12 Opinion
GROWING WITH THE FEED INDUSTRY OF BANGLADESH
In South Asia the feed industry is growing rapidly. The feed industry of Bangladesh has seen drastic uptrend in recent times. While there was no use of industrial feed in 1990, currently broiler industry use 100% industrial feed while layer and fish industry use 50% industrial feed and the market size is increasing every year. There is a huge gap between production & supply of the feed items. Current annual turnover in feed industry is over BDT 100 billion and increasing at a rate of 10% every year. As our consumption is very low compare to other country, our internal growth scope is immense. Since 2000, exports from Asian nations have more than doubled from 204,000 tons to 418,000 tons as a result of increased shipments from Turkey, Malaysia, China, India and, to a lesser extent, Thailand. It is illegal to reproduce this material in any format without prior written approval of LankaBangla Securities Limited.
13 Opinion
By Farahnaz Zarrin Photo: Internet
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August 2017 MARKET PULSE
14 Opinion
GLOBAL INDUSTRY OVERVIEW Animal feed refers to food for livestock, such as poultry, swine, cattle, horse, poultry, and sheep. It includes feed cereals, cakes and meals, coproducts from food sector, minerals, additives, and vitamins, oil and fats, and supplements, such as silage of legumes, grass, and hay, or harvested crops. The animal feed ideally is high in fiber content, vitamins, minerals, and other nutrition-based edibles for animals. The global animal feed market can be segmented into five divisions based on livestock: Poultry, swine, ruminant, aquaculture, and others. The major ingredients in poultry diets include cereals, fats and oils, which provide the protein and energy required for poultry to maintain health, and produce eggs. Animal feed plays a major role in the global food industry. It is one of the major constituents for ensuring safe and nutritious means of animal proteins and represents the largest input cost, of around 75% of the total cost for livestock producers, depending on the species. Increased demand for livestock products for domestic consumption have made farmers and livestock rearers aware of the fact that the animals should be fed with superior-quality animal feed. The proportion of crossbred animals has also increased over the years, which has generated a higher demand for a better quality and more nutritious animal feed. The market for animal nutrition has also been changing considerably and is becoming strongly competitive owing to its major share in the pet care industry, which is thereby driving the global feed industry.
MARKET PULSE August 2017
ACCORDING TO THE FEED SURVEYS CONDUCTED BY ALLTECH, ONE OF THE TOP ANIMALS FEED MANUFACTURERS, THE PRODUCTION OF THE GLOBAL FEED INDUSTRY INCREASED BY 161 MILLION MT BETWEEN 2010 AND 2016.
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15 Opinion
CURRENT STATUS
CURRENT STATUS The global compound feed production reached almost over 1 billion tons in 2016, with a market size of approximately USD 460 billion in the same year. According to the estimates of the UN Food and Agricultural Organization (FAO), the animal protein production will increase by more than 60% by 2050, with meat (poultry/swine/beef) production being doubled, and dairy and fish production being tripled during the same time frame. According to the feed surveys conducted by Alltech, one of the top animals feed manufacturers, the production of the global feed industry increased by 161 million MT between 2010 and 2016. The number of feed mills around the globe was over 30,000 in 2016. Although an increase in the annual feed production was witnessed at a global level of more than 3%, this was achieved with 7% less feed mills. This trend has been most prominent in countries especially in the Asia-Pacific region including China, India, South Korea, and Vietnam. These countries witnessed a decrease of feed mills of around 30%, 39%, 18% and 13%, respectively between 2015 and 2016. Overall, the combination of increased production from a decreased number of mills reflects a continued consolidation of agricultural production, in spite of the continued growth in animal protein consumption. Increased production of meat, milk and eggs is also being achieved through fewer producers as farms integrate and feed efficiencies increase.
