South American countries have an important potential in terms of the world compound feed sector. 190.9 million tons (15%) of world compound feed production, which was 1.266 billion tons in 2022, was realized by South America countries. 28.1% of the 28,156 feed mills in the world, i.e., 4,806, are located in this region. According to the report of Research and Markets, South America animal feed market is expected to grow at a CAGR of 2.70%, from an estimated value of US$ 32.18 billion in 2021 to US$ 38.77 billion in 2028.
By Derya YILDIZ
South America is one of the important compound feed production region of the world. Approximately 15% of the world’s compound feed production is produced by South America (including Mexico). South America (Referred to in the report as Latin America – including Mexico), one of the four major regions in the world in compound feed production, produced 190.9 million tonnes of the world compound feed production of 1.266 billion tonnes in 2022, according to the Alltech Agri-Food Outlook 2023 report. In the same period, the region has achieved a significant performance increase in production compared to major feed producers such as Asia-Pacific, Europe and North America. According to the Alltech report, the region’s compound feed production increased by 1.6% from 187.9 million tonnes in 2021 to 190.9 million tonnes in 2022. Most of this growth was reported by Mexico, Brazil and Chile.
PRODUCTION BY FEED SPECIES
When compound feed production in the region is analysed by species, it is seen that broiler feed has the highest amount in total production. In Latin America, the world’s second largest broiler feed producer, broiler feed production increased by 1.27% from 66.7 million tonnes in 2021 to 67.5 million tonnes in 2022. In other words, 18.5% of the world’s broiler feed production in 2022 was produced by Latin American countries.
According to the Alltech report, Brazil and Mexico, which represent most of the market for broilers in Latin America, had steady numbers from 2021 to 2022.
A similar outlook is seen in layer feed production. Latin America, the world’s third largest producer of layer feed after Asia-Pacific and Europe, produced 23.6 million tonnes of layer feed in 2021. In 2022, there was a significant increase of 3.7% in layer feed production in the region and total production increased to 24.5 million tonnes.
According to the Alltech report, feed value increased because countries such as Argentina increased egg production. In Brazil, the rise of the raw materials prices and the slow increase of final prices put the egg industry in a difficult situation. Demand was slower and prices were higher. In 2021, there was a decrease in the number of breeders, which continued to affect the industry in 2022, but a recovery is expected by the end of 2023.
The remarkable quantity and growth rate in both broiler and layer feed production highlights the importance and development of the poultry industry in the region. Based on Alltech data, the region’s total poultry feed production was around 92 million tonnes in 2022. This represents 47.9% of the total compound feed production in the region.
Another major feed species in the region is pig feed. Latin American pig feed production, which was 35.4 million tonnes in 2021, increased by 2% to 36.1 million tonnes in 2022.
According to Alltech data, African swine fever (ASF) and high feed prices depressed pig production in many countries. However, in Brazil and Mexico, better pork prices and other market conditions led to growth in the sector. The pig industry expanded in Latin America, thanks to increased demand, decreases in the cost of food, favourable exchange rates and numerable opportunities to export to Asia. Brazil’s feed tonnage grew by 4%, from 19.7 million tonnes to 20.5 million tonnes.
In dairy feed, another important feed species for the region, production declined slightly. The region’s dairy feed production, which was 25.7 million tonnes in 2021, decreased by 1% in 2022, unlike other feed species, and production fell to 25.4 million tonnes.
Peru reported a double-digit feed production decrease in 2022 due to a reduced commercial dairy population in the region. Brazil’s dairy feed production dropped in 2022 because of unfavorable weather that resulted in poorer pasture conditions, as well as lower consumer demand, economic challenges, low consumer disposable income and elevated milk retail prices, according to the Alltech report.
Latin America is the world’s second largest producer of beef feed, although it has a much lower production volume compared to North America, the world’s largest producer of beef feed. The region’s beef feed production, which was 15.6 million tonnes in 2021, increased by 2.3% to 16 million tonnes in 2022.
In Latin America, according to Alltech report, the high prices of bovine animals and meat in 2022 provided a steady incentive for cattle growers to expand production.
In terms of other feed species, the outlook in the region is as follows:
• Aqua feed production, which was 5.6 million tonnes in 2021, reached 5.9 million tonnes in 2022, a significant increase of 4.7%.
• Pet food production, which was 7.4 million tonnes in 2021, reached 8.8 million tonnes in 2022, a record increase of 19.2%.
• Horse feed production in Latin America is around 1 million tonnes.
COMMERCIAL VALUE OF THE MARKET AND EXPECTATIONS
Data for the South American animal feed market is often analysed as South America or Latin America. This situation causes differences between the countries included in the reports and makes it difficult to obtain more comprehensive and consistent data. While reports on South America include countries such as Brazil, Argentina, Peru and Chile, reports on Latin America include Mexico, which is a power that will affect the data considerably.
As a result, reports give different estimates of the size of the market. The following two examples can be considered consistent, given the different countries covered.
One of these is Research and Markets’ June 2023 report titled South America Animal Feed Market. According to this report, South America animal feed market is expected to grow at a CAGR of 2.70%, from an estimated value of US$ 32.18 billion in 2021 to US$ 38.77 billion in 2028.
Another report is the Latin America Compound Feed Market report published by Market Data Forecast. According to Market Data Forecast analysts, who included Mexican data in their report, unlike the other report, Latin America compound feed market was worth US$ 52.02 billion in 2021 and estimated to be growing at a CAGR of 1.90%, to reach US$ 57.15 billion by 2026.
Some of the major players:
Corporación Multi Inversiones
Frigorífico Soychú SA
Goncalves Tortola S.A.
Grupo La Caridad
Grupo Pilar S.A.
Lar Cooperativa AgroIndustrial
Marfrig Global Foods
Proteína Animal (PROAN)
Sollio Cooperative Group
MARKET DRIVERS & RESTRICTIONS
Increased demand for meat and other end-products is driving South American animal feed market growth. According to report of Research and Markets, the demand for beef has been a significant driver for the animal feed market in South America. The region is home to some of the world’s largest beef producers, with Brazil, Argentina, and Uruguay being the top three beef exporters globally. In recent years, beef consumption in South America has been increasing steadily, driven by population growth, rising incomes, and changing dietary habits. This increased demand for beef has led to a surge in livestock production, which, in turn, has driven up the need for animal feed.
There are also some factors challenging the market, especially animal diseases. Market Data Forecast summarises these in its report as follows: Different regulatory structures, volatile economies, and increasing cost of operations are the major hindrances for the market in this region. And, an increase in the cost of raw materials is also a key challenge for the companies in the market.
SOUTH AMERICA FEED MILL INDUSTRY
South America is the fourth largest region in the world in terms of the presence of feed mills. According to 2022 data, 4,806 of the 28,156 feed mills in the world are located in this region. This number was announced as 4.765 for the previous year. In other words, between 2021 and 2022, it is seen that 41 new factories started operating.
1. 2023 Alltech Agri-Food Outlook, https://www.alltech.com/agri-food-outlook
2. Research and Markets, South America Animal Feed Market – Forecasts from 2023 to 2028, June 2023, https://www.researchandmarkets.com/reports/5602550/south-america-animal-feed-market-forecasts
3. Market Data Forecast, Latin America Compound Feed Market, March 2023, https://www.marketdataforecast.com/market-reports/latin-america-compound-feed-market
4. Business Market Insights, South America Animal Feed Market, September 2020, https://www.businessmarketinsights.com/reports/south-america-animal-feed-market