June 2017

Livestock Feed of European Origin

2 Code: Livestock Feed of European Origin

Producing in the Best Possible

Place

Agrifirm believes that raw materials

should be produced where this can

be done most efficiently from a

geological and climatological point

of view.

The raw materials for livestock feed

originate in a large international

network of product streams. This

market has grown over recent

decades. Raw materials originate

in various regions throughout the

world; cereals from Europe, Ukraine,

Belarus and Australia, and protein-

rich raw materials from South

America, North America and Asia.

Agrifirm believes thatraw materials should be produced where this can be done most efficiently from a geological and climatological point of view.

Global Market Dynamics

Global markets have emerged for

Livestock Feed of European Origin

various reasons. A key driver is

the difference in harvest times

in the northern and southern

hemispheres. Storing raw materials

is expensive. This is why there

is a global trade in which raw

materials originating from the

two hemispheres are used to

supplement each other.

The trade is also motivated by

climatological differences. For

example, soy is a tropical/sub-

tropical crop. Of course it can also

be grown at different latitudes,

but generally this is less efficient.

Conversely, crops that grow well at

other latitudes do not grow as well

in tropical/sub-tropical regions.

Trade is also important for

matching regional overproduction

with regional underproduction.

As well as for the purpose of

eliminating the complexity of

the difference in food safety

requirements between Europe and

North America, for example. To

put it succinctly, the global trade

is important for matching supply

and demand, and to set a fair price

on this basis. Naturally, there are

concerns about the impact of the

global trade in raw materials.

Agrifirm ImplementsSustainable Procurement Agrifirm realises that making the production of raw materials increasingly sustainable is important and wants to contribute to this in a structured way.

Agrifirm is actively involved in the

development of sustainable soy

and in the research into possible

alternatives. Agrifirm believes

that the most effective way to

exert influence on helping to

achieve change is to be involved in

a specific supply chain. Agrifirm

consequently is a proponent of

the global implementation of

'Sustainable Procurement'.

Regional Raw Materials

Market demand for regional raw

materials is growing and needs

professional support. Agrifirm is

familiar with the debates concerning

the regional supply of raw materials.

The origin of raw materials for livestock feed is the subject of debate. Debates concerning

the growing soy production, the circular economy and protein self-sufficiency in Europe.

For Agrifirm, this is a good reason to actively involve itself in this theme.

The company is regularly asked to

think about participation in regional

supply chains, or to study the

impact of regional supply chains

or initiatives. It is striking that the

debate quickly zeroes in on the

availability of European soy.

In Agrifirm's view theinquiry into the availability of European soy is only a small part of the issue.

European soy is available. The

challenge does not lie in its

availability. The challenge lies

in the fact that European soy is

significantly more expensive than

world market soy. Given the way in

which livestock feeds are currently

composed, this automatically

means that other sources of protein

are used. For example, for dairy

feeds the more expensive soy meal

means that palm kernel expellers

are more likely to be used. And the

discussion then shifts to the next

raw material. Generally speaking,

the initiators consider this an

undesirable development.

This simple example illustrates

that the demand for regional raw

materials needs proper guidance.

Because improper implementation

will lead to uncontrollable

processes, the unavailability of

raw materials, and unwanted and

unnecessary cost price increases.

Agrifirm wants to generate

measurable, relevant and

sustainable value for the farmer

and the farm. With the 'Livestock

Feed of European Origin' Code,

Agrifirm wants to contribute to the

development of new supply chains,

as they emerge.

This is a first step. Different lists

of requirements may also be

developed. Agrifirm is prepared

to assist in the thinking process,

but believes that working with a

well-thought-out cohesive list of

requirements is essential. The

undesirable effects in different

situations can be major.

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Regional Livestock Feed RequirementsThe origin of raw materials for livestock feed is the subject

of debate. For Agrifirm, this is a good reason to actively

involve itself in this theme. With the 'Livestock Feed of

European Origin 1.0' Code, Agrifirm makes a contribution

to the development of new supply chains.

Cereal co-products result from the industrial processing of grain. The key co-products are wheat gluten and feed, corn meal and feed, cookies and bread.

Cereal co-products

Sunflower kernel and rapeseed products result from processing sunflower kernels and rapeseed. The key products are sunflower kernel, rapeseed meal and oil products.

Sunflower kernel and rapeseed Meal

80%

Soy products are protein-rich raw materials that result from processing soy beans. Key soy products are soy meal, oil, husks and beans.

