USA feed market: Tempered growth
There were significant changes among states and regions, including pig feed growth in Minnesota and broiler feed cutback in Arkansas.
The USA continues to lead the world in production and consumption of animal feed, outpacing even the combined production of the 25 member states of the European Union by around 10 million metric tons of feed products. The USA produces a third-again to half-again as much as China, next in rank in industrial feed production. Overall, the feed industry in the USA remains stable and growing, supporting expansion of production in red meat, poultry, and dairy industries that in aggregate is averaging more than 1% per year.
However, the food and feed trade of the USA is increasingly intertwined with that of Mexico and Canada, and increasingly dependent upon export markets, especially for poultry meat, pork, and beef. There is also growing competition from the burgeoning fuel ethanol industry for corn, the main carbohydrate energy source for most feed products. Moreover, potentially human lethal diseases of food animals, BSE and highly pathogenic avian influenza or ‘bird flu,' hover over domestic consumer demand and export market demand for key food products that depend upon large volumes of manufactured feed. These factors together represent increased riskand greater volatilityin feed demand. They can contribute significantly to changes from year-to-year and in the longer term to the USA's feed potential.
Feed potential is the potential use of manufactured, industrial, or formula feed expressed in short tons on a complete feed basis, calculated for specific types of farm animals from state-by-state livestock and poultry inventories and other production data received from the US Department of Agriculture. Feed potential does not represent actual tons of feed products, but rather estimates the amount of complete feed needed for feeding livestock, including swine, beef cattle, dairy cows, broilers, laying hens, turkeys, etc, per location. FEED MANAGEMENT's estimates of feed efficiency and animal weight, used in calculating feed potential, were updated with the help of a team of nationally recognized experts.
Broiler feed alone accounts for nearly a quarter of potential feed consumption in the USA and, combined with egg layer and turkey feeds, represents around 38%. Potential feed tonnage for pigs ranks next at nearly 22%, followed by feeds for beef cattle at about 21% and dairy feeds at a little over 19%. Aquafeeds for catfish, trout, and shrimp are increasing in tonnage, but still amount to less than 1% of the US total. FM estimates that the USA's total feed potential for the main food animals receiving formula feedswine, beef cattle, dairy cattle, and poultryincreased to nearly 188 million short tons in 2005, about 0.5% over 2004.
Shifting challenges ahead
The twin long-term trends of increased consolidation of ownership and increased vertical integration continue to reshape the North American feed industries in 2006. However, there also is growth in local, organic, and increasingly specialized and branded animal production, which represent expanding niche markets for feed products. ‘Safe feed-safe food' is the mantra of feed industry leaders in the USA as they help to organize international participation in global food and feed trade safety standards.
Clouding the view ahead for the USA's feed industry are new worries over animal diseases. US beef exports continue to be hurt by occasional, but increasingly mysterious domestic BSE outbreaks, although there appears to be little effect on US consumer demand. The H5N1 virus poses a risk to US poultry production, although, based on experience in Europe, its main threat may be to consumer demand for poultry meat and eggs.
While the USA is a leader in aquaculture technology, including closed-cycle recirculation systems for shrimp and tilapia as well as open-ocean cage rearing of high-value carnivorous species, aquafeed production remains less than 1% of total US feed potential. The most significant species, catfish, is growing slowly in a smaller number of larger commercial operations, but still represents only about 750,000 tons of actual feed production and less than 1 million tons of feed potential. Nonetheless, aquafeed is the fastest growing sector of the global feed industry, and an increasing number of US-based companies are involved in both domestic and foreign aquafeed and integrated aquaculture projects.
Another challenge is looming larger over the US feed industry: Competition for corn, the USA's main feedstuff, from burgeoning ethanol plants, along with growing demand from foreign feed makers, especially in Asia. Also, newer ethanol plants are able to extract more energy from corn, thus increasing protein content of the feedstuff co-products, like DDGS, which may make them less attractive in pig and poultry feeds. The coming years are likely to see more innovative approaches to co-products from industrial processing of both corn and soybeans.
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