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Industry Overview 2016 Total Global Tonnage (mm)
2015 Total Global Tonnage (mm)
1,032.2
995.6
Number of Feed Mills Globally
Number of Feed Mills Globally
30,090
32,341
+3.7%
-7%
Source: 2017 Alltech Global Feed Survey
Global Feed Growth (Million Metric Tons) 995.6 1,032.2
954.2
960.4
980.1
9.6%
0.7%
2.1%
2.0%
3.7%
2012
2013
2014
2015
2016
UP
1.6% per annum
Source: 2017 Alltech Global Feed Survey
August 2017 MARKET PULSE
16 16 Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
MARKET TRENDS Global animal feed market is segmented based on their function as amino acids, antioxidants, enzymes, vitamins, minerals, acidifiers, antibiotics, binders and others. Based on livestock, global animal feed market is segmented as swine, cattle, poultry, aquatic animals and others. Meat is the major driving factor for animal feed market on global level. Increasing consumption of meat has led the animal feed market grow at rapid pace. Dairy products and their worldwide demand is an imperative factor to the growth of animal feed market. Livestock like poultry are driving the animal feed market. Other major livestock like cattle has led to growth in animal husbandry and is expected to drive the animal feed market over the forecast period. The poultry industry represented 44% of the total global feed production, a slight decrease from last year. This could
be a result of avian influenza, industry consolidation and more efficient feed conversion. Positive growth was observed in pig feed production, particularly in Asia as Vietnam and Thailand are now top 10 pig-producing countries. China represents over a quarter of the world’s pig feed production, but sow numbers have decreased by almost 40% over the past 3 years. Global dairy feed production remained flat, while the US and India reinforced their position as the top 2 producers with increases of 12% and 14%, respectively, whereas Europe saw a downturn. Turkey decreased by 1.5 million tonnes and Germany declined by 3.4 million tonnes. The US maintained the top position in the beef industry, and estimated feed production was 10% higher than last year. China, Spain, Turkey and Mexico all showed increased beef feed production.
Aquaculture continued its year-overyear growth with a gain of 12% in feed production in 2016. Increased production from Turkey, Germany, the UK and France contributed to a strong performance from the European region. Africa increased production by almost 1 million tonnes, while Asia maintained its volume. The increase in aquaculture feed correlates to the consumption of farmed fish.
THE POULTRY INDUSTRY REPRESENTED 44% OF THE TOTAL GLOBAL FEED PRODUCTION, A SLIGHT DECREASE FROM LAST YEAR.
THE GLOBAL FEED MARKET AS A PERCENTAGE BY SPECIES
Poultry
Pigs
Ruminants
Other
44%
27%
21%
8%
Source: 2017 Alltech Global Feed Survey
MARKET PULSE August 2017
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17 Feed Tonnage (Million Metric Tons)
Swine
Pigs
Africa
Asia-Pacific
Europe
Latin America
Middle East
North America
Total
2.1
117.0
72.2
30.3
0.1
50.6
272.4
Ruminants Dairy
Beef
Calves
Other Ruminants
6.0
4.8
0.1
1.8
ASIA-PACIFIC
22.4
16.6
0.1
0.8
EUROPE
37.7
21.6
4.5
8.6
LATIN AMERICA
16.8
11.3
0.7
0.0
6.0
1.7
0.2
2.9
27.4
26.0
0.3
0.3
116.4
82.0
8.3
14.4
AFRICA
MIDDLE EAST NORTH AMERICA TOTAL
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August 2017 MARKET PULSE
Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
SPECIES NUMBERS
18 18 Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
ALTHOUGH AN INCREASE IN THE ANNUAL FEED PRODUCTION WAS WITNESSED AT A GLOBAL LEVEL OF MORE THAN 3%, THIS WAS ACHIEVED WITH 7% LESS FEED MILLS. Layers
Broilers
Turkeys
Other Poultry
8.5
11.3
0.2
0.1
ASIA-PACIFIC
66.1
105.9
0.2
2.6
EUROPE
28.8
47.5
5.7
3.5
LATIN AMERICA
20.9
62.2
0.8
0.1
5.5
9.2
0.3
0.2
13.6
51.0
7.4
0.2
143.3
287.1
14.6
6.6
Aqua
Pet
Equine
Others
1.6
0.4
0.2
0.1
26.7
2.4
0.6
3.0
EUROPE
5.9
8.1
1.3
3.6
LATIN AMERICA
3.6
5.2
2.0
1.5
MIDDLE EAST
0.3
0.1
0.1
0.0
NORTH AMERICA
1.8
8.8
3.7
0.2
39.9
25.0
7.8
8.4
Poultry AFRICA
MIDDLE EAST NORTH AMERICA TOTAL
Other Species AFRICA
ASIA-PACIFIC
TOTAL
