1. Competitive landscape in the feed industry
According to national feed industry statistics, in recent years, although China's feed production has shown an increasing trend, the number of feed industry enterprises in China has shown an overall downward trend. The reason is that China's feed industry is gradually shifting from an extensive to an intensive direction, and small enterprises with poor production technology and product quality, as well as poor brand awareness, are gradually being replaced. At the same time, due to factors such as competitors and industrial restructuring, and increased labor and raw material costs, the profit level of feed enterprises is decreasing, and large-scale production enterprises can only continue to operate in industry competition.
Large production enterprises, on the other hand, take advantage of their economies of scale and seize opportunities for industry integration to expand their production capacity through mergers or new production bases, enhancing the concentration and efficiency of the industry, and promoting the gradual transformation of China's feed industry towards scale and intensification.
2. The feed industry is cyclical, regional, and seasonal
The production regions of China's feed industry have certain regional characteristics, for the following reasons: firstly, China has a vast territory, and there are significant differences in crop varieties and grain yields planted in different regions. Concentrated feed and premixed feed account for a large proportion in the north, while compound feed is mainly used in the south; Secondly, the feed industry is closely related to the aquaculture industry, and due to different dietary habits and breeding varieties in different regions, there are also regional differences in feed. For example, in coastal areas, aquaculture is the main method, while in Northeast and Northwest China, there are more ruminant animals raised for cattle and sheep; Thirdly, the competition in China's feed industry is relatively fierce, with a low overall gross profit margin, complex and diverse raw materials, different origins, and a short transportation radius. Therefore, the feed industry mostly adopts the model of "national factory establishment, unified management, and local operation". In summary, the feed industry in China presents certain regional characteristics.
The factors that affect the feed industry include multiple aspects, mainly including the upstream raw materials of the feed industry, such as corn and soybeans, and the downstream of the feed industry, which is closely related to the national animal husbandry. Among them, upstream raw materials are the most important factors affecting the feed industry.
The prices of bulk raw materials such as corn and soybeans in the upstream are subject to certain fluctuations in domestic and foreign markets, international situations, and meteorological factors, which affect the cost of the feed industry and subsequently affect feed prices. This means that in the short term, feed costs and prices will also change accordingly. The inventory of the downstream aquaculture industry is influenced by factors such as animal diseases and market prices, and there is also a certain degree of fluctuation in inventory and sales, which affects the demand for feed products to a certain extent. Therefore, there are certain cyclical characteristics in the feed industry in the short term.
However, with the continuous improvement of people's living standards, the demand for high-quality protein meat is also steadily increasing, and the feed industry as a whole has maintained relatively stable development. Although there are certain fluctuations in feed demand due to downstream animal diseases such as African swine fever, in the long run, the feed industry as a whole has no obvious periodicity. At the same time, the concentration of the feed industry has further increased, and leading enterprises in the industry are closely following changes in market demand, actively adjusting product and marketing strategies, and can benefit from stable growth in market demand.
There is a strong cultural atmosphere during holidays in China, especially during festivals such as the Spring Festival, Dragon Boat Festival, Mid Autumn Festival, and National Day. The demand for various types of meat by the people will also surge. Breeding enterprises usually increase their inventory in advance to cope with the surge in demand during holidays, which leads to a high demand for pre holiday feed. After the holiday, consumer demand for livestock, poultry, meat, and fish will decrease, and the entire aquaculture industry will also perform relatively weakly, resulting in a off-season for feed. For pig feed, due to the frequent festivals in the second half of the year, it is usually the peak season for feed demand, production, and sales.
3. Supply and demand situation of the feed industry
According to the "China Feed Industry Yearbook" and "National Feed Industry Statistics" released by the National Feed Industry Office over the years, from 2018 to 2022, China's industrial feed production increased from 227.88 million tons to 302.23 million tons, with an annual compound growth rate of 7.31%.
From the perspective of feed types, the proportion of compound feed is the highest and maintains a relatively fast growth trend. As of 2022, the proportion of compound feed production in the total feed production is 93.09%, showing an increasing trend. This is closely related to the scale up process of China's aquaculture industry. Generally speaking, large-scale aquaculture enterprises tend to purchase comprehensive and direct feeding ingredients, while small-scale farmers save farming costs by purchasing premixes or concentrates and processing them to produce their own feed. Especially after the outbreak of swine fever in Africa, in order to further ensure the biological safety of pig farms, pig breeding enterprises tend to purchase pig formula products in a one-stop manner, rather than purchasing premixes and concentrated materials for on-site processing.
Pig feed and poultry feed are the main varieties in China's feed product structure. According to the "China Feed Industry Yearbook" and "National Feed Industry Statistical Data" released by the National Feed Industry Office over the years, the output of feed varieties in different breeding categories in China from 2017 to 2022.
