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A_111

    A

EconomicReview

    ;AC0mprehenSiVeAnalysisof

    ;2007AnimalFeedEconomicSituation ;Intheaccelerationoflargescalebreedingtheproductstructurehaschanged

    ;MrJinWeidongthecoreinitiatorand ;thepresidentoftheWellhopeGroup,gota ;masterdegreeinAnimalPhysiology&Bio

    ;chemistryofShenyangAgriculturalUniver

    ;sity.Heworkedasafeacheraftergradua

    ;tionln1991heworkedasasalesmanat ;theContinenta1GrainCompany.andsoon ;inIessthanfhreeyears.hewaspromoted ;asthepresidentassistant,thehighest ;rankingofficiaIofthiscompanyonChinese ;mainlandjn1995heestablishedthe ;WellhopeGrouptogetherwithfiveofhis ;counterpartswhooccupiedimportantposi

    ;tionsattheforeignenterprisesaswell ;TheWellhopeGroupholds43sub

    ;sidiarieswith4000employeesfmmhome ;andabroadTheproductscover25

    ;provincesandregionsThegrouphases

    ;tablishedtheJointVenturesinDPRKand ;NepelIn2006aiointventurewithDeHeus ;Company,aHollandfeedcompanywitha ;hundredyearofhistory.wasestab?shed. ;TheLiaoningWellhopeDeHeusCompany ;isNationaJAgriculturalIndusfriaIizatiOnKey ;LeadingEnterprise,Vice-presidentEnter

    ;priseofChinaFeedlndustryAssociation ;ThetrademarkofWellhopeisauthorizedas ;thefamoustrademarkinChina.Thesales ;revenuefor2007exceeded3billionRMB ;ThecompanyranksthefirstinLiaoning ;Provinceandfifthamongthefeedgroupsin ;China

    ;MrJinWeidongholdsaseriesofso

    ;cialtitles.suchasthevicepresidentof ;ChinaFeedIndustryAssociation,the

    ;judgeandtheinstructorforMBAprogram ;jnTsingHuaUniversity.Hehasbeena ;visitingprofessorformanyuniversities, ;suchastheOceanUniversityofChina, ;WuhanUniversityofTechnology,the ;NortheastAgricultureUniversity,etcIn ;2008.hewaselectedasthestanding ;committeeofLiaoningCPPCC,therepre

    ;sentativetolheNationalPeoplesCongress ;ofShenyangCity,

    ;2007wasayearofsignifi

    ;cantgrowthfortheanimalfeedmarketin ;China.Largeenterprisescontinuedtoex

    ;pand,andthecreationofnewandextensive ;businessopporttmitiesincreasedsignifi

    ;stimulatedproduction.Thefourthquarter ;performancereflectedtheresumptionofpig ;production,andsaleswereexpectedtocon

    ;tinuetorise;thesalesofchickenfeedwere ;expectedtodecline,butduetothelarge ;cantly.Thedeadlyblueearspigdiseasein

    ;evitablyaffectedpigfarming,andthis ;pushedtheindustrytoexpandthescopeof ;farming.Family-ownedfarmsaswellas ;small&mediumsizedfarmshavealtered ;theirpracticesusingsyntheticfeeddueto ;thehighpriceofrawmaterialsinaddition ;totheunstablequalityofhomemadefeed. ;ThehJghpriceofporkalsoboostedthe ;marketforpoultryconsumption,andthis ;increasedactivityallowedtheshorteningof ;thepoultryproductioncycle,whichinturn ;ledtothefurtherdevelopmentofpoultry ;feed.Thepriceoflivepigswashigh,even ;withanumberofnationalpoliciesthatsup

    ;portedthedevelopmentoflivepigs;thede- ;velopmentofaquaculturewasstableand ;steady,andtherestorationofexportshas ;24CHINAFEEDINDUSTRYIFeb2008lvv’,Nvv.Chinafeedindustry.Gem

    ;scaleofpigbreeding,

    ;thedemandforani.

    ;malfeedshouldnot

    ;declineoveral1.The

    ;salesbenefitsofhen

;feedwereexpected

    ;todeclineandacce1.

    ;eratetowardsobso.

    ;lescence.thusthede

    ;mandfel1.However,

    ;thehenfeedmarketin

    ;thefirstthreequarters

    ;wasquitegood.111e

    ;abovefactorsledto

    ;thegrowthofthetotal

    ;marketforanimal

    ;feed.

    ;PoultrybreedingisaIucrative

    ;business,withpoultryfeed

    ;showingstronggrowth

    ;inthispastyear,thes~ongascension ;ofthepoultryfeedmarketisduetothefol- ;lowingfourreasons:

    ;1)Inthewakeofthestabilizationof ;thebirdfluepidemic,poultrybreedinghas ;significantlyimprovedovertheprevious ;year.

