During the first quarter of 2015, China's feed production was down 4 percent from the same period last year, according to production data from 180 feed companies monitored by the Ministry of Agriculture. This is the toughest year ever for the Chinese feed industry, say feed industry managers interviewed by Guangdong's Southern Rural News.
Feed companies have been cutting prices aggressively, offering two-for-one sales and other promotions to boost sales volume in the hyper-competitive market with weak demand. Many companies expanded production capacity during the last two years, and they are willing to sacrifice profit to maintain their market share. Another round of price cuts is rumored for June.
The cutback in pig inventories over the last two years is a major factor cutting into demand. Sales of pig feed were down 14 percent during the first quarter. With hog prices having fallen for 20 months and stiff losses last year, many farms in Guangdong Province are cautious about restocking, said one farm operator. There has already been a rebound in piglet prices, and feeder pig producers are starting to restock sows. Farmers are not enthusiastic about expanding their herds of finishing pigs, though.
Ministry of Agriculture data shows the hog inventory down 9.8 percent year-on-year in May for the farms it monitors. The National Bureau of Statistics shows a less-drastic reduction of 4.2 percent for the first quarter of 2015.
Guangdong Province gave out subsidized loans to buy feed this year to stem the decline in sales.
According to Southern Rural News, feed industry executives are eagerly watching for a rebound in the hog sector.
companies are all on edge,” said one feed company manager.