The feed prohibition order came into effect in July

According to the announcement of the Ministry of Agriculture and Rural Affairs, from July 1, 2020, feed production enterprises will stop the production of commercial feed containing growth-promoting pharmaceutical feed additives, which marks the full implementation of the "Prohibition of Livestock and Poultry Feed" from next month However, all varieties of growth-promoting drugs and feed additives except traditional Chinese medicine will temporarily retire from the stage of China's aquaculture industry.

On the one hand, "green farming" is the only way for the development of my country's farming industry, but on the other hand, the "withdrawal" of antibiotics will undoubtedly bring about certain changes to the domestic farming industry chain. Will the cost of feed increase? Will the survival rate of farming be affected?

Feed companies may have a layout

At the end of 2019, the Ministry of Agriculture and Rural Affairs issued relevant documents confirming that from January 1, 2020, all growth-promoting drugs and feed additives will be withdrawn except traditional Chinese medicines, veterinary drug production enterprises will stop production, and imported veterinary drug agents will stop importing corresponding veterinary drug products. At the same time, cancel the corresponding approval number of veterinary products and the registration certificate of imported veterinary drugs. The corresponding veterinary medicine products that have been previously produced and imported can be circulated until June 30, 2020. Starting from July 1, 2020, feed production enterprises will stop producing commercial feed containing growth-promoting feed additives (except traditional Chinese medicines). The commercial feed that has been produced before can be used in circulation until December 31, 2020.

It is undeniable that the correct and reasonable use of Antibiotics plays a very important role in the treatment and prevention of animal infectious diseases and other diseases. Especially in large-scale breeding, feed antibiotics have significant advantages. However, according to the documents of the Ministry of Agriculture and Rural Affairs, my country is one of the countries that use the most antibiotics in the world. In recent years, antibiotic use has become more inclined to "veterinary use." Since 1986, many countries in the European Union have banned all growth-promoting antibiotics, and after the ban, there has been no obvious high incidence of epidemics and production decline. Promoting the prohibition of feed will reduce the use of antibiotics in the breeding industry and help maintain the safety of animal-derived food and public health in my country. It is an inevitable choice for the development of the industry.

Will this adjustment of feed medicine increase the production cost of enterprises? How will it affect the feed industry?

"The use of antibiotics in feed is prohibited, the industry will seek some alternatives, or it will have a certain impact on the cost of feed production, but the impact is not great." As the leader of the domestic feed industry, the relevant person in charge of Dabeinong said in an interview with reporters recently that feed The rational use of antibiotics in China will provide end consumers with safer food and is a beneficial development trend for consumers. At the same time, for large feed enterprises, the problem of illegal use of antibiotics by some small feed enterprises in the past will be regulated, the market environment will be further optimized, and the industry's concentration will be accelerated, which is a good measure. As a leader in the industry, Dabei Agricultural Industrial Chain has obvious advantages. Even if the cost increases, there will be no problem of transmission to the downstream.

The reporter is concerned that the market has already expected the implementation of the "ban and resistance" policy, and related companies have also made adjustments to the layout.

Since 2015, the former Ministry of Agriculture has banned 8 veterinary antibiotics for food animals and 1 veterinary antibiotic for animal growth promotion in three years. According to Announcement No. 2638 of the Ministry of Agriculture and Rural Affairs, from May 1, 2019, my country has ceased the operation and use of three kinds of veterinary drugs including olaquindox, aminophenylarsinic acid, and roxarsone. After the implementation of the "anti-resistance order", the remaining 11 veterinary antibiotic products will also be withdrawn. However, if the animal is sick, it can still be treated normally with other drugs.

Regarding the implementation of the ban policy on July 1, the above-mentioned responsible person of Dabeinong said that the feed “ban resistance” company had already done layout and research and development, and would not have a significant impact on production in the later period. "Preparations are definitely advanced." The person said.

Regarding investors’ questions about the company’s response to the “Forbidden Anti-resistance” initiative, Tianbang’s board secretary also recently replied on the interactive platform that the company’s feed has no anti-resistance technology and reserves for many years. "Key Technology and Application" won the second prize of National Science and Technology Progress Award in 2019.

What is the impact of downstream aquaculture?

For the aquaculture industry downstream of the feed industry, after the ban, animal growth, especially epidemic prevention and control in large-scale farms, will undoubtedly face a certain degree of challenge.

