China Feed Industry Report, 2011-2012 - Latest Report
Naperville, IL -- (SBWire) -- 07/09/2012 --Fueled by the steadily growing demand from downstream breeding industry, the total feed output in China rose 4% YoY to 169 million tons, accounting for around 20% of the global total and ranking No. 1 in the world. The output of pig feed topped the list for 62.1 million tons, up 4% YoY. The poultry feed output enjoyed the fastest growth, with output soaring 5% YoY to 49.8 million tons in 2011. The aquatic feed and ruminant feed saw low output, but aquatic feed witnessed larger growth space.
Presently, China has around 13,000 feed companies, most of which are small ones, and over 20% of medium-sized feed companies have been acquired by large players. The top 10 feed manufacturers such as CP Group, New Hope Group, Wens, Zhenghong and TRS Group together occupy more than 30% market share by sales. In recent years, given that the giants continually increase their production capacity to expand the market, the concentration degree of feed industry in China will be enhanced as well. For instance, New Hope Group brought Liuhe into the listed company through asset integration in November 2011. After the reorganization, Liuhe contributes feed capacity of 9.45 million tons to the Group.
Additionally, Chinese enterprises are carrying out expansion in overseas market. The third feed mill invested by Tongwei Co., Ltd. in Vietnam successfully went into operation in June 2012. Haid Group, engaging in the production and sales of aquatic feed and aquaculture preparations, subscribed equities in Vietnam-based Panasia in December 2011, with shareholding ratio reaching 80% after the capital increase. New Hope Group plans to set up 8 feed plants overseas annually after 2011 which will boast capacity of 100,000-200,000 tons, and to double its overseas investment each year. Currently, 20 enterprises like New Hope, Tongwei Co., Ltd. Haid Group and Ningbo Tech-bank which have established plants in Vietnam make up 10%-15% market share in Vietnamese feed industry.
The report not only focuses on the operating environment, supply & demand, upstream & downstream industry chain and market competition pattern of Chinese feed industry, but also minutely analyzes the industry development trend, enterprise dynamics, as well as operation, feed business and development strategy of 16 feed companies.
As the feed industry follows the cost-plus pricing and the costs of major raw materials such as bean pulp, corn, wheat and additives are high, the feed industry suffers a low gross margin and the manufacturers boost efficiency through different modes of operation. Some enterprises take advantage of their large scale to boom effectiveness, such as New Hope which focuses on complete feed with low gross profit and has a low gross margin. Its gross margin got to only 5.7% in 2011, but its revenue from feed products registered as high as RMB44.58 billion, featuring a high profit level as a whole. Some enterprises enhance their profitability by the operation of products with high gross margin, and such companies include Ningbo Tech-bank engaging in high-end aquatic feed, and Dabeinong Group, Wellhope and China Animal Husbandry Industry specializing in concentrated feed.
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