China Layer Industry Boom Analysis & Forecast Report February 2016

By CnAgri 2016-05-26 15:19:59 Print Tel:861064402035 Email: Service.boabc@boabc.com

Price: RMB12000(English Version) RMB7000(Chinese Version)

20160526032057479

Brief Introduction:

Livestock farming companies, feed producers and veterinary drug and vaccine companies such as Dabeinong, New Hope, Chuying Agriculture and Vica Group all are gradually increasing investment in “internet + modern agriculture”. “Internet + Egg” marketing has rapidly developed since 2013, but in fact, upstream industry develops slowly and only 2 companies are involved in it.

Basic Information:

The first one is Deqingyuan’s “Yun Farming Model” (internet + Eco-agriculture + Industrial Finance). Regarding National Egg Product Engineering Technical Research Center as the technical platform, Deqingyuan is reasonably building Yun farms and provides technical managers, high-quality baby chicks and feed and standardized farming techniques and product standards to Yun farms. High-quality products produced by Yun farms enter its logistics and marketing system. And meanwhile, Haier Financial Services Co., Ltd provides equipment financing to farm households, which increases enterprise capacity. A win-win innovation farming model for Deqingyuan and layer farming companies is formed.

Table of Contents:


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Content
BOABC Viewpoint: “Internet + Layer” Model Greatly Improves Enterprise Competitiveness  3
1 Layer Market Price and Prosperity Analysis in Feb.. 4
1.1 The wholesale price of eggs rose up slightly month on month. 4
1.2 The farmgate price of layer chicks rose up by 2.75% month on month. 4
1.3 The farmgate price of culled layer declined by 4.07% month on month. 5
1.4 Layer compound feed price went down slightly compared with last month. 5
1.5 Layer breeding profit increased greatly in Feb. 6
2 Layer Industry Deep Analysis. 7
2.1 “Internet + Layer” Model Greatly Improves Enterprise Competitiveness. 7
2.2 Specialized Adult Layer Farming has Huge Potential, but Faces More Difficulties. 8
2.3 The Building of Standardized Livestock/Poultry Demonstration Farms Improves Overall Level of Layer Farming  8
2.4 Per Capita Egg Consumption in China Has Reached a Relatively High Level 9
3 Layer Industry Production Analysis and Forecast 10
3.1 Monthly inventory of layer kept stable in February. 10
3.2 In February egg production increased slightly. 11
4 Breeders and Eggs Import & Export Analysis and Forecast 11
4.1 There was no breeding hens imports in January. 11
4.2 In January 2016, China exported 6.7 thousand tons of eggs, increasing 15.48% year on year 12
5 Business Dynamics. 12
5.1 Xinjiang Jiangnan Poultry’s 0.6-Million-Ton Layer Industrial Park is Located in the 29th Division of Xinjiang production and construction Corps. 12
5.2 Deqingyuan was Listed on the “New Three Board” 13
5.3 Pulike Has Got the Approval of Production for NDV-IBV-AIV Vaccine. 13
5.4 Dalian Commodity Exchange publicly collected egg delivery warehouse and sweep template delivery site. 13
Attached Tables. 14
Table 1, Farmgate Price of Eggs in Major Provinces of China, February 2016. 14
Table 2, Farmgate Price of Culled Layer in Major Provinces of China, February 2016. 14
Table 3, Price Trend of Egg, Feed, Layer chick and Culled Layer, February 2016. 14
Table 4, China Breeding Hens Imports and Exports, in Jan 2016. 14
Table 5, Breeding Hens Importers of China and Market Shares, in Jan 2016. 15
Table 6, Market Shares of China Fresh Eggs Exports by Country (Region) of Destination, in Jan 2016  15
Table 7, Top 10 China Egg Exporters and Market Shares, in Jan 2016. 15
Attached Figures. 16
Figure 1, China Monthly Export Change of Fresh Eggs in 2014-2016. 16
 

BOABC Viewpoint: “Internet + Layer” Model Greatly Improves Enterprise Competitiveness
 
Livestock farming companies, feed producers and veterinary drug and vaccine companies such as Dabeinong, New Hope, Chuying Agriculture and Vica Group all are gradually increasing investment in “internet + modern agriculture”.
“Internet + Egg” marketing has rapidly developed since 2013, but in fact, upstream industry develops slowly and only 2 companies are involved in it.
 
