Eco-friendly feed becomes a new market trend, feed products become more refined and distinctive
According to the latest data from the Ministry of Agriculture, as of March 16, 2015, the total number of enterprises producing complete feed, concentrated feed and concentrate supplements nationwide was 5,987, and the number of single feed production enterprises was 1,700. The number of feed enterprises dropped by about 1/3 compared with the end of 2013. In 2014, the national total feed output was 197 million tons, a year-on-year increase of 2%. Another set of data: the national industrial feed production capacity is close to 600 million tons, while the current output is only nearly 200 million tons, with a capacity utilization rate of only about one third. In other words, there are still 400 million tons of production capacity that have not been released.
The problem of overcapacity is evident. Coupled with the complex market conditions of the pig industry and environmental pressure, where is the survival space for the feed industry, as an input supplier to the industry?
“At present, it is not only the pig industry that has overcapacity; the feed industry is also oversupplied. In the future, the feed industry will not seek quantity, but quality. In the process of pursuing quality, whoever breaks through first will be the winner.” Hong Ping, chairman of Anyou Biotechnology Group Co., Ltd., said in an interview with reporters recently that in the past, the feed industry emphasized marketing; whoever had strong marketing was the winner. But now, marketing appears increasingly weak. How to respond under the pressure of food safety, pork safety and environmental protection is a common problem in the industry.
The general pressure in the industry does indeed exist, but Anyou has achieved counter-trend growth under the current situation, with annual sales growth of nearly 30%. And they started out with creep feed.
The market coverage rate of creep feed is not low; what is low is consumption
The domestic creep feed market still has at least 10 years of rapid growth ahead, the industry once asserted. When it comes to creep feed, one cannot fail to mention Anyou from Taiwan, China. It was precisely because they introduced creep feed from abroad to the mainland that the landmark event of “creep feed being formally introduced into China” took place.
“The coverage rate of the foreign creep feed market has already reached 80%~90%, but the domestic market is only 30%, and some statistics say less than 25%, but in recent years it should have exceeded that figure.” Hong Ping believes there is still room for growth in domestic creep feed.
He explained that at present, the amount of creep feed used per piglet is very small, but the coverage rate is not low. At present, most domestic feed mills sell creep feed; wherever there is feed, there is creep feed. If you do not make it while others do, that will not work either. Generally speaking, farmers now use an average of 1~2 kg of creep feed per piglet, which is fully enough for them to grow to 3~4 kg.
It is understood that, in addition to Anyou, companies such as Dabeinong, Jinxinnong, Datai Nong and Hunan Baiyi have invested heavily in building specialized creep feed production lines, which have become important bases for OEM processing for peer enterprises.
“Domestic statistics on creep feed are one thing, but my own judgment is still that the problem is low usage, not low coverage.” Hong Ping said.
Speaking of the current reality of low usage demand, Hong Ping said that because pig prices are low at present, farmers are also unwilling to invest more, but as the prosperity of pig prices improves and pig prices rise, the demand for creep feed will further increase.
Eco-friendly feed becomes a new market favorite
In recent years, Anyou's feed sales have still maintained an annual growth rate of nearly 30%, attracting the industry's attention.
“Our growth comes from eco-friendly feed. Because eco-friendly feed can make the excreted pig manure not smelly; the feed itself is known for low protein and high amino acids, which reduces the stench of feces. Non-smelly pig manure also reduces the possibility of inducing respiratory diseases in pigs. The final result is improved weight gain performance in pigs.” Hong Ping said that with changes over time, current pressures such as environmental protection are instead favorable to the development of their eco-friendly feed.
It is understood that Anyou's low-carbon eco-friendly formula technology is at a leading level in China's feed industry. It currently owns 59 intellectual property rights, including 28 invention patents (15 already authorized), 6 utility model patents (all authorized), 10 design patents (all authorized) and 15 copyrights. Industry statistics show that Anyou Group's technical patents account for 20% of the industry's share.
We can see their emphasis on eco-friendly technological innovation from the following examples.
