Years of cutthroat price competition in the veterinary drug industry have left a growing number of companies struggling to stay in business. But perhaps few people realize that no matter how fierce the price competition gets, it will not drive companies out of business. What really drives veterinary drug companies out of business is the drugs sold on credit and the lives put on the line!
In light of this, this article examines the underlying predicament of the broiler industry chain—the demand side for veterinary drugs—and the reality of survival in the veterinary drug industry from a different angle.
As the livestock industry grapples with intense competition and farming profits continue to hit new lows, a silent structural struggle is unfolding across the broiler industry chain.
On the surface, it is about market fluctuations, drug price competition, and cutthroat competition at the point of sale. Beneath that, the entire industry is facing shrinking profit margins, hollowed-out cash flows, and a fragile system of trust.
Among them, the most painful, most real, and least openly acknowledged truth in the industry is the credit sales dilemma that runs throughout livestock farming and the animal health sector.
Farmers buy medicines on credit, betting on the hope that better market prices at sale will turn things around; veterinary medicine sellers extend credit for goods, staking their entire year's livelihood.
Everyone is struggling to hold on; everyone is caught in circumstances beyond their control.
1, Livestock farming: profits squeezed relentlessly, hope gradually exhausted
Broiler farming has long since moved beyond the era of “easy money” and entered a finely managed survival cycle marked by high costs, low margins, strong volatility, and high risk.
Feed costs remain stubbornly high, water, electricity, and labor costs rise year after year, and chicken-catching, transportation, and other incidental expenses are unavoidable. Disease risks are a constant reality. All costs on the farming side are rigid, fixed expenses, while revenue from selling chickens is entirely passive and beyond the farmer’s control.
When market conditions are stable and farming goes smoothly, farmers barely break even or make a small profit. But if disease outbreaks, a higher feed-to-meat ratio, weight loss before shipment, or a market slump occur, the entire flock can fall below the cost line and plunge into losses.
It is precisely this passive reality—**“hard work does not guarantee a profit, but a mistake guarantees a loss”**—that has reshaped farmers’ attitudes toward capital:
When expectations of farming profits disappear, all cash outlays become “risky investments.” When the prospect of losses is clear, no one is willing to put up more real money.
When flocks fall ill, respiratory outbreaks occur, enteritis recurs, and serositis becomes more common, farmers know they need medication to limit losses and health programs to maintain stability. But their thinking has changed: paying cash is a definite cost with an uncertain return; toughing it out without treatment means known losses and losses that can be controlled.
As a result, a common attitude has taken hold in the industry: no cash upfront; medication can be bought on credit.
Farmers’ wait-and-see stance, caution, and reluctance to spend cash ultimately pass all operating, financial, and risk pressures down through the veterinary medicine distribution channels.
2, animal health terminals: selling on credit is a remedy of necessity, but also a deadly poison
Today’s veterinary medicine distributors and frontline salespeople occupy the most strained, conflicted, and vulnerable middle layer of the entire industry chain.
As cutthroat competition intensifies, products become increasingly homogeneous, low-price pressure spreads, and competitors extend credit with no limits, selling on credit is no longer a choice; it has become an industry survival rule.
No credit, and you’re out immediately
As market competition intensifies, livestock farmers run out of cash, and the industry as a whole resorts to widespread credit sales and concessions. If you insist on cash upfront, customers leave immediately, sales drop to zero, inventory piles up, and performance falls off a cliff. Offering no credit means dying right now.
Offer credit, and the long-term consequences come crashing down.
To hold on to customers, maintain sales, and protect market share, countless people in the veterinary medicine industry are forced to front the funds for product distribution and extend unlimited credit.
Payment terms stretch from monthly to quarterly, then to settlements spanning years and batches. Sales figures on the books look impressive and grow year after year, but in reality, they are all illusory profits on paper.
Real cash flow keeps drying up, personal funds are continually used to cover costs, and business risks accumulate without limit.
The harshest truth in the industry is that the livestock and poultry medicine distribution channel ultimately bears the full risk of losses in animal farming.
After losing money on one flock of chickens and continuing to incur losses, a farmer may ultimately choose to clear out the farm, leave animal farming, change careers, and walk away. The chickens are sold, the poultry house is empty, the people are gone, and calls go unanswered. All that remains is a worthless IOU and bad debt that cannot be recovered.
The poultry house is rented, the poultry have been sold, the assets are unpledged, and there is no credit guarantee. Those in the veterinary medicine trade extend goods on credit and advance real money, only to be left with bad debt that cannot be converted to cash, losses that cannot be undone, and years of hard work sunk without return.
Selling on credit protects performance in the short term but drains the foundations of the business over the long term.
3, the industry’s prisoner’s dilemma: everyone knows it’s a trap, yet no one dares to stop first
The entire industry is trapped in a cycle of selling on credit. This is not one person’s problem, but a collective prisoner’s dilemma spanning the whole supply chain. Everyone knows that selling on credit is fatal, yet everyone is forced to keep doing it. Behind this lie five layers of human behavior and commercial logic that the industry cannot escape.
