August 15, 2003



China's Growing Market For Animal Protein Will Fuel Feed Grain Demand

China's growing demand for animal protein will lead to more grains, such as rice and corn, being used in the livestock feed sector, said Carol Gong of Rabobank Netherlands (China) Ltd. in a recent report.


Grain consumption for food, on the other hand, is saturated and is unlikely to increase further as income rises, a report from an industrial analyst from the food & agribusiness research department said.


The numbers of swine and poultry raised in China are increasing at 2% and 3% a year, respectively, due to improved standards of living and higher demand for meat, report said.


As a result, use of low-quality, inexpensive rice in animal feed has increased and the percentage of its use in feed is expected to grow, even if only marginally, the report said.


Data from the Ministry of Agriculture showed that China's paddy production in the September 2002-August 2003 marketing year was estimated at 175.5 million metric tons. Imports were estimated at 0.6 million tons, rice for food use at 117.4 million tons, and 10.7 million tons were estimated for feed and industrial use combined.


Corn for feed use is also expected to expand as the livestock industry grows, the report said.


Around 65% of total corn output goes into animal feed currently, while 13% of output is for food, and 10% for industrial use. The report didn't account for the usage of the remaining corn output.


MOA data showed corn output was estimated 123 million tons in the October 2002-September 2003 marketing year. Of that amount, approximately 85.5 million tons were estimated for feed use, 17.4 million tons for food and 13.3 million tons for industrial use.


The report didn't say the amount by which corn and rice for feed use will expand at the expense of food and other uses.


At the same time, per capita grain consumption is expected to fall nationwide.


The report, citing data from the China Statistical Abstract, 2001, said per capita grain consumption for rural and urban households was 249 kilograms and 82 kg, respectively.


The urban population is expected to increase following the government's urbanization program. The urban population is expected to rise to 50% within two decades from 38% presently, the report said.


Furthermore, rural consumers are now adopting urban lifestyles, it said.


62% of China's population currently lives in rural areas.