Overhaul of China’s feed industry drives new talent demands

  • HC Insider
  • Overhaul of China’s feed industry drives new talent demands
29 May 2019
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The Chinese government plans to eliminate the use of antibiotics in livestock feed by next year, necessitating rapid R&D across the feed industry and highlighting key skills gaps

According to the United Nations, by 2050 the planet may have as many as 9.7 billion mouths to feed, requiring us to raise global food output by 70% from 2009 levels. China finds itself at the frontline of the rapid drive to make more food, as a growing demand for processed meats and a high-protein diet is fuelled by rising household incomes.

In recent years, this uptick in demand has led livestock and poultry farms to seek productivity gains through technological advances aimed at producing better foods at lower cost. Cheap raw material substitutes have been employed, and more antibiotics have been applied to prevent disease infection in the short term.

The feed industry now faces an overhaul, however, since the Chinese government launched a programme to eliminate the use of antibiotics in livestock feed by 2020. Resistance to antibiotics has become a concern for Chinese consumers, along with a host of other issues such as biosecurity – as a result of the 2018 African Swine Fever outbreak – and calls for Chinese medicine and probiotics to be employed as alternatives to improve animal health.

China’s animal feed producers are now recognising an urgent need to adapt in order to survive, with the more savvy businesses focusing investment not only on upgrading feed formulation to increase nutrition and animal health, but also on research into antibiotic substitutes. The chances are that the ban will lead to greater use of additives such as acidifiers and enzymes, again with a view to improving nutrition and animal growth. Finally, feed production management is becoming much more critical, with manufacturers looking to reduce pollution, pay more heed to raw material costs and supply chain stability, and upgrading feed processing technologies.

China’s animal feed producers are now recognising an urgent need to adapt in order to survive, with the more savvy businesses focusing investment not only on upgrading feed formulation to increase nutrition and animal health, but also on research into antibiotic substitutes.

The search for antibiotic substitutes has the potential to be a game-changer for those that are able to lead, and for those companies that have antibiotics at the centre of their business models, there is an urgent need to transition to new options.

For the livestock sector, it is highly likely that the move to ban antibiotics will result in higher mortality rates, lower feed conversion rates and higher production costs, at least in the short term, as was seen in European countries that undertook similar antibiotic reduction programmes in the past. Furthermore, costs look set to rise as the livestock farming business moves to tighten biosecurity practices, which remain weak across China, due to high stocking density, poorly equipped housing and weak farm management.

Against this backdrop, feed ingredient suppliers find themselves in a race to hire technical experts with relevant technical experience, PhD backgrounds and innovative outlooks. Alongside this burgeoning demand for greater technical expertise comes a parallel requirement for strong commercial leadership. On both fronts, the problem is a shortage of supply, with very few candidates stepping forward for these positions in the Asia Pacific market, and particularly in China.

Some of the challenges that we are currently observing when looking to hire in this market include a lack of English language capability among candidates, limited talents available with the combination of both technical know-how and commercial competence, and a shortage of nutritionist backgrounds in specific categories. Often we find that PhD-qualified individuals are relatively young and therefore lack the leadership capabilities to build and manage strategic technical teams, while experienced candidates in swine, poultry, ruminant and other similar categories are becoming more niche.

Despite China having been a focus market for many multinational businesses over the past decade, English-language skills remain a significant barrier in the employment market. Local talents are rising, and international businesses are certainly open to hiring local talents and allowing English to be picked up on the job. As a result, fluency levels have notably increased in the past 10-15 years, but still the vast geography of China – with many feed mills, operators, customers and suppliers based outside of English-speaking capitals – English skills have not been a prerequisite and are therefore not easy to come by during recruitment.

Similarly, in Commercial Leadership roles, this imbalance of talents and English capability is also very visible. This therefore results to a higher demand of Chinese with overseas experience.

Emerging markets continues to be a high growth market for a lot of the organisations as there are growing opportunities. Chinese players in particular are growing very quickly, especially in markets such as Indonesia, Vietnam, India and Bangladesh. This therefore creates a much more competitive environment which results to a high demand in upgrading and recruiting for new talents.

When there is an imbalance between supply and demand of candidates, we encourage clients to consider alternatives when looking to hire. In this case, that could mean exploring hiring opportunities in animal health, considering relocating talents from outside of China, hiring alternative technical category expertise, or bringing in high-potential young talent to develop through enhanced succession planning.

The next couple of years look set to be transformative for China’s animal feed industry, making it essential for companies to plug key skills gaps in order to adapt and flourish for the next phase.

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