Source: 2017 Alltech Global Feed Survey
MARKET PULSE August 2017
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19
Over the last five years, Africa has been the fastest- growing region; this year’s growth was over 13%. Half of the countries grew strongly, and only a handful actually had lower reduction in production. Shining stars for the region include Nigeria, Algeria, Tunisia, Kenya and Zambia, all of which saw growth of at least 30%. Africa is one of the more difficult regions from which to obtain information; nonetheless, there were a few new countries added to this year’s survey. It is worth noting that the region still lags in penetration of feed per capita (feed produced per person), reflecting a poorly developed animal protein sector. Nigeria’s leadership within the region is indicative of population growth — expected to make it the fourth largest country in population by 2050 — and the related economic possibilities as it and other countries continue to demonstrate economic prosperity. Africa presents the greatest growth opportunity for the feed industry.
The Asia-Pacific region continues to lead in production, and its promising growth at nearly 5% indicates that it won’t be surpassed any time soon. The largest producer, China, continues to contribute to the region’s leading position, but upand-coming countries, such as Vietnam and Pakistan, as well as consistent performers, such as India and Japan, will also reinforce the region’s lead for the foreseeable future. The European region’s growth was on the smaller side at only 3.33%. Some of this slow growth can be attributed to the tumultuous year the European Union (EU) has seen with Brexit and the reform of agriculture subsidies. The major story within the European region is Spain. It now leads EU feed production at 31.9 million metric tons, an 8% increase from last year. This increase is significant given that the region as a whole grew by 3.36% compared to last year. Other major contributors within the region include Russia, Germany and France, all of which again made it to the top 10 list. Of
notable mention is the reduction of feed production in the European dairy industry: Several leading countries saw noticeable decline, including Germany, France, Turkey and the Netherlands. Enough smaller producing countries, such as Ireland and Norway, saw healthy growth that somewhat mitigated this decline, and the overall result was a reduction of around 2 million metric tons. Brazil continues to be the dominant player for the Latin America region. Mexico is gaining ground for 2016 and saw the most substantial growth in terms of tons for the region. This was particularly evident in the dairy and layer industries. The Middle East saw the most significant growth of any region at over 16%. The survey extended its reach into this region somewhat and therefore was able to procure more robust numbers. North America feed production remains relatively flat. The region continues to lead feed production in beef, turkey, pet and equine.
Regional Totals
2016 Total Tonnage
Total Mills
Average Regional Growth
AFRICA
39.5
2081
13.2%
ASIA-PACIFIC
367.6
11,214
4.9%
EUROPE
249.4
5,307
3.4%
LATIN AMERICA
157.5
4,287
4.0%
27.1
732
16.7%
191.1
6,470
-1.5%
1,032.2
30,090
MIDDLE EAST NORTH AMERICA TOTAL
(MILLION METRIC TONS)
Source: 2017 Alltech Global Feed Survey
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Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
REGIONAL COMPARISONS
20 20 COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
TOP FEED PRODUCERS The combined production of China and the U.S. is over one-third of global production (35%).China and the United States have dominated the top two spots on the country leaderboard of Alltech’s annual feed survey since its inception. With China as the number one feed producer, as well as increasing production in Vietnam, Pakistan, India and Japan, Asia is expected to maintain its lead for the foreseeable future. Vietnam saw phenomenal growth of 21 percent in the last year and moved into the top 15 countries. Specifically, its pig and broiler industries each saw an increase in production of more than 1 million tons of feed.
