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Chinese Feed Output Increasing Year-on-Year

by 5m Editor
1 May 2009, at 9:50a.m.

CHINA - In 2008, China's feed industry continued to show a trend of stable development.

The output of China's feed industry in 2008 reached 131 million tons, an increase of 6.2 per cent year-on-year. Among them, compound feed achieved 99.5 million tons, up 6.8 per cent year-on-year; concentrate feed made 26 million tons, an increase of 4.4 per cent year-on-year; additive premix feed contributed 5.4 million tons, an increase of 3.7 per cent year-on-year. In 2008, China exported six million tons of feed with a total value was $3 billion, and imported 2.5 million tons worth $2 billion.

At present, pig and poultry feeds account for 80 per cent of Chinese total feed production, while the global feed industrial structure is pigs, poultry and cattle feed account for one-third each. As expected, in terms of the improvement of living standards, pork consumption will decrease, and poultry, beef and aquatic products will increase.

It is expected that in the next five to ten years, after the rapid formation of industrialisation of China's breeding industry, the number of feed companies will quickly reduce. Through mergers and acquisitions, those companies who have advantages in technology, scale and brand will occupy more market share. In recent years, the market concentration of the Chinese feed industry has been rising, and further mergers and acquisitions are on the way. In 2008, there were 13 feed companies whose annual production capacity exceeded one million tons and they accounted for one-third of China's total feed output.

In order to reduce the stress from upstream AND downstream industries, some feed companies have started to extend their industry chain into the downstream breeding industry, such as Sichuan New Hope Agribusiness Co. Ltd, Tongwei group, Tech-bank and Zhengbang Group. Greater integration into the downstream breeding industry can bring feed enterprises more closely to market demand, thereby enhancing the quality of feed processing, raising sales, and also through the integration of industrial chain, they are able to intensify their ability to deal with industrial cyclical fluctuations and promote the level of comprehensive profitability.