China's growing appetite for meat will cause China to be an import of corn within five years, predicts Liu Yonghao, chairman of the New Hope Group, the largest feed producers in China.
"Farming is changing in China and as a result, we're seeing increased demand for meat products and therefore an increased need for animal feed. This trend is gradual but it will continue over the next 5-10 years," says Liu. "We procure corn on the local market but 3-5 years down the road, we'll need corn from the international market to meet our feed needs."
Liu added that about 100 million Chinese farmers leave the countryside for jobs in the city annually in China. While some go back to the land, many more remain in the city where they earn a larger income. Those remaining farmers are slowly becoming more industrialized to meet China's rising meat demand. "China used to be the largest soybean producer and now we're the largest soybean importer," says Liu. "With the technological advances in farming and the increased demand, I believe we'll be looking to the international market for corn in the years to come."
NHG started in 1982 with a $120 investment by four brothers. Today, the privately-owned company has annual sales of $2.6 billion and produces 6 million tons of feed annually. NHG operates 60-plus feed mills under their name and owns interest in the Liuhe Group, which operates almost 50 feed mills. Growing the company is definitely in the business plan as Liu hopes their 700 million bird broiler operation will grow to 2 billion birds in three years and that their hog production will double in the same amount of time.
"We've been involved with NHG for many years now and they are an impressive agricultural force in China," says Mike Callahan, U.S. Grains Council senior director of international operations - Asia. "After meeting with Liu and his representatives, it's clear the company is exploring their business options in the pork industry beyond their current roles of supplying feed and limited hog processing."
The Council has particular interest in NHG due to the company corn import quotas. In 2005, the company applied for and received 180,000 metric tons of import quotas but did not use them. "This is one of the larger allocations for any single company in China and represents about 6% of the total private quota allocation," Callahan adds. "If China were to become an importer, NHG would be one of the first and largest of these important new private sector feed grain customers for U.S. producers."