(MILLION METRIC TONS) Pigs
Dairy
Beef
Layers
Broilers
Aquaculture
China
75.5
3.0
3.9
29.4
54.9
16.4
USA
41.6
23.3
24.8
12.6
48.0
1.0
Source: 2017 Alltech Global Feed Survey
The mills in the top 30 countries are responsible for producing 86% of all feed. These top 30 countries are home to 82% of all feed mills. The other 14% of production spread across 111 other countries, utilizing the other 18% of feed mills. The top 10 countries have half of the mills (56%) and account for 60% of all feed production, leaving 131 countries to produce 40% of feed with the remaining 44% of the feed mills.
Mills
2016
Mills
2016
China
6000
187.20
India
909
31.36
USA
5970
169.69
Russia
500
29.09
Brazil
1554
68.93
Germany
330
24.49
Mexico
498
33.88
Japan
115
23.99
Spain
820
31.85
France
300
23.45
(MILLION METRIC TONS)
Source: 2017 Alltech Global Feed Survey
THE COMBINED PRODUCTION OF CHINA AND THE U.S. IS OVER ONETHIRD OF GLOBAL PRODUCTION (35%).CHINA AND THE UNITED STATES HAVE DOMINATED THE TOP TWO SPOTS ON THE COUNTRY LEADERBOARD OF ALLTECH’S ANNUAL FEED SURVEY SINCE ITS INCEPTION.
MARKET PULSE August 2017
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21
In general, global feed prices are down when compared to last year’s figures. As a result, so is the cost of raising production animals. From a global perspective, the feed industry can be roughly valued at around $460 billion dollars, although feed prices in general were 5–7% lower than the previous year. This represents a small increase over 2015, reflecting higher values attributed to the pet, equine and other businesses.
AVERAGE GLOBAL FEED PRICES Pigs
Layers
$355 -5%
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Broilers
$370 -7%
$422 -7%
August 2017 MARKET PULSE
Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
GLOBAL FEED PRICES
22 Opinion
LOCAL INDUSTRY OVERVIEW The role of Fisheries and Livestock sectors in the development of agrobased economy of Bangladesh is very important and promising. They contribute around 8% to national income, which also is 32% of the total agricultural income. About 80% of animal protein in our diet comes from fish and livestock. The poultry industry in Bangladesh plays a crucial role in economic growth and simultaneously creates numerous employment opportunities. The poultry industry, as a fundamental part of animal production, is committed to supplying the nation with a cheap source of good quality nutritious animal protein in terms of meat and eggs. Approximately 20% of the protein consumed in Bangladesh originates from poultry. A gap still exists between the requirement and supply of poultry meat and eggs. Among poultry species, the chicken population is dominant over others, at almost 90%, followed by ducks (8%) and a small number of quail, pigeons and geese. Free range ‘backyard’ and scavenging poultry that are traditionally reared by rural women and children, still play an important role in generating family income, in addition to improving the family's diet with eggs and meat. Commercial poultry production in Bangladesh is conducted on an industrial scale and is growing tremendously in spite of recent difficulties but is expected to make a significant contribution to the economic
MARKET PULSE August 2017
CURRENT ANNUAL TURNOVER IN FEED INDUSTRY IS OVER BDT 100 BILLION AND INCREASING AT A RATE OF 10% EVERY YEAR. AS OUR CONSUMPTION IS VERY LOW COMPARE TO OTHER COUNTRY, OUR INTERNAL GROWTH SCOPE IS IMMENSE.
