1. Current Status of Industrial Feed Production
China is the world’s largest producer of feed, and changes in its production levels have a relatively significant impact on the global feed industry. According to data from Alltech, in 2020, China and the United States together accounted for approximately 40% of the global feed production structure. China is the country with the highest global production share, accounting for 20.21%. , the United States accounts for 18.18%, while Brazil, India, Mexico, Spain, and Russia make up 6.53%, 3.31%, 3.19%, 2.93%, and 2.64%, respectively.
As the world's largest producer of animal feed, China's feed industry has been rapidly advancing. Since entering the 21st century, China's feed sector has gradually shifted from a focus on sheer volume to a phase of high-quality development. A growing number of industry-leading enterprises have emerged, while, against the backdrop of increasingly stringent market regulations, China's industrial feed market has entered a period of consolidation and upgrading—leading to a moderation in overall growth rates.
According to data, China's industrial feed production in 2020 reached 252.761 million tons, representing a 10.4% increase compared to 2019. The main reason is the rapid increase in downstream demand for pork, which has driven up pork market prices sharply and, in turn, significantly boosted China's industrial feed production. Production from January to August 2021 totaled 192.12 million tons.
Regarding the material structure of industrial feed, according to data from the China Industrial Feed Association, From January to August 2021, compound feed accounted for the largest share of China's industrial feed structure, with a production volume of 17.669 million tons, representing approximately 92% of the total. The production volumes of concentrated feed and additive premix feed were 10.55 million tons and 4.27 million tons, respectively.
In terms of the structure of industrial feed usage, from January to August 2021, China’s total industrial feed production reached 192.12 million tons, representing a year-on-year increase of 19.1%. Among these, pig feed output stood at 84.09 million tons, driven by rising downstream pork prices—up 62.6% compared to 2020—and accounting for 43.8% of the total production. In contrast, egg and poultry feed production came in at 20.97 million tons, while meat poultry feed totaled 59.27 million tons, both declining by 9.4% and 3.8%, respectively, compared to the same period in 2020. These declines accounted for 10.9% and 30.9% of the total, respectively. The primary reason behind this trend is the generally low profit margins in the poultry feed sector, exacerbated by soaring raw material costs and persistently weak profitability in the livestock industry, putting additional pressure on small and medium-sized enterprises.
2. The Landscape of Industrial Feed Enterprises
In this context, large enterprises are striving to enhance product competitiveness, pursue new growth opportunities, and strengthen their ability to withstand risks. Building a fully integrated industry chain spanning feed ingredients, feed processing, vaccines, livestock farming, slaughtering, and food production emerges as an excellent strategy for breaking through challenges.
3. Analysis of the Industrial Feed Industry Chain Drivers
1 The overall industrial chain
From a supply chain perspective, the feed industry’s upstream segment consists of feed raw materials, primarily including protein feeds, energy feeds, mineral feed ingredients, and feed additives. The midstream involves feed production, covering products like pig feed, poultry feed, ruminant feed, and aquaculture feed. Downstream activities mainly focus on livestock farming—such as raising chickens, ducks, pigs, and cattle—as well as freshwater and aquatic animal farming for aquaculture purposes. Among these, pig feed accounts for the largest share and exerts the most significant influence on the overall industrial feed sector.
In 2020, pig feed production reached 89.225 million tons, accounting for approximately 35.3% of the total output. This represented a year-on-year increase of 16.4% compared to 2019—slightly higher than the growth rate of industrial feed. As the domestic epidemic gradually comes to an end, pork prices have begun to decline steadily. It is expected that in the coming period, China's pork prices will gradually stabilize, while industrial feed production will also return to a steady growth trend.
4. 2022 Outlook for the Feed Industry
1. Trends in the Development of Industrial Feed
The cost side is significantly affected by fluctuations in raw material prices. The competitive landscape of the industrial feed industry is gradually shifting—from competition within the feed-processing sector to comprehensive competition across the entire agri-food value chain. The feed industry relies on upstream commodities such as soybeans and soybean meal, making its cost structure highly sensitive to fluctuations in raw material prices. Currently, the feed industry faces relatively intense competition. In 2019, the combined output of the top three companies (CR3) accounted for approximately 18.75% of China’s total feed production—a figure that still lags behind countries like Germany and Japan, where CR3 concentration exceeds 30%. This highlights significant room for further consolidation within China’s feed sector.
In recent years, the industry has experienced slower growth, shifting into a phase of steady development and structural adjustment. Large enterprises are leveraging their financial strength, advanced management practices, and robust disease-prevention systems to expand across the entire feed-to-farming value chain. Meanwhile, smaller and medium-sized firms—confronted with mounting pressures related to capital access, talent acquisition, technological challenges, and service capabilities—are increasingly being absorbed by stronger players through mergers and acquisitions, or they may choose to exit the market altogether.