The first one is Deqingyuan’s “Yun Farming Model” (internet + Eco-agriculture + Industrial Finance). Regarding National Egg Product Engineering Technical Research Center as the technical platform, Deqingyuan is reasonably building Yun farms and provides technical managers, high-quality baby chicks and feed and standardized farming techniques and product standards to Yun farms. High-quality products produced by Yun farms enter its logistics and marketing system. And meanwhile, Haier Financial Services Co., Ltd provides equipment financing to farm households, which increases enterprise capacity. A win-win innovation farming model for Deqingyuan and layer farming companies is formed.
The second one is Vica Group’s specialized “Jianong Online” farming service model. “Jianong Online” is an online platform invested by Vica Group, which provides market information, farming management, farming technical service, online transaction, finance and talents to farm households. It is helpful for farm householders to understand layer and egg market, record and manage the process of layer farming, test eggs, and buy and sell the products online. It also provides fund channels to farm households. Industrial efficiency and benefits are improved.  
 
“Internet + Layer” provides high-quality products and service to consumers and farm households. It will integrate companies with farm households and consumers to promote sustainable, healthy and efficient development of layer sector.
1 Layer Market Price and Prosperity Analysis in Feb

1.1 The wholesale price of eggs rose up slightly month on month

In February 2016, the average wholesale price of eggs in China’s 36 large and medium-sized cities was RMB 8.48/Kg, up by 0.87% month on month, decreasing 7.60% year on year.
Figure 1.1 China Monthly Wholesale Prices of Eggs in 36 Large Cities, 2014-2016

Source of data: MOA, BOABC

1.2 The farmgate price of layer chicks rose up by 2.75% month on month

In February 2016, the farmgate price of layer chicks in main producing areas was RMB3.21/Bird, increasing 2.75% from last month and increasing 12.79% from last year.
Figure 1.2 China Monthly Layer Chick Price, 2014-2016

Source of data: MOA, BOABC

1.3 The farmgate price of culled layer declined by 4.07% month on month

The farmgate price of culled layer in main producing areas was RMB9.61/Bird, down by 4.07% month on month but up by 6.44% year on year.
Figure 1.3 China Monthly Culled layer Price, 2014-2016

Source of data: MOA, BOABC

1.4 Layer compound feed price went down slightly compared with last month

The price of compound feed for layer was RMB2.59/Kg in February, down by 0.35% month on month and 7.29% year on year.
Figure 1.4 China Monthly Layer Compound Feed Price, 2014-2016

Source of data: MOA, BOABC
 

1.5 Layer breeding profit increased greatly in Feb

This month the ratio between layer price and grain price was 3.52, the ratio between layer price and feed price was 2.62. The profit of each link of China’s layer breeding industry in this month was as follows:
(1)  Layer breeding link: the gross profit of layer breeding was about RMB35.42/bird, decreasing RMB24.17/bird compared with last month, and down by 13.21% year on year;
(2)  Egg wholesale link: the gross profit in egg wholesale link was about RMB1.41/Kg, increasing RMB 1.35/Kg than last month, and up by 265.30% year on year.
(3)  Egg retail link: the gross profit in egg retail link was about RMB1.75/Kg, increasing RMB0.08/Kg from last month, and up by 2.38% year on year.
In February, egg farmgate price dropped down sharply, the ratio of egg/grain and egg/feed decreased and layer breeding margins presented a big slump. Influenced by festival demand, egg wholesale and retail prices reached high, but fell down quickly. In March, egg price will still have falling space and the margins in each link all will go down.
Table 1.1, Benefit on the Value Chain of Layer Industry in China
Unit:RMB/Head, RMB/KG
  Egg/Corn Egg/Feed Breeding(layer) Breeding(egg) Wholesale Retail
Feb-2016 3.52 2.62 35.42 1.77 1.41 1.75
MoM -14.08% -14.71% 321.20% -82.43% 2271.21% 4.57%
YoY -0.13% -2.12% 285.81% -83.73% 265.30% 2.38%
Data source: MOA, BOABC
 