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23 Opinion
CURRENT STATUS
development of the country. A national poultry policy has been approved by the government, which will improve the organization of production and marketing, allowing increased stability and security of output throughout the year. The sector shows significant development over the last 20 years. While there was no use of industrial feed in 1990, currently broiler industry use 100% industrial feed while layer and fish industry use 50% industrial feed and the market size is increasing every year. The government declared poultry and fish farming as a thrust sector and classified as agro based industry. The availability of non-cereal protein food in Bangladesh has reportedly increased significantly and has had a sustained growth rate of over 8% per annum in the fishery and livestock sectors in recent years. OVERVIEW (Figures in Thousan)
54,375 Nos
320,633 Nos
3,855 MT/Year
Source: Bangladesh Economic Review 2016
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24 24 Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
INDUSTRY STRUCTURE Feed mill plays an important role in the supply of commercial feed to poultry, livestock and fish farming. Feed mills generally distribute their products as “complete feed� to poultry, fish and livestock industry. In the immediate past, commercial poultry, livestock and fish farming expanded at a faster rate in Bangladesh resulting in a large scale demand for commercial feed round the year. However in recent period due to natural calamities and disease the poultry sector are facing challenges to ensure sustainable growth which was also reflected in the price trend of both chicken and eggs due to huge demand in the market with the growth of population, rapid urbanization, changed life style and food habits. Though the feed industry is increasing but it is unable to meet the demand of feed supplies which the poultry farms presently require. For a poultry farm, at least 65% to 70% of the total expenditure goes for the procurement of poultry feed. Poultry feed is prepared with the mixture of different micro - nutrients apart from wheat, maize and others where most of the ingredients are imported which eventually causes increase in price of feeds manufactured by the local companies. Apart from conventional materials like fish meal and rice bran are in short of
MARKET PULSE August 2017
supply. However in most of the cases the feeds are still prepared in an unscientific manner in the country. Quality assurance keeping the price competitive is a vital challenge for the local feed manufacturing companies. Few large companies are playing vital role in meeting the demand of quality feed requirement in the poultry sector. Considering the growth of industry and huge market vacuum the dependency on imported feed and establishment of foreign companies have been increasing over the years increasing challenge for the local feed manufacturing companies. Feed milling industry can be divided into organized and unorganized sectors. The products are used by the poultry farms and fish farms throughout the country. The growth and stability of poultry, fishery and dairy products depend on production of balanced protein diets of international quality. But the number of such industries in the country is very small and they cannot meet the increasing demand of this sector. The distribution of feed industries, regionwise, also lacks balance. Some parts of the country have sufficient number of feed industries and the supply is also higher than the actual demand. However, some other parts of the country suffer from short supply. There is a huge gap between production and supply of the feed items. The Feed Mill manufacturing industry has
grown consequently to provide backward linkage support to the three industries, especially poultry farms which consume the biggest share of the feed industrially produced.
MARKET SIZE There is a huge gap between production & supply of the feed items. Current annual turnover in feed industry is over BDT 100 billion and increasing at a rate of 10% every year. As our consumption is very low compare to other country, our internal growth scope is immense. Since 2000, exports from Asian nations have more than doubled from 204,000 tons to 418,000 tons as a result of increased shipments from Turkey, Malaysia, China, and India and, to a lesser extent, Thailand.
AS PER INDUSTRY SOURCES, CURRENT DEMAND FOR POULTRY FEED IS ESTIMATED TO BE 5.08 MILLION MT/ YEAR, BASED ON CAGR 10% GROWTH.
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25
Person Per Kg
Person Per Kg
USA
86
Pakistan
38
Australia
86
India
16
UK
56
Srilanka
12
Malaysia
38
Bangladesh
4.5
Thailand
26
Source: LBIL Research
As per the standard of World Health Organization (WHO), a matured person should intake 22 Kg of protein per year; whereas average intake of protein per person per year is 4.5 Kg in Bangladesh. A study shows that 6% GDP growth leads to 11% growth in poultry industry. Since there is a huge gap between standard intake and actual intake of protein, it is expected that the industry will grow very fast in future, if the present economic growth can be maintained at least.
