News 283 views last update:6 Aug 2012

Chinese feed production tops 137 million tonnes

In 2008, Chinese industrial feed production, compound feed production, concentrated feed production and feed additive premix production amounted to 137 million tonnes, 105.90 mt, 25.31 mt and 5.46 mt respectively.

With many years’ development, Chinese feed industry has set up the complete feed industrial system integrated with the feed processing, feed additive, feed raw material and feed machinery manufacturing industries as well as feed research, education, standard and examination. In 2008, Chinese feed market scale was about RMB 400 billion (€ 40.8b).
In 2008, Chinese industrial feed production, compound feed production, concentrated feed production and feed additive premix production amounted to 137 million tons, 105.90 million tons, 25.31 million tons and 5.46 million tons, rising year-on-year by 10.83%, 13.64%, 1.58% and 4.79% respectively.
The increase in feed production mainly comes from those regions with rising population and personal income and accelerating urbanization process.
In 2008, the production of compound feed, concentrated feed and feed additive premix accounted for 77.5%, 18.5% and 4% of the total feed production separately.
The proportion of compound feed production was further improved with the YOY growth of 1.5% while the proportion of concentrated feed production was reduced slightly and the proportion of feed additive premix production remained unchanged.
Overcapacity in feed production
Presently, there is severe overcapacity in Chinese feed industry with the equipment utilization rate below 50%.
There are over 10,000 feed producers in China, but the annual production of one feed producer is even less than 10,000 tons.
As a result, Chinese feed market can only support 1,000 feed enterprises at most considering the increase in Chinese total feed production, the lowest production of feed enterprises and the productivity-led market distribution.
According to international experience, there will be only several hundreds of feed enterprises in China in the future.
Industry shake-out
Feed enterprises are forced to adjust their strategies (larger scale, more perfect industry chain and complete value chain) to reduce production, sales and management costs for survival.
Large scale has been the indispensable survival condition for enterprises. In 2008, the number of Chinese feed enterprises was reduced by over 1,000 YOY.
In the following 3-5 years, the feed enterprise number will continue to decrease while the market concentration will be improved, leading to M&A and reorganization in this industry.
The competition among Chinese feed enterprises is transferring from the product competition to the value chain competition as well as from the single feed production to the supply of solutions for numerous raisers.
The key factor for success is to provide services with higher value for raisers.
Future potential
There are high potentials for the growth of Chinese feed resources. On one hand, feed grains demand for transformation.
Presently, only 1/4 feed grains in China are directly for feed processing while the remaining 3/4 are processed by farms or directly fed by raisers.
On the other hand, the planting industry starves for structure adjustment.
The full report can be obtained from China Intelligence and Research

Dick Ziggers

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