World Feed Market and Turkey

09 October 201410 min reading
It is estimated that world compound feed production has increased 65% in the last 20 years. According to results of the surveys by Alltech; world compound feed production amount of 954 million tons obtained in 2012 reached to 963 million tons with an increase of 1% in 2013. China maintains its leadership in the production with the 189 million-ton feed produced in the estimate of more than 9,500 feed mills. Many grain products such as wheat, corn, barley, oat, millet have strategic importance in the world. Produced by being cultured by humans since the ancient times, these products are extremely important resources in terms of animal nutrition just like human nutrition. Animal feed is the second mostly used field in which these grains are used after human nutrition. Qualified as the most important factor that affect efficiency and profitability directly in livestock raising, feeds is divided into two groups in itself. While feeds with low digestible nutrients and high cellulose ratio like alfalfa and hay obtained from meadows and pastures are defined as roughage; feeds formed by being processed and blended of grain and pulse varieties with high amount of digestible nutrients in unit weight are defined as compound (concentrated) feed in general. And our main focus is on these compound feeds obtained by processing of grains. These feeds meet the most important part of basic nutritional needs of animals both in sheep & goat farming and cattle livestock, both in winged and other poultry, both in fisheries group and group of pets. Grains (barley, wheat, rye, millet, oats), oilseed residues (sunflower, nut, cottonseed, soybean residues), animal originated proteins (fish, meat and bone, blood meal, poultry and slaughterhouse residues, bone meal), mill residues (wheat cracks, middling [razmol], bran, rice bran, red dog), beer factory waste (malt grass, malt powder), selector bottom pulses (lentils, beans, etc. cracks) and additives (vitamins, minerals, molasses, salt, marble dust, limestone chemicals) are used in compound feeds produced for cattle, sheep and goats. For poultry feed production; grains (barley, wheat, rye), oilseed residues (sunflower residues, cottonseed, soy, peanut and nut residues), animal originated proteins (fish, meat and bone, blood meal), energy resources (vegetable oils) and additives (vitamins, minerals, premixes, chemicals) are used. WORLD COMPOUND FEED PRODUCTION AND THE FEED INDUSTRY Compound feeds have a long history in the world production. The first industrial production of compound feed was started at the end of 1800s in Missouri USA and the same facility still continues to production. The first arrangements for compound feed sector in the world were made between 1916 and 1920. According to the “Global Feed Surveys Report” by Alltech which was prepared for 2013 and in which compound feed production in 130 countries were evaluated; the findings reveal a one percent increase in the feed industry with a global feed tonnage of 963 million metric tons, up from 954 million metric tons last year. According to the report; this modest increase was likely influenced by droughts in more than 30 countries worldwide in 2012, which, in turn, drove up the price of raw feed materials. When the regions where world compound feed production is intensely realized are reviewed; it is seen that South America, Asia and EU are prominent. According to the Alltech survey; China was the largest producer meeting 19,6% of the world compound feed production in 2013. USA with a share of 17,4% and Brazil with a share of 6,8% follow China. Mexico, Spain, India, Russia, Japan and Germany are other major producers. Among the 130 countries reviewed, China was once again the leading producer of feed with 189 million tons manufactured in the estimate of more than 9,500 feed mills. The United States and Brazil ranked second and third respectively, with 169 million tons from 5,236 feed mills and 67 million tons from 1,237 feed mills. There was an observed decline in the number of feed mills in China, likely driven by government policy, which favors a smaller number of larger feed mills to facilitate traceability and improvements in quality, and the continued demand by urban consumers for further processed proteins from larger farms. In terms of percent growth over 2012 figures, Africa was again found to be the fastest growing area. Countries in this region such as South Africa, Cote d’Ivoire, Senegal, Mauritius and Namibia all saw significant production increases, boosting Africa’s combined tonnage 7 percent to just short of 31 million tons in 2013. Asia, of the six regions surveyed, is once again the leading overall region in terms of production of animal feed, with 348 million tons or more than one-third of global feed, but did not grow in 2013. The Middle East is estimated to have the largest feed mills by average metric tons per year. Globally, feed mills produced an average of 34,140 tons. When the feed costs of 2013 is reviewed; it is seen that the highest average cost of feed was experienced in Asia, averaging around $524 per ton for pig finisher diets and around $480-$550 for chicken finisher diets. The final months of 2013 saw a significant drop in feed prices in Asia, a trend which could continue into 2014 and result in a year of recovery and perhaps even growth ahead. FEED PRODUCTION ACCORDING TO THE SPECIES AND REGIONS When looking at global livestock species, poultry held its position as industry leader with a 46 percent share of the feed market at 444 million tons, which was an almost 6 percent growth over the prior year. However, it was aquaculture that saw the largest percentage of growth in 2013, with a 17 percent increase, up to 34 million tons. The Food and Agriculture Organization of the United Nations (FAO) trends suggest that the total global consumption of farmed fish and shellfish now exceeds beef on a weight basis. Growth in figures for pig feed was close behind, with an estimated 11 percent