June 19, 2013
 

China's falling premium fish demand and rising soymeal prices narrow fish feed profits

The shareholders of listed subsidiary company Ningbo TECH-BANK Co., Ltd. posted a net loss of RMB16.364 million (US$2.67 million) in Q1, a fall of 483.23% on-year, though the company saw an increase of 11.96% in operating revenues. At the same time, sales from January to April rose but remained stagnant in May.

Senior management of Ningbo TECH-BANK Co., Ltd. explains the fall in net profit, "The company focuses mainly on aqua feed, and feed for premium aquatic products accounts for a large share of the company's product offering. Unfortunately, the fall in prices of premium aquatic products resulted in producers suffering losses and cutting back on demand for feed for premium aquatic products. In addition, due to high rainfall and cold weather, the intake of fishmeal reduced."

Rising raw material costs and cost of agricultural products exacerbated the predicament of producers of aquatic species. The source quoted that prices of fishmeal, one of the raw materials, rose RMB2,000/tonne - RMB3,000/tonne (US$326.02 - US$489.03), from RMB9,000/tonne (US$1,467.09/tonne) last year,whilesoymeal prices increased by RMB1,000/tonne (US$163.01/tonne) from RMB3,000/tonne (US$489.03/tonne) last year.From mid-March to the beginning of June, soymeal prices were on an uptrend, although little room to rise for price increase is expected for the latter half of the year.

Moreover, the rising price of aquatic feed does not match up to the increase in raw material. Currently, tepid demand for premium aquatic products will continue to depress sales of aquatic feed for a period of time.

She is of the view that feed companies can only wait for the conditions of aquatic product market to improve and bring up the prices of aquatic products, while at the same time focus on research and development to develop more cost effective feed products.

With livestock producers suffering losses, whether the feed industry continues to face challenges or sees progress is yet to be known, though prospects do not appear optimistic.