Experts Speak: Where Are Market Opportunities for U.S. Feed Products?

Written by: Lacie Dotterweich & Victoria Broehm   |   September 10, 2021

Trade, China, Pigs, PISC

At the recent American Feed Industry Association Purchasing and Ingredient Suppliers Conference (PISC), we heard several speakers share their views on what the future holds for feed and pet food products at home and abroad.

Gregg Doud, Aimport Research’s vice president of global situational awareness and chief economist, shared his take on where he sees the biggest international trade opportunities. Over the next five years, Doud believes the biggest gains will take place in China and across Southeast Asia, including in Vietnam, the Philippines, Malaysia and Indonesia.

He discussed that the United States “made enormous progress” with China with the U.S.-China phase one trade agreement, but “the challenge going forward is that this is a two-year deal that expires at the end of the year.” By Jan. 1, he estimated that the U.S. will still have tariffs on roughly $360 billion of imports from China, which could complicate discussions in extending the phase one agreement.

2020 marked a historic change in global agriculture with China modernizing its hog industry and banning swill (i.e., food scrap) feeding of hogs, Doud explained, saying this is “big” because half of the hogs on the planet are in China and half of them were swill fed. That means that a quarter of all hogs globally will need a new source of food, which presents a good opportunity for the U.S. feed industry.

“Where do you have feed and water to grow more hogs?” Doud asked, “North America,” which presents a huge opportunity for U.S. producers. Keep in mind that the amount that China imports in agricultural products is the same amount the United States exports to the world.

Another market opportunity Doud sees is in India. By 2023, there will be more people in India than China. Within the next 30 years, China’s population will age and fertility rates will further decline, but that is not the case in India. However, India has some of the highest agricultural tariffs and protectionist policies in the world, which are barriers to U.S. entry in that market.

Richard Brock, of Brock Associates, shared with PISC attendees some of his views on the major drivers impacting world agriculture right now, including the coronavirus pandemic, weather abnormalities, government regulations, oil price volatility, changes in food consumption practices and high inflation, among other things.

Joe Kerns, president of Partners for Product Agriculture, believes renewable diesel may impact the feed market in the future.

“It is your new neighbor, renewable diesel,” Kerns said. “It may make you uncomfortable and it may require you to shift your paradigm or practice,” but Kerns believes that “biodiesel,” as we know it, is dead and renewable diesel is the shiny new object.

He also noted that the general outlook for the U.S. protein sector is looking very good thanks to a strong domestic demand during the coronavirus pandemic.

“COVID has chosen a winner – pork,” said Kerns. During the pandemic, pork outperformed other sources of protein due to its cheap price tag. This point was reiterated by a huge spike in people searching “how to cook pork” on Google. But we cannot ignore some of the risks facing the protein industry, including pork specifically, such as the introduction of foreign animal diseases such as African swine fever (as noted in our previous blog).

Overall, Kerns wrapped up saying the demand for U.S. protein is robust domestically and abroad.

Interested in hearing more on these market outlooks? You may contact afia@afia.org to learn more about purchasing recordings from the webinars.