increase over 2012, moving to 243 million tons globally. The pet food sector was also up slightly in 2013, and represents 20.7 million tons and equine feed tonnage once again increased 14 percent to 12.4 million tons. The ruminant feed market, comprising dairy, beef and small ruminants, decreased in tonnage demand between late 2012 and December 2013. These animal sectors have the most alternative feed materials with which to supplement when grain prices rise, including grazing and forages. The December 2013 assessment identified a total of more than 28,000 feed mills globally, with Asia and North America being home to over half of them. About sixty percent of all feed produced is pelleted, and this is even more prevalent in Europe. COMPOUND FEED PRODUCTION IN TURKEY According to the data of Food, Agriculture and Livestock Ministry; Turkey’s total compound feed production that was 9,5 million tons in 2008 reached 13,1 million tons in 2011. The largest share in total compound feed production belongs to cattle and sheep and goats feed. Cattle and sheep and goats feed production that was 7,2 million tons in 2011 is followed by poultry feeds with 5,5 million tons. Figures of compound feed production that was realized between 2008 and 2011 are indicated in the table by taking records of Food, Agriculture and Livestock Ministry into account. These figures represent the invoiced official figures reported to the Ministry. Thus; in addition to the 13,1 million ton-compound feed that is the registered feed amount in Turkey in 2011, compound feed producers that make productions for themselves and non-invoiced sales in the sector should be taken into consideration. In this case; it is said that Turkey’s compound feed production is over 15 million tons. TURKISH FEED INDUSTRY According to the data of “Current Status and Projections of Feed, Meat and Dairy Sectors in the World and Turkey Report” prepared by Turkey Dairy, Meat, Food Industrialists and Producers Association (SETBIR) in March 2013; 30 % (24,4 million hectare) of land area of Turkey is cultivable. 67,8 % of agricultural lands (16,3 million hectare) in Turkey (excluding fallow lands) is separated for field agriculture. Grain is cultivated on 74,2 % (12,1 million hectare) of this area. Wheat ranks first with 66,9 % share, barley ranks second with 25,1% and corn ranks third with 4,9% in the entire grain cultivation land. Rye, rice, oats and triticale follows these products in order. Food is associated with feed in the world now. The relation between food and feed in the international arena is sloganized with “Feed to Food” phrase. Turkey’s starting negotiations of Food Safety, Phitosanitary and Veterinary Act within European Union membership process and continuation of harmonization studies make feed sector even more important for Turkey as compound feed is one of the major topics in harmonization package for livestock. The first initiative on compound feed industry in Turkey was started by the private sector in 1955. Inıtiative in real terms was realized with the establishment of Yem Sanayi Türk A.Ş. in 1956 under the leadership of the government. Operationalizing its own facilities, the aforementioned company established 26 facilities in partnership with the private sector. Feed mills of the private sector started to be established as of 1965. Completing its mission of being a pioneer, Yem Sanayi Türk A.Ş. withdrew from the sector in 1996 by selling all feed mills within the scope of privatization. The entire compound feed was started to be produced by the private sector after this year. Numbers, capacities and capacity usage rates of the compound feed mills by years are indicated in the table below. Active mills in Turkey are mainly located in Aegean and Marmara regions; Central Anatolian Region follows them. It is said that 61,7 % of total active feed mill numbers in Turkey in 2010 consists of facilities with capacities lower than 10 tons/hour. The rate of facilities with 11-20 tons/hour capacity is 26,2 % and the rest 12,1 % belongs to the facilities with capacity over 20 tons/hour. 83,4 % of inactive facilities, in other words the closed ones are the ones with capacity lower than 10 tons/hour. Thus the new facilities in the sector prefer to establish high capacity mills. FEED PRICES IN TURKEY Compound feed prices in the sector were determined by the Government after Feed and Forage Act Regulations numbered as 1734 were put into force, but the prices have been formed in competitive market conditions after the decisions taken on 24 January 1980. Feed industry is an intermediate sector. It takes its inputs mainly from crop production and presents its production to livestock production. Due to this feature, feed prices are affected from two factors. One is raw material prices and the other one is animal product prices. Feed prices increase as the feed raw material prices increase. FEED PRODUCTSTRADE IN TURKEY The raw material production amounts used in compound feed and the increases in compound feed production figures have not been realized in the same amounts in Turkey. It is seen in Turkey that the growth speed of especially oilseeds and their residues with protein source and feed raw materials that are energy source like corn is quite behind the compound feed industry development speed. Thus import is applied in order to cover the deficit. Dependence on import causes problems in the feed sector in terms of taking costs under control and adversely affects the competition force of the sector in the international market. In the SETBIR report; it is especially emphasized that compound feed industry in Turkey is not having a consistent year in getting raw material supply in terms of both price and amount. It is stated that turnover of compound feed sector in Turkey is approximately 5,8 billion dollars and nearly 3 billion dollar-amount of this amount is realized via import. Especially the amounts paid for corn, oilseed residues, soya bean and its residues and barley are huge amounts.
Articles in Research Category