mentioned in one way or another how important data has become in farming. And it seems to me as though you’re catering to that interest.

John:                           Yeah. That’s right. We’re looking at these businesses, some of them multimillion dollar businesses. And they are run through archaic methods. You know, “Why are you making these decisions? Well, ‘cause dad and grandpa did it that way.” And now, there’s a desire and a need for these businesses to do more with less, increase those efficiencies and start making data-driven decisions to really refine the process, track those performances and then make decisions based on what’s performing. We look at all other industries that have benefited from the use of data and through the use of these process improvements. And that’s what we’re doing in this space.

Tom:                           A number of the people who we have spoken with have mentioned the rise of “big data” and how it has become so important in agriculture. Would you agree with that, and is that really what AgriWebb addresses?

John:                           Yeah. Absolutely. For us, there are two aspects to that. The first one is the data collection and management at the farm level to help that producer manage their business, make those data-driven decisions, track inputs and outputs, and drive their business forward with software results.

                                    The second component is across the supply chain. The data now shows that the consumer is driving a lot more demand for traceability in their food for security, health reasons, health risks. So, this information we’re collecting, sure, it’s useful for a farmer to help their business, but it’s also useful because it’s been collected on-farm. That data can then go through the supply chain into the processing so the meat processors can really secure that traceable supply chain.

Tom:                           Will that information in some way be made available on the consumer end?

John:                           I think in time there’s a huge opportunity for that. We’ve got to get through a few stages. But it’s about linking it from farm to that next stage and then really having that end-to-end solution, which may be made up of other products and solutions along the way. But I think that’s where the industry is going to go. And I think that that’s what the consumer is going to demand.

Tom:                           How does this systematic collection of data change a farm’s operation?

John:                           It’s all traditional decision-making, typically. It’s decisions made because that’s the way dad it or that’s the way grandpa did it. So, what we’re doing is decisions made off what’s performing and what’s not: the inputs, the outputs, looking at yields, looking at cost. The decisions now are run purely on what the data is telling them. It’s a big shift from the day-to-day activities to actually relying on these tools and then having trust in these tools to deliver a better result.

Tom:                           So, it really tightens the efficiency?

John:                           Absolutely.

Tom:                           How is the industry responding to your product?

John:                           It’s a very, very exciting time to be in the ag-tech space. There’s a shift in demand, and people are starting to look for tools that can help their businesses. There’s also a shift from these younger generations coming back in. They may have had other careers in other areas, and they’re now driven back to agriculture. So, they’re looking for tools that exist in other industries to help with their businesses.

                                    We see a huge increase in awareness of the technology, and a prime example is, our best ROI on our marketing and sales is through digital and social media. So, people are looking for it. It’s a perfect age bracket between the sort of 30- to 50-year-old. So, I think the timing is perfect for these solutions.

Tom:                           What was it like for you to learn that AgriWebb is one of only 10 out of 180 finalists in The Pearse Lyons Accelerator program?

John:                           Well, we’re obviously very, very excited to be a part of this program. You know, we’re the only company out of Australia to be selected. On a global stage, it gives us great awareness. It opens up opportunities to look at new territories, look at what’s happening out there in the market, understand how other producers are running their business. So, for us, it’s going to be a big step in helping us shift, and develop, and really look to expand.

Tom:                           Since you grew up in the business looking at the need for this data and now your own company is producing it, that must be enormously satisfying.

John:                           Yeah, it is. It’s very, very exciting to see our own family business developing and evolving and also now to see some of our customers that have been with us for 12 or so months and the results that I’m seeing. They’re getting an increase in productivity by up to 18 percent. To see those results and deliver those results for our customers is very rewarding.

                                    We’re all about trust and building relationships with our customers. That’s proven by the fact that we haven’t had any customers leave us through the journey. And so, I think it’s about building trust and lasting relationships and showing that we can deliver some good results for them.

Tom:                           John Fargher is chief operations officer for Australia-based AgriWebb. We thank you for joining us.

John:                           Thank you so much.

John Fargher spoke at ONE: The Alltech Ideas Conference (ONE17). To hear more talks from the conference, sign up for the Alltech Idea Lab. For access, click on the button below.

