Mitigating the impact of high oil prices on the cost of single ingredients

The price of oil in particular has increased substantially. This is especially important since oil prices determine market sentiment. Higher oil prices increase operational costs across industries causing uncertainty about the future. This sparks panic buying and hording of materials and products which drives up prices even further. For example, the cost of methionine has risen, but market prices have increased far more strongly. This difference is mainly due to sentiment.

What can you do when prices spike

As general rule, be patient when others are panicking. Production has to continue of course, so it is important to secure steady supplies of raw materials. By negotiating long-term agreements and establishing strategic relationships with suppliers, solutions can be found even in a highly insecure market. There will surely be further panic situations in the future: factories and borders will close, import taxes will change and wars will break out. The real solution in these situations is to take a long-term view: long-term agreements and relationships, long-term planning and long-term stocks. That is why sharing market information is an important and valuable part of Koudijs' relationships with its customers. It leads to real solutions.

Finding lower priced alternatives

It is often difficult to know how long a crisis will last and this currently applies to the situation in the Middle East. We have no idea how high the price of raw materials can go, so it may no longer be financially viable to include particular ingredients in your feed. When raw materials are in short supply or too highly priced, you can look for suitable alternatives that deliver the same performance in animals. For example, polyphenols can be a viable substitute for vitamin E to relieve oxidative stress. With our own R&D department, Koudijs has the knowledge and experience to help you identify acceptable substitutes that provide the nutritional benefits your customers require. Furthermore, as part of a global parent company with a strong market position, we are able to offer the most favourable terms.