Small farmers are affected by China's massive feed shift to reduce soybean imports

Industry experts believe that China's plan to limit the use of soymeal as animal feed in order to reduce its dependency on imports will not only be feasible, but also costly and difficult for smaller farmers who produce one-third of the Chinese pork.

China announced in April that it would lower the content of soymeal in animal feed to 10% by 2030. This is down from 13% as in 2023. The ongoing trade war between China and the United States has increased Beijing's urgency in bolstering food security. According to the Chinese agriculture ministry, soymeal made up 17.9% of animal feed in 2017.

According to calculations and estimates by two analysts, China's soybean imports could be cut by 10 million tons annually, which is equivalent to the $12 billion that China spent on U.S. beans in 2024. This would reduce the demand for soybeans from U.S. farmers and Brazil, the top soybean supplier.

Farmers, nutritionists and analysts say that while leading swine producers in China have reduced their soymeal usage, they can reduce it further by using other protein sources. Smaller producers, however, will likely struggle due to cost constraints and an increased sensitivity to the effects on animal growth.

China is the home of half the world's pork.

Matthew Nicol is a senior analyst with the research firm China Policy. He said that smallholders have a habitual preference for soymeal formulations. This is mainly due to familiarity and trust.

He said that "larger firms will move faster, while smaller producers could lag behind or even suffer setbacks."

In China, soybeans can be crushed to produce cooking oil or meal. This is a cheap, high-protein ingredient that's used to fatten cattle, pigs and poultry. In feed, soymeal is highly valued for its amino acid profile as well as compatibility with grains rich in energy such corn and wheat.

China, the largest soybean importer in the world, has decreased its dependence on U.S. products since the trade conflict began during the first term of President Donald Trump. China purchases about 20% of its soybeans in the U.S. This is down from 41% of 2016 but it still represents nearly half of U.S. oil seed exports.

SOYMEAL CUTTINGS

China uses less soymeal than some other regions.

In the United States, soymeal is estimated to make up 15% to 25% of hog rations. Alternative protein sources such as corn-ethanol byproducts distillers grain, and synthetic amino acids, have been used to replace soymeal at times.

Basilisa Reas is the regional technical director for U.S. Soybean Export Council.

According to government and company documents, the top Chinese hog breeder Muyuan Foods reduced its soymeal usage to 5.7% in 2023, from 7.3% in 2012, while Wens Foodstuff reported a soybean meal inclusion rate in compound feed of 7.4% on average in 2021.

Analysts and nutritionists say that smaller Chinese producers, who raise 32% pigs in the country, 63% beef cattle, and 12% broilers, lack the technical know-how and precision feed tools needed to reduce soymeal usage.

Chinese family farms use between 15% and 20% soymeal, according to data from the pig-farming platform Zhue.com.cn.

Wang, a veteran pig farmer who raises 200-300 pigs in the northern Chinese province of Shanxi, uses 18% soybean meal in his sow's feed. He believes that a diet with less soymeal would reduce weight gain and lengthen production cycles.

He said, "With diets high in soymeal, I can feed less." He said that if I feed low-soymeal, the pigs will become too thin.

Alternatives that are expensive and underdeveloped

Reas explained that soymeal substitutes are usually a mixture of protein alternatives such as palm kernel meal and rice bran or fish meal. They may also contain synthetic amino acids.

China's Agriculture Ministry announced in April that it would encourage alternatives, such as synthetic amino acid, fermented hay, high-protein corn, and non-grain protein sources, including microbial proteins, insect proteins, and kitchen waste. It aims to produce non-grain proteins in excess of 10 million tons per year by 2030.

China, since the first trade war of the Trump administration, has been promoting a "low-protein technology" that reduces animal reliance on soymeal by supplementing animal feeds with synthetic amino acid, particularly among large-scale companies.

Muyuan is, for example, collaborating with Westlake University, Hangzhou, on synthetic biology, aiming at "zero soy" pig breeding.

Industry experts have said that synthetic amino acids cannot replace the natural protein in animals and can only partially meet their digestive needs.

Beijing has also planted 667,000 acres of high-protein corn. The variety has a protein content of over 10%, up from 8%.

According to Guide to Chinese Poultry (a journal backed by the agriculture ministry), insect protein is also on the rise. Black soldier fly farms, located in Shandong, Guangdong, and other provinces, produce 100,000 tons of food annually. This feed is currently being used in diets for poultry, pigs, and aquaculture.

The majority of alternatives are either expensive or still in the early stages of development.

According to a Shanghai-based dealer, in late May soymeal cost 66 Yuan ($9.19), per unit of protein. This was cheaper than lysine (a synthetic amino-acid supplement used to balance feed) at 79 Yuan and corn protein, which costs 69 Yuan.

Even Rogers Pay is an agriculture analyst with Trivium.

As long as it remains the most cost-effective option for livestock and price, soymeal will maintain its market share. $1 = 7.1810 Chinese Yuan Renminbi (Reporting from Ella Cao and Naveen Thkral in Beijing; Additional reporting from Karl Plume in Chicago, Editing by Tony Munroe & Sonali Paul).

(source: Reuters)