China Swine Feed Down, Poultry Feed Up

China's animal feed output grew 2.8 percent during 2018, according to figures released by the country's Feed Industry Association. Swine feed sales are down due to effects of African swine fever, but impacts vary by region. More recent reports say poultry feed sales are expanding, but they are constrained by lack of breeding stock and environmental restrictions. The reduction of soybean meal use parroted by officials in Beijing is never mentioned in reports on feed mill site visits--its low price still encourages use.

China's feed industry association said 2018 swine feed output was down due to the impact of African swine fever (ASF), while production of poultry, aquaculture and ruminant feed production was up. Production of complete compound feed was up 4.6 percent, but concentrates was down 13.4 percent (typically soybean meal and other protein meals, and micronutrients to be mixed on-farm with grains for pigs). Premix output was also down 5.1 percent.

China animal feed industry output, 2018
Type of feed	Output	Growth
	Million metric tons	Percent
All feed	227.88	2.8
Complete feed	205.29	4.6
Concentrate	16.06	-13.4
Additives, premix	6.53	-5.1
by species:
Swine	97.20	-0.9
Layers	29.84	1.8
Meat poultry	65.09	8.2
Aquaculture	22.11	6.3
Ruminants	10.04	8.9
Other	3.60	10.7
Source: China feed industry association.

Swine feed accounts for 43 percent of feed output, according to the industry association statistics, a surprisingly small share considering that last year's pork output (54 mmt) accounted for 63 percent of meat output (85.2 mmt) reported by China's National Bureau of Statistics. Feed for chickens and ducks accounts for a disproportionately large share of feed output. Thus, expansion of China's poultry production is to some degree cushioning the industry against the decline in swine output.

Two Chinese provinces--Guangdong and Shandong--are dominant in feed output. Guangdong is the largest swine feed producer, but poultry and fish feed account for a large share of the province's feed output. In Shandong--the center of China's broiler industry--poultry feed output is more than double swine feed production. Guangdong is China's top fish feed producer and Shandong is the top poultry feed producer. Guangxi, Liaoning, Jiangsu, and Fujian also have significant poultry feed production. Jiangsu and Hubei are no. 2 and no. 3, respectively, in fish feed output.

This being China, every statistic is problematic. There are at least three statistics on China's feed output for 2018 that are within a few percentage points of one another. An industrial output statistic available deep in the National Bureau of Statistics web site says cumulative feed output through December 2018 was 242 mmt and was up 3.4 percent from the previous year. The Alltech global feed survey reported a much lower output of 187.9 mmt for 2018 and negative growth in output (-0.4 percent). Alltech says China is the world's leading feed producer.

Measures of China's animal feed production, 2018
Source	2018 output	Growth
	MMT	Percent
China Feed Industry Association	227.9	2.8
China National Bureau of Statistics	242.1	3.4
Alltech global feed survey	187.9	-0.4

A separate report on site visits to feed manufacturers in Jiangxi, Hebei, Shandong, and Henan Provinces during February 2019 posted on a feed industry news site reported that swine feed production was down in February due to combined impacts of ASF and that month's lunar New Year holiday. The report said ASF impacts were milder in southern provinces and more serious in northern provinces. Hebei Province was singled out as a "disaster area" with swine inventories down 50 percent or more on most farms. The report concluded that expansion of poultry feed output was offsetting the decline in swine feed and anticipated more of the same if ASF could not be brought under control. (Publication of the month-old report was probably delayed by the usual ban on bad news during the "two meetings" of communist party leaders held in March.) 

A large feed mill in Jiangxi Province said there were ASF outbreaks in local plains regions but few in mountainous areas. The company had a big decline in swine feed output. Some large swine-farming companies were looking to expand production to take advantage of high prices later in the year, but medium and small farms are "on the sidelines." A feed mill in eastern Shandong said it was not affected much by ASF because small pig farms there don't buy much commercial feed. Sales of poultry feed were brisk. However, the supply of broiler chicks is limited due to restrictions on imports of breeding stock and prices are rising, shrinking profits for poultry growers. 

In Fujian, feed mills were said to buy corn cautiously, holding much lower inventories than usual. Output at a large feed mill in Hebei Province was down 60 percent in February, and corn purchases were only half the planned amount. 

Another March 2019 industry report on site visits in Guangdong found that swine feed sales were down 10 to 50 percent, but poultry feed sales were up 10 percent. Swine farms worried about ASF risks switched from mixing their own feeds to purchasing complete feed from a reputable mill. Expansion of poultry farming is constrained by environmental regulations in Guangdong. Duck farming is reportedly moving from Guangdong into neighboring provinces Guangxi and Hunan. An expansion of fish ponds in Hubei province has driven down fish prices, discouraging further aquaculture expansion in Guangdong. 

Reports do not mention the Chinese feed industry association's new standards published last October calling for reduced soybean meal inclusion. To the contrary, the Guangdong report says that the current price of soybean meal makes it a very cost-effective ingredient, and inclusion of soy meal in feed formulations was said to be at its upper limit. The soybean meal price was said to be about 2500 yuan/mt (down about 1000 yuan from the peak price in October). There was no shortage of protein feed ingredients, but companies were holding minimal inventories as they expected supplies to increase as soybean import arrivals increased their pace (from their low point in January-February). High prices for rapeseed meal were discouraging its use. 

Feed mills in Guangdong reported reducing their use of imported sorghum and barley-formerly at 40% of feed formulations. They now use 60-65% corn and 20% soybean meal in swine feed rations. They purchase most of their corn from depots in the northeast where they have personnel posted to keep an eye on grain purchasing and drying. One feed mill was considering eliminating wheat bran from feed because of the risk of transmitting ASF from wheat-growing provinces in the north. Mills are adding some field peas and sunflower seed meal to feed. another company engaged in feed and livestock farming emphasized the flexibility of feed formulations for poultry.