Figure 1.5 Profit on Different Links of Layer Industry Chain, 2014-2016

Source of data: BOABC
 
2 Layer Industry Deep Analysis

2.1 “Internet + Layer” Model Greatly Improves Enterprise Competitiveness

Livestock farming companies, feed producers and veterinary drug and vaccine companies such as Dabeinong, New Hope, Chuying Agriculture and Vica Group all are gradually increasing investment in “internet + modern agriculture”.
“Internet + Egg” marketing has rapidly developed since 2013, but in fact, upstream industry develops slowly and only 2 companies are involved in it.
The first one is Deqingyuan’s “Yun Farming Model” (internet + Eco-agriculture + Industrial Finance). Regarding National Egg Product Engineering Technical Research Center as the technical platform, Deqingyuan is reasonably building Yun farms and provides technical managers, high-quality baby chicks and feed and standardized farming techniques and product standards to Yun farms. High-quality products produced by Yun farms enter its logistics and marketing system. And meanwhile,   Haier Financial Services Co., Ltd provides equipment financing to farm households, which increases enterprise capacity. A win-win innovation farming model for Deqingyuan and layer farming companies is formed.
The second one is Vica Group’s specialized “Jianong Online” farming service model. “Jianong Online” is an online platform invested by Vica Group, which provides market information, farming management, farming technical service, online transaction, finance and talents to farm households. It is helpful for farm householders to understand layer and egg market, record and manage the process of layer farming, test eggs, and buy and sell the products online. It also provides fund channels to farm households. Industrial efficiency and benefits are improved.  
“Internet + Layer” provides high-quality products and service to consumers and farm households. It will integrate companies with farm households and consumers to promote sustainable, healthy and efficient development of layer sector.
 

2.2 Specialized Adult Layer Farming has Huge Potential, but Faces More Difficulties

Adult layers are sexually immature hens at the age of 7-20 weeks and weight and uniformity decide the laying rate in the future. Now, most of layer farm householders incubate by themselves or raise the chicks after purchasing, but due to big difference between management and technical level, there is a big difference on laying rate, feed/egg ratio, mortality and elimination rate, further influencing farm households’ farming margins.
Adult layers have strictly technical requirements on environmental control, feeding, etc. and farming equipment also is different from the layers that are laying; along with short farming time but high labor expenses and frequent epidemic prevention, fund and technical investments are great. In recent years, more specialized adult chicken farms have been emerging in the main farming areas such as Hebei, Shandong and Henan. But specialized adult chicken farming is at an initial stage and still faces many issues:
1)     Lack of standards, there is a big difference on weight, uniformity, quality, etc.; 
2)     Owing to weak consciousness on brand building and small investment, there is no typical brand on the market;  
3)     Along with weak awareness on price from customers, the market is in a mess and the profit is low. 

2.3 The Building of Standardized Livestock/Poultry Demonstration Farms Improves Overall Level of Layer Farming

Standardized livestock/poultry farming means livestock/poultry variety improvement, farming automation, production normalization, epidemic prevention systematism and manure harmlessness. It aims to improve the level of standardized production for livestock and poultry. By the end of 2015, there have been 635 layer farms that are involved in the listing of livestock/poultry normalization demonstration farms. Layer scale-farming increased to 48% in 2015 from 27% in 2010.
On February 15, 2016, the Ministry of Agriculture published “Scheme for Building Livestock/Poultry standardized Demonstration Farm”, which explicitly plans to set up 500 new livestock/poultry (hog, dairy cattle, layer, broiler, beef cattle and meat sheep) standardization demonstration farms in 2016, 150 higher than last year. It requires that farms’ production and operation must abide by relevant laws and administrative regulations of “Animal Industry Act”, “Law on Animal Epidemic Prevention”, “ Pollution Prevention Regulation on Livestock/Poultry Scale-Farming”, etc.; the farms must be registered and recorded and have animal epidemic prevention qualification certificate and complete archives and have no no important animal epidemic disease and quality safety events within two years.
Layer demonstration farms must maintain more 10,000 birds of farming scale (cage), which further improves layer farming scale and promotes management on production, health, disease prevention and quality safety.
 

2.4 Per Capita Egg Consumption in China Has Reached a Relatively High Level  

China is the world’s biggest layer producer and also is the biggest consumer. According to data from China Statistic Bureau, 2015 China’s consumption recorded 29.9 million MT, taking up 42% in the global total.
Per capita egg consumption in Japan and China are highest; the next is America; the consumption in EU is lowest. China’s per capita egg consumption ascended rapidly to 19.16 kg in 2015 from 15.41 kg in 2000, up 20%. Japan, America and EU have a roughly similar change trend of stabilization with some declines. Per capita egg consumption in Japan, America and EU has reached a saturation condition, respectively at 19 kg, 14 kg and 12 kg. Compared to America and EU, per capita egg consumption in China has maintained at a relatively high level and is almost same as Japan. 
Figure 2.1 Egg Consumption Comparison between China and Foreign Countries

Source of data: FAO, BOABC
 
3 Layer Industry Production Analysis and Forecast

3.1 Monthly inventory of layer kept stable in February

According to BOABC’s monitoring data, China’s inventory of layer in February, 2016 was 1.425 billion birds, decreasing 0.10% month on month, increasing 8.11% year on year.
Figure 3.1, China Monthly Layer Inventory, 2014-2016

Source of data: BOABC data
After the Lunar New Year, egg price descended, which led to the decline of breeding margins and the elimination of old layers. It is predicted that layer stocks still will drop in March.
 

