Feed industry is one of the key basicindustries affecting China's national economy. Due to the impact of the COVID-19epidemic, global agriculture has been impacted, import and export trade hasbeen affected, resulting in high feed costs and rising feed prices.

As an industry linking comprehensiveindustries such as planting, breeding, animal product processing, and consumption,the feed industry has an important impact on the development of animalhusbandry. It is an important method to realize the modernization andcommercialization of animal husbandry. From the perspective of the industrialchain, the relationship between the feed industry and upstream and downstreamis shown in the following figure:

From the perspective of feed production,with the integration and improvement of China's feed industry, the totaldomestic feed output will continue to grow, but the growth rate will slow downyear by year, entering the high-quality development of the feed industry. OnOctober 30, 2021, the Feed Research Institute of the Chinese Academy ofAgricultural Sciences announced that China has achieved the synthesis of carbonmonoxide to protein for the first time in the world, has formed an industrialproduction capacity of 10,000 tons, and obtained the first new productcertificate for feed and feed additives.

01 The total output value of China's feedindustry has grown significantly

China's feed industry started in the 1970s.With the continuous development of national economy and the continuous growthof China's aquaculture industry, China's feed industry has also risen rapidly,and the total output value and total operating income of the domestic feedindustry have continued to increase.

According to data from the China FeedIndustry Association, the total output value of China's feed industry in 2021will reach 1,223.41 billion yuan, an increase of 45.74% over 2017 and a 29.3%increase over the previous year. The total operating income in 2021 will be1,168.73 billion yuan, exceeding one trillion yuan for the first time, anincrease of 43.24% over 2017 and an increase of 28.8% over the previous year.

Among them, the output value of feedproducts in 2021 will be 1,096.40 billion yuan, and the operating income willbe 1,049.98 billion yuan, an increase of 29.8% and 29.1% respectively. Theoutput value of feed additive products was 115.49 billion yuan and theoperating income was 111.04 billion yuan, an increase of 23.8% and 29.5%respectively. The output value of feed machinery products was 11.52 billionyuan, an increase of 36.4%, and the operating income was 7.70 billion yuan, adecrease of 3.6%.

02 China's total industrial feed outputincreased rapidly

According to product characteristics, feedcan be divided into compound feed, concentrated feed and additive premixedfeed.

In 2021, China's total industrial feedoutput will be 293.443 million tons, an increase of 28.77% over 2018. Amongthem, the output of compound feed was 270.171 million tons, an increase of31.6%; the output of concentrated feed was 15.511 million tons, basically thesame as in 2018; the output of additive premix feed was 6.631 million tons, aslight increase of 1.5%.

In terms of varieties, the output of pigfeed in 2021 is 130.765 million tons, an increase of 46.6%; the output of eggand poultry feed is 32.314 million tons, a decrease of 3.6%; the output of meatand poultry feed is 89.096 million tons, a decrease of 2.9%; the output ofruminant feed is 14.803 million tons, an increase of 12.2% %; the output ofaquatic feed was 22.93 million tons, an increase of 8.0%; the output of petfeed was 1.130 million tons, an increase of 17.3%; the output of other feed was2.405 million tons, a decrease of 16.2%.

The formula structure tends to bediversified. In 2021, the amount of corn used byChinese feed manufacturers will decrease by 24.7% compared with the previousyear, and the proportion of corn in compound feed will decrease by 15.3%compared with the previous year. The consumption of raw grains such aswheat, rice, barley and sorghum and by-products of grain processing such aswheat bran and rice bran increased rapidly. The consumption of soybean mealincreased by 5.7% over the previous year, which was smaller than the increasein the total output of industrial feed. The proportion in compound feed andconcentrated feed decreased by 1.4% compared with the previous year, and theconsumption of rapeseed meal, cotton meal and other cake meal increased by17.9%.

03 Competitive landscape of China's feedindustry

At present, China's feed production ismainly concentrated in eastern China, mainly in East China, Central China, andSouth China, of which Shandong and Guangdong are the major feed productionprovinces in China.

In 2021, there are 13 provinces with feedproduction exceeding 10 million tons in China, an increase of 3 over theprevious year, namely Shandong, Guangdong, Guangxi, Liaoning, Jiangsu, Henan,Sichuan, Hebei, Hubei, Hunan, Anhui, Fujian and Jiangxi. Among them, the outputof Shandong Province reached 44.763 million tons, accounting for 15.25% of thenational feed output, ranking first in China; the output of Guangdong Provincewas 35.733 million tons, accounting for 12.18% of the national feed output. Thetotal output value of feed products in Shandong and Guangdong provincescontinued to exceed 100 billion yuan, 159.7 billion yuan and 148.2 billion yuanrespectively.

Chinese feed industry enterprises areconstantly improving their own production capacity and eliminating outdatedproduction capacity. According to data released by the China Feed IndustryAssociation:

In 2021, there are 957 feed productionplants with a scale of more than 100,000 tons in China, an increase of 208 overthe previous year; the total feed output is 177.077 million tons, an increaseof 24.4% over the previous year, accounting for 60.3% of the country's totalfeed production, an increase of 60.3% over the previous year. Annual increaseof 7.5%.

There are 14 production plants in Chinawith an annual output of more than 500,000 tons, an increase of 5 over theprevious year, and the maximum output of a single plant is 1.251 million tons.

There are 39 feed enterprise groups with anannual output of more than one million tons, an increase of 6 over the previousyear; the total feed output accounts for 59.7% of China's total feed output, anincrease of 5.1% over the previous year; 6 of them have an annual output ofmore than 10 million tons, an increase of 3 over the previous year.

China Feed Industry Association releasedthe 2020 Chinese Feed Enterprise Selection. Ten enterprises including GuangdongHaid Group Co., Ltd., Wen's Food Group Co., Ltd., and Tongwei Group Co., Ltd.were rated as leading enterprises in China's feed industry.

In 2021, China's feed industry innovationwill accelerate. Throughout the year, 4 certificates for new feed and new feedadditives were issued through the review. Clostridium ethanolic proteinobtained the first new feed raw material certificate in history, and obtained asingle feed production license. It was the first time in the world to useinorganic substances to produce high-quality protein raw materials on a largescale under factory conditions. The evaluation progress of basic parameters offeed raw materials has been accelerated, the nutritional value database hasbeen further improved, and technologies such as low-protein diets, precise feedformulation and fine processing have been accelerated. The promotion of bulkfeed in bulk was accelerated. The total amount of bulk feed was 90.287 milliontons, an increase of 53.1% over the previous year, accounting for 33.4% of thetotal output of compound feed in the country, an increase of 7.8%.

Source: China Feed Industry Association,compiled by China Grain Network.