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FEATURE: Breeders Delight
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 Brian McCawley, President China, Big Dutchman
altShiny feed silos in the Chinese countryside bearing the Big Dutchman logo are an obvious source of pride for the China head of Big Dutchman, a manufacturer and installer of farm feeding and housing systems. China is “going fairly well, the five year forecast looks good,” says Brian McCawley, head of operations in China for Big Dutchman. 
McCawley shows photos of a farm completely fitted with Big Dutchman systems in Pinggu, a rural hinterland of Beijing. However, while photos lining the corridors to McCawley’s office show the neat brown bricks of the company’s German headquarters, it’s clear that the company’s focus is turning increasingly to sales opportunities in China, formerly only a centre for sourcing for the company. Privately held Big Dutchman has seen demand for its products in China rise as demand for meat and eggs rises, and farms consolidate for greater efficiencies. McCawley has also seen the company benefit from demands for improved food safety and traceability. 
Thriving sales means Big Dutchman’s Tianjin facilities will be consolidated into one large space by the summer of 2014. “We need more space to house an expanding sales and service crew. It’s conditional on getting a large block of land,” he explains. Sales in China outpaced growth in global revenues of 30% in 2011, a figure helped by demand in the EU for egg-laying farm refits. 
McCawley is from Florida, and while not from a farming background, he’s seen the evolution of farming in the US. He’s also seen how Floridians get their vegetables and meat trucked in from Alabama and Carolina, “because no farming is tolerated” in the sunny state, a favourite retirement destination. In somewhat the same way China’ s pig population has seen a subtle shift away from urban centres and northwards towards land and feed sources, there’s also been a big rise in numbers around Urumqi, capital of Xinjiang province, one of China’s grain belts.

Transition from exports to domestic salesalt

Big Dutchman set up a wholly foreign owned enterprise (WFOE) in Tianjin over a decade ago, “because everyone needed to be in China”. The company bought an existing facility in the city’s Beichen district, and has expanded there ever since. However, the factory was originally geared for exports to Europe, but China’s pig and chicken populations have since soared, pushing McCawley to focus on domestic sales.
Big Dutchman exports from China slipped 25% in 2011 and McCawley expects a stronger CNY to further dampen exports in 2012. “It used to be 10 to 1 [exports to local sales] but now it’s 8 to 1.” McCawley watches which local meat companies are expanding their production, “because the animals will follow”. 
In China, Big Dutchman emphasises the pig business, supplying feeding and stable management systems to local hog farmers. He explains how a stable temperature and environment is vital to the economics of modern animal barns: “cold animals eat a lot more feed”. According to the UN-affiliated Food & Agricultural Organisation (FAO) almost half the world’s pork output comes from China, which has nearly 700 million pigs (compared to 450 million in 2002) and will be responsible for all of 2011's increase in global supply. Pork accounts for about 75% of meat demand in China.
McCawley also foresees a big expansion in laying hen numbers: the 2,000-per-farm average will rise to 40,000 eventually. Poultry output in China has climbed nearly 40% over the last decade, and the trend will continue: the figure is expected to exceed 15.6 million tonnes in 2019. Similarly, of the 5 billion egg-laying hens in the world, 1.2 billion are in China, compared to about 300 million in the USA and 140 million in India. Much of the increase in meat output is due to bigger farms and processing plants, which keeps poultry prices low for consumers, but often confines chickens to deplorable conditions in breeding and slaughtering plants. 

Food safety concerns first

McCawley believes the first priority for China is to ensure the country’s food supply chain is safe, before animal welfare conditions will be dealt with.  However, he argues, modern farms and animal welfare are not mutually exclusive. Controlled environments mean animals often have better living conditions than many humans in China. 
McCawley also noted that China’s concern with food safety ensures the firm’s business will continue to grow here. While EU regulations ban cages for eggs and doubled the space per laying hen, in China, farms tend to be smaller, often back-yard affairs. Currently, average per-hen space in egg-producing farms varies from 750 square centimetres per hen in Europe versus 400 square centimeters in China.
China is in the middle of a shift away from the back yard farming culture. “Pure ag[ricultural] people will become more prevalent in China’s farming sector,” says McCawley, who adds, “farms will consolidate further”. While Big Dutchman has so far only one state-owned customer, McCawley points to “a lot of money coming in, especially from Hong Kong,” to mainland China’s agricultural businesses. 
Much of the cash has gone to breeding more pigs in ever more sophisticated farms. China has seen growth in numbers of imported fast growing breeds like the Landrace, the Yorkshire, and the reddish-skinned Duroc. The three breeds account for the bulk of the billion pigs killed globally every year. Pig breeders in China have increasingly ditched indigenous breeds for the Landrace and Duroc to fatten pigs to maximum weight in the shortest time: 113 kilos in 160 “days to market”, translates as to how long it takes to feed a pig to the stage where it’s butchered.  Many Chinese pig fatteners currently take, on average, 200 days to ready their pigs for slaughter.
Consolidation of the agricultural sector will make the role of knowledge and technical experts like Big Dutchman “more necessary” because of the superior service the company offers. China will remain preoccupied with food safety and “question what goes into” the country’s pigs and other food. 
Aside from watching private investment in the agricultural sector, Big Dutchman closely watches Chinese government economic blueprints and spending plans which guide investment in certain segments of the agricultural market. For instance, the government’s five-year plan will ensure egg production grows. In China, subsidies to farmers have guided investment in particular areas. Subsidies have helped consistently lift grain yields, for instance, and have helped the rise of a wave of new ‘integrator’ pork processors like Zhongpin and Shineway which also produce their own pigs to ensure quality of supply.

altBetter service

Big Dutchman’s staff of 250 is mostly engaged in sales as manufacturing is outsourced. Installation and service staff numbers are growing every day. “A lot of farmers in China know they need to get to the next level, but don’t know how.”  Big Dutchman staff provides a “consultative sales role”. A design fee is added into the cost, but is only a minor element of the overall cost.
There’s room for Multi National Corporations for the next decade, “and after that it’s hard to say.” Locals, like Beijing-based Kingpen, are growing in scale and quality. They also have crucial distribution networks. Big Dutchman’s international competitors in China include US-based GSI, which supplies Chinese pig farms. “There are a few big guys who come and go, it’s very spread out… We are all good friends; we meet at trade shows like the annual Nanjing show in May.”
Big Dutchman’s high standards of service means it will continue to have a role in China. Service is key; it takes a lot of maintenance. “Ventilation systems, for instance are key in a big facility.” The company’s customers get spare parts in 24 hours from Tianjin. Likewise, there’s a telephone help line.
Nearly a decade finding quality local suppliers and tweaking standards has ensured McCawley’s Tianjin operations can guarantee international-standard products for Chinese farmers.  “The idea of globalised production is that standards are the same across all facilities. Steel and plastic must meet the firm’s global standards.”
Finding reliable local suppliers is a painstaking process. “Some [of our products] are more difficult to produce because of the tight tolerance on the welding…if you do production it has to be available for export…thus it takes longer to find local suppliers.”


By Mark Gao


 

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