Feed Bussiness Worldwide: March 2016
Agribusiness Interrupted
by Eric J. BROOKS
When one analyses five years of Alltech Global Feed Survey statistics, we can see that world feed and livestock is transitioning away from the growth patterns and parameters taken for granted during the previous decade.

Although world feed production increased by 11% in the five years from 2011 to 2015 inclusive, the rate of increase is clearly decelerating. From 5.5% annual growth in the late 2000s to 3.4% since 2011. Many expected feed production to keep growing at its former pace. Instead, rather than totalling over 1.1 billion tonnes by this time, world feed demand only amounts to 995.57 million tonnes.

The resulting 2015 year increase in feed production is far below its 3.4% annual rate of the past five years, or the 5%+ rates taken for granted in the previous decade. This slowdown is partly caused by a long-term deceleration in developing country meat demand growth, and also by recurrent economic woes that have dogged the world economy ever since the late 2000s’ financial crisis. It is also a symptom of the world's agribusiness "shifting gears."That is, the growth of some regions slow down, and others too small to impact overall numbers are accelerating.

China, which led world feed demand growth for 30 years and boosted its own output more than the rest of the world at one time, is now a stagnant deadweight, having increased by an average of 0.8% annually from 2011 to 2015 inclusive (compared to the mature US feed sector's annual 1.3% increase over the same time).

Against China's faltering 1.35 billion market, there are over 1.6 billion people in fast-growing markets within the Indian subcontinent, Eastern Europe and Middle East.

The feed output of India, Russia, Bangladesh and Turkey increased by an average of 7.6%, 10.4%, 9.3% and 22.4%, respectively, from 2011 to 2015. Southeast Asia's 600 million people have also taken over from China as a growth driver, with 2011 to 2015 feed output rising in Thailand, Indonesia, Vietnam and Myanmar by 9.6%, 11.5%, 13.6% and 13.5%, respectively.

The problem is that while the 2.2 billion people in these fast-growing countries are nearly double China's population, they eat a lot less meat. India nearly equals China’s population but only consumes about a tenth as much meat per person.

Similarly, India overtook Mexico to become the world’s 4th largest feed producer, but even so absolute feed numbers can be misleading.

With 120 million people but 99% of India's feed production, Mexico has a per capita meat consumption of 66kg, 10 times higher than India's.

All this is also true of Indonesia which has, at most, a fifth of China or Mexico's per capita meat consumption and of Thailand and the Philippines, where the average person eats a fifth less meat than his Chinese counterpart.

Until the meat consumption of these new, emerging markets approaches that of maturing markets like China, their more rapid feed expansion will continue to be offset by a low meat consumption starting base, making for slower world feed output growth.

But even so, the last five years has seen a major shift in feed output growth, particularly within Asia itself.

We also see large shifts in regional growth rates. Asia, once the perennial leader in feed expansion, recorded a mere 0.4% growth in 2015. This, however, reflects Chinese feed milling's five years of stagnation, as its feed production only grew by 0.6% over this time.

In Asia excluding China, from 2011 to 2015, feed production expanded at a very high average annual rate of 7.6%, with 7.5% to 13.5% growth in places like Thailand, Indonesia, India, Vietnam and Bangladesh only partly offset by static feed and meat demand in mature economies like Japan and South Korea.

But we are in a situation where, for several years, growth will be below trend. Until China's economy recovers, until meat demand in faster growing Asian regions rises high enough to make their large percentage increases in feed demand statistically weighty, the years from now to 2020 will mostly see below-trend feed output growth, before recovering near the turn of the decade.

According to International Feed Industry Federation (IFIF) estimates, from now to 2050, feed production will grow by a little over 2% annually.

This implies that from now to 2030, we can expect feed output to grow by around 3% annually, or twice as fast as the world's population.

The full article is published on the March 2016 issue of LIVESTOCK & FEED Business. To read the full report, please email to inquiry@efeedlink.com to request for a complimentary copy of the magazine, indicating your name, mailing address and title of the report.
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