The soaring food prices are an urgent problem the actual governments have to face worldwide: Food riots are provoking more and more political instability, like in Haiti or Indonesia. The price level of food is able to lead to developing countries missing international poverty targets.

Source: FAO

Besides the world population growth the changing eating habits in India and China are one of the main reasons for this development. An example: Having consumed 20 kg meat in 1980 a Chinese ate 50 kg in 2007.

According to the survey China Feed Market Review & Outlook 2007-2008 China’s feed market experienced a hard time in 2007. Hog farms suffered a substantial reduction of hog inventory. Demand for Feed reduced largely and feedstuff price surged on a high level. Soymeal price even surpassed the highest level of RMB3,500/MT in 2004, resulting in more than 5,000 mid-small scale feed manufacturers suffering from stop production in China.

Affected by tense hog supply and surging hog purchasing price, numbers of large scale animal slaughtering and meat processing enterprises entered animal breeding and feed producting industry, causing a reduction of feed market share rate. Meanwhile, a drowsy feed demand and high feedstuff price casued a reduction of profit rate, even losses in feed industry. Therefore, large scale feed groups engaged in animal breeding to expand market share and increase integration system as to gain more profit and accelerate market distribution. While the cessation of small scale feed factoties provide more space for the promotion of large scale enterprises business, it is expected feed market in China will be carved up by large scale enterprises in 2008.

2007 is a milestone in Chinese feed industry. With the enlargement of animal breeding scale and long-term feedstuff price, product structure adjustment will be carried out in feed production, so output growth rate tend to be slowed down. In terms of feed varieties, formula feed and premixed feed increased proportion, while concentrated feed proportion reduced. In addition, corn feed supply tends to be strained on year-on-year basis, so farmers have enlarged utilization of non-regular feed, although which faced industrialization lag.

The survey: China Feed Market Review & Outlook 2007-2008