4. Technical level and characteristics of the feed industry
The feed industry has always been an important component of modern agriculture, leading the transformation and upgrading of the livestock industry chain through innovation. Thanks to the efforts of industry, academia, and research, the feed industry has further promoted sustainable agricultural development in areas such as formula innovation, precision nutrition, and antibiotic substitution. At the same time, it has promoted the informationization and intelligence of the feed industry in production equipment and processes, empowering the feed industry chain with digital technology.
(1) Technical level of feed formula
With the acceleration of agricultural modernization and the deepening of feed research, optimizing the formula structure of feed has become the core competitiveness of feed production enterprises. The research on new feed ingredients and their substitution has become the development direction of the industry, promoting the diversification and precise nutrition of feed formula structure.
Feed cost is the main component of breeding costs, and bulk raw materials such as corn and soybean meal are also the main components of feed cost. Due to the price fluctuations of feed raw materials such as corn and soybean meal, and the main dependence on imports of soybeans, finding alternatives to feed raw materials to reduce feed costs has become a research direction for enterprises. Feed enterprises based on the production areas of alternative raw materials and the geographical advantages of feed enterprises, Different alternative solutions can also be adopted. In terms of antibiotic substitution, with the improvement of technology, the application of plant essential oils, probiotics, enzyme preparations, and probiotics is increasing. At the same time, industry enterprises are also continuously conducting research on antibiotic substitution combination schemes, promoting the absorption of feed nutrients in all aspects through additive combinations, and achieving good substitution effects.
At present, leading feed enterprises in the industry have made significant breakthroughs in the field of bulk raw material substitution, and can effectively respond to fluctuations in raw material prices through raw material substitution; The use of anti microbial additives has made progress, but there is still a problem of adjusting the combination of additives or end feed to achieve optimal feed nutrition.
5. The Development Trends of the Feed Industry
(1) Scale and intensive transformation and upgrading of the feed industry
At present, the competition in the feed industry is becoming increasingly fierce, and large feed processing enterprises have shown significant competitive advantages in feed formula research and development, raw material procurement cost control, feed product quality control, sales and brand system construction, and subsequent services. In July 2020, the comprehensive implementation of the anti epidemic law and the continuous rise in prices of large feed raw materials such as corn and soybean meal have severely impacted small and medium-sized feed processing enterprises, The overall gross profit margin of the industry is decreasing, continuously compressing the survival space of small and medium-sized feed enterprises. Small and medium-sized feed processing enterprises will gradually exit the market, and large enterprises will occupy more and more market space.
(2) Continuously optimizing formulas
With the increasing awareness of raw material functions in the industry and the continuous improvement of downstream breeding databases, the accuracy and customization of feed enterprise formulas are constantly improving. At the same time, the social and economic environment and the increasing consumer demand of people are also constantly pushing feed formula enterprises to consider more low-carbon environmental protection, meat quality improvement, and supplementary functional ingredients when formulating formulas. Low protein diet feed, functional feed, and other feed products are constantly being introduced to the market, The continuous optimization of formulas represents the future development direction of the feed industry.
(3) Improve the guarantee capacity of feed raw materials and control feed costs
The industrial feed raw materials mainly include energy raw material corn and protein raw material soybean meal. In recent years, the structure of China's planting industry has gradually adjusted, to some extent improving the self-sufficiency of feed raw materials. However, the current situation of China's protein feed raw materials mainly relying on imports still exists, and the uncertainty of the international situation further puts higher requirements on the ability of the feed industry to guarantee raw materials. Improving the ability to guarantee feed raw materials is an inevitable choice to stabilize feed prices and quality.
While promoting the structural adjustment of China's planting industry and moderately improving its self-sufficiency, the feed industry promotes the diversification of imported varieties and sources of protein feed raw materials, such as actively exploring the supply potential of surrounding countries along the "the Belt and Road" and other countries to enrich supply reserves, strengthening the monitoring, assessment and early warning of the supply and demand situation of egg white feed raw materials, and making full use of tariff, quota adjustment and other mechanisms to grasp the pace of raw material import. At the same time, we will continuously strengthen the promotion and application of new feed nutrition varieties domestically, and promote the reduction of the proportion of protein raw materials added in feed formulas; Strengthen the reserve of raw material substitution technology, and use wheat, barley, etc. for raw material substitution on the basis of ensuring feed quality. In addition to traditional bulk raw materials, the feed industry continues to tap into the potential for the feed utilization of agricultural and sideline resources, such as supporting dehydration and drying of crops such as sweet potatoes and cassava, as well as agricultural by-products such as fruits and vegetables, lees, and base materials; By conducting biological fermentation and physical detoxification on the by-products of oilseed processing, the content of anti nutrient substances in agricultural and sideline resources is continuously reduced, the protein quality is improved, and then transformed into feed raw materials that are convenient for industrial production, comprehensively improving the guarantee ability of feed raw materials.
