An unusually wet early summer in one of China’s key shrimp production zones has been a dampener on sales for China’s fish feed firms, but the sector is bullish about future demand. Market leader Guangdong Haid is predicting a surge in demand through the second half of 2013 due to increased usage by aquaculture operators focused on the non-luxury domestic and export markets.
The sector’s number two player, Tongwei Aquatic — which is predicting a 15 percent increase in income in 2013 — meanwhile has pledged to scale back its non-core activities. Company CEO Yan Hu told investors recently that the firm would add new capacity “only according to demand.”
Haid has reported sales of fish feed rose 40 percent in each of the past six years, compared to an average 6 percent annual growth in sales of pig feed — traditionally the leading category in the feed sector.Feed sales in 2013 and 2014 are predicted at 5.52 million tons and 7.02 million tons respectively, according to a report from Minsheng Securities.
A bullish outlook has also spurred mergers and acquisitions across the country’s fish feed sector. With demand for fish feed rising, larger players like Haid have been snapping up smaller rivals, according to Minsheng. In 2004 there were more than 100 Chinese firms producing feed for shrimp farms but that number has fallen to ten. The top four players meanwhile have 70 percent of the market share. “As shrimp producers become more educated on feed features they’re moving up to higher quality products,” noted Minsheng.
Official data appears to support the optimism of feed producers. China’s fishery economy gross output in 2012 produced CNY 1.732 trillion (USD 283 billion, EUR 219.9 billion) in value terms, up 15.44 percent year-over-year, according to the agricultural ministry, which oversees the sector. Of that figure added value production totaled CNY 791.52 billion (USD 129 billion, EUR 100.5 billion), up 15.02 percent year-over-year. The marine catch contributed CNY 170.67 billion (USD 28 billion, EUR 22 billion), up 14.66 percent year-year-over while added value output contributing rose 18.89 percent to CNY 96.04 billion (USD 15.7 billion, EUR 12 billion). Output in what the ministry categorizes as “sea-water culturing” totaled CNY 226.45 billion (USD 37 billion, EUR 28.7 billion) (up 17.25 percent year-over-year), with added value production reaching CNY 130.81 billion (USD 21 billion, EUR 16.6 billion), up 14.61 percent year-over-year.
An ongoing clamp down on official corruption meanwhile continues to put downward pressure on producers of high-end species, hurting major players like Shandong Homey, which has reported that demand for its high-end sea cucumber is down 50 percent in some key domestic markets. Echoing the worries, Haitong Securities noted wholesale prices in Weihai (a major trading hub in Homey’s home base of Shandong province) at CNY 140 (USD 23, EUR 18) per kilogram were down 17 percent compared to last year — CNY 168 (USD 27, EUR 21) per kilogram.
Increased output capacity and better technology are also to blame for falling sea cucumber prices, according to Professor Zhao Minghui at the China Marine University. Output of abalone is up 20 percent year-over-year, explained Zhao. He points to abalone prices, which in May fell CNY 20 (USD 3.27, EUR 2.54) to CNY 30 (USD 4.90, EUR 3.80) per 500 grams year-over-year in seafood markets in the prosperous southern city of Nanjing.
