December 27, 2007

 

Subsidies and high hog prices enriching China's pig farmers

 

 

Pig farmers in China are seeing a bonanza as lavish government subsidies and high hog prices combine to bring spectacular growth in profits.

 

Pig farmers in Zheng Yang county, in south-western Henan province are raking in solid profits thanks to huge domestic demand and subsidies.

 

The inflation-driven price increases and rising affluence of consumers has resulted in a farmer with a 3,000-head operation making RMB 400 in profits per pig marketed, according to local media.

 

Enriched by their newfound wealth, farmers are driving cars, making deals through mobile phones and going online to seek new markets to tap growing pork demand in the country.

 

To be fair, the county has long had a tradition of pig production and its pigs have acquired a respectability in the region. The county had production of 2 million pigs a year as far back as 1995.

 

The local pig-rearing industry has also undergone several crisises before the current boom. However, pig farmers, used to the cyclic nature of farming, had anticipated the price rise and started stocking, with same earning profits of RMB 80,000 within the past half-year from a 5,000 pig operation. 

Central and provincial authorities have also generously disbursed subsidies to the tune of RMB 16 million to the county to encourage production, which was used to reward farmers who modernised their farms. New pig farms or old ones undergoing expansion, with 500-head production and above received RMB 25,000 in subsidies. 

 

For operations above 3,000 head, subsidies would amount to RMB 150,000. Loans were also made interest free for one year. Water and environmental charges for integrators and farming areas were also waived for 2 years.

 

At present, the county has three integrators with operations above 10,000 head and 18 operations with more than 5,000 head production.

 

The rise in pork prices has also brought a bonanza to the poorest villages. For example, in Xifeng County in Liaoning province, higher hog prices this year have helped farmers raise their incomes from RMB 900 yearly to RMB 2,500 this year.

 

Xingde village in the county received RMB 500,000 in funding as a result of a poverty alleviation scheme by provincial authorities. The opportunity thus arose for village heads to develop the region's pork production potential. Aspiring village leaders have also sought technical expertise from Shenyang University and at the same time brought in pedigree pig breeds to enhance profitability.

 

To manage costs, the village has also formed a committee and hired representatives to consolidate feed orders, animal medicines and vaccines to gain price advantages.

 

These improvements has enabled the village to conduct pig breeding activities in ways not unlike that of integrators, in which breeding, fattening and sales are all handled by one entity. With far profits and surging production,  pig farming now accounts for 60 percent of the average income in the village.