The boom of feed industry

The shift from raising backyard chickens to commercial poultry farming began in the mid-1980s but gained significant momentum in the '90s. 

Since then, the feed industry has started to develop on a small scale as a backward linkage sector. Significant investment came right after 2000, when the poultry sector in Bangladesh was booming, and the supply capacity exceeded the demand.

Meanwhile, some companies are also exporting feed after meeting the country's needs, which entrepreneurs are working to increase as well.

According to data from the Feed Industries Association of Bangladesh (FIAB), the amount of investment in this sector is about Tk28,000 crore at present, with an annual production capacity of about 80 lakh tonnes of feed, exceeding the local demand.

Currently, this feed industry plays a major role in supplying food to the 44 crore livestock population, including cows, buffaloes, goats, sheep, donkeys, and chickens, as well as fish farms. 

The feed industry, as a backward linkage of protein production, supplies 65.7 lakh tonnes of feed per year to this huge livestock population, directly connected with the food and nutrition security of people across the country.

FIAB says feed mills supply 85% of the country's fish and animal feed needs. A portion of the family farms' animal feed comes from grass, hay, and human food scraps, as it used to before the commercialisation of the livestock sector.

Md Ahsanuzzaman, senior vice-president of FIAB, told The Business Standard that since 1996, some investments have come into the country in commercial feed mills. 

However, significant investments started coming in after 2000. The industry also underwent major growth during this period.

According to FIAB data, the consumption of feed is highest in the poultry sector because commercial poultry is entirely dependent on industrial feed. The poultry sector's consumption of feed is 45.40 lakh tonnes, followed by fish farms at 13.60 lakh tonnes, and dairy/cattle feed at 6.70 lakh tonnes.

The Livestock Economy data of the Department of Livestock Services (DLS) states that the number of livestock populations in the country is more than 44 crore. Out of this, the production of meat is 87 lakh tonnes, milk production is 1.4 crore tonnes, and egg supply is 2,337 crore pieces.

Additionally, the country's fish production exceeds 47 lakh tonnes, with the supply of farmed fish from ponds reaching 21.66 lakh tonnes, according to Department of Fisheries data, most of which comes from commercial farming. The feed industry meets the needs of all this commercial farming.

According to DLS and FIAB 2020-21 data, the number of registered mills producing feed for the livestock population in the country is 249, while unregistered mills total 83.

Among the leading feed manufacturing companies are Kazi Farms Group, Paragon, Aftab Feed, Narish Poultry & Hatchery, CP Bangladesh, Provita, and Quality Feed.

According to FAO's Poultry Sector Country Review on Bangladesh, published in 2008, since 2003, the production of poultry in the country has increased significantly. At that time, along with domestic commercial farms, some foreign firms based in India and Thailand also started production operations in Bangladesh.

As a result, significant investments started flowing into the feed industry. Among them, Kazi Farms made substantial investments at that time. Simultaneously, the Thailand-based firm CPO invested $60 million in Bangladesh.

The feed industry has consistently experienced good growth in the last decade, except for 2018 and 2021. The year 2020 witnessed a record growth of over 26%.

According to Alltech's Feed Survey Report 2022, a global fish and animal feed company, the production of feed in 2022 was 65.70 lakh tonnes.

The report states that during the period 2015-2022, the year 2020 saw the highest production of feed, amounting to 71.90 lakh tonnes. However, the following year witnessed a decrease in production of 8.86%. The reason for this decrease is attributed to the Covid pandemic. There was no significant growth in 2022 either.

However, the country's feed prices are increasing due to the collapse of the global supply situation during the Covid period, the Russia-Ukraine war, and the increase in the exchange rate of the dollar. Additionally, the issue of excessive profits for some companies is being discussed at this time. Consequently, the prices of cows, broiler chickens, and eggs are becoming volatile at times.

Md Ahsanuzzaman, senior vice-president of FIAB, said, "The exchange rate of the dollar and the increased interest rate of banks have created a big challenge for us now. At the same time, the complexity of the dollar crisis while opening LCs has not been completely resolved yet."

According to FIAB, due to an increase in the price of raw materials, producers have been forced to increase the price of feed. The two major feed ingredients are corn and soybean meal, constituting 55% and 30% of the feed, respectively. The rest contains many raw materials. However, 70% of the demand is being met by locally produced maize.

But corn and soybean meal prices play the biggest role in determining feed prices. Maize, which was Tk17.30 a kg in July 2020, stood at Tk36 in November 2023 due to volatility in the international market. Similarly, the price of imported and locally produced soybean meal rose to Tk84 from Tk38.

Shamsul Arefin Khaled, president of FIAB, said the feed consists of 75-80% corn and soybean meal. But the availability of these raw materials locally is not sufficient, and there is no alternative, whereas several alternative raw materials exist in neighbouring countries. If the government allows these to be imported duty-free, then it will be possible to reduce the price of feed.

However, FIAB also states that many small and medium-sized companies are closing down because they are unable to stay competitive.