Saturday, January 2, 2021

China's 2020 Feed Production Surged

China's animal feed production through November 2020 was up 9.5 percent from the same period a year earlier. The rebound in swine feed and sustained production of poultry feed is likely to bring the calendar year feed total to a record high. These numbers are not a complete accounting of feed use in China--they don't include feed mixed on-farm--but the data do suggest that China's industrialized "efficient" farms are bumping up demand for commercial feeds as they replace "backyard" DIY on-farm feed mixers and garbage-feeders.

China's feed industry association reported that feed output for the month of November 2020 was up 12.6 percent from November 2019 when feed output was depressed due to African swine fever's decimation of the pig population. November feed output was up 8.6 percent from November 2018--before the epidemic was in full swing. Cumulative January-November 2020 feed output was about 229 million metric tons (mmt). December output (not yet announced) could bring the 2020 total to more than 250 mmt. That would be a record high. 

Source: China feed industry association monthly data.

Monthly feed industry data indicate that swine feed production was down sharply in 2019 when many farmers liquidated their swine herds to avoid ASF. Swine feed began its recovery in the second half of 2020 as monthly output rose from 5.9 mmt to 9.3 mmt between May and October. Swine feed output for the month of November was up more than 50 percent from a year earlier, and it was just 2 percent below its November 2018 value. Some farmers filled their empty pig barns with ducks and chickens. Accordingly, poultry feed surged in 2019 and remained high in 2020--except for a dip during the months of China's covid lockdown in January-March. Feed produced for poultry still exceeded swine feed output in November 2020. The feed data indicate that medium- and small-scale farmers who switched from pigs to poultry have not switched back.

Source: China feed industry association monthly data.

Let's zoom out to look at the explosion in China's commercial feed output despite stagnant meat production reported by the statistics bureau over the past decade. Feed industry output more than doubled from 2005 to 2018 (its previous peak). Meat output rose just 24 percent over that period and seemed to stagnate after 2014. In 2019, meat output dropped 11 percent while feed output dropped less than 4 percent as the boost in poultry feed offset much of the decline in hog feed output during the ASF epidemic. A back-of-the-envelope estimate indicates that feed output could be up about 22 mmt year-on-year for 2020 while meat output could be up 3.5 mmt (when the final 2020 numbers come in). 

Source: China feed industry association monthly data and estimates for 2020.

Looking at these numbers as a ratio, the commercial feed output per ton of meat has risen from 1.5 tons in 2005 to 3.2 tons in 2020. In other words, the amount of commercial feed needed to produce a ton of meat doubled in 15 years, a trend that contradicts presumptions that the industry is getting more efficient.

Calculations by species are even more perplexing. According to the feed and meat data, China's poultry consumes twice as much feed per unit of meat as does its pork. Poultry feed-to-meat averaged about 3:1 until 2017, while swine feed-to-pork rose from 1.2:1 to 1.8:1 during 2010-19. Laying hen feed-to-egg output was consistently about 1:1. These ratios are inconsistent with Chinese cost of production surveys that show typical on-farm feed efficiency ratios of 3:1 for swine and less than 2:1 for poultry and eggs, and the ratios have changed only marginally over the years. Moreover, the poultry and swine feed-to-meat ratios calculated from the feed industry and meat output data indicate poultry are less feed-efficient than swine, the reverse of on-farm ratios. Furthermore, it is odd that the efficiency of converting feed to meat appears to be worsening rather than improving.

Ratio of feed output to animal protein output as
reported by China National Bureau of Statistics.

These data surely are inaccurate, but it seems unlikely that under-counts of poultry over over-reporting of poultry feed (for example) are big enough account for these anomalous results. The January-November 2020 feed data shows that swine feed (for sows, piglets, and finishing hogs) accounted for only about 33 percent of commercial feed output while feed for meat chickens and ducks accounted for over 40 percent. These shares are incongruent with meat output: China's pork output is more than twice as large as its poultry output. It's unclear why poultry feed output has surged in the last 3 years, unless the statistics bureau is missing a surge in poultry output.

Source: China feed industry association November 2020 report.

The feed numbers only reflect feed sold by manufacturers (and reported to the association), so they reflect penetration of commercial feed more than overall feed consumption. Commercial feed has had the highest penetration in China's poultry production since the 1990s when industrialized poultry production was introduced to the country by companies that supplied feed and chicks to groups of farmers they recruited, a so-called "company plus farmer" model. Pig farms often milled their own feed or fed their animals vines, pumpkins, aquatic plants, and food waste. But penetration of commercial grain- and soy-based feeds in the swine sector is surely increasing with the influx of industrialized pig farms, "company plus farmer" models in the swine sector, and efforts to eliminate garbage-feeding. And the farmers who replaced their culled pigs with poultry last year probably bought commercial poultry feed. That still doesn't explain why the apparent 3:1 feed-conversion for poultry calculated from aggregate data is at least a third higher than it actually is at the farm level.

Bags of feed ingredients waiting to be mixed into feed at a Chinese swine farm.

There are no concrete answers here--except that no precision or consistency should be expected from Chinese data. But this deep dive points to the influx of industrialized farms as a factor driving an explosion of feed demand in the aggregate. These farms may be individually efficient in converting grain and oilseed meals into meat (if well managed), but demand for feed ingredients could be increasing in the aggregate if the swine industry as a whole is replacing restaurant waste, vines and potatoes with corn and oilseed meal. It also points to the importance of poultry in commercial feed output, and raises questions about whether China's statistics bureau is undercounting the billions of Chinese chickens and ducks. 

Hundreds of ducks in a Chinese fish pond. Are statisticians counting them all?

A bag of duck feed.

Bags of soybean meal mixed into feed on a Chinese pig farm.


Jaume said...

Do you know any other blogger like you? That writes about China's agricultural sector.
Thanks for the info.

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Ginger Wang said...

Hello there,
Thank you for such a great piece of writing.
I am doing some research on the future of Chinese agricultural sector, I would like to seek some guidance from yourself. Could you email me on please?
Thank you,