3.2 In February egg production increased slightly

According to BOABC’s monitoring data, in February China laying hens stocks accounted for 82.09% of total layers, increasing 4.34 percentage points than last month; the production of eggs was projected 2.12 million tons, up 5.84% from last month and 18.48% from last year. Figure 3.2, China Monthly Egg Production, 2014-2016

Source of data: BOABC data
The rising layer breeding margin led to the increasing purchase of layer chicks in the past, thus, the amount of laying hens kept high. BOABC predicted that the egg production may get down in March according to the positive elimination of culled layers.
 
4 Breeders and Eggs Import & Export Analysis and Forecast

4.1 There was no breeding hens imports in January.

China’s import volume of breeding hens in January 2016 was 0 birds, 37.2 thousand birds less than last month, down by 100.00% year on year.
By countries, affected by the bird flu outbreak, China issued a ban import order to France and USA birds and their products. Now, only New Zealand, Hungary and Danmark have signed breeding birds trading agreement, and it is predicted that the breeding hens import will decline in the former half year of 2016.
 

4.2 In January 2016, China exported 6.7 thousand tons of eggs, increasing 15.48% year on year

According to eggs foreign trading, China barely imported eggs, while for export, 80% of exported eggs was exported with the fresh egg method.
(1) Export volume and FOB price of eggs
China exported 6,683 tons fresh eggs in January 2016, 94 tons more than last month, up by 15.48% year on year.
In January, the average FOB price of exported fresh eggs was 1,623 USD/T, 10.93 USD/T less than last month, down by 9.32% year on year.
(2) Exports by destinations
Hongkong was the main destination of China exported fresh eggs. In January 2016, 89.43% exported fresh eggs was sold to Hongkong, and the rest was sold to Macau.
(3) Exports by enterprises
By enterprises, the main exporter of eggs in January 2016 was Tianmen city Quansheng Egg Trading Company and Qingdao Liuhe Changlong Food Co.Ltd.,etc. The export volume of top ten exporting enterprises in January accounted for about 76.27% of total.
 
5 Business Dynamics

5.1 Xinjiang Jiangnan Poultry’s 0.6-Million-Ton Layer Industrial Park is Located in the 29th Division of Xinjiang production and construction Corps 

Recently, Xinjiang Jiangnan Poultry and the 29th Division of Xinjiang production and construction Corps have successfully signed agreement on jointly building layer industrial park project with RMB 110 million and a planned area of 33.33 ha. This project includes a 0.6-million-bird layer farm, 20 chicken houses, 15 laying houses and a plant with annual corn drying and feed processing capacity at 17,000 MT and an organic fertilizer plant with annual capacity at 10,000 MT, as well as egg tray production lines and harmless treatment equipment for livestock and poultry. The construction period is 8 months. It will be put into operation in September 2016.

5.2 Deqingyuan was Listed on the “New Three Board”

On January 29, Beijing Deqingyuan was listed on the “New Three Broad” and the initial transfer of shares is around RMB 68 million. GP layer breeder farming can reach 30,000 sets, PS layer breeder farming is 0.24 million sets and CS layer farming is 3.5 million birds. Main products are shell egg and egg liquid. After many years of development, it has owned “Deqingyuan”, “Danboshi”, “Guantingshuiku”, “Yunduannongchang” and “Nongjiaxiang” brand series products. 

5.3 Pulike Has Got the Approval of Production for NDV-IBV-AIV Vaccine

On February 19, Pulike got the approval of production of inactivated vaccine (La Sota strain + M41 strain) against Newcastle disease, Infectious Bronchitis and Avian Influenza from the Ministry of Agriculture. This kind of vaccine fills in the blank of inactivated influenza (H9 subtype & genetic recombination) vaccine in Chinese market by recombining influenza H9 subtype virus-Re-9 strain. It is an important new product that is upgraded and updated in poultry vaccine industry.

5.4 Dalian Commodity Exchange publicly collected egg delivery warehouse and sweep template delivery site.

On February 17, Dalian Commodity Exchange published message of collecting egg delivery warehouse and sweep template delivery site in eleven regions including Liaoning, Henan, Hebei, Shandong, etc., which will contribute to exerting the market function of egg futures better, avoiding market risk and serving the development of spot egg industry.

