May 2, 2012

Chinese meat consumption has increased as the country continues to produce about 50 million tonnes of pork each year and accounts for nearly 55% of global pig production.

To avoid price fluctuations and deal with the growing concern of food safety among consumers, the Chinese government has been encouraging investment in Western-style, large-scale farming since January 2011.

Cofco Ltd., China's largest grain trader, plans to invest CNY3.5 billion (US$556 million) on breeding and slaughtering facilities that will accommodate 60 million chickens and swine breeding farms in the Southwestern province of Sichuan this year.

It has also set up a joint venture last year with Mitsubishi to invest CNY$1.5 billion (US$238 million) on hog, chicken breeding and processing facilities.

Cofco Ltd aims to be the largest pig farmer in China and produce 10 million to 15 million hogs per year by 2015, an increase from the current rate of 1.5 million.

It plans to invest more than CNY20 billion (US$3.2 billion) to set up three pig farming bases in Tianjin, Jiangsu and Wuhan, with each expected to produce 3 million pigs annually.

Yurun, a Chinese meat processor slaughtered 46.05 million hogs at the end of 2011 and intends to reach 70 million head per year by 2015.

China's top animal feed producer, New Hope Group

plans to build more pig farms to expand its annual production by three million in the next three years and intends to have 70 to 80% of the commercial breeding market in the next five to 10 years.

Hog prices have fallen for 12 consecutive weeks. However, recently the Chinese government said it would intervene to stabilise the hog market via rebuilding meat reserves. Upon the news, hog prices rallied to take the highs out of the previous week.