MARKET PARTICIPANTS The feed industry of Bangladesh is dominated mostly by the top industrial producers. The capacity of the industry is estimated to be 240,000 MT/month and half of this demand is met the top 7 feed companies of the industry. The other 50%
is met by home mix producers (25%) and low quality local level producers (25%). There is a major difference in quality between the two different forms of feed since home mix producers and local producers do not hire expert supervision or add the necessary additives or vitamins and in some instances the raw materials, such as: maize and soy-bean are beyond expiry dates contributing to lower quality. The industry trend is shifting towards relatively higher-priced balanced feed manufactured by mechanized feed millers due to high feed conversion ratio that leads to a greater commercial benefit. Increased demand from the ready-mix feed segment is causing the decline of home-mix feed market and exit of smaller, low quality producers having lower economies of scale.
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CURRENTLY, OVER 52 LOCAL ANIMAL FEED PRODUCERS ARE IN OPERATIONS. CP, PARAGON, AFTAB, QUALITY, KAZI, AND QUALITY ARE DIRECTING THE BULK OF THE MARKET.
August 2017 MARKET PULSE
Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
Poultry Consumption Per Person
26 26 Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
50% of Industry Demand is met by Top 7 Producers
Top Producers
Home Mix Producers
25%
25%
Local Producers
50%
Major Feed Mill Companies in Bangladesh Agro Industrial Trust
Rupsha Poultry Feeds Limited
Surma Poultry Feeds Limited
Narish Poultry Feeds Limited
C. P. Bangladesh Limited
BRAC Agro Industries Limited
Kazi Poultry Feeds Limited
Soudi Bangla Fish Feed Limited
Quality Feed Limited
Paragon Poultry Feds Limited
Provita Feeds Limited
New Hope Feed Ltd.
City Feeds Limited
Aman Feeds Ltd.
Aftab Poultry Feed Industry Limited
National Feed Mill Ltd.
Broiler and layer birds consume about 90% of the ready poultry feed. The remaining 10% is consumed by grandparent and parent birds. Currently, over 52 local animal feed producers are in operations. CP, Paragon, Aftab, Quality, Kazi, and Quality are directing the bulk of the market. In a capital-intensive industry such as this, small local players are facing a high entry barrier because achieving economies of scale is very difficult. Feed business is volume driven. Attaining economies of scale in the production process is hence the key dynamic in this business. Smaller commercial ready feed makers are hence facing survival risks in the face of competition from larger, more efficient top producers. It is crucial for a ready-mix producer to be well-positioned for future growth by adding substantial capacity
to existing production levels. Only three large companies – Kazi Farm Ltd, Paragon Poultry and Nourish Feed Ltd – practice formal input-marketing contracts.
FEED MILLING PROCESS Commercial Feed Mill production requires specialized management skills, large volume of finance and fine tuning between supply of timely and quality inputs and timely sell of outputs. Over the years modern techniques have been implemented for poultry rearing which led to gradual development of farms and hatcheries with high technology and environment-controlled systems. The production process starts with grounding some of the inputs. However, there are some inputs which do not need to be grind (such as – oil), which are added into the
production process straight into the next step, mixing. The feed outputs differ for the different breed of end consumers. Feed manufacturers have an established Research and Development unit, which develops the formula for animal feed. The production process is automated and controlled by the supervisors. The crushed ingredients, along with remaining ingredients are then mixed according to proportion mentioned in particular formulae. Steam is passed through the mixture to give the feed a shape. Subsequently, the mixture is cooled down in cooler. The steam used for the process is taken from sterile water to maintain quality of the feed and avoid fungus. The output is then packed and stored for distribution.