As a result, the competitive landscape is evolving—from a focus on feed-processing competition to a broader, more integrated battle spanning the entire agri-food ecosystem, from feed production all the way to livestock and crop cultivation.
The feed industry as a whole has entered a new normal characterized by thin profit margins. During the decade of golden development for the feed industry, market demand was robust and profit margins remained high, enabling a wave of feed companies to seize this strategic opportunity and achieve simultaneous growth in both scale and profitability. However, driven by slower growth in the livestock farming sector, the feed industry’s market capacity is nearing saturation, with overcapacity becoming a prominent issue. At the same time, many companies struggle with weak R&D capabilities and face severe product homogenization, leading to cutthroat competition. As a result, the era of "superprofits" in the feed industry has largely come to an end, giving way to a new normal characterized by razor-thin margins across the board. Industry consolidation has now become inevitable. Moreover, as large-scale farming continues to expand and the problem of feed product homogeneity intensifies, the industry’s overall profit margins are being squeezed even further. This, coupled with rapidly accelerating market reshuffling, has left small and medium-sized enterprises increasingly vulnerable and struggling to survive.
2022 marked the second year of the nation's implementation of the "14th Five-Year Plan," making it a pivotal year for driving social and economic development. The livestock industry must adapt to the evolving landscape, embrace new opportunities for growth, adopt innovative approaches, and deepen reforms while staying true to fresh development concepts and fostering innovation as the key driver. Feed companies need to focus on the theme of "pursuing high quality."
At the end of 2021, hog prices saw a slight recovery, but according to executives from a leading feed company, hog prices are likely to decline in 2022, potentially forcing cross-sector pig farming businesses to either cut their losses significantly or exit the market altogether.
Li Weifeng believes, "There may not be any major outbreaks in the future, and it’s possible that our generation won’t even see pork prices drop below 20 yuan per kilogram. If this year brings high prices, next year could very well deliver生猪 (pig) prices lower than expected—this is indeed our assessment of the market." Therefore, when pig prices decline, many companies from sectors like real estate—and other industries—may rush into investing in pig farming. However, these businesses might eventually pull out midway through the process. There's a possibility in 2022 that some people might sell their pig farms at half price.
2 Prospects for the Feed Industry Development Prolonged improvement in industry sentiment
The growth potential of the feed industry is primarily driven by demand from downstream end consumers. In recent years, as China's per capita disposable income has risen, domestic demand for livestock products such as meat, eggs, and dairy has steadily increased. However, compared to developed countries, China's per capita consumption of meat and dairy products remains relatively low, leaving significant room for further growth. Looking ahead, with China's economy expected to maintain long-term, stable development, China's domestic consumer market will drive the continued growth of the feed industry for an extended period.
Laws and regulations accelerate industry standard integration.
Animal-derived foods are essential staples in residents' daily consumption, making their safety critical for maintaining national stability and people's livelihoods. As the upstream industry of animal-derived food products, the feed sector indirectly influences the safety of these foods. Looking ahead, as Food safety-related laws, regulations, and the regulatory system are steadily being improved, and industry authorities will strengthen their oversight of feed companies as well as enhance monitoring of feed products. This presents an opportunity for companies that have already established a strong presence in the biosecurity sector of feed products to increase their market share.
Comprehensive antibiotic restrictions raise the technological demands on businesses.
According to Announcement No. 194 issued by the Ministry of Agriculture and Rural Affairs, China has implemented a nationwide ban on antibiotics in feed production, effective July 2020. Drawing from historical experiences in European countries, the feed antibiotic ban could temporarily lead to a decline in livestock and poultry resistance to pathogenic bacteria, potentially increasing the likelihood of disease outbreaks. Feed manufacturers need to identify suitable alternatives that can match the effectiveness of antibiotics and integrate them into their feed products. This places high demands on their formulation capabilities, as well as their feed-processing expertise—including advanced techniques for refining raw materials. Given the high sensitivity of small and medium-sized downstream farmers to the economic benefits of feed, feed products that fail to effectively ensure intestinal health in pig herds or promote growth will be phased out by farmers.
Industry integration strengthens corporate competitiveness.
In recent years, driven by factors such as international trade disputes and weather-related disasters that have pushed up upstream raw material costs, coupled with fluctuating demand in the downstream aquaculture industry, some companies have chosen to expand their presence across the upstream and downstream segments of the industry chain. Integrating across the industry’s upstream and downstream operations helps businesses break free from the constraints of a single line of business, enabling synergies between internal upstream and downstream activities—benefits that ultimately support… Enhance the company's cost-control capabilities, expand the overall business scale, and strengthen its comprehensive competitiveness. Therefore, it will be the next growth direction for large and medium-sized feed enterprises.
Source: HuaJing Intelligence Network
