Animal Feed Output Plunges in 2013

Statistics from China's Feed Industry Association show that the country's output of manufactured animal feed plunged by 8.7 percent during the first three quarters of 2013 compared with same period last year.

The feed and livestock sectors were hit by a series of unfavorable incidents during the first half of 2013:

• The "quick chicken" incident late in 2012 revealed that many chicken producers were abusing pharmaceuticals, discouraging poultry consumption.
• In March an outbreak of avian influenza prompted closure of poultry markets, slaughter of birds and scared consumers from eating poultry.
• Pigs were in over-supply after a big build-up of inventories in 2012, putting downward pressure on hog prices after spring festival. 
• The discovery of thousands of dead pigs floating in Shanghai's Huangpu River in Feb-March discouraged pork consumption and prompted a crackdown on small pig farms. 
• Periodic reports of sale of meat from diseased pigs also cut into consumer confidence.
• Numerous cattle and sheep were killed by winter snow storms
• Hot temperatures, rain and typhoons during the peak season for fish-farming cut into aquaculture feed demand.

Production of feed for all types of livestock except aquaculture were down, suggesting generally weak demand for animal protein. Even aquaculture feed's growth was tepid in comparison with previous years' growth. Feed for meat poultry was down 16.3 percent due to the deep freeze in the poultry market caused by the avian influenza outbreak. Swine feed output was down 7%, a dramatic turnaround from torrid growth in 2011 and 2012. 

China animal feed production, January-September 2013
Type of feed	2013 output million metric tons	Change from 2012 percent
Swine	53.0	-7.0
Egg layers	22.4	-7.8
Meat poultry	39.0	-16.3
Aquaculture	16.9	2.4
Ruminant	5.4	-5.3
Other	2.3	-8.0

Sum of numbers exceeds reported total of 133 mmt.

Source: China feed industry association.

The feed industry association said feed additives and premixes were one bright spot in the industry. In order to economize on costs, many farms bought grain directly from farmers or bought premix and additives to mix feeds on-farm instead of buying compound feed from mills. 

The disease and floating pig incidents brought pressure to close down small farms and consolidate livestock. On October 8, the state council issued draft regulations for prevention of livestock pollution that are designed to "raise the threshold" for livestock farming. The government is pushing industrialized business models and increased scale of operations. A 2013-2020 plan for cattle and sheep industries called on each locality to boost "company + farmer" models.