THOUGH THE FEED INDUSTRY IS INCREASING BUT IT IS UNABLE TO MEET THE DEMAND OF FEED SUPPLIES WHICH THE POULTRY FARMS PRESENTLY REQUIRE. FOR A POULTRY FARM, AT LEAST 65% TO 70% OF THE TOTAL EXPENDITURE GOES FOR THE PROCUREMENT OF POULTRY FEED.
MARKET PULSE August 2017
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27
Grain Store
Milling
Mixing
Dozing
Poultry Feed
Packing
Storing
Marketing
DEMAND AND SUPPLY DYNAMICS The major demand driver of the feed industry is the poultry industry. The feed milling industry works as the prime backward linkage industry for these industries. As per industry sources, current
demand for poultry feed is estimated to be 5.08 Million MT/year (based on CAGR 10% growth). As the market size and demand for feed are increasing, the demand for the major raw materials is also expected to rise. However, since Bangladesh is not self-sufficient in producing these raw materials, it has
Pelleting
to import major portions of them from neighboring country India. The rising price of Corn and Soy-bean, due to seasonal variation, creates continuous pressure on the market. As our consumption is very low compare to other country, our internal growth scope is immense.
Demand Dynamics POULTRY INDUSTRY
LIVESTOCK INDUSTRY
FISHERIES INDUSTRY
Regional Aspect
Poultry farms in BD are situated mainly around Dhaka, Chittagong, and Khulna Division which leads to a higher demand for feed in those areas.
Among three types of dairies: Rural, Pocket, and Metro, demand for feed is highest in the last category because of the farmers’ comparative affordability and consciousness of nutrition.
Dhaka, Chittagong, and Khulna have the highest percentage (27.57%, 20.27%, 18.58%) of inland water fish production and consequently have the highest demand for fish feed among regions of the country.
Seasonal Aspect
Demand for poultry feed decreases around 30% during Nov-Feb and increases during Jul-Sep by 50%
Demand for livestock feed stays similar throughout the year with a special pull during later in the year due to Eid-ul-Adha festivals.
Similar to the demand for poultry feed, demand for fisheries feed decreases around 30% during NovFeb and increases during Jul-Sep by 50%, as well.
Source: Light Castle Blog
SUPPLY DYNAMICS As the livestock and fisheries industry has been growing at a steady rate of 20% for the last two decades, the demand for feed has been growing accordingly. However, the supply side has not been able to keep up with the increasing demand. Yearly production of feeds per year is 27, 95,040 MT which is inadequate for meeting demand, which have to be imported directly from India and China.
THE INDUSTRY TREND IS SHIFTING TOWARDS RELATIVELY HIGHERPRICED BALANCED FEED MANUFACTURED BY MECHANIZED FEED MILLERS DUE TO HIGH FEED CONVERSION RATIO THAT LEADS TO A GREATER COMMERCIAL BENEFIT.
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August 2017 MARKET PULSE
Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
Feed Milling Process
28 28 Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
SUPPLY CHAIN AND RAW MATERIALS Maize, Rice Bran, Meat Bone Meal, Rapeseed, Soya bean Meal, Fish Meal, Fish Oil, Protein Concentrate, DL Mathanine, Salt, Premix, Growth Propoter, Enzyme, Mastered oil, Mastered Oil Cake, and Atta are the main raw materials of feed mills. A significant portion of some raw materials are imported from India while the remaining portion is outsourced from the local stores. The existing production facility requires nearly 160,000 MT of corn per year, 60% of which is imported while the rest is sourced locally. The entire requirement of corn is imported from India. Large feed manufacturers have their nominated corn supplier in India and Bangladesh who supplies corn on season basis. Sourcing of
Major Import Sources
India
China
corns basically depends on the seasonality. In India peak season for corn production is from October-December and May to July.
feed is supplied to the DOC production unit and rest is supplied to different
In this time frame, feed manufacturers can
poultry factories of Bangladesh through
import corn from India. The critical time
nominated distributors. The pricing is
is August-September when feed millers have to bear higher price to procure corn. Soyabean is another most crucial raw material for feed production. Yearly around 82,000 MT soybean is consumed for producing feed, of which 60% is imported from India and the remaining is
procured
locally.
