LONDON, Oct. 24, 2019 /PRNewswire/ -- Years of stagnant demand growth combined with low-cost producers aggressively targeting export markets has led to consolidation in the inorganic feed phosphates (IFP) market. An outbreak of African swine fever in China this year caused a substantial cull of the world's largest pig herd, weighing on IFP demand. This has pushed more Chinese product into the export market and accelerated the displacement of exports from elsewhere into Asia, the most promising region for IFP growth over the medium term. Low cost producers in North Africa and Russia are tightening their grip on important demand regions in Europe and the Americas, resulting in a number of capacity closures and industry consolidation. However, there is some faint hope for under-utilised IFP production facilities. The rate at which substitute products weigh on demand growth is slowing, which should allow strong growth in livestock production to support IFP demand. In this insight we assess how IFP producers are holding up against current soft demand and whether the anticipated return to growth in IFP demand will help to lift the industry out of its precarious state.
How has the African swine fever influenced IFP demand?
This year the African swine fever (ASF) epidemic in China has led to a vast pig culling programme in order to halt the spread of the fatal disease. Reports indicate that 30-55% of China's swine herd has been eliminated already. In China the IFP of choice for the swine producers is dicalcium phosphate (DCP), so the cull has hit Chinese DCP demand. Though the cull sounds extreme, there are some important caveats which must be understood in order to evaluate the likely impact it will have on IFP demand.
Chinese swine production is predominately a backyard farming industry, which is inherently more at-risk of ASF because these animals are exposed to less stringent animal health and welfare standards. In China, the disease has spread through wild hog populations and cross-contamination from infected farms. Commercial scale operations are indoors and contained, so less likely to be contaminated. Backyard farms consume less IFP and compound feed than commercial scale producers, using cheaper feedstuffs and nominal additives such as IFP.
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