A hog cooperative in Beijing has recently purchased feed directly from a feed mill at a price RMB300/MT of 12% below than the market level. The cooperative consists of 203 farming households whose brood sow inventory totals 14,000 heads and whose annual hog production totals 300,000 heads. Their total feed consumption is about 70,000 MT a year.
As feed cost makes up 1/2 of hog cost, bulk discount saves feed cost by 12% and hog production cost by 6%.
Moreover, bulk feed purchase ensures a higher feed quality, since feed mills must meet the cooperative’s requirements for the producer’s qualifications, feed quality insurance and testing standards.
On the other hand, feed mills can speed up fund turnover by means of direct feed sales. Normally, feed mills sell their products to suppliers on credit, which results in a long cycle of fund turnover.
If bulk purchase turns popular, small feed mills may become livestock collectives’ feed workshops or a part of a quasi-integrative enterprise.
|
