Argus Feedgrade Minerals

A crisis of confidence among muốn European consumers in the beef industry from fears about the spread of bovine spongikhung encephalopathy (BSE), or mad cow"s disease, has hit suppliers of chemicals derived from animal sources.

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But at the same time it is boosting sales of feed phosphates, particularly dicalcium phosphate (DCP), as a result of a European Union (EU) ban on meat and bone meal being fed to lớn cattle, pigs và poultry.

The ban is one of a number of restrictions introduced by the EU in an effort khổng lồ stem the incidence of BSE and khổng lồ calm fears among mỏi consumers worried about links between the condition & the fatal human brain disease Creutzfeldt-Jakob Disease (CJD).

The EU measures could reduce supplies of raw materials for some bovine-derived products. Pharmaceutical companies have warned that a tightening of certification rules covering the provision of bovine materials could cause them difficulties.

Gelatine producers clayên ổn that there could be shortages of bovine-sourced gelatine. This would be caused by a sharp drop in cattle being slaughtered because so many Europeans have stopped eating beef as a result of the scare.

Consumption has gone down between trăng tròn percent & 50 percent in the major beef-eating countries of Germany, France, Italy and Spain, after new tests revealed a sudden rise in the number of BSE cases, some of them in countries previously thought to lớn be miễn phí of the disease.

The discovery of the first cases in Germany has shattered public trust in the beef sector, with some slaughterhouses operating at around 10 percent of their capađô thị.

The slaughter rate across the EU has fallen even further after the introduction of a program from January 1 requiring all cattle aged over 30 months be tested for BSE before being allowed to enter the food chain. The new checking systems are unlikely to be operating efficiently for many months.

"There is going lớn be a problem getting enough raw material for bovine-sourced gelatine in Europe," says Michael Tepp-ner, group vice-president, corporate communications at DGF Stoess, Germany.

"There has a been small increase in the slaughtering of pigs in Europe, but the extra availability of porcine material has not been enough to offset the decrease in bovine supplies," he says. "The main problem could be in supplies of gelatine for photographic applications, which mainly comes from bovine sources. Some pharmaceutical-grade gelatine is also derived from bovine material."

Stoess, the parent company of the Gelita Group, is able to 3D for a deficit in supplies in Europe by importing products from its two subsidiaries in the Americas--Kind & Knox, Sioux, Iowa, và Sargel, Mococa, Brazil.

Nonetheless, it warns that gelatine prices may have khổng lồ go up shortly, not only because of the BSE debacle but also because of rising production costs. Gelatine prices in Europe went up by an average of 10 percent last year even before the latest crisis.

"These current raw material difficulties follow big increases in the price of natural gas, of which we use a lot in our production processes," Mr. Teppner explains.

In response to anxieties aước ao consumers about the sources of animal-derived materials, customers of suppliers, such as gelatine producers, are being more rigorous about documentation that shows that products are safe.

In particular, they are being more meticulous about certification confirming that products are not linked to lớn specified risk materials (SRMs), such as the brain và skull of cattle. The EU has recently extended SRMs to include the entire intestines of bovines of all ages.

Pharmaceutical companies, which have sầu been complying with EU guidelines on bovine-sourced materials for several years following the first outbreak of BSE in the UK, are having to provide documentation when previously it was not required. "What is new is that compliance with the BSE guidelines has lớn be formally demonstrated now," says Throm Siegfried, production quality and environment manager at the German association of research-based pharmaceutical companies (VFA). Many VFA thành viên companies are finding that suppliers at present are not able khổng lồ provide certificates, he adds.

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The European pharmaceutical industry is concerned that the BSE scare may increase pressure on the EU to lớn bring in legislation on manufacturing standards for excipients such as gelatine.

The European Commission, the EU executive, is due this year to draw up a directive or regulations making good manufacturing practices (GMP) obligatory for the production of pharmaceutical intermediates and active sầu ingredients (APIs). This could now be extended khổng lồ cover excipients.

"This directive sầu should address only APIs and not excipients," says Mr. Siegfried. "Otherwise the workload of plant inspectors would be overwhelming."

For European feed phosphate producers, their biggest concern at the moment is whether they will be able to take full advantage of what is likely khổng lồ be a sizeable growth in demvà following the EU ban on meat và bone meal in animal feed.

The ban was introduced on January 1 for six months, but it is thought highly likely that it will be made permanent. DCPhường prices have already gone up this month by around 10 percent in many EU countries.

"It is hard to lớn estimate what the increase in dem& for feed phosphates will be at present, but it will probably be between 10 percent & trăng tròn percent or even higher," says Sven-Ulaf Malkvist, business manager for feed phosphates at Kemira, Europe"s second largest producer.

A surge in demand for feed phosphates in the UK after the banning of meat và bone meal in all animal feed in 1996 because of discovery of link between BSE và CJD could indicate what will now happen in the rest of the EU. The UK has had by far the highest incidence of BSE in Europe with around 180,000 cases by the over of last year, well ahead of Irelvà with 540, Portugal with 470 & Switzerl& with 360.

"Consumption of feed phosphates almost doubled after the ban in 1996 and then settled down khổng lồ an overall rise of 70 percent," says Willy Dawson, general manager of Britphos, the UK subsidiary of Tessenderlo, the European market leader in DCPhường.

The EU estimates that around 3 million metric tons of meat & bone meal were used in animal feed last year. As much as 10 percent of the meal consisted of phosphorus, signifying that the extra feed phosphate required could be 300,000 million tons, or almost 30 percent of a market of 1.1 million tons per year.

"The extra demand is unlikely lớn be as high as that because patterns of use of meat và bone vary across Europe while the phosphorus nội dung can be much lower than 10 percent," says one DCPhường marketing manager.

If dem& for DCP soars, EU producers could have sầu problems meeting demvà in a market in which imports only have a relatively small mô tả. Tessenderlo with annual capađô thị of 700,000 tons and Kemira with 200,000 tons trương mục for the vast majority of the EU output, although players like Timac of France have comparatively high regional sales.

Rotem Amfert Negev, a subsidiary of Israeli Chemicals which already has a small DCP plant in Haifa, Israel, serving the domestic market, believes the current rise in demvà will provide a useful platform for its entry inkhổng lồ the European feed phosphates market.

The company recently bought an 80,000 ton-a-year DCP facility from the Turkish company Opal, which a few years ago took over the plant from BASF và had it dismantled and transported from Ludwigshafen, Germany, to lớn a site in northwestern Turkey.

"The majority of the output will be targeted at the European market, in particular southern Europe," says a Rotem official. "The BSE crisis will make our entrance inkhổng lồ Europe easier because otherwise we would have faced a tough battle in a highly competitive sầu market."

Rotem says that it has the competitive advantage of being bachồng integrated into phosphoric acid, unlike Tessenderlo and most other EU producers of feed phosphates, with the exception of Kemira.

If its move sầu inlớn the European DCP market is successful, it may build a feed phosphate plant at Amsterdam where it already has a 600,000 ton-a-year nitrogen-phosphorus-potash (NPK) fertilizer unit.

The ban on meat và bone meal could also open the way to new customers for producers of phytase, the enzyme which enables animals to absorb phosphorus from vegetable ingredients in feeds.

"This presents new opportunities for us, but at the moment, it is impossible to lớn forecast how much we will benefit from the ban," says Lars Dalgaard Andersen, director of the feeds unit at Novozymes, the enzymes operation of the Novo Group, Denmark. "Feed producers và farmers will now have a straight choice between mono và dicalcium phosphates và phytase as a source of phosphorus. Phytase is now highly cost competitive sầu with phosphates and provides a more environmentally friendly alternative."