Wait. In China they can do what?

Where on the planet can you try out a new beer, share photos of the brew on social media, buy a six-pack through that same social media channel and have it delivered to your doorstep?

In the world’s biggest beer-drinking market: China.

Chinese consumers — as a group, the world’s largest — spent $5.5 trillion on all sorts of purchases made through mobile payment platforms last year. That’s about 50 times the amount spent in this manner in the U.S., according to the Financial Times.

And well-positioned to accommodate a rapidly changing consumer landscape across China is Alltech Brewing.

“They can go on our WeChat channel,” said Dr. Mark Lyons, global vice president and head of the company’s Greater China division. “They can say ‘I just had a Kentucky Ale^®’ and they can actually order it directly through that app.”

That’s a far cry from the China of not all that long ago. Most Chinese over age 55 readily recall the austere conditions of the Cultural Revolution of the ‘60s and ‘70s. If in those days you had suggested that private consumption would someday be a significant force in the Chinese economy, no one would have believed it.

But over time, the nation’s industrialization has steadily increased mainstream affluence. Frugality is giving way to consumerism made affordable by discretionary income. Younger generations, driven by digital technologies and social media, are entering the market relatively free of the influences of the past.

“The pace of change in China is very, very fast, and a mere couple of weeks can change the entire dynamic, which means that strategies must be adapted,” said Mark Lyons. “The Western model of quarterly plans or even annual plans does not fit well where competitors can be operating in a much more real-time pace.”

In a report entitled “Meet the Chinese Consumer of 2020,” the McKinsey Quarterly notes that an outcome of this noticeable trend in consumer spending “is a propensity to trade up, driven increasingly by consumers aspiring to improve themselves, the way they live and their perceived social standing. Many Chinese, like their Western counterparts, judge themselves and others by what they buy.”

In its own analysis, the Economist Intelligence Unit (EIU) forecasts nearly 35 percent of the population, or around 480 million consumers, will meet its definitions of upper middle-income and high-income by 2030. That’s larger than the entire U.S. population of 321 million.

The EIU predicts that the portion of the Chinese population defined as low-income will shrink from 36.9 percent in 2015 to just 11 percent in 2030.

“There will be a corresponding bulge in the middle-income bracket, with a growing portion of the population falling within its upper reaches,” stated the EIU in a recent report. “The share of high-income consumers, with annual disposable income of above RMB 200,000 (US $32,100), will rise from just 2.6 percent in 2015 to 14.5 percent in 2030. China will look and feel like a more middle-class society.”

The trend is altering the consumer landscape in the world’s most populous nation as this rapidly emerging middle class expresses changes in preferences and tastes, upgrading consumption habits and switching to more expensive and premium brands — including the libations selected for personal consumption and entertaining.

A key to the success of Alltech’s beverages in China has been savvy pricing, according to Patrick Lin, Asia manager of Alltech Brewing.

“In the past, the highest-selling alcohol products were either on the lowest end of the price scale — mass-produced beer and spirits — or in the highest range — cognacs, high-end wine, etcetera,” said Lin. “Now, the new middle-class consumer is demanding something that’s in-between. 

“They no longer want the lower-priced beer their parents drank, and at the same time, they don’t want to spend the massive amounts that previously were spent on luxury alcohol products that were consumed as gifts and at banquets,” he explained. “The middle class wants to go out to restaurants and bars that are offering unique products and environments that are affordable, but not cheap.”

The China beyond Shanghai and Beijing

China is an immense nation of 31 provinces, its regions so diverse that the whole resembles a collection of separate countries.

“I often see companies coming in and seeing Shanghai, maybe Beijing, and assuming that they understand the country,” observed Mark Lyons.

And that, he says, can be a fatal mistake.

“Many subregions are very different in not only their levels of development, but personal, cultural preferences, in terms of the types of products consumers are looking for, but also business practices,” he explained. “This is where it is crucial to have local people in each market. We have representatives in virtually every province of China, and our regional representative offices help us considerably to be able to be more in touch with these local changes.”

Alltech founder and president Dr. Pearse Lyons has long been preparing his company to capitalize on the transitions now occurring in China. Alltech has 250 employees in the country, spread among offices in Chengdu, Guangzhou and Qingdao, with a factory in Tianjin and another expected to open in southern China.

