Chinese feed and food manufacturing giant Lianing Wellhope is enjoying significant growth and profits, even when facing challenges in China’s new corn stockpile policy. The odds are well that the company will continue to expand quickly and a bright prospect for the future is more than likely, according to CCM.

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China is in the middle of its feed industry transformation, which aims to upgrade the industry in terms of output and efficiency. In 2016, the feed output in China witnessed a significant growth. Enterprises, in general, were able to enjoy profits, due to decreasing raw material prices and hence lower production costs. 

One of the biggest players in China’s feed market is Lianing Wellhope. According to market intelligence firm CCM, the company was enjoying a steady growth of profit throughout 2016. The total profit in 2016 even increased by more than 35% compared to 2015. 

However, Wellhope is also facing the risk of China’s abandoned corn stockpiling policy, which let the prices of corn, one of the main raw materials for feed products, rise under uncertainty. 

In the year 2016, China’s government decided to cancel its purchase policy of corn for temporary storage and established a subsidy system for corn producers in China. This followed the principle of letting the market determine prices and delinking subsidies from prices. This, to some extent, relieved the problems of continuously rising corn prices, stockpiles, subsidies and losses in China. However, at the same time, it creates possible risks for feed manufacturers like Wellhope, as fluctuations and uncertainties are pushing up the manufacturing costs for pig feeds. 

Currently, corn stockpiles for temporary storage still surpass 230 million tonnes in China. The state will take grain safety and rulemaking into consideration when it promotes new channels to reduce corn stockpiles. According to CCM, in the future, will be a series of policies issued to support corn stockpile reduction by multiple ways. 

According to CCM’s price monitoring, the price of corn is falling since the second half of 2015. When the Chinese government announced the end of its corn storage and subsidy policy, the corn price dropped even faster. As a result, In the middle of February 2017, China’s corn price witnessed a year on year decrease by 28.7%. 

On the other hand, China’s policy of implementing forbidden farming areas in the country is benefitting the enterprise. As part of the new Law of Environmental Protection of the People Republic of China, the government is establishing forbidden farming areas in several parts of China, which have to be left by farming companies by the end of 2017. Other areas, mainly located in the northeast and south-west of China, are labelled as developing areas, which indicates the encouragement of farmers and enterprises to move in these areas. 

Wellhope is stated in one of the developing zones in the northeast of China, which offers the company a great geographical, logistical and economical advantage to competitors. This is due to the low distance to many raw material producers like corn farmers. In addition to this, the area of Wellhope is also labelled as one of the key areas for China’s pig industry, which offers some benefits in environmental protection and pollution management. 

What’s more, Liaoning Wellhope will work together with Beijing Dabeinong to invest about USD146 million in a new project of pig feeds production. As a matter of fact, the Chinese pig production was shrinking in 2016 by about 3.4%. The reason can be found in a large volume of cheap imported pork, which lowers the price and makes live pig farming less profitable. 

What’s more, the enterprise has announced to invest about USD5.5 million in Indonesia firm PT Karka Nutri Industri, which is the largest food processing company in Indonesia. This shows the international trend the company is following to ensure a stable growth and bright prospect for the future. 

About the company

Liaoning Wellhope was founded in 1995 in China by chairman Jin Weidong. Nowadays, the enterprise is the biggest agricultural company in the economically strong northeast of China. 

The company is one of the most influential feed enterprise in China and has established a business scope from international trade, feed machinery, farm equipment, slaughtering, food processing to agricultural product deep processing. Especially the latter areas are granting the company an advantage in China’s market, as sectors like raw material trading, slaughter, and food processing are booming in profitability and also represent a less uncertain trend than feed production. 

The dutch feed enterprise Royal De Heus has become one of the main shareholders in the year 2006, whose knowledge and expertise has helped Wellhope to grow rapidly in the feed market. By now, the company is doing business worldwide. 

About CCM

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. 

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