In this special episode, Ted and T3 enlist the help of Richard Bradfield, General Manager of St. Louis-based International Ingredients Corporation, to discuss the impacts of the African swine fever virus on dairy ingredient export sales to China. Jeff Johnson, T.C. Jacoby & Co.'s Vice President of Dairy Ingredients, also sits in.
Nearly half of the hogs in the world are raised in China, but the combination of fatalities from the virus and preventative culling has sent herd numbers plunging down as much as 35%. It's drastically reduced demand for whey permeate, a crucial part of hogs' diets.
Anna: Welcome to The Milk Check, a podcast from T.C. Jacoby & Co., where we share market insights and analysis with dairy farmers in mind.
T3: Welcome to "The Milk Check." Today we have a special guest in Richard Bradfield. Richard runs International Ingredient Corp?
Richard: Am part of the team.
T3: And part of the team for International Ingredient Corp. International Ingredient Corp is the second largest whey permeate manufacturer in the United States, and with everything that we're hearing about with African Swine Flu and what is going on in Asia, we thought it would be a great topic to talk about. And so, we wanted to find somebody who is an expert who can tell us a little bit about what is going on in Asia, what is African swine flu, and how it's affecting our dairy markets and our whey markets. And so, Richard, thank you for joining us today.
Richard: Thank you.
T3: Why don't we start, why don't you tell us a little bit about International Ingredient Corporation and what you do, and why you got...why we would think of you as an expert in whey permeates?
Richard: I have no idea, but... So, thank you very much. So, again, Richard Bradfield with International Ingredient Corporation based here in St. Louis. We are an animal feed ingredient company, so we have 10 facilities throughout the U.S. About half of our business is in the dairy side of things, so it's an important part of our business. We also export—about half of our production is exported, so the export markets and what's going on in China is obviously very important to us. I've been with the company for about 25 years, and I am currently the General Manager of the group there.
T3: About half of your production is exported?
Richard: Yes.
T3: For the whey permeates that you produce, is that about a 50/50 split as well?
Richard: I would say, overall under whey it's about 50% is exported, for the permeates it would be a larger percentage of the production is exported. I would say probably more like two-thirds exported.
T3: And of that two-thirds that's exported, what percentage would you say goes to China or Southeast Asia? Or, just...let's just talk about in terms of the general permeate market in terms of your best guess.
Richard: Of our business?
T3: Mm-hmm.
Richard: Our business, basically, we've always felt strongly that you needed to have…you know, be in certain regions, so we're obviously here domestically. We've focused on, you know, Mexico, Latin America, and also then China, Southeast Asia. Of the three components, I would say Southeast Asia is the largest part of our business, followed by domestically, then followed by the Latin American region.
T3: When did you guys first start hearing about the African swine flu, and I guess, why don't you just tell us a little bit about what is going on right now in China, and what is going on in Southeast Asia, and what is this virus we're hearing about?
Richard: So, it's the African swine fever, because there's also the avian flu to something totally different, and we just recently heard of some cases popping up there as well. So,