Analysis Report on the Current Situation of China's Feed Market

1. industry development characteristics analysis:

1. China's industrial feed production is growing steadily, and the product structure has not changed much.

With the development of the downstream aquaculture industry, China's feed industry continues to grow. From 2013 to 2022, China's industrial feed production continued to grow, exceeding 250 million tons in 2020. In 2022, China's industrial feed production reached a new high of 302.23 million tons, an increase of 3% year-on-year. From January to April 2023, the national industrial feed output will reach 96.36 million tons. Industrial feed production is expected to reach 0.31 billion tons in 2023, up about 3% year-on-year.

Figure 1 Changes in industrial feed production in China, 2013-2023

Source: Ministry of Agriculture and Rural Affairs, China Feed Industry Association

From the perspective of feed variety output, in 2023, the proportion of soybean meal in China's feed formula will drop to 13%, a decrease of 1.5 percentage points from 2022. According to the annual feed consumption, it is equivalent to a reduction of about 9 million tons of soybean consumption. The proportion of compound feed, concentrated feed and additive premixed feed production is expected to be 92.9, 4.4 and 2.2, with little change compared with the previous year.

Figure 2 Changes in industrial feed production by variety in China, 2013-2023

Source: Ministry of Agriculture and Rural Affairs, China Feed Industry Association

2, raw material prices fell sharply, feed costs fell high.

In 2023, the high price of feed ingredients fell, making the cost of pigs, broilers and layers continue to decline. Among them, the average annual price of corn is 2,755 yuan/ton, down 2.2 percent year-on-year, while the average annual price of soybean meal is 4,312 yuan/ton, down 5.8 percent year-on-year. Overall, the average cost of full-price compound feed for fattening pigs, broilers and laying hens fell to 3,509, 3,597 and 3,261 yuan/tonne respectively in 2023, down 99, 120 and 99 yuan/tonne from 2023, down 2.7 per cent, 3.2 per cent and 2.9 per cent respectively.

Figure 3 Changes in compound feed costs for pigs, broilers and layers in China, 2021-2023

Data source: Iger database

In 2023, the average ex-factory prices of live pigs, meat and poultry, egg and poultry feed were reduced by 4 yuan/ton, up 76 yuan and 55 yuan/ton respectively from the previous year. Feed prices did not follow the continuous decline in raw material prices, and the decline was much smaller than the decline in raw materials. This was mainly due to the high concentration of the feed industry, the relatively large scale of enterprises, and the strong ability to control prices. The dividends of the decline in feed raw materials were not fully transferred to terminal breeding.

Figure 4 Changes in production efficiency of compound feed for pigs, broilers and layers in China, 2021-2023

Data source: Iger database

Analysis on Business Development of Representative Enterprises in 2. Feed Industry

In 2022, China's feed listed companies with higher feed revenue mainly include Haida Group, New Hope, Tongwei shares, etc., with revenues exceeding 30 billion yuan. Among them, Dabei Nong, Baiyang and Shennong Group all exceeded 11%, higher than other listed feed companies. From the perspective of feed production and sales, Haida Group and New Hope have higher feed production and sales, both exceeding 20 million tons. From the channel layout, most of the feed listed companies sales network distribution in the country's major provinces and cities, Jingji Zhinong, Tiankang Bio, Zhenghong Technology and other enterprises focus on the advantages of the province's sales layout.

Figure 5 Comparison of feed business of listed companies in China's feed industry

Data source: Prospective Industry Research Institute

Analysis of Competition in 3. Enterprises

1, the industry concentration is high, New Hope, Haida Group and other leading production.

In 2022, there will be 36 feed production groups with more than one million tons in China, accounting for 57.5 percent of the country's total feed production. The total number of enterprises with annual output of more than 10 million tons reached 6. China's feed industry head enterprise production concentration is high.

In 2022, the feed output of New Hope Group will reach 28.22 million tons, accounting for 9% of the national feed output, ranking first in the industry. Haida Group and Muyuan shares feed production of more than 20 million tons, accounting for more than 6% of the country's feed production, into the industry's top three. Wen's shares, Twins Group, Zhengda shares and other enterprises are also in the industry-leading level of feed production. The output of the top ten enterprises accounted for 45.69 per cent of the country's total output.

2, Shandong production concentration, product revenue and output value are leading.

From the perspective of regional competition, in 2022, the top 5 provinces in China's feed production are Shandong, Guangdong, Guangxi, Liaoning and Henan, accounting for more than 5% of the country's total feed production. Among them, Shandong's feed production ranked first in the country in 2022, accounting for 15% of the total output.