In 2011, Anyou's “Research on Efficient Eco-friendly Feed Formula Technology with Low Carbon and Nitrogen Emissions” project won the “China Feed Major Technological Progress Award.” In February this year, at the “World Environmental Protection Conference Green Low-carbon Development Transformative Power Annual Meeting and International Carbon Gold Award 2014 Awards Ceremony” organized by the World Environmental Protection Conference (WEC), Anyou Group also won the honor of “2014 International Carbon Gold Award----Carbon Gold Ecological Practice Award,” becoming the first enterprise in the agriculture and animal husbandry industry to receive this award.
“Our patent applications are still relatively numerous among peers. Of course, in this field, there are currently no foreign patents. But it is only in the past year or two that foreign feed enterprises have increasingly attached importance to patents.” Hong Ping said.
It is said that Anyou attaches great importance to the results of feed technology innovation, and whatever ideas or paths there are, they will carry out targeted development.
However, they also have difficulties they find hard to speak of. According to Hong Ping's admission, “although we have applied for patents, the protective effect of patents is not very good. When we say the protective effect is not good, the reality is that not only patents, but even trademarks may be counterfeited. In some places, the relevant departments simply have no time to manage it.”
In fact, this is also a real problem encountered in Anyou's localization process. But Hong Ping also insisted that although it was founded in Taiwan, China, Anyou has indeed achieved localization and counts as a localized company.
Since moving its company headquarters to Taicang, Jiangsu in 2009, Anyou's strategic positioning has been very clear, that is, the mainland feed market.
Market transformation: a single advantage is hard to rely on
“In recent years, Taiwan's pig inventory has dropped from 14 million head to more than 6 million head. Moreover, Anyou's market in Taiwan has become saturated, so there is no need to station many people there. The key is that in Taiwan, we do not feel there are opponents ahead of us.” Hong Ping said firmly.
According to him, Anyou came to the mainland in 1999 to conduct market assessments, partly to understand what advantages it had. First, to see what we should learn from peers in terms of manufacturing costs, and whether we had advantages. Even if we had disadvantages, could we learn them? Second, to see whether we had advantages in technology. “Compared with foreign businessmen, my technical side is not inferior to theirs. In this way, there are responses on both sides, but this was more than 10 years ago.”
“Now in feed production, including manufacturing, marketing and management costs, these are no longer the most important. Because the market has already turned toward refinement, quality and distinctive features. Now and in the future, the two advantages of manufacturing and technology must exist at the same time for there to be prospects; neither can be missing.”
Regarding foreign enterprises such as CJ Group entering the domestic feed industry, Hong Ping analyzed that foreign-funded enterprises are much inferior to local enterprises in comprehensiveness. Whether it is Purina, Cargill, Alltech, etc., their advantages are only partial, occupying a place only in a certain aspect, and their comprehensiveness cannot compare with domestic enterprises.
The implication is that on the issue of comprehensiveness, what Hong Ping refers to should be the systemic nature of manufacturing, marketing and management mentioned above.
Some foreign feed enterprises are companies making additives. Unlike Anyou, their marketing is very strong, and they have already begun integrating within the industry. “Cargill in the industry is the world's largest feed factory, with a very large technical team. It also acquired Provimi, the best company in Europe. They are the strongest in management, but in domestic development, there is still a lot of room for improvement in localization.”
“This year, we hope to continue last year's growth, give better play to the growth of eco-friendly feed, and push the volume further forward. In addition, the young livestock segment is also our advantage.” Hong Ping said: “Family farms will be the main market entities we develop.”
Speaking of feed e-commerce, he put forward his own views. “In the past, small farmers all bought feed through dealers. Where the customers are can be reached through platforms. In the future, backyard farmers will decrease, and the remaining main body will be family farms. Then doing feed must be face-to-face, because everyone's needs are different, the livestock and poultry breeds raised are different, the environment is different, and the personalized demand for feed will become prominent, so e-commerce will be very difficult to do.”
But he also said that service and ordering can be done through the internet. “In other words, it is walking on two legs, online and offline. Many things need to be solved face-to-face, and transactions also need to be face-to-face.”