Erik Visser, CEO of Hamlet Protein, said that the outlook for 2025 is uncertain with market developments largely depending on how the global geo-political situation will evolve and how increasing regulation on sustainability will impact markets.

“A possible trade war is looming on the horizon. With Donald Trump in the White House and a Republican majority in Congress, there is a significant risk that an aggressive implementation of tariffs could destabilize global trade flows and impact animal protein and animal feed production along the way,” Visser said.

Lack of clarity on timing and scope of EU regulations aimed at driving sustainable industry practices could put European producers at a disadvantage versus their Asian, American, and Latin American counterparts. “While there is broad support within the industry to invest in sustainable practices, and unilateral initiatives create the risk of disrupting markets and slowing down investments,” Visser said.

Visser expects poultry and aquaculture to show strongest growth in 2025, with limited growth for swine and a decline in beef. Improved demand and lower feed costs will drive aquaculture production growth in 2025. All key species should see growth, with pangasius and tilapia in the lead. Shrimp, which continues to face relatively low prices, is expected to grow just 2%.

Geo-politics

“The biggest unknown with possibly the highest impact will come from Donald Trump’s new term in office. If his administration implements the tariffs that were announced by the president-elect, then trading partners are likely to respond with retaliatory tariffs. Such a trade war would significantly impact global economies.”

“For the EU, US tariffs on European goods may slow Gross Domestic Products (GDP) growth in the region by limiting export opportunities and increasing production costs. Similarly, China could face headwinds, particularly as higher tariffs disrupt its export-driven economy, although domestic stimulus and market diversification may mitigate impacts. The US might see initial growth from fiscal policies but could encounter medium-term pressures. Protectionism would be likely to increase inflation in the US as higher tariffs raise consumer prices, compounded by wage pressures from stricter immigration policies.”

At the same time, we will closely follow the political developments in European powerhouses “Germany and France as they are the dominant economies in the European Union. Upcoming federal elections (February 23) and low growth rates in Germany and increasing political uncertainty in France give rise to uncertain outcomes.”

Feed costs

Feed is the most significant cost of livestock production, often representing as much as 60%-70% of the total production costs. A large portion of that cost comes from soy, wheat, and corn.

Ukraine is a major exporter of wheat, barley, and corn. “Even though it has managed to continue to export reasonable volumes of agri-commodities through the Black Sea corridor, the ongoing war with Russia could disrupt this channel at any time,” Visser said.

“The cost of animal nutrition strongly impacts profitability levels of producers, and lower feed costs typically lead to increased inclusion of feed additives and specialty ingredients. We expect feed costs to remain relatively stable in 2025 when compared to 2024 year-end levels, yet lower when compared to the full year average,” Visser said.

“Increasing tension in the relationship between EU and US on the one hand, and China, on the other hand, could create a supply risk for key feed ingredients, as China produces more than 70% of the world’s vitamins, and many critical amino acids, including more than 75% of the world’s lysine and more than 25% of methionine,” Visser said.

Soybean meal

The US harvested a record crop in 2024, and South America has increased its plantings for the 2025 harvest. “If we couple that with a declining soybean meal demand from China, we expect prices to stabilize at current low levels or slightly decrease.”

“Even though La Niña could have some impact on the South American harvest, we do not expect that to significantly impact price developments.”

“In case of a US-China trade war, China would likely target US soybean exports. This could lead to a drop in US soybean price levels and be followed by a reduction in soybean acreage, while simultaneously driving increased Chinese demand for South American soybeans.”

“The implementation of the European Deforestation Regulation (EUDR), which is now scheduled for the end of 2025, will have an impact on the pricing of soybean meal and global trade flows. Europe represents only a small fraction of the global soybean meal trade, and there is a risk that European producers will end up paying a premium, while non-EUDR-compliant soybean meal will be diverted to geographies with less strict regulations.”

Regulation

“Europe is taking the lead in implementing a wide range of ESG regulations and companies will have to invest time and money to keep up with a changing landscape. Even though the implementation of the EUDR was recently postponed for a 12-month period, we do expect increasing regulation targeting livestock and feed producers.”

“Across all industries large European companies, listed SME’s and financial institutions will face additional reporting requirements in 2025, to comply with the Corporate Sustainability Reporting Directive (CSRD). The CSRD was designed to boost transparency and hold companies accountable for their environmental, social, and governance (ESG) impacts. Even if an organization does not yet face additional reporting obligations, or is located outside the EU, it may be asked to provide information to their business partners as they need to submit data on their entire supply chain.

“The EU has been working on a new legal framework for feed additives and communicated that this is a strong priority for 2025. The existing regulation is over twenty years old. New legislation will focus on sustainability, animal welfare and health, and law makers will seek to align it with the EU Farm to Fork Strategy and the EU Green Deal.”

“In the US, the AAFCO feed ingredient definition process expired last year. The Innovative FEED Act, a bipartisan legislation amending the Federal Food, Drug and Cosmetic Act to give feed additives, an efficient way to come to market, has not yet been passed into law. This bill would establish a new regulatory path for non-nutritive animal food ingredients that act in the animal’s gut to provide production benefits, address human food safety concerns, and affect the byproducts from digestion from the animal.”

On a global level, the use of medication in general and antibiotic growth promoters in particular will increasingly be regulated. As there is no single product that can replace antibiotics, a multi-faceted approach will be needed to drive animal health and performance. Increasing regulation will provide opportunities for feed additives and specialty ingredients producers.”