    ;2)Duetohighpricesofporkandto ;theknownpigepidemic,consumershave ;shiftedconsumptiontoothertypesoflive

    ;stock&poultry,andaquaticproducts,and ;thisledtorisingconsumptionprices;this ;effectwasespeciallyevidentthispastyear ;attheendofMay,andledtoalargein- ;creaseofpoultrysupplements.

    ;3)Duetotheriseinpricesofcorn, ;soybeanmealandotherstaplerawmated. ;als,manyfamilyfarmshaveswitchedto ;buyingcompoundfeedandconcentrated ;feed,insteadofusinghomemadefeed. ;Thishasincreasedtheopportunitiesfor ;poultryfeed.

    ;4)Theexportoffrozenchickenmeat ;waslaunchedinJuneofthisyear,inre

    ;sponsetos~ongdomesticconsumption.It ;hasbroughtmoregoodopportunitiesfor ;chickenandduckproduction.

    ;Inshort,thisyear’spoultryfeedmar—

    ;ketperformancewaspositivelyaffectedby

    ;theabovefactors.Thepricesofeggsand ;poultrymeatweresignificantlyhigherthan ;thatofthesameperiodlastyear.Thishas ;stimulatedfarmersenthusiasm;many ;large?-scalepoultryfarmshavebeensupple?-

     ;mentingtheirbusinessessothatthede

    ;mandofpoultryfeedsubstantiallyin- ;creased.Inpoultryfeed,chickenfeedasa ;wholehasexhibiteds~onggrowth,buthen ;feedhadonlyasmallincrease.Duetothe ;BirdFluof2006,henbreedinghasbeen ;steadilydecliningincertainregions. ;AquacuItureenterprisesacce1. ;eratedtheirexpansionsuch

    ;thattheaquaticfeedmarket

    ;hashadsteadygrowth

    ;Thisyear,theaquacultureindustry ;wasinfluencedbythe”green”measuresof

    ;theUnitedStates,JapanandtheEuropean ;Union;exportswereblocked,butthein- ;creaseofdomesticconsumptionofaquatic ;productshelpedensurethesteadygrowth ;ofaquaticfeed,despitetheexportlimita

    ;tionsduringtheaquaculan’eproductmarket

    ;expansion.Insummary,theHengxing ;Groupsetupfournewplants(threeofthem ;inGuangdongProvince,inZhaoqing, ;Huadu,Jiangrnenrespectively,andthe ;forthinHainan),andinvestedinanew ;plant(Yancheng,Jiangsu).TheHaid ;Grouphasthreenewfactoriescurrentlylm. ;derconstruction(Taishan,Guangdong; ;Jingzhou,Hubei;Shaoxing,Zhejiang),in

    ;vestedinanewplant(Lianjiang,Guang

    ;dong),andacquiredanexistingplant(Fan

    ;ling,Guangdong).GuangdongYuehaiFeed ;Grouphadsalesof180,000tonsofaquatic ;feedfromJanuarythroughNovemberof ;thisyear;productionandsalesvolumein

    ;creased25%incomparisonwiththesame ;periodlastyear.Itsgrowthwasprimarily ;attributedtoincreasedcapacityoftheirpro

    ;ductionline,aswellasthesustainedcapac

    ;ityandscaleexpansionoftheaquaculture

    ;industryinrecentyears.GuangxiHong ;BrandFeedCo.,Ltd.setupanewaquatic ;fbedproductionline,enablingtheaquatic ;feedproductioncapacitytoreach14,000 ;tons,comparedto4,300tonslastyear,e

    ;qualtoanincreasebyafactorof2.25.In ;addition,inthispastNovemberanaquatic ;feedenterprisefoundedinBeihaiCity ;reachedanewproductioncapacityof ;60,000tonsandwasaddingtoproduction ;facilities;atthesametimeinQinzhouCity, ;anotheraquaticfeedenterprisewasfound

    ;edandbeganconstruction.Inparticular, ;lastyear’shighlevelof

    ;efficiencyofPenaeus

    ;VannameiinZhejiang

    ;Provincenotonlygreat

    ;lybenefitedthecompany

    ;butalsopromotedaqua

    ;culturefeedinanew

    ;roundofexpansion.Ac

    ;cordingtostatistics,Zhe

    ;jiangProvincehasmore

    ;than130aquaticfeed

    ;plants;itwasexpected

    ;toreach937,100tons

    ;thisyear,withthegrowth

    ;of32.2%overthatof

    ;Iastyear.

    ;Thepriceofbeef

    ;hasbeenstable

    ;andcow(cud)

    ;feedhasmain

    ;tainedupward

    ;growth

    ;Thepricesofbeef

    ;andmuttonarerelatively

    ;stable,withonlyminorfluctuationsin ;pricesanddemandforfeed.Duetolow ;mi11priceswithinthelivestockindustry.in ;additiontohighpricesofrawmaterials ;usedtomakeCOWfeedanddairyfarmers ;buyingexpensivelivestockearly,most ;farmersoperateinthered.Theseliabilities

;areotienreferredtoas”cattleslavery”.

