The quarterly feed industry development meeting was held in Changchun on Nov. 26. The vice director of Ministry of Agriculture's livestock office described this year's feed industry development as "overall not optimistic." The meeting reported feed output statistics that reveal a big shift toward formula feed and discussed consolidation in the feed milling industry.
The feed industry is on a general upward trend, but this year it faced numerous natural disasters (droughts, floods, disease?), pig prices were low in the first half of the year, and raw materials for feed are in short supply.
Commercial feed production for January to August of this year totaled 90 million metric tons (mmt), up 5.7% from last year. There was a big change in the composition of feed. Production of complete formula feed increased 9.3% while production of feed concentrates was down 9.6% and feed additives were down 7.1%.
The change in composition represents a shift from the traditional practice of farmers mixing raw grain with concentrate feed (containing mainly protein) and additives (trace elements, vitamins, antibiotics) with raw grain from their own farms or purchased locally. The report calls this "a vanishing trend."
The shortage of feed raw materials is cited as a big issue facing the industry. This year corn supplies were short and quality of corn was down. The report says reduced corn quality induced medium and small-scale farmers to switch to complete formula feeds instead of mixing grain with concentrate feeds.
The report singled out the domestic shortage of protein as a "key issue" facing the industry that emerged during the 12th 5-year plan period. Specifically, it noted that 75% of soybeans and 70% of fish meal are imported.
The report says the quality and safety of feed is improving. There have been no feed safety incidents [e.g. no one was poisoned by toxic feed additives like melamine or clenbuterol]. In 4141 quality tests of feed, the compliance rate was over 93%, up 3 percentage points from last year. Very few forbidden substances are being detected in feed. Tests of 1237 samples found no clenbuterol; just one sample out of 1024 samples of "protein material" tested positive for melamine. Government departments have increased their monitoring of feed and companies are doing their own checks.
The industry is described as highly competitive--"white hot" in some regions. Companies are under cost pressure from rising raw material and labor costs. Some companies that posted huge growth rates in 2008 and 2009 slowed down this year.
Consolidation and industrialization are related trends. The report says the "threshold has to be raised" for feed companies--small companies need to be eliminated. The report says small companies are especially under pressure from rising costs. Large conglomerates are expanding, refurbishing their equipment, and opening retail chain stores [for meat or feed?].
Science and technology and personnel training are emphasized. Companies like Wen's group and Haid are praised for their programs offering technical services to farmers, loan guarantee services, sponsoring cooperatives and centralized purchase of feed.