Moreover, for
producing feed - millers import a variety of other raw materials which include premix (a mixture of vitamins and other additives to the feed) from Thailand, Meat and Bone Meal, oil, vitamins and other additives. Overall, feed millers
mainly fixed by auction.
MAIZE, RICE BRAN, MEAT BONE MEAL, RAPESEED, SOYA BEAN MEAL, FISH MEAL, FISH OIL, PROTEIN CONCENTRATE, DL MATHANINE, SALT, PREMIX, GROWTH PROPOTER, ENZYME, MASTERED OIL, MASTERED OIL CAKE, AND ATTA ARE THE MAIN RAW MATERIALS OF FEED MILLS
store stock in hand at all times. Produced
Raw Material: Corn
60%
Imported
Raw Material: Soy Bean
40%
Produced Locally
60%
Imported
40%
Produced Locally
Total Local Feed Supply
Total Demand
Total Demand
27,95,040
160,000
82,000
MT/Year
MT/Year
MT/Year
Source: LBIL Research
MARKET PULSE August 2017
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29 Demand Side
Feed Mill Company
Inernational Suppliers
Maize
Poultry & Cattle Farm
Local Suppiers/Manufacture
Soya Bean
Hatchery & Fish
Rice Bran
Traders
Plam Oil
Others raw Materials
Vaccination Supplier
Medicines
PP Woven Bag Supplier
Bag
OPPORTUNITIES AND CHALLENGES OF THE SECTOR The feed industry is poised to a number of challenges. These are: There has been a steep rise in the prices of raw feed materials recently. Both conventional and non-conventional feed resources therefore need to be optimally used to balance nutrients, energy and protein requirement and protein-energy ratio as well as palatability so that ultimate cost-effective productivity is achieved. Feed manufacturers in the unorganized sector do not have in-house laboratories for carrying out the proximate analysis of aflatoxins, urease activity and toxic residues which has led to production of poorly balanced feed of questionable quality. The farmers using such rations are virtually cheated and do not get the expected products. The unregistered feed companies should appoint animal nutritionists and engineers to control the quality of feed and maintain machines.
Contamination in raw feed materials is a major problem. In fish meal, NPN urea and saw dust are added. Strict legislation to ensure quality of feed materials should be enacted. The problems of aflatoxins in most feed materials like cereals and oilcakes are a regular phenomenon. Improper storage of extracted cakes or harvested cereal results in fungal contamination and aflatoxin production. The essential amino acids like lycine and methionine are imported and custom duty on them is high. The costs of amino acids need to be brought down by reducing this duty to encourage their higher utilisation in feed formulations which would result in enhanced productivity of livestock and poultry. Import of maize has come under OGL for the actual users with the result that large feed manufacturers are able to import maize. The import needs to be eased for the traders so that small poultry farmers
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producing their feed can also use cheaper source of feed ingredients. Product quality of feed mills is sometimes overlooked. There is a shortage of dicalcium phosphate in the country. The basic raw material for production of dicalcium phosphate, namely bones, are available in the country in large quantities. A few more plants for production of dicalcium phosphate need to be established. High import duty of vaccine required for mixing in the feed increases the cost structure of the produce. At present, the feed industry is not producing milk replacers for rearing of the calves and growth production rations for production of meat from sheep, goats and male buffaloes. Concerted efforts are, therefore, needed to promote and produce these balanced rations for intensive feeding of sheep, goats and male buffalo calves.
August 2017 MARKET PULSE
Opinion COVER STORY | GROWING WITH THE FEED INDUSTRY OF BANGLADESH
Supply Side