“We have been in China for over 25 years,” he said. “We know the marketplace, and they know us. Therefore, to bring the beer in was almost like a logical extension. We decided to go to the market, so we reached out to our connections. We already had the resources there. They were well-educated, could speak the language and were Kentuckians. We needed to give them something that fit, like Kentucky Bourbon Barrel Ale^®.”

With the launch of Kentucky Bourbon Barrel Ale in China five years ago, Alltech became the first independently owned American craft brewery to produce beer in China for national distribution. The division now sells 10 different brews made by Alltech, including Kentucky White Ale^® , a citrus wheat beer that recently joined the beverage line. 

Sales expanded to Taiwan in 2015, then on to Hong Kong and Japan. Today, Alltech Brewing is the largest independently owned American craft brewery operating in China.

Alltech’s spirits were introduced to the market three years ago, including Town Branch^® Bourbon, Town Branch^® Rye, Pearse Lyons Reserve^® and Bluegrass Sundown^®. The Foxes Rock^™ brand appeared two years ago, and 2017 has seen the addition of Ha’penny Pot Still Gin^®.

The brands are stocked in stores and restaurants in more than 400 locations across Greater China, including nearly all of the largest cities, such as Beijing, Shanghai, Chengdu, Shenzhen, Chongqing and Tianjin, as well as in Hong Kong and Taipei.

The current sales focus, according to Mark Lyons, is on cities where palettes have long been accustomed to big Chinese beer brands such as Tsingtao, Yanjing and Snow.

“We’re offering something to them that looks completely different,” he said. “It’s probably three times higher in alcohol, has a very different flavor and is presented in different ways. Just getting them to try a beer is one thing. Once they do that, we see the same thing that’s happened all around the world: that conversion happens rapidly.”

And he believes the beverages’ appeal extends far beyond the city limits of China’s sprawling urban centers.

“It’s not even just second- or third-tier cities,” explained Mark Lyons. “It’s already down to communicating directly with our customers on the agricultural side who are in really small places where these sorts of products are not accessible.”

Quite a different picture in Japan

Alltech’s 2017 arrival in Japan required a recognition of dynamics that are in stark contrast with those in China.

Due to the steady aging of the population and low national birthrate, the Japanese drinking population is relatively small. But the Japanese, observed Mark Lyons, make up for it with attention to quality.

“You already have this very high level of affluence,” said Mark Lyons. “The focus on quality is extraordinary. There is such attention to every single detail. It’s a super-premium market, and I think that’s where our products can fit very nicely.”

With 290 craft breweries, according to a 2017 global craft beer survey released by The Brewers Journal and Alltech, Japan leads China (170 breweries) and Taiwan (22 breweries) among Asia-Pacific craft brewers. Australia holds the regional lead with 410. The Asia-Pacific region, however, accounts for a mere 7 percent of global craft brewery production.

Raising a pint to opportunity and partnership in China

When asked to consider Alltech Beverage’s most important achievement, Mark Lyons cites its presence and stature as the largest American craft brewer in China.

“That provides us with a platform for growth, which we’re very, very excited about,” he said.

And that growth works to the benefit of others.

“We’re beginning to sell other people’s beers,” he said. “We’re in discussions with several large American craft brewers (about) helping them come into the market.”

He notes that many craft brewers cast a wary eye in the direction of the brewing giant AB InBev and its self-titled “Disruptive Growth Organization.” The company is investing in craft breweries and craft beer bars in the Asian market.

“Many independent craft brewers are worried about this,” said Mark Lyons. “They’re concerned about middlemen and ‘gray channels,’ and they’re hesitant to get in. But when they see a company doing the types of things that we’re doing, it gives them a lot of confidence. So, we’re getting a lot of people knocking on our door. We’re seeing it as a great opportunity to provide customers with a truly independent and unique product.”

By 2020, predicts the McKinsey Quarterly, “companies (operating in China) that have focused on maximizing their brands’ scale will have to adopt a model based on a portfolio of more targeted brands or sub-brands to connect with different consumer segments.”