Soy Products

Primary raw materials are agricultural products that have not been subjected to industrial processes as a result of which a large part of the original raw material has a different destination than animal feed. Key raw materials are corn, wheat, barley, oats, lupines, linseed, rye, triticale and rapeseed.

Primary Raw Materials

A segregated raw materials stream means that the agricultural raw materials destined for the animal feed producer are separated – segregated – from the complete raw materials stream. These raw materials are harvested, stored and transported segregated and are fully traceable in the supply chain starting from the farm. A mass balance raw materials stream means that the agricultural raw materials destined for the animal feed producer are combined with the complete raw mate-rials stream. The share of agricultural raw materials destined for the animal feed producer – in the entire raw materials stream – are fully traceable in the supply chain starting from the farm. Suppliers must demonstrate that a purchased quantity is equivalent – equal – to a quantity of original raw materials of European origin supplied to the supplier's production sites. Suppliers must demonstrate that the primary raw materials fully originate in Europe. Europe here is defined as continental Europe, including the large islands, such as the United Kingdom, but excluding peninsulas and small islands, such as Tenerife. Suppliers must demonstrate that the processed raw materials fully originate in Europe. Suppliers must demonstrate that more than 80% of the raw materials from theproduction sites from which the animal feed producer acquires raw materials comes from Europe. These raw materials are not subject to any additional requirements.

80%

Legend

Many raw materials are subjected to industrial processes. This results in a main product and co-products. The co-products in particular end up in livestock feed. Key processed raw materials include beet pulp, vinasse and DDGS (dried distiller grains solubles).The use of raw materials such as citrus pulp, cane sugar molasses and palm oil is excluded.

Processed Raw Materials

4 Code: Livestock Feed of European Origin

Premixes are raw material mixes composed of the above-referenced raw materials. Together with vitamins and minerals (micro-components) these mixes are added to livestock feed.

Micro- components

Primary Raw Materials

C

o-products

Demonstrability

The origin of the supplied raw materials and the additional requirements

for each raw material are demonstrated by the animal feed producer – in

cooperation with suppliers – using an additional GMP+ module. Validity

is ensured through means of GMP+ auditing.

Non-GM

Due to the selected implementation of the requirements, it is impossible

to avoid GM (genetically modified) feed traces in the livestock feed of

European origin. The primary raw materials produced in Europe are

predominantly non-GM, however mixing regularly occurs in actual

practice. For example, in case of cereal co-products.

Scope

The raw material requirements only apply to livestock feed administered

during the animal's productive phase. In other words, the requirements

do not apply to animal feed destined for young livestock.

6 Code: Livestock Feed of European Origin 7

Livestock Feed of European OriginVersion 1.0

Demonstrability Demonstrability of the origin of supplied raw materials, as well as additional requirements via an additional GMP+ module. The method of demonstrating that raw materials comply with the requirements is left up to the feed company, in cooperation with its suppliers. Confirming validity takes place through means of GMP+ auditing.

Non-GM Due to the selected implementation, it is impossible to avoid GM traces (for example in cereal co-products). The primary raw materials produced in Europe are predominantly non-GM, however mixing regularly occurs in actual practice.

Definitions Europe is defined as continental Europe, including the large islands, such as the United Kingdom and Iceland for example, but excluding peninsulas and small islands, such as Tenerife and Cyprus, for example. The following countries are covered by this definition: Albania, Andorra, Belgium, Bosnia and Herzegovina, Bulgaria, Czech Republic, Denmark, Germany, Estonia, Finland, France, Greece, United Kingdom, Hungary, Ireland, Iceland, Italy, Kazakhstan (European part), Kosovo, Croatia, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Macedonia, Montenegro, Netherlands, Norway, Moldavia, Monaco, Ukraine, Austria, Poland, Portugal, Romania, Russia (European part) San Marina, Serbia, Slovenia, Slovakia, Spain, Turkey (European part), Vatican City, Belarus and Switzerland.

• Primary raw materials are raw materials that have not been subjected to industrial processing (other than cleaning, drying, etc.), as a result of which a significant portion of the original raw material has been given a destination other than animal feed.

• Micro-components are raw materials that are used in low concentrations in animal feeds, such as enzymes, vitamins, etc. The total concentration of micro-components may not exceed 5%.

• Co-products are raw materials that were subjected to industrial processing and whereby the residual products are destined for animal feed applications.

• Premixes are raw materials that may be composed of all of the above-referenced raw materials and that can be used as an ingredient in compound feed.

