Expanding feed demand in China

by Teresa Acklin
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   By Dr. Suchart Thada-Thamrongvech, senior vice-president and economic advisor for Charoen Pokphand, Bangkok.

   Asia has become one of the world's most important poultry production areas. Production growth rates since 1960 have outpaced the world rate, and Asian broiler chicken production in 1990 accounted for 23% of world output. In the same year, Asia's chicken egg production made up 42% of the world total.

   Among the major Asian poultry producing countries, which include Japan, South Korea and Thailand, China's production is the largest. In fact, China is the world leader in chicken egg products and is third in chicken meat production, after the U.S. and Brazil. In 1991, China's egg production was 132.8 billion eggs, 20% of total world production, and meat production was 3.9 million tonnes, 9.3% of the world total.

   The expansion of China's poultry industry has created a corresponding demand for feed. In 1991, feedmill production in China was 32 million tonnes, 33.6% of total Asian production and 5.2% of total world production. In the year 2000, it is estimated that demand will push feedmill production to 50 million tonnes.

   Historically, chicken raising in China was principally a domestic affair. It then expanded into commercial production and later developed into integrated systems. Since 1986, broiler chicken production has expanded at a rate of 20% per year.

   Despite this growth, the Chinese government traditionally has subsidized and supported pig farmers. The domestic market therefore is filled with cheap supplies of pork, the meat that is preferred by Chinese in general.

   Indications are, however, that the government will decrease subsidies to pig farmers, forcing an increase in the price of pork. It is anticipated that consumers will increase the amount of chicken meat in their diets as pork prices increase.

   Current Chinese egg and poultry meat consumption is relatively low. In 1989, Chinese per capita egg consumption was 6.1 kg, slightly below the world average of 6.3 kg. North American per capita consumption was 11.9 kg that year.

   China's per capita poultry meat consumption in 1989 was the lowest in the world, at 2.6 kg. The world average was 7.2 kg, and North America's consumption was 27.6 kg. These figures clearly illustrate the potential in China for future growth in egg and poultry meat consumption.

Total Poultry Meat Production

(1,000 tonnes in ready-to-cook equivalents)
YearProduction
19882,744
19892,820
19903,229
19913,952
19924,500
*19935,200
*forecast
Source: U.S. Department of Agriculture

Per Capita Total Poultry Consumption

(kg in ready-to-cook equivalents)
YearConsumption
19882.50
19892.60
19902.81
19913.40
19923.80
*19934.32
*forecast
Source: U.S. Department of Agriculture

Total Domestic Feed Use

(in million tonnes wheat and coarse grains)
YearFeed Use
1988-8960.1
1989-9061.6
1990-9161.6
1991-9265.9
1992-9366.0
*1993-9469.9
*forecast
Source: U.S. Department of Agriculture

Charoen Pokphand helps expand China's feed industry

   The Charoen Pokphand Group Co., Inc., based in Bangkok, operates feedmills throughout Asia and in Turkey and Portugal. It also is one of Southeast Asia's most diversified conglomerates.

   The company's commercial involvement in China began more than 50 years ago, when company founders opened a small grocery in Sichuan Province in 1942. The Chinese revolution in 1949 interrupted Charoen Pokphand's commercial involvement, but when China instituted economic reforms in 1979, the company began to invest again.

   Today, Charoen Pokphand's investments in China comprise about 100 projects. In addition to agribusiness, the company's interests extend to a fast-food restaurant, industrial products and telecommunications.

   Dr. Suchart Thada-Thamrongvech, senior vice-president and economic advisor for Charoen Pokphand, recently described the company's feedmill operations in China.

   In 1979, C.P., in partnership with Continental Grain Co., opened a feedmill in Shenzhen's special economic zone in Guangdong Province. With Avian International Co. Ltd., C.P. brought in breeder stock and invested in chicken raising and feedmill processing, designed to integrate the industry.

   Today, C.P. operates 35 feedmills in China. Together, they produce about 3 million tonnes of raw animal feed annually, a 20% market share. The company sells its output to 5,400 smaller provincial feedmills throughout China for processing into ready-made feed.

   The largest C.P. feedmill is the Shanghai Da Jiang Co. Ltd., which was established in 1985 and produces 300,000 tonnes of feed annually. The feedmill also has two chicken slaughtering and processing factories exporting largely to Japan.

   Besides the Shanghai Da Jiang factory, C.P. has joint ventures with other feedmills, including Beijing Chia Tai Feedmill Co., Yueyang Chia Tai Co., Chia Tai Conti-Shenzhen Co. and Chia Tai Conti-Shantou Co. Companies that complement the industry's vertical integration include Xiamen Fu Tai Co., which is involved in animal husbandry, and Nantong Chia Tai Livestock & Aquatic Products Co.

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