China's big feed shift to curb soybean imports, strain small farmers

BEIJING/SINGAPORE, June 18 (Reuters) - China's move to curb the use of soymeal in animal feed to reduce its dependence on imports is feasible but will be costly and technically challenging for the smaller farmers who account for one-third of Chinese pork production, industry experts say.
In April, China announced a plan to lower the soymeal content in animal rations to 10% by 2030, down from 13% in 2023, as the ongoing trade war with the U.S. adds to Beijing's urgency to bolster food security. In 2017, soymeal accounted for 17.9% of Chinese animal feed, according to its agriculture ministry.
If successful, China could cut annual soybean imports by roughly 10 million metric tons, equivalent to half of the $12 billion in U.S. soybean purchases China made in 2024, according to Reuters calculations and two analyst estimates, crimping demand from farmers in the U.S. and top supplier Brazil.
While leading swine breeders in China have reduced soymeal use and can make further cuts by using alternative protein sources, small producers are likely to struggle with cost constraints and a greater sensitivity to impacts on animal growth, farmers, nutritionists, and analysts said.
China is home to half the world's pigs.
"There is a significant habitual preference among smallholders for traditional soymeal-based formulations, largely due to familiarity, trust, and perceived reliability," said Matthew Nicol, senior analyst at research firm China Policy.
"Larger firms will move quickly, while smaller producers may lag or even face setbacks," he said.
Soybeans are crushed in China to make cooking oil and meal, a relatively cheap and protein-rich ingredient used to fatten pigs, poultry and cattle. Soymeal is valued in feed for its optimal amino acid profile and compatibility with energy-rich grains such as corn and wheat.
China, by far the world's top soybean importer, has reduced its reliance on U.S. supplies since the trade war that began during President Donald Trump's first term. China buys roughly 20% of its soybeans from the U.S., down from 41% in 2016, but still accounts for nearly half of U.S. exports of the oilseed.
Already, China's use of soymeal is lower than in some regions.
Hog rations in the United States are estimated to be around 15% to 25% soymeal as alternative protein sources like the corn-ethanol byproduct distillers grain and synthetic amino acids have displaced soymeal in rations at times, said Hans Stein, a swine nutritionist at the University of Illinois.
Southeast Asia uses about 25% for poultry and 20% for swine, said Basilisa Reas, Manila-based regional technical director at the U.S. Soybean Export Council.
By comparison, China's top hog breeder Muyuan Foods (002714.SZ), opens new tab cut soymeal use to 5.7% of its feed mix in 2023 from 7.3% in 2022, while Wens Foodstuff (300498.SZ), opens new tab reported an average soybean meal inclusion rate of 7.4% in its compound feed in 2021, according to company statements and government documents.
However, smaller Chinese producers who raise 32% of the country's pigs, 63% of beef cattle and 12% of broilers typically lack the capital, technical knowledge and access to precision feed tools to cut soymeal use, analysts and nutritionists said.
Data from pig-farming platform Zhue.com.cn shows Chinese family farms typically use 15% to 20% soymeal.
A veteran pig farmer surnamed Wang, who raises 200 to 300 pigs in northern China's Shanxi province, uses 18% soymeal in his sow feed and believes a lower-soymeal diet would slow weight gain and prolong the production cycle.
"With high-soymeal diets, I can feed less," he said. "With low-soymeal feed, I need to feed more - or the pigs get too thin."
Soymeal replacements typically involve a mix of protein substitutes such as rapeseed meal, palm kernel meal, rice bran, and fish meal or are supplemented with synthetic amino acids, Reas said.
In its April announcement, China's agriculture ministry encouraged alternatives such as synthetic amino acids, fermented straw, high-protein corn and non-grain proteins including microbial protein, insect protein and kitchen waste. It targets non-grain protein production topping 10 million tons by 2030.
Since the first Trump administration trade war, China has also been promoting "low-protein feed technology," which typically reduces soymeal reliance by supplementing animal diets with synthetic amino acids, especially among large-scale firms.
Muyuan, for instance, is collaborating with Westlake University in Hangzhou on synthetic biology aimed at "zero-soy" pig farming.
However, synthetic amino acids can only partially replace natural protein and cannot fully meet animal digestive requirements, industry experts said.
Beijing is also backing high-protein corn, with about 667,000 hectares planted. The variety contains over 10% protein, up from the standard 8%.
Insect protein is also gaining ground: black soldier fly farms in Shandong and Guangdong provinces produce 100,000 tons of feed annually, currently being tested in poultry, pig, and aquaculture diets, according to the Guide to Chinese Poultry, an agriculture ministry-backed journal.
Most alternatives are either more expensive or in early development.
In late May, soymeal in eastern China cost 66 yuan ($9.19) per unit of protein - cheaper than lysine, a synthetic amino acid supplement used to balance animal feed, at 79 yuan per unit, and corn protein at 69 yuan, according to a Shanghai-based trader.
"Chinese farming operations are ultimately going to prioritise profitability," said Even Rogers Pay, agriculture analyst at Trivium China.
"As long as soymeal remains the best option in terms of price and livestock outcome, it will retain market share."
($1 = 7.1810 Chinese yuan renminbi)

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