    ;Manycowfarmershavefilednumerous ;complaintsaboutacertainofenterprises’

    ;monopolybehaviorregardingcapitalopera? ;tion.Slaughteringthedairycowisvery ;prominentinsomeregions,andthisre

    ;strictsthecudfeedconsumptiontosome ;degree.However,duetothesteadygrowth ;ofbeef,andwiththeencouragementfrom ;themostlynon--dairycattlebreedingindus-- ;try,cudfeedhasmaintainedamomentum ;ofpositivegrowth.

    ;Currently,specialanimalfeed

    ;isuniqueinthediVerscatiOn

    ;Offarmingstructure

    ;Asmepreferentialpoliciesofspecial ;鼬瞳哪瞒啊咖m删哪?啪瞳帅州ma玎佃咖

    ;嘲砸啊嗽岫岫哪哪胁畹埘岫岫吐删l

    ;www.Chinafeedindustry.cornIFeb2008ICHINAFEEDINDUSTRYl25

    ;

    ;?蕊强蔓,?|0t*溉誊_j?._ll0lll0i00lllj?lll.

    ;animalbreedinginsomeregionsbolstered ;industrymorale.this1edtoanincreasein ;theproductionofspecia1.animaIfeed.Parts ;ofthefoxandmartenhaveturnedintoa ;marketforalargescalebreeding,tothe

    ;pointofproducingasurplus.

    ;IntheaccelerationofIarge

    ;sc8lebreeding,theproduct

    ;structurehaschanged

    ;Livestockmodelsrumfromfamily

    ;farmstointensive,largescalebreeding

    ;farms.Theconsumerswithfeedenterpris

    ;eshavechangedtolargescalefarms;sales

    ;volumeshaveincreasedsteadily,yetthe ;numberofdealersdecreasedby20%.In ;thisnewproductstructure,concentrated ;feedsalestofamilyfarmsdeclinedinthe ;firsthalfoftheyearwithadecliningrateof ;17%insomeareas.Salesincompound ;feedweregrowingwhilesalesforconcen

    ;tratefeedwereexperiencingnegative ;growth,leadingtoachangeinproduct ;strtucture.

;Increasingoperatingcostsac

    ;celerateindustriaIrestructur

    ;ing

    ;In2007,someimportantrawfeedma

    ;terialpricesincreasedonanaverageof ;morethan30%:ononehand,bulkrawma

    ;terialswereinshortsupplyandtheprices ;continuedtorise,andontheotherhand ;somerawmaterialsreliedlargelyonim

    ;ports,suchassoybeanmeal,fishmeal,DL

    ;Metandvitamins.Theinternationalmar

    ;ketdictateddomesticsuppliesandmarket ;prices.whichwasacrucialfactorthatim

    ;pactedcurrentandfuturefeedindustryand ;husbandryconditions.Furthermoreconsid

    ;eringthecostsoflabor,electricity,coal, ;andincreasinglogisticsandbankloans,these ;factorsledtoasubstantialincreaseinfeed ;costs.

    ;Accordingtoaninvestigationin

    ;GuangdongProvince,porters’expenses

    ;haveincreasedby50%.Inonefeedenter- ;prisewithacapacityof250,000tons, ;workers’salaryhaveincreasedbyover100

    ;millionRMB.whileheavyoi1anddiesel ;pricerisingwerealsoaddingcostover100 ;million.Thesamephenomenonwasalso ;foundinHunanProvincewithproduction ;lineworkers’salariesincreasingasmuchas

    ;20%.

    ;Inordertostabilizethevolumeofo

    ;riginalcustomersinthelivestockbreeding ;market,feedproducershaveallowedthe ;rateofincreaseinfeedpricestobesubstan

    ;tiallyslowerthantherateofincreaseinraw ;materialpricesforproducingfeed.Many ;enterpriseswentsofarastoloseprofit, ;henceenterprisesoverallhaveexperienced ;asignificantdeclineinprofitmargins.In ;thiscurrentsituation,withoutfinancialben

    ;efitsonrawmaterialsandcapital,small ;feedproductionfactoriesfounditdicult

    ;tosurviveandhadtowithdrawfromthe ;market.Hence,largeenterprisesthathave

;theadvantagesoffinancialsupport,ser

    ;vices,personneltrainingandstrongbrands ;aresharingthemarket.Thisledtoamajor ;polarizationbetweenlargeandsmallenter

    ;prises;smallenterprisesexperiencedan ;unprecedentedhighrateoffailure,andnew ;largescaleenterprisescontinuedtomerge ;andtakeoverorleasesmallerenterprises, ;aswellascontinuetheirexpansioninpro

    ;ductioncapacity.

    ;26CHINAFEEDINDUSTRYlFeb20081www.Chinafeedindustry.corn

    ;

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