Raw Materials Requirements All primary raw materials originate segregated in Europe.

The following rules apply to co-products: • Processed raw materials for which the main product has a local main destination or that are produced for the world market

may not be used (such as citrus pulp, palm kernel expeller, palm oil, etc.).• Soy meal and products (including oil) come segregated from Europe. • Sunflower kernel and rapeseed meal and oil can be used without any further restrictions, as long as the supplier demonstrates

that, measured on an annual basis, more than 80% of the raw materials from the production sites from which the feed company acquires its raw materials comes from within Europe.

• Cereal co-products may be acquired from production sites in Europe, whereby the supplier, on the basis of a closed system, must demonstrate that, measured on an annual basis, an equivalent quantity of the original primary raw material is supplied from Europe to the production site from which the feed company acquires its raw materials (Mass Balance).

Micro-components and premixes are not subject to any additional requirements.

ScopeThe raw material requirements only apply to compound feed administered during the animal's productive phase (in other words not to young livestock).

Definition of Europe

Agrifirm defines Europe as continen-

tal Europe.

> There is no rational foundation

for other definitions. A 500 km

zone is an arbitrary choice.

Defining Europe as 'Political

Europe' is linked to the spirit of

the times. Political Europe could

very well look (very) different in a

number of years.

> A considerable availability of raw

materials is key to large-scale

transitions. The Ukraine and

Belarus are Europe's granary

and furthermore also produce

protein-rich crops. That means

that they must not be positioned

outside Europe.

Europe is defined as continental

Europe, including the large islands,

such as the United Kingdom and

Iceland for example, but excluding

peninsulas and small islands, such

as Tenerife and Cyprus, for example.

The following countries are covered

by this definition: Albania, Andorra,

Belgium, Bosnia and Herzegovina,

Bulgaria, Czech Republic, Denmark,

Germany, Estonia, Finland, France,

Greece, United Kingdom, Hungary,

Ireland, Iceland, Italy, Kazakhstan

(European part), Kosovo, Croatia,

Latvia, Liechtenstein, Lithuania,

Luxembourg, Malta, Macedonia,

Montenegro, Netherlands, Norway,

Moldavia, Monaco, Ukraine, Austria,

Poland, Portugal, Romania, Russia

(European part) San Marina, Serbia,

Slovenia, Slovakia, Spain, Turkey

(European part), Vatican City, Belarus

and Switzerland.

Primary Raw Materials

It must of course be possible to

demonstrate that these raw materi-

als originate in Europe.

Co-products

More than 80% of dairy cattle feed

consists of co-products. This con-

cerns by-products from industrial

processes, such as starch, beer, oil

or bio-ethanol production. There are

many co-products (such as rapeseed

meal, brewers’ spent grain, palm

kernel meal) that is imported into

Europe. Often because it is a source

of protein, or because it contains a

great deal of fibre.

In this approach it was decided not to

allow those co-products, whose pri-

mary product is produced for a market

outside Europe, to be imported into

Europe. By this we mean processes,

such as beer production in Russia, oil

production in Asia (although this oil is

partially imported into Europe).

Soy and soy products must originate

in Europe. Sunflower kernel and

rapeseed meal are sufficiently avail-

able in Europe to be able to serve a

considerable number of large-scale

supply chains. Sunflower kernel and

rapeseed crushers often supplement

these quantities with sunflower ker-

nel and rapeseed produced outside

Europe. This is why a Massa Bal-

ance approach was selected in this

case, whereby at least 80% of the

original product must demonstrably

come from Europe. The situation

concerning cereal co-products,

such as wheat yeast concentrate,

is complex. In this case, the main

product requirements (for example,

starch production) is leading for

the producer. It is known that these

producers consciously mix cereals

from different origins to ensure they

have a stable production process and

to enable them to supply consistent

quality. This is why a Mass Balance

approach is used in this case.

Other Products

In addition to the more important

raw materials, animal feed includes

many other products. This includes

high-quality additives, such as

health-promoting fatty acids, vita-

mins and minerals. The consumption

limit of these products often is a

maximum of 5% of the total ration.

This involves hundreds of different

and high-quality products. Restrain-

ing the origin of these products

has an enormous impact on their

availability and on animal health and

efficiency. This is why it was decided

not to constrain these products.

Background to the Code 'Livestock feed of European Origin'

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Agrifirm Group BVinfo@agrifirm.com

T +31 (0)88 488 10 00 www.agrifirm.nl

PO Box 200007302 HA Apeldoorn, The Netherlands