As the demand for feed increased, the industry recovered rapidly towards the end of 2020. But Corona’s lockdown this year has put the industry in trouble again. The feed-producing sector is still struggling to get back on track due to repeated epidemic attacks on the livestock business.
The industry, known as backward linkage of poultry, shrimp, fishery and cattle farms, had rebounded rapidly towards the end of 2020 following a rise in demand for feed after the COVID-led 66-day shutdown was withdrawn.
But a series of lockdowns this year again put the industry into trouble as many livestock farms on which its business relies upon stopped production for failing to absorb pandemic-induced losses.
The mixed performance of three publicly-listed feed makers in the July-March period of FY21 reflects how the sector fared during the lean phase.
In the first nine months of the last fiscal year, National Feed Mills registered an 84% revenue growth year-on-year, while Aman Feed Mills saw a 5% rise in revenue but suffered an over 4% decline in profit. On the other hand, Index-Agro saw both its revenue and profit fall by 3% and 1.3% respectively during July-March, according to their financial statements published recently.
The only profit maker, National Feed Mills, fetched Tk103.55 crore and made a profit of Tk11.52 crore, up from Tk56.18 crore and Tk1.4 crore respectively over the same period of FY20.
In the fiscal 2019-2020, the company made a profit of Tk1.47 crore and paid a 2% cash dividend and an 8% stock dividend to its shareholders. However, sponsors were not provided with the cash dividend.
The company, which got listed on stock exchanges in 2015, has three units, each having a production capacity of 5-8 tonnes per hour, with its monthly sales reaching up to 5,000 tonnes.
Md Arifur Rahman, company secretary of National Feed Mills, told, “Our business went well after the shutdown was lifted last year, but hikes in raw materials prices have created a new crisis.”
“Import costs of raw materials rose significantly. As a result, there is also a shortage of raw materials,” he added.
Aman Feed, engaged in manufacturing poultry, fish, shrimp, and cattle feed with a production capacity of 10 tonnes per hour, marked a slight uptick in income, but its profit fell slightly year-on-year.
In the first nine months of FY21, its revenue stood at Tk576.36 crore and profit at Tk26.99 crore in contrast to Tk548.59 crore and Tk28.23 crore respectively in the same time of the previous year.
In the January-March period of the last fiscal year, the company also saw sales up and profit down over the same period a year ago.
The company, which got listed on stock exchanges in 2015. In FY20 fiscal year, the company made a profit of Tk 46.62 crore, which is 27% lower than the previous year and it paid a 10% cash and 2.5% stock dividend to its shareholders.
In the first nine months of FY21, Index Agro Industries’ sales declined by 3% and profit by 1.3% year-on-year. Its revenue stood at TK297.47 crore in contrast to Tk308.97 crore a year ago.
The company’s profit was Tk18.88 crore, down from Tk19.13 crore at the same time of the preceding year. But in the January-march period of FY21, its sales declined by 11% but its profit went up by 15%.
In the period, its revenue stood at Tk90 crore, which was Tk102 crore during the same time in FY21.
Feed industry sources said the feed industry is now witnessing new crises – a hike in raw material prices, shortage of raw materials, and increased import costs.
The prices of raw materials used to make feed have increased by 40% in the international market. Also, the shortage of containers is hindering the import of raw materials. As a result, feed prices have gone up by 10% in the local market, they informed.
Ihtesham B Shahjahan, president of the Feed Industries Association of Bangladesh. told , “The feed industry is going through a very bad time owing to the pandemic. Many feed mills are now struggling to run their businesses.”
“Raw materials are now costly and not available too as per our needs. There is now demand for feed, but we cannot meet that because of the raw material crisis,” he added.
Currently, over 200 companies are engaged in manufacturing poultry, fish and cattle feed. The investment of entrepreneurs in this industry amounts to around Tk10,000 crore.