“Our more recent strategy on the beverage side to expand our product portfolio, including other companies’ brands, and also to diversify our own portfolio, is a response to this type of feedback from the market,” said Mark Lyons.

“It is clear that, without a great number of price points and brands that appeal to different demographics, it is difficult to really scale a business in a sustainable way,” he continued. “We have to be thinking about a market for us, in terms of craft beer, that within a little bit over a decade will have three to four times more accessible consumers.”

There are challenges to navigate, warns the EIU analysis: “China’s economic trajectory has become more uncertain, and firms will need to monitor risks accordingly in order to stay ahead of the curve.”

Pearse Lyons sees opportunity. His vision for the company’s beer and spirits interests in Asia is broad and has yet to be fully realized.

“We are actively looking at producing in other areas,” he said. “Keep in mind that we have Alltech Vietnam, Alltech Philippines, Alltech Malaysia, etcetera. Some of these offices are older than Alltech China. 

“We can use Kentucky Bourbon Barrel Ale as a major differentiator for us,” Pearse Lyons continued. “The strategy has been: use the beer, use the Kentucky name. We have a unique product to promote Alltech and our home state. It will slowly but surely build up the brand image.” 

The impact that heat stress can have on a herd, as we all know, can be substantial. When looking at a lactating herd, it is critical to find ways to minimize the effects of heat. But one vital area of the farm that is affected by heat is sometimes overlooked: calves can be extremely susceptible to higher temperatures due to their smaller body mass and higher respiration rate.

Calves and lactating cows experience heat stress at different levels. For a mature lactating animal, the level at which they begin to experience heat stress is at around 60 degrees Fahrenheit and is lower in humid environments. In contrast, calves start feeling heat stress around 75-80 degrees Fahrenheit. In the summer sun, calves look for relief in their hutches, but sometimes the hutch environment can be even hotter and more humid than the outside environment.

By managing the following three key areas, producers can ensure that their calves stay cool and healthy during the hottest time of the year.

Drink up: Keep calves hydrated

Though it might seem obvious, ensuring calves have an adequate water supply that is fresh and clean can be a key factor in helping to prevent dehydration. Dehydration can be particularly dangerous during times of gastrointestinal stress, which can hinder a calf’s rate of recovery.

Water acidifiers have been shown to increase water consumption because they make the water more palatable to the calves, which encourages them to drink more.

Shoo, fly — don’t bother the calves!

Hot temperatures go hand in hand with flies. It is extremely important to control flies in the calf’s environment, as flies are a main offender when it comes to transferring dangerous bacteria throughout the herd. Illnesses such as pink eye are known to be spread by flies. Recent research has also shown that flies can be carriers of some strains of Salmonella, which can show up later in life as a cause of mastitis at first lactation.

Common fly control methods include an Insect Growth Regulator (IGR) in the feed as well as treating and spraying around hutches with chemicals labeled to assist in fly control.

Easy, breezy temperature maintenance

Adequate ventilation is important for calves, especially if they are kept inside an enclosed area or barn. Some operations may have a more serious ventilation issue when using automatic feeders because the bedding can be more prone to moisture.

Ensuring the bedding remains clean and dry is critical to calf health and longevity. As temperatures rise, ammonia levels tend to rise as well, and wet bedding can pose a serious threat to calves as a result. Utilizing an ammonia binding product can be helpful.

De-Odorase®, a product from Alltech, is commonly utilized in calf barns to control ammonia issues.

Adequate ventilation is also important in the hutch. One key component to hutch ventilation is keeping vents open during the day, as hutches can get too hot if vents are closed. What many people don’t think about in the summer, though, is that hutches can also get too cold on cool evenings if the vents are not closed at night. This is particularly concerning in the summer because usually less bedding is used during this time, and a cold front can be hard on the less protected calves, especially when they are younger.

Heat stress can affect herds in many ways. Herd longevity and the future of operations depend on the health of calves, who rely on farm owners and managers taking the necessary steps to ensure they remain healthy during the summer. 

Have a question or comment?