"Forbidden resistance definitely has an impact on the pig industry. Now the problem of adding antibiotics to pig feed is widespread. Because there is still African swine fever and the immunity of pigs is relatively poor, so the addition of antibiotics is also to improve the survival rate of pigs. If it is not added, it is definitely beneficial from the perspective of food safety, but from the perspective of breeding, it may increase the difficulty of enterprise breeding." Zhuo Chuang, an pig industry analyst Zhang Lili, said in an interview with the Securities Times·e company that although there are antibiotics Other substitutes, but the effect is definitely still a certain gap, so in the short term will have a certain impact on the industry. However, changes in feed composition will also have a habitual process, and the overall view will not have a significant impact on the pig industry.

Zhang Lili said that after the ban, even if the feed cost increases, the range will not be obvious, and the impact will be mainly reflected in the immunity of pigs in the short term. The price of live hogs is currently steadily declining. Although there may be a boost in hog prices due to busy farming in June and the Dragon Boat Festival, prices may fall back in July. The recent domestic epidemic of new pneumonia may have an impact on imported meat, but it has little impact on the entire industry. The detection of frozen products will become stricter, or it will benefit the price of live pigs.

"Antibiotics do have a certain therapeutic effect. If you do not add antibiotics, if the enterprise's feeding biological safety system is better and has certain prevention and control capabilities against the disease itself, then the ban on antibiotics will put forward higher requirements for the level of enterprise breeding. However, for some small enterprises with poor management level, the survival rate may be reduced." A person from an unnamed listed company in the A-share market told the Securities Times and e company reporters that many small farms are unwilling to spend their energy to do Good farm management, so only through the extensive use of antibiotics and other drugs to prevent the occurrence and spread of disease. Under the anti-resistance policy, higher requirements are put on pig breeding, or it will further promote the production capacity of pigs to companies with high management level and strong core competitiveness. For leading companies in the industry, because of the early response to the policy, which is also an international practice, the impact on the company will not be particularly great.

Antibiotic alternatives have become popular

At the same time as the policy prohibition, the Ministry of Agriculture and Rural Affairs has also organized a team to start the work of "Development of Feed Substance Resistance Standards", and organized relevant experts and enterprises of colleges and universities and scientific research institutes throughout the country to participate in the preparation of "Guidelines for Alternative Technologies for Feed Antibiotics". Provide several optional and operable feed substitution solutions for various animal farms. In the A-share market, concept stocks on antibiotic substitutes have become popular.

At present, the types of commonly used feed substitute functional additive products mainly include: enzyme preparations and acidulants and plant essential oils to improve palatability. The enzyme preparation can improve the digestibility and utilization efficiency of feed, and probiotics can maintain the balance and integrity of the intestine. The acidulant can lower the pH of the gastrointestinal tract, increase the activity of digestive enzymes, and at the same time maintain the animal's intestinal health, mainly organic acids, including formic acid, acetic acid, propionic acid, butyric acid, lactic acid, citric acid, fumaric acid, etc.

Jindan Technology, which has just landed on the Growth Enterprise Market in April 2020, is a high-tech enterprise that uses modern biotechnology to industrially produce L-lactic acid and its derivatives on a large scale. Since June, the company's stock price has risen nearly 60%.

In a recent survey by investors, Jindan Technology stated that in July this year, it was forbidden to add antibiotics to feed processing in China. The products that replace antibiotics include Chinese herbal medicine extracts, plant essential oils, lactic acid bacteria, and acidic agents based on lactic acid. Domestic animal farming is now pursuing efficiency. Relatively speaking, acidifiers have a quick effect and low cost. From the second half of last year to the present, the demand for lactic acid in the feed industry has increased rapidly.

The company also stated that due to the limited use of feed antibiotics, the compound acidifier with lactic acid as a component will rapidly grow in feed due to its low overall cost and obvious substitution effect; in the context of the rapid growth of polylactic acid demand, lactic acid as a The most important raw material for polylactic acid will grow rapidly.

Cholesterol is the key raw material of vitamin D3, mainly derived from lanolin and animal brain stem. Due to the risk of spreading diseases, European and American countries have long prohibited the use of brainstem and spinal cord as raw materials. Companies producing lanolin cholesterol mainly include domestic garden creatures, as well as NFC in Japan, Dishman in India, and NK in Singapore (limited production). The national standard for feed additives vitamin D3 oil stipulates that the starting material of vitamin D3 oil is lanolin cholesterol, which restricts the use of brainstem cholesterol. The raw materials are limited, the supply of vitamin D3 is contracted, and prices are expected to rise.

Or affected by the above factors, since the end of May, vitamin D3 industry companies, including Garden Biology, Xinhecheng, and Zhejiang Medicine, have seen their stock prices fluctuate.