In a far-reaching interview, Prof. Qi Guang-Hai, Director General of the Feed Research Institute at the Chinese Academy of Agricultural Sciences, gave his insights into the future of the Chinese animal feed industry. Given his years of experience, he has published 23 books or book chapters and about 150 peer-reviewed articles including more than 30 SCI journal papers, his predictions may be key for those wanting to expand into China’s feed and feed additive markets.
Qi Guang-Hai was speaking to Feedinfo News Service, an information service for agribusiness and feed additive markets, in an interview that covered many aspects of China’s growing feed market.
The biggest takeaways from his discussions were:
Chinese Feed Market Expansion
Prof. Qi believes that there is significant future growth in Chinese feed markets. Unlike some feed professionals, he thinks that the Chinese Central Government’s ambitious target of 220 million tons of industrial animal feed output by 2020 (up 11% from 2015) is achievable. Although he is uncertain if the market can meet higher targets, despite some predicting consumption amounting to 250 million tons by 2025.
He has based this prediction on the back of continued Chinese feed market expansion, highlighting that output had already reached 209.2 million tons in 2016. As an analyst he notes that it is, “…also estimated that Chinese industrial feed will increase by 2-3% yearly in next 2-3 years due to the increase in per capital animal product consumption, economic development and rapid decrease of small-holder animal production.”
Chinese Feed Market Self-Sufficiency
Prof. Qi notes that the Chinese government is very keen to improve feed ingredient self-sufficiency in the coming years. Whilst imports of meat products are more easily accepted, the government has set some ambitious targets for increasing domestic raw material output. Many of which focus on specific feed ingredient sectors.
As Qi outlines, “In China, we basically want self-sufficiency in our energy ingredients supply. It really means most of, not 100%, energy ingredients will be supplied domestically. As for protein ingredients, we only want to maintain the stability of protein ingredient supply as we heavily rely on imported protein ingredients. To reach this goal, we will continue to import soybeans from more countries. In addition, we will import other protein ingredients such as rapeseed meal, etc. In the new-round structural adjustment of agriculture, some areas will grow beans and quality-grass rather than grains to increase our self-supply of protein ingredients in China.”
Furthermore, Qi believes that Chinese feed producers will continue to modernise rather than expand. He explains how, “Chinese feed mills [are currently] meeting only approximately 50% of productive capacity,” so there is little need for volume growth. Instead, cost savings will be made by increasing the use of bulk feed trucks, multiple bar code identification, and palletizing machines, as well as increased use of “non-routine feed ingredients and low crude protein feed formulation technology.”
Competition in the Chinese Feed Additives Market
Prof. Qi is quick to note that Chinese feed additive suppliers remain highly competitive. This is one of the reasons why China remains one of the largest manufacturer of feed additives in the world, supplying 41% of global amino acid production, and 70% of the feed vitamin market. This market dominance is not a position that Qi foresees changing any time soon. As he explains, “There are three major reasons for this situation; higher technical level of production, lower cost of production, and greater demand from domestic markets.”
Furthermore, Qi predicts Chinese feed additive production costs to fall, “The development of production technology and competition between feed additive manufacturers will contribute to the reduction of production costs of feed additives, thus a large number of more competitively-priced feed additive manufacturers will emerge in China.”
The Future Goals of the Chinese Feed Market
In general, Prof. Qi believes that the Chinese feed and feed additive market will not only continue to modernise, but will also begin to offer a wider choice of products for farmers. This will include making feed products that are more environmentally friendly and safer for consumers.
Qi bases these predictions on increasing levels of R&D, something that has been notable in many Chinese industries, as well as a desire to compete with European and American markets in “the trends of antibiotic replacing additives and ‘green’ feed additives.”
In fact, the market is already having to adapt in these areas, with Qi observing that, “On August 25, 2016, the Chinese government adopted a national plan to counter antibiotic-resistance of bacteria. Recently, the China State Council asked the Ministry of Agriculture to pay close attention to enact and implement the exit plan for medicated feed additives and to eliminate medicated feed additives with potential risks as quickly as possible. With all these efforts taken by Chinese governments and enterprises, the usage of antibiotics in feed as growth promoters will be reduced to a great extent and will perhaps be banned in the future.”
From Qi’s predictions, it is clear that expansion by European or American feed and feed additive producers into Chinese markets will not be easy. Competition remains strong, the central government is keen to promote domestic production, local labour costs remain low, and there is excess capacity in feed mills. Instead, feed suppliers should focus on diversity of products, product specialisation, and products that offer safer or ‘greener’ alternatives to typical Chinese output.
However, while Chinese research funding continues to grow, this will also definitely not be easy.
As a renowned expert on Asian feed markets, Prof Qi will be speaking at the Feed Additives Asia 2018 conference being held in Bangkok in May.
If you wish to learn more about Chinese feed and feed additive markets, then please take a look at the other articles on AGCHEMI’s blog page, including Top 5 Challenges for Feed Exporters and Manufacturers in Chinese Markets, and Growth and Export in the Chinese Feed Market.
AG CHEMI GROUP sales team
Photo credit: Chinesefoodcompany, FeedAdditivesAsia, Wikimediacommons, Chinaprefabhouse, & MoundofSound
