The last few years have been volatile for the feed value chain due to issues ranging from supply chain disruptions to the impact of climate change on agriculture. The war in Ukraine only exacerbates the challenges; both Ukraine and Russia produce more than 30% of the world's wheat and barley and 20% of corn. Prior to the conflict, corn exports from Ukraine for MY 2021-22 (October-September) were estimated at 33.50 million tonnes which are now estimated to be at 26 million tonnes.

Since 2020, China's corn and soybean meal prices have increased to higher levels seen in recent times. Corn prices account for the highest proportion of feed production costs. With soaring prices, corn usage dropped. Hence, the top 30 'pure' broiler feed manufacturers in China have corn inclusion rates significantly below the national average.

Chinese poultry enterprises' efforts in digital management lie in the use of the enterprise resource planning system, along with other management applications, in various vertical subdivisions. Meanwhile, international poultry enterprises in China generally use solutions developed by SAP, which works in unison with their parent company's systems.

The financial results of listed Chinese poultry companies for the first half of 2022 saw some dismal results, with only Huaying Agriculture's net profit exceeding CNY50 million. Wen's Group reported a loss of CNY3.524 billion in the first half, mainly due to its pig business, which accounted for 44.8% of the company's revenue. Its poultry business, which contributed 47.09% of the company's revenue, has an operating profit of CNY879.7 million (US$126 million). Chinese companies in the chick production sector generally performed more poorly.

Since the final week of July 2022, India's chicken consumption dropped by 30-40%, with this expected to remain at similar levels until the end of October. Higher monsoon rains have affected the movement of live chickens and eggs from production sites to consumption centres. Meanwhile, higher raw material prices have pushed the production costs of live broilers and farm gate selling prices are now below production costs.

China's Ministry of Agriculture and Rural Affairs recently issued the revised version of "Fermented Soybean Meal for Feed Raw Materials" (NY/T2218-2022)" - the country's first fermented feed raw material standard - which took effect on October 1. There are currently four approved categories of fermented feed ingredients, namely, fermented soybean meal, fermented cottonseed protein, yeast and post-fermentation residue. Estimations show that China's production of fermented raw materials in 2021 was close to two million tonnes.

Zhenghong Technology was the first feed company in China to be listed in the domestic feed industry. The company was able to go public early as it is a state-owned holding company. However, this status led to Zhenghong's negligible development for the past 25 years. Unlike its counterparts that saw exponential growth, Zhenghong Technology's feed output in 2021 was only about 362,000 tonnes, lower than what it produced 20 years ago.

Last July, Yuehai Feed released its 2022 performance forecast - which showed its sales volume of aquatic feeds, in the first half of 2022, at 397,700 tonnes, a year-on-year increase of 2.77%. However, net profit attributable to shareholders is expected to lose ¥50-60 million (US$7.3-8.8 million). Yuehai Feed claimed three key reasons for the loss: increased raw material costs, a year-on-year increase in its operational expenses and weak aqua feed sales.

Data show that the total number of feed enterprises in China had dropped from 15,519 in 2005 to 6,772 in 2020 - even as the scale of feed mills continues to expand. In 2005, there were only 17 feed enterprises with 500,000 tonnes or higher annual production volumes, and their combined output accounted for 25% of the country's total feed output.

Lumpy skin disease (LSD) has swept through the Indian states of Punjab, Gujarat and Rajasthan in northwest India and claimed the lives of thousands of cattle. Amul Dairy, a dairy state government cooperative society based in Anand district, Gujarat, recorded 1,507 LSD cases since April 1. According to a report by the Food and Agriculture Organization, LSD entered the eastern states of India from Bangladesh in 2019 and slowly spread to other states.

With most antibiotics for use in feed banned in China, it is necessary to source more functional additives as alternatives. Functional additives that promote the growth of rumen microorganisms, modify the rumen microbial flora, stabilise the rumen's PH value, prevent rumen poisoning and improve the rumen's methane emission are the key functions of additives for dairy cattle. However, the application of plant extracts in dairy cattle has only been introduced in the past five to six years.

Established in July 2014, Adopt A Cow entered China's milk market with pure milk and yogurt as its main products, and achieved an annual income of ¥2.5 billion (US$370.6 million). Last year, Adopt A Cow's revenue reached ¥2.566 billion, a 55.54% increase over the previous year.

China's beef consumption has shown rapid growth in recent years, but the meat's output has not been able to meet local market demand. For a long time, the country has relied on imports to fill its huge beef shortages, and its import dependency (total import /national output) is at 20%, far exceeding those of pork (5%). According to statistics from the National Bureau of Statistics, the country's beef cattle population totaled 98.17 million in 2021, a year-on-year increase of 2.7%.

India produced 210 million tonnes of milk during the 2021-22 fiscal year, with small farmers being the biggest beneficiaries of the dairy sector. Dairy contributes 5% to the economy of India and employs 80 million dairy farmers. A recovery of economic activities, rising per capita consumption of milk and milk products, changing dietary preferences and rising urbanisation in the country have driven the dairy industry to grow by 9% in the 2021-22 period.

