Analysis of the three major battles faced by China's feed industry in 2015

Data show that in 2014, China's total industrial feed output was 193 million tons, up 0.2% from 2013. 2015 may be the most important transition period for the feed industry.

The past two years can be described as a turning point for the feed industry, experiencing overcapacity in the breeding industry, survival of the fittest and ups and downs in raw material prices. 2015 has become a critical period for the transformation of the feed industry. At the same time of awakening the recovery of the industry, there are also many hard battles between feed enterprises. Here, Xiaobian summarizes the three major battles of the feed industry in 2015:

Internet transformation debate

Internet genes have been integrated into all walks of life, especially the livestock feed industry in the past two years. With the acceleration of feed enterprise integration and intensification, the single and traditional marketing model has long been unable to keep pace with the development of the industry. Embracing the Internet has become a major trend in the development of the feed industry. How to combine the Internet and feed industry? The farming and animal husbandry enterprise that has to be mentioned here is Dabei Agriculture. Whether from the early investment or later development, Dabei Nong has achieved good results in Internet transformation. Recently, the fixed increase of 2.2 billion yuan has launched the agricultural Internet and once again detonated the entire livestock feed industry, which is enough to prove Dabei Nong's determination to enter the Internet. On the road of Internet transformation, if the feed enterprise is too formalized, it will ignore the fundamental purpose of the enterprise. If you just wait for the opportunity to observe blindly, the market will not give too much time and opportunity. Xiao Bian believes that using the Internet's thinking to re-upgrade the traditional feed industry, so that it presents a "new normal", serving the entire animal husbandry, can truly embrace the Internet.

Dispute over Aquatic Feed Industry

In today's overcapacity of livestock and poultry breeding industry, the high-profit aquatic feed industry has become a battleground for many leading enterprises. Apart from aquatic feed giants Haida and Tongwei, agricultural and animal husbandry enterprises such as Dabeinong and New Hope, which are committed to livestock feed production, are also marching into aquatic feed industry on a large scale. In fact, the aquatic feed industry that depends on heaven also has higher risks behind high profits. From last year's situation, aquaculture can be described as depressed even if it is not bleak. Why can it attract the favor of many enterprises? For more information, please refer to the Feed Industry Market Survey and Analysis Report released by China Report Hall.

Let's look at a set of figures: 43.05 million tons of domestic aquaculture in 2012, if calculated according to the feed coefficient of 1.3, the demand for aquatic feed is 55.97 million tons, while the actual output is only 1883, and the coverage rate is 31.4%. It is estimated that in 2020, China's aquaculture volume will be 58 million tons. Assuming that the coverage rate is 40%, 30.16 million tons of aquatic feed will be required, and there is still 60% room for industry growth. It is enough to prove that the aquatic feed industry has great development potential. In addition, only Tongwei and Haida are the giants stationed in the aquatic feed industry. On the contrary, there are many livestock and poultry feed and animal husbandry giants with fierce competition. Therefore, the advantages of enterprises taking the lead in entering the aquatic feed industry will be greater.

Controversy over feed raw material industry

The fundamental of feed enterprises lies in the production of feed, which cannot be separated from the supply of raw materials. In recent years, the price of bulk feed raw materials in China fluctuates violently, which is undoubtedly not a headache for feed enterprises to purchase. In 2012, hype about the U.S. weather led to a spike in soybean meal prices, followed by another plunge after the USDA report. The purchase of a large number of high-priced soybean meal in the early stage makes the feed production cost too high; the soybean meal plummeted in the later stage, and customers clamored for the price reduction of feed products. At the same time, how to reduce the price when the cost is too high? These problems make feed enterprises very entangled. In fact, each enterprise has its own solution to the problem of feed raw material supply. Some enterprises directly cooperate with the upstream grain and oil processing industry to achieve win-win results; some enterprises use hedging and other trading means to directly control costs in the procurement process. In Xiao Bian's opinion, direct cooperation with grain and oil processing industry is a good choice, which can not only reduce intermediate links to improve efficiency and share risks, but also avoid problems caused by quality differences. The most important point is to implement quality safety. The development of upstream raw materials in 2015 will be another development measure for feed enterprises.

In the context of the slowdown in national economic growth, the transformation of the feed industry is also imminent, and 2015 is destined to become a key year for transformation. In addition to the three major battles mentioned above, such as Internet transformation, aquatic feed industry and feed raw material industry, talents and services will also become battlefields for feed enterprises to compete.