① Path dependence: years of bad practices have become entrenched as unwritten industry rules
Using the medicine first and paying later has long been a deeply ingrained trading habit in grassroots livestock farming; supplying products first and retaining customers has long been the default survival strategy for veterinary medicine sales.
Whoever is first to break the rules and stop extending credit will be first to lose the market, customers, and market share. The industry collectively sees the truth, yet collectively remains silent and makes compromises.
② Wishful thinking: every unpaid debt comes with a comforting story
“These long-standing customers and I have years of rapport; they won’t disappear.” “Once this batch of chickens is ready for market, I’ll get paid.” “Others can collect what they’re owed, so I’ll have no problem either.”
The starting point of countless bad debts is a moment of misplaced softness and wishful thinking. The industry’s greatest risk has never been market conditions, but excessive trust in human nature.
③ Performance pressure: sales volume takes precedence over risk, sacrificing the long term for short-term gains
Manufacturers push for sales volume, regional rankings, monthly assessments, and annual targets all add pressure. Under performance pressure, long-term risks are downplayed without limit, while immediate sales are magnified without limit.
Selling on credit is the fastest, most direct, and most effective way to ship goods. All those impressive-looking reports today are bought at the cost of future cash flow and business security.
④ Emotional blackmail: personal ties with customers are the hardest to sever
Most people working in the veterinary medicine industry and livestock farmers have worked alongside each other for years, witnessing the ups and downs of farming together. The industry is a small circle, with strong personal ties and a deep concern for saving face.
When the other party is already facing difficulties and asking for help, it is hard for industry professionals to be completely hard-hearted and insist on cash payment. Personal ties can warm a business relationship, but they cannot guarantee repayment or offset bad debts.
⑤ The ultimate dilemma of being caught between two choices
Stop selling on credit, and risk ending the partnership and leaving old debts completely uncollectible; keep selling on credit, and become passively locked into the partnership, exposed to unlimited risks.
Moving forward is a deep pit; retreating is a cliff. This is the ultimate predicament that countless people in the veterinary medicine industry cannot escape.
4, the underlying truth of the industry chain: livestock farming is unprofitable, and the entire chain is operating without a safety net
The root cause of all the chaos around selling on credit, all channel difficulties, and all industry anxiety has never been conflict between people, but the systemic disappearance of profits across the industry.
Broiler farming has entered a vicious cycle: a sluggish market → marginal profits or losses for farmers → reduced cash investment → lax husbandry and management → increased disease pressure → poorer performance at market → further compressed profits.
When farmers cannot make money, there are no real winners anywhere in the supply chain—not in feed, animal health products, equipment, or technical services.
Farmers are running down their hopes, while distributors are running down their cash flow. Farmers bear the risks of raising livestock; veterinary medicine professionals absorb the risk of losses.
This is the harshest reality of the industry today: what appears to be a buyer-seller relationship is actually a transfer of risk; what appears to be mutual cooperation is actually one-sided loss coverage.
The most heartbreaking clarity for people in the veterinary medicine trade: they know extending credit is digging a pit, yet they have no choice but to keep filling it; they know unpaid debts are unlikely ever to be recovered, yet they have no choice but to keep smiling and supplying goods.
If you don’t, you lose immediately; if you do, you slowly run dry.
5, Understanding the industry’s endgame: in a downturn, focus on staying alive, not on sales volume
When the market is rising, the industry competes on scale, sales volume, customers, and speed; when the market is in a downturn, it competes on prudence, cash flow, collecting payments, and survival.
In the new era of animal husbandry, the industry must abandon an outdated belief: selling on credit has never been a measure of sales ability. The ability to collect payments, manage risk, and screen customers is the true core competency.
In an era of industry shakeouts, those who can truly weather the cycles are all doing the same thing: holding the line, screening customers, controlling risk, and protecting cash flow.
① Prioritize supporting quality farmers who are willing to invest, value flock health, and repay honestly, focusing on high-value customers; ② Establish controls on credit limits, payment terms, and loss prevention for vulnerable customers, customers with a pattern of losses, and customers with overdue payments; ③ Stop trading credit for customers and stop advancing funds to boost volume; put an end to cutthroat competition without limits; ④ Shift from “selling products, competing on price, and competing on credit” to “competing on technology, solutions, results, and value.”
The industry's path forward has never been lower prices, longer payment terms, or wider product distribution; it lies in using technology to empower farming, creating value through solutions, solving problems through service, and delivering results through expertise.
Finally, the gentlest yet cruelest saying in the livestock industry: what is extended on credit is veterinary medicine; what is put on the line is years of hard work and the lives of industry professionals.
May all our fellow livestock farmers emerge from the mire of losses soon, earn profits from farming, see their efforts rewarded, and have confidence when sending their animals to market. May all our fellow animal health professionals no longer have to advance funds or shoulder the burden passively; may bad debts continue to decrease, payments become increasingly reliable, and business become increasingly worry-free.
No one in the industry chain can prosper in isolation. When livestock farming is profitable, the channel partners can be secure; when the end market is thriving, the industry can go further. Weathering the downturn and surviving the shakeout—staying in business is the greatest victory.