When we talk about the balancing act of a healthy gastrointestinal tract, we want to make sure that calories, colostrum, cleanliness, comfort, the strength of the immune system and the health of the gut flora outweigh the pathogens that may invade the gastrointestinal tract of calves. In a recent webinar, Dr. Corale Dorn, a veterinarian at Dells Veterinary Services in Dell Rapids, South Dakota, explained how using proper management practices and keeping an eye out for diseases are key to tipping the scales in the right direction for healthy calves.

Calories

We need to adjust our thinking from quarts to the number of calories that calves are receiving through milk replacer.

“When I go out to a farm in the dead of winter in South Dakota and they are only feeding 2 quarts of 20/20 milk replacer every 12 hours, I know we are not hitting anywhere near the calorie requirements that we need,” said Dorn. “If we are completely missing the mark on these calorie requirements, we cannot expect to maintain calf health when pathogens enter the herd.”

If we are getting 2.1–2.5 pounds of average daily gain on Holstein calves, then we have enough calories to keep the calves healthy and growing. 

The calories and protein that they need depend on their weight and the temperature of their environment. For example, during the winter in South Dakota, we need to be feeding at least 6 quarts of milk a day.  This can be pasteurized whole milk or 24/20 milk replacer.

Re-evaluating our thinking when it comes to feeding calves for the calories they need can assist in their ability to endure seasonal changes and other challenges that can impact calf health.

Colostrum

It’s a given that calves need a good measure of colostrum beginning at calving. We know that when we take a blood sample at 24–48 hours post-calving, calves well-fed with colostrum should reach a calibrated total protein of 6.0 grams per deciliter

For calves that require esophageal tubes, we need to make sure they are getting 1 gallon of colostrum within the first six hours of life.

Not only is quantity key, but quality is equally important. Colostrum needs to be clean, high in immunoglobulin (IgG), low in bacteria and fed as soon possible. If colostrum is not fed within one hour, it needs to be cooled to less than 35 degrees Fahrenheit to prevent bacterial growth.

Cleanliness

A standard procedure to ensure milk bottles and nipples are properly cleaned is extremely important to reduce pathogen exposure to calves. It is also vital that the environment the calf comes into is managed properly to ensure cleanliness.

“The maternity pen is the first place the calf is going to be, so ask yourself, can you kneel into the bedding and come out with dry knees?” asked Dorn.  “If you have a large surge in calving, you can have a very dirty pen, so ensuring that pen is cleaned as frequently as necessary is important.”

Calves should be moved to a clean “wet calf” area within the first 15 minutes of life before attempting to stand. Be sure to clean this area vigorously after every calf to prevent pathogens from spreading between calves.

Comfort

The thermo-neutral zone for a calf is 50–68 degrees Fahrenheit.

In the winter, use calf jackets and deep bedding.

In the summer, we start to get anxious when we have semi-opaque housing, as on hot days these hutches can get very hot if not ventilated properly. Looking at ways to provide additional ventilation and water to hutch calves during the summer months is key to keeping calves cool and comfortable.

Immune system

Everything we do impacts the health of the immune system. Normally, when bacteria invade the calf’s system, immune cells attack and swallow up the bad bacteria, destroying them. However, some bad bacteria can evade this immune response.

“The problem with some of the bugs that enter the immune system, such as Salmonella, is that they have developed ways to invade the calf’s immune system by hitching a ride on the white blood cells,” explained Dorn. “Once bacteria join ranks with the white blood cells, we have a breach in the immune system and have bugs we can’t kill, with few medicines or vaccines that can slow down this process. This is where MOS products come into play. When bacteria attempt to attach to receptors on the intestinal wall, MOS blocks the attachment of these bacteria.”

Stop bugs before they take hold in your livestock

Long gone are the days we could just give calves a drug and kill the bug. Dorn advised dairy producers to:

• Keep the maternity pen clean. Be sure to test the bedding regularly to ensure it is not too damp.
• Ensure calves are well-fed! Remember, calves need an adequate supply of energy not only to fuel metabolic activity, but to support their developing immune system.
• Alltech’s Bio-Mos® is designed to feed the gastrointestinal tract and is the original solution to intestinal health issues. It promotes good bacteria and builds defenses, thereby maximizing performance and profitability.

To watch the full webinar, click here.  For more information on how Bio-Mos might be a fit for your farm, visit bio-mos.com.