Dhaka, Bangladesh - The country's multi-billion taka animal feed industry is facing a major shake up with one of China's largest animal feed producers, New Hope Group, starting production in Bangladesh.
New Hope started production at its newly built feed mill in Gazipur earlier this year, a plant that has the capacity to become the largest in the country.
Local competitors fear the entry of such a big conglomerate into the local feed industry, saying it might drive small local feed companies out of business. However agricultural analysts said it would increase competition and help farmers get quality feeds at a competitive price.
The New Hope Group has invested about Tk 35 crore in Bangladesh establishing its business. It owns 100 percent of the plant, which has an hourly capacity of 30 tonnes.
“We believe Bangladesh has a potential market. We have already started manufacturing our feeds,” said Dang Zhi Min, in charge of administration, human resources and procurement of New Hope Feed Mill Bangladesh, a subsidiary of New Hope Group.
The New Hope Feed Mill, according to the official, is now producing and selling poultry feeds under its brand “New Hope”. It also intends to manufacture fish feeds.
“It will be tough for small scale manufacturers to survive in the business as New Hope will enjoy low production costs due to large scale production,” said Moshiur Rahman, managing director, Paragon group, one of the country's biggest animal feed producers.
New Hope has started operation at a time when the country's about Tk 5,000 crore animal feed market is facing trouble in increasing sales due mainly to a downturn in poultry farming, a result of the outbreak of bird flu.
Industry operators said the animal feed market, which witnessed annual growth of around 15 percent between 2001-2006, now stands between 15-20 lakh tonnes a year.
China's animal feed conglomerate, having over 100 feed mills in China, will compete with existing manufacturers to capture a slice of the pie.
At present, over 50 local animal feed producers are operating in Bangladesh with Paragon, Aftab, and Quality controlling the bulk of the market. Another one of the world's largest animal feed producers, Thailand CP Group's CP Bangladesh is also competing locally.
Moshiur said the production capacity of New Hope will far outpace the existing production capacity of many local manufacturers. The total production capacity of our four feed mills is about 55 tonnes per hour while New Hope alone will produce 30 tonnes per hour, said Moshiur.
Moshiur also said New Hope will enjoy a comparative advantage in terms of availing bank loans at low interest rates. “It also has vast experience compared to us,” he said.
However, Shah Habibul Haque, in charge of Aftab's poultry and feed businesses, is eager to compete. “We will be able to compete through our quality and marketing efforts,” he said.
MM Khan, an expert on the poultry sector, was positive to New Hope's arrival. He said the entry of such a big company will increase competition and enable local farmers to get quality feeds at a competitive price.
The New Hope Group, which has businesses ranging from animal feed through real estate to finance, has also invested in Vietnam and Philippines.