The Greek competition authority has initiated a mapping of competition conditions across various sectors of the economy, specifically targeting the animal feed market. This initiative is particularly focused on feed for sheep and goats, as these animals represent a significant portion of the livestock population in Greece, excluding poultry. The production of goat's milk is essential for feta cheese, a product of great importance to Greek consumers, accounting for 2% of retail sales.

This research complements an ongoing mapping of the veterinary pharmaceutical products sector, which began in May 2024. Both studies are part of the authority's strategic goal to analyze competition conditions in the agri-food sector in Greece, especially within the supply chain of essential food products.

Animal feed constitutes approximately 75% of costs in livestock farming, with the price index for compound feeds increasing by 33% from 2020 to the third quarter of 2023. According to Eurostat, feed costs are the largest cost component for Greek livestock farming.

The mapping aims to identify customer categories, geographical areas of operation, market shares, and the degree of concentration in wholesale distribution. It also seeks to analyze price trends and sales volumes across different customer categories, as well as profit margins based on financial statements from 41 feed production and trading companies over the period from January 1, 2021, to June 30, 2024.

Key findings indicate that the feed sector is characterized by 'economies of scope,' with the distribution of sheep and goat feed often accompanied by other feed types and activities related to other livestock. Simple feeds, such as corn and wheat, and compound feeds, which are mixtures of at least two raw materials, are both significant in this market.

In 2023, simple feeds accounted for 14.2% of the turnover of the sampled companies, while compound feeds represented 9.7%. Notably, 62.7% of sheep and goat feed purchases originated from Greece, with the remainder primarily sourced from Romania and Italy. The sales structure shows that compound feeds for sheep and goats dominate both in value (65.8%) and quantity (55.4%).

The market for compound feeds for sheep and goats exhibits low concentration, with the CR4 and CR5 ratios for 2023 calculated at 41.6% and 48%, respectively. The Herfindahl Index for the same year stands at 665, indicating moderate concentration in certain categories like clover, while a high concentration is noted in premixes.

In terms of customer categories, 45.3% of sheep and goat feed sales are directed to wholesalers, and 39.0% to breeders. There is no significant price differentiation between wholesalers and breeders, although retail prices are slightly higher, which is largely expected.

In 2023, higher sales percentages for simple feeds were observed in Central Greece, particularly in Thessaly and Epirus, while compound feeds for sheep and goats saw higher sales in Central Macedonia and Crete. The average purchase prices for raw materials increased in 2022 compared to 2021, but showed a decrease in 2023, continuing into the first half of 2024.

Several companies reported that their pricing strategies are influenced by international market negotiations, pricing their products based on international prices at the time of sale, regardless of the source. The pricing trends of the companies appear to follow the corresponding purchase prices, likely due to external competition, although the response rates to price changes vary.

Despite the rising price spreads (selling prices minus purchase prices), these do not seem to be directly linked to energy prices, which historically represent a small percentage of total operational costs in the feed production sector. The average gross margin for the sampled companies ranges between 10% and 13.6%, while the net margin is significantly lower, between 2% and 4%. However, as international commodity prices and energy prices decline in 2023, profit margins for companies are increasing.

For more detailed information on the mapping in the animal feed sector and a comprehensive presentation of the results, please visit the website of the competition authority.