(4) 'Product+Service' will become one of the core competitiveness of feed enterprises
In recent years, the downstream aquaculture industry structure in the feed industry has been constantly changing, with some free range farmers and small aquaculture enterprises gradually upgrading to moderately scaled modern family farms or exiting the market. The downstream of the feed industry is showing a trend of scale, and the market share of large-scale aquaculture farms, including modern family farms, is gradually expanding. Product+Service "refers to the specialized manufacturing and provision of products that meet the personalized needs of customers by enterprises based on their requirements. With the increasing concentration of downstream aquaculture industry, customized models have become an important means to attract downstream large-scale aquaculture customers.
In the service process, feed enterprises tailor a unique product service plan that includes continuous adjustment and optimization of nutrition and on-site management for a single customer based on their hardware facilities, pig herd genes, and health status. In addition to the feed product itself, the plan also needs to be accompanied by relevant courses, training, and consulting to assist downstream breeding customers in overall transformation from software and hardware, achieving the upgrading of feeding, epidemic prevention, breeding, disinfection, health care, disease prevention and control, and sewage treatment steps.
In the future, feed companies will provide dynamic solutions based on the needs of different users and the pain points of different periods. At the same time, enterprises will use user data to establish their own databases, collect information including nutritional composition, feeding effects, and breeding environment, better analyze the preferences and actual needs of farmers, and enhance the customer stickiness of feed enterprises.
(5) The demand for high-quality downstream proteins and functional livestock and poultry products continues to increase
With the improvement of the living standards of Chinese residents, the demand for high-quality protein and functional livestock and poultry products has been increasing year by year, such as beef, lamb, fish and shrimp meat, and lean pork. During the reporting period, the production of ruminant feed and aquatic feed in China continued to increase, maintaining a high growth rate.
(6) Biological feed is one of the strategic emerging industries in China
Biological feed is one of the strategic emerging industries in China. Biological feed refers to feed products developed through biotechnology technologies such as fermentation engineering, enzyme engineering, and protein engineering for feed raw materials and additives, including fermented feed, enzymatic feed, and biological feed additives. At present, the feed industry has entered an era of comprehensive anti epidemic measures, with high prices of traditional feed raw materials and the normalization of African swine fever and other diseases. The pressure and challenges faced by the feed and downstream aquaculture industry are increasing day by day. Biological fermented feed products have become a global research and application hotspot in the field of animal husbandry due to their advantages in facilitating the development of feed resources, ensuring the safety of feed and livestock products, and improving the ecological environment.
In recent years, the core technologies in the biological feed industry chain have been gradually established, and breakthroughs have been made in bacterial breeding, feed fermentation processes, processing equipment, additive nutrition formulas, and manure treatment. In the future, under the background of prohibition and substitution of antibiotics, the growth of biological feed will be more rapid. At the same time, the feed industry needs to establish a basic database of fermented feed nutrition and corresponding effectiveness evaluation system, use biotechnology for dynamic monitoring, and equip with more standardized biological feed production processes and processes.
(7) Green, environmentally friendly, and sustainable development
The "14th Five Year Plan" once again clarifies the industry development plan of "promoting green development and promoting harmonious coexistence between humans and nature". The "Guiding Opinions on Accelerating the Establishment and Improvement of a Green and Low Carbon Circular Development Economic System" issued by the State Council also points out that establishing and improving a green and low carbon circular development economic system is the fundamental strategy to solve China's resource, environmental and ecological problems. Green, low-carbon, and environmentally friendly "is an important means for feed enterprises to achieve truly sustainable development, and is one of the areas that the feed industry will continue to focus on in the future. The untreated pollution sources of aquaculture farms have certain adverse effects on the environment, and the main source of pollution in aquaculture farms is animal excrement, which contains a large amount of harmful substances such as ammonia and hydrogen sulfide. The above-mentioned harmful substances pollute water and soil through ecosystems, and may also affect consumer health. Feed, as the source of animal feeding, is a key node in reducing aquaculture pollution. Leading feed companies in the industry actively design a scientific and balanced nutrition matching system, and improve the digestibility of animal feed by adding plant essential oils, enzyme preparations, and microecological preparations to the feed, thereby reducing the emissions of substances that have an impact on the environment such as feces, ammonia, and phosphorus. In the future, feed enterprises will continue to build professional research teams to research and develop cutting-edge biotechnology, finding a balance between green, low-carbon and cost control.
Post time: Nov-10-2023