In the early stages of China's feed industry development, the share of industrial feed was relatively low, with a significant portion of feed being self-produced. Due to the high demand in the feed market, many small and medium-sized enterprises could purchase premixes and concentrates, along with basic production lines, to manufacture bulk feed. The entry barriers were quite low during this period.
In recent years, industrial feed has gained popularity, leading to intensified market competition and a narrowing profit margin. As competition became more intense, it began to focus on technology, research and development capabilities, scale, and financial strength. Many small and medium-sized feed companies, lacking core technologies and operational advantages, have gradually exited the market. Today, the feed industry demands higher standards in terms of technology, scale, marketing, branding, and management.
**1. Technical Barriers**
Feed technology is primarily reflected in formula development. This involves continuously optimizing feed formulas based on animal nutritional needs, promoting efficient growth, and reducing feed costs to improve farmers' breeding efficiency. According to the China Industrial Economic Research Network, there are numerous small and medium-sized feed companies in the industry, leading to an oversupply of mid-to-low-grade feed products. These companies often rely on price competition, which makes it difficult for them to remain profitable and survive. Only those that focus on product quality and cost-performance can thrive. Such performance is only possible through advanced feed technology, making it essential for current feed enterprises to master.
Developing feed technology is challenging. First, it requires sustained R&D efforts. It's not just about creating one optimal formula, but continuously adjusting it based on regional feeding conditions, changing animal nutritional needs, and evolving regulations. This long-term optimization ensures competitive pricing and product quality. Companies must invest heavily in R&D teams and maintain ongoing innovation, which poses a high barrier for smaller players. Second, mastering feed technology takes time. While there are standard nutritional databases for animals, these vary by species and region. Feed companies need to build their own extensive databases over time to create cost-effective formulas.
Moreover, with the rise of large-scale farming, customer needs have evolved. Experts from the China Industrial Economic Research Network note that large farms require more than just cost-effective products—they also want consistent performance and excellent service. Food safety concerns have further raised the bar, requiring feed companies to meet strict regulatory standards. As consumer preferences shift toward better taste, quality, and even functional benefits like organic or green products, feed technology must keep pace with these changes. Therefore, the feed industry now faces high technical barriers due to the need for continuous R&D and long-term accumulation.
**2. Scale and Financial Barriers**
Feed products are often limited by transportation distances, with most companies operating locally. Typically, the transport radius for bulk feed is 60–100 km, for concentrate feed 150–200 km, and for premixes up to 300–500 km. To grow rapidly, feed companies must expand their scale and increase the number of facilities. However, feed production requires strong capital turnover, and financial strength becomes a key factor in entering the industry.
Additionally, feed ingredient prices—such as corn, soybean meal, and fishmeal—can fluctuate significantly. With a low gross profit margin (around 10%), raw material costs make up a large portion of total expenses. Large-scale companies can reduce costs through bulk purchasing and have the resources to monitor price trends effectively, helping them manage risks. In contrast, smaller firms often struggle with cash flow, as they may need to pay upfront for raw materials before selling products. Rapid capital turnover is crucial for success in the feed industry. As large enterprises grow and mergers become more common, financial barriers will continue to rise.
**3. Talent Barrier**
The feed industry operates with a low gross margin and high turnover, relying heavily on efficient management. Large companies typically have experienced management teams that have navigated multiple industry cycles, giving them valuable insights and decision-making abilities. Their deep industry knowledge helps drive sustainable growth and adaptability in a competitive environment.
**4. Brand Barrier**
A strong brand reflects a company’s technological, scalable, and marketing strengths. Brands play a critical role in expanding the reach of large feed companies. However, building a brand takes time and effort. New entrants often face challenges due to low visibility and higher marketing costs. As profit margins shrink, weaker brands struggle to compete, affecting their long-term viability.
**5. Management Barriers**
The success of feed companies depends on their ability to expand markets efficiently and manage operations at low costs. Turning products into profits through sales is a key factor in business success. Reducing procurement and operational costs is essential for modern enterprises. The industry’s low-price competition, volatile raw material prices, and rising labor costs test managers’ skills. Crisis management, institutional innovation, and employee training add new challenges. As the industry becomes more integrated, how companies handle competition, cooperation, expansion, and diversification will determine their future success.
For more information: http://www.chinafeedindustry.com
Shandong Yahong New Materials Technology Co., Ltd , https://www.okrooftile.com