 
Attached Tables

Table 1, Farmgate Price of Eggs in Major Provinces of China, February 2016

Unit:RMB/Kg
  Liaoning Hebei Shandong Henan Guangdong
Feb-2016 6.56 6.98 6.77 6.77 8.16
MOM -16.70% -14.04% -17.50% -17.50% -6.43%
YOY -15.72% -19.63% -19.46% -20.41% -9.28%
Source of data: BOABC data
 

Table 2, Farmgate Price of Culled Layer in Major Provinces of China, February 2016

Unit:RMB/KG
  Liaoning Jilin Heilongjiang Hebei Henan Shandong
Feb-2016 9.68 9.50 9.43 9.37 9.78 9.88
MOM -3.63% -1.94% -1.74% -7.64% -3.93% -3.46%
YOY 8.60% 10.49% 8.31% 7.34% 4.84% 4.38%
Source of data: BOABC data

Table 3, Price Trend of Egg, Feed, Layer chick and Culled Layer, February 2016

Unit:RMB/KG, RMB/Bird
  Layer Chick Compound Feed Culled Layer Farmgate Egg
Feb-2016 3.21 2.59 9.61 6.78
MoM 2.75% -0.35% -4.07% -14.98%
YoY 12.79% -7.29% 6.44% -18.32%
Data source: MOA, BOABC
 

Table 4, China Breeding Hens Imports and Exports, in Jan 2016

 
Month Import Volume
(10,000 birds)
Import Value
(million dollars)
Export Volume
 (birds)
Export Value
(dollars)
Jan-2016 0 0 0 0
Accumulative Total in Jan-Jan 0 0 0 0
Accumulative YOY -100.00% -100.00% - -
Source of data: China Customs, BOABC

Table 5, Breeding Hens Importers of China and Market Shares, in Jan 2016

Unit: 10,000 heads
Importers Import Volume
in Jan
Accumulative Import
Volume in Jan-Jan
Accumulative
Market share
Total 0.00 0.00 -
China Animal Husbandry Group 0.00 0.00 -
Beijing An Feng Run De Trading Co., Ltd 0.00 0.00 -
Beijing Dejia Honesty Livestock Import & Export Co. Ltd. 0.00 0.00 -
Beijing Poultry Breeding Co., Ltd 0.00 0.00 -
Hubei Tongxing Cobb Poultry Breeding Co., Ltd 0.00 0.00 -
Source of data: China Customs, BOABC
 

Table 6, Market Shares of China Fresh Eggs Exports by Country (Region) of Destination, in Jan 2016

Countries(Regions) Export Volume in Jan(MT) Accumulative Export
Volume(1,000MT)
Accumulative market
 share
Total 6,683.23 0.67 100.00%
Hongkong 5,976.86 0.60 89.43%
Macau 706.37 0.07 10.57%
Source of data: China Customs, BOABC
 

Table 7, Top 10 China Egg Exporters and Market Shares, in Jan 2016

Importers Export Volume
In Jan (MT)
Accumulative
 Export Volume
(MT)
Accumulative Market Share
Liaoning Xinjiean Agriculture Technology Co. Ltd 767.05 767.05 11.48%
Qindao Liuhe Changlong Food Co., Ltd 743.94 743.94 11.13%
Shenzhen Banjgie Imp&Exp Co., Ltd 622.25 622.25 9.31%
Hubei Xiangyu Animal Husbandry Co., Ltd 546.73 546.73 8.18%
Tianmen City Quansheng Egg Trading Co.,Ltd 532.78 532.78 7.97%
Shenzhen Xiongsheng Imp. &Exp. Co., Ltd 475.58 475.58 7.12%
Chaoyang City Lixiang Trading Co., Ltd 462.01 462.01 6.91%
Hubei Shuanggang Animal Husbandry and Processing Co., Ltd 365.17 365.17 5.46%
Dalian Lvkang Poultry Development Co., Ltd 297.02 297.02 4.44%
Dandong Longding Imp. &Exp. Co., Ltd 285.00 285.00 4.26%
Total        5,097.52        5,097.52 76.27%
Source of data: China Customs, BOABC
 
Attached Figures
 

Figure 1, China Monthly Export Change of Fresh Eggs in 2014-2016


Source of data: China Customs, BOABC

 

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Email: lili.yang@boabc.com 

 
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