Feed thrives as poultry grows

Once dependent mainly on imports, the country's animal feed industry now meets 98% of local demand and has even made inroads in neighbouring export markets.

The industry has registered an around 25% expansion in the last decade, driven by a surge in poultry farming as well as fish and cattle farming.

Rapid growth of the restaurant business has given a boost to the poultry industry as chicken constitutes a significant portion on their menus, which in turn has benefited feed production to a great extent.

The poultry sector's investment now stands at approximately $4.16 billion, which is expected to double over the next decade. The number of poultry farms is increasing by 15% on an average annually.

Dairy has made significant progress as well and the market value of dairy milk has been estimated at Tk8,420 crore annually. The country is looking for self-sufficiency in milk in 2029, doubling production from nearly one crore tonnes now, a survey of the Department of Livestock shows.

"Farms are less dependent on imported feed now," said Md Ahsanuzzaman, general secretary of the Feed Industries Association Bangladesh (FIAB).

The feed industry's growth depends on the expansion of the livestock industry, according to industry owners.

After the big shock of avian influenza in 2007, poultry farming developed rapidly over the last decade and it is now considered the main driver of the feed industry.

The feed industry supplies three major sub-sectors of poultry, cattle, and fish, which saw significant growth over the years.

The annual demand for animal feed in Bangladesh is around 6.3-6.4 million tonnes; production in 2020 surpassed the demand, industry people say.

In that year, total commercial feed production reached 6.57 million tonnes. Of that, poultry feed production was 4.45 million tonnes, fish feed 1.59 million tonnes and cattle feed was 0.53 million tonnes.

The feed industry has witnessed a 161% jump in production over the last seven years. The poultry sector consumes 62.9% of feed, cattle 14% and fish 23%.

The industry's annual growth was 12-15% until the pandemic hit that caused a decline in feed sales as farm demands took a dive.

Though the industry is now recovering from the shock, it is facing a hike in raw material prices that is also causing a rise in the prices of farm products.

"Covid-19 has dealt the feed industry a terrible blow. But the industry has now absorbed the losses, and sales have again increased," Ahsanuzzaman, the feed industry representative said.

"The industry has overcome the pandemic bump but will fall short of the growth target," he added.

The feed market

According to an IDLC report, seven feed makers rule the market. Nourish Poultry Feed, ACI, Kazi Farms, Provita Feed, Aftab Feed, New Hope Feed, and Aman Feed have now gained more than 70% of the market share.

United Feed, City poultry, CP Bangladesh, RRP Agro, Quality Feeds, AIT Feeds and AG Agro are also significant players in the feed market.

According to the Bangladesh Poultry Industries Central Council (BPICC), the apex body of poultry associations, the number of registered feed mills is 261 and 135-140 companies renewed licences from the Department of Livestock Services. Besides, more than 200 feed mills are unregistered.

Moshiur Rahman, president of the BPICC told TBS, "The feed industry has grown depending on the growth of poultry as a supporting sector. But unregistered feed mills are producing low-quality feed and the reputation of the leading companies are suffering."

The industry could not provide any investment data.

But according to LightCastle, a research organisation, the feed industry's turnover was Tk10,000 crore in 2017. It listed some challenges such as increasing price of raw materials, adulteration of raw materials, lack of quality control in the unorganised sector, and high import duty of vaccines. 

The feed industry needs high capital investment  and feed production is not coping up with the increasing demand. Attaining economy of scale has been a primary challenge for the industry players, it said.

Handmade to modern facilities

In the beginning, the feed manufacturing process was labour intensive and manual, but its transformation riding on modern facilities started in the 1990s when local entrepreneurs became interested in investing in the area.

The FIAB said Bangladeshi feed mills are equipped with hi-tech machinery, mostly imported from Europe and the United States and some from China.

The majority of FIAB-registered feed mills are modern and automated. In the budget for the current fiscal year, regulatory and supplementary duties on importing soya cake and soya protein concentrate – two ingredients for animal feeds – were withdrawn to support the feed industry. Soybean and maize comprise more than 80% of inputs for animal feeds, and local production of these items increased over the last few years owing to the growth of the animal feed industry.

At present, the import of poultry and fish feed is almost nil. Alongside Bangladeshi manufacturers, a few foreign companies are also in the feed making business.  

The dependency on finished poultry and fish feed is almost none but many ingredients are being imported from countries like the US, Brazil, China and India.

Export footprints

In the fiscal 2019-2020, nine companies have got approval to export feed. They are Paragon Group, Agata Feed Mills, CP Bangladesh, Aftab, AG Agro, Quality Feeds Limited, Alia Feeds, RRP Feed and Nourish Group.

Among them, eight companies have exported around 1,172 tonnes of poultry and fish feed to the Indian states of Tripura, Assam and neighbouring Nepal. 

Exports of several companies have hit a roadblock because of the pandemic. Shipments of the stuck goods are expected to begin this year.