Corn is the third most important food grain in India. It is also the fastest-growing cereal crop in terms of area, production, and productivity. But the growth rate of corn consumption has outpaced the production growth over the last decade. Furthermore, the war in Ukraine, COVID-19 and low production of key producers have impacted the global corn trade leading to higher prices.

As per available national data, India is facing a shortage of 11%, 35% and 28% of dry fodder, green fodder and concentrate, respectively. In fact, there have been several research initiatives and innovations that would help address its feed deficit.

Over the past decade, China's poultry meat consumption has increased consistently year by year. Correspondingly, overall domestic pork consumption has declined steadily. One factor behind China's falling pork consumption was the outbreak of African swine fever in the country in 2018. Thus, China's pork consumption decreased from 52.28 million tonnes that year to 28.17 million tonnes in 2019.

The price of corn in China surged from ¥1,870/tonne in January 2020 to ¥2,629 /tonne by the end of 2020, an increase of ¥759/tonne. Prices of corn stayed high in 2021. Entering 2022, the price of corn continued to trend higher. Price fluctuations triggered the substitution of this ingredient.

Muyuan Foods Co., Ltd, the biggest pig farming enterprise in the world, saw its sales of live pigs increase by 122.3% to 40.263 million heads in 2021. But as pig prices tumbled last year, the company's net profit plunged 74.9% to ¥6.904 billion. Muyuan's current cost of fattening pigs is close to ¥16/kg (US$2.39), lower than most producers in the market.

At the beginning of its establishment in 2011, Aonong Bio was an agricultural and animal husbandry enterprise with pig feed as its main business. Since 2014, the company gradually ventured into the pig breeding industry and its breeding volume expanded steadily. Last year, Aonong Bio sold 3,245,900 live pigs, a 141.10% increase from 1,346,000 in 2020. Piglets accounted for 58.3% of its total sales.

China's COVID-19 lockdowns have greatly rocked the domestic animal husbandry industry. According to data from the Ministry of Agriculture and Rural Affairs, pork sales on three major e-commerce platforms in March this year totalled 414.81 tonnes, equivalent to the previous month. However, year-on-year pork sales tumbled by as much as 52.09%.

India's broiler feed production last year was around 12.5 million tonnes and layer feed production was around 13 million tonnes. The main feed additives used in broiler and layer feeds include enzymes, antioxidants, emulsifiers, anticoccidials and prebiotics. Synthetic amino acids are also used. Due to higher raw material prices, the penetration of other enzymes is also increasing. Using enzymes will lower the cost of production due to the use of matrix values.

The world is depending on India for the supply of wheat as no fresh arrival is expected from anywhere in the world between now and July. However, India banned wheat exports from May 13 after a heatwave swept across the country and affected wheat production. Meanwhile, wheat crops in Ukraine and Russia are expected to mature in August and September. However, no one knows the extent of damage to Ukraine's wheat fields, warehouses and ports as a result of its war with Russia.

Studies show that China's import dependence on beef is about 30%, while that of dairy products is higher at 50%. The shortage of beef and milk, together with the low reproductive rate of ruminants, means that investments in the ruminant sector represent good development opportunities in the next decade.

Modern milking machines have become one of the most important technologies in China's dairy farming; based on the 2020 China Dairy survey data, 13.4% of domestic dairy farms used rotary parlour milking machines, which have made milk production more efficient. Reflecting this trend in using modern technology, automatic milking robots were installed last year by Ningxia Jiubeier Agricultural Development Company, which completed the construction of its 5G intelligent dairy farm.

During the 2020-21 period, milk production in India went up by 5.81%. As per the production data of the Food and Agriculture Organization's Corporate Statistical Database (FAOSTAT), the country ranks first in milk production, accounting for 21% of global output. Its milk production was 209.96 million tonnes in 2020-21, compared to 198.44 million tonnes in 2019-20.

At 65.49 million tonnes, China's 2020 aquaculture output accounted for more than 60% of global production. The country's rapid aquaculture development fueled its aquafeed industry's growth. eFeedLink statistics show that its aquafeed output exceeded 20 million tonnes in 2019; by 2021, it expanded to over 23.3 million tonnes.

Guangdong Hengxing Group is one of the leading aquafeed companies in China and has been the leader of the Chinese shrimp feed market for many years. The group currently has five subsidiary companies in Guangdong and Hainan provinces. Having started marine farming and fish fry breeding in 2004, Guangdong Hengxing saw sales volume of its shrimp feed reaching 320,000 tonnes in 2012, with a market share as high as 25%.

Since 2001, Tongwei, one of the largest aquafeed producers in China, has started to expand from feed production and seedling cultivation to aquatic product breeding, processing and forming a vertically integrated agricultural industry chain. Integrating photovoltaic power generation with modern fishery, the company intends to create a new 'aquaculture solar farm' model. It aims to establish this model to become the world's leading supplier of green agriculture and green energy.

In 2020, the production volume of the giant tiger shrimp in China was 100,000 tonnes, with annual production expected to surge to 500,000 tonnes within the next five years. This shrimp has become one of the favourite species in shrimp farming. They can fetch high prices and thus, in recent years, many large-scale farms were established in Fujian and Guangdong, Jiangsu and Guangxi.