January 15, 2020

 

China's swine producers report higher profits amid low pork supply

 

Profits have rose up to 45% as the African swine fever (ASF) outbreak has cut swine supplies in the country, leading high demand and rising prices for pork, reported Caixin.

 

An analysis of full year earnings from large swine producers by Caixin has found these companies are reporting increased profits even as pork supplies have decreased.

 

One of China's largest swine producers, New Hope, reported 45% revenue in its swine division even as its annual swine slaughter volume fell year on year.

 

At the start of last year, New Hope targeted 25 million swine to be produced annually by 2022, higher than its previous 5 million target in 2018. However, Hu Ji, head of New Hope said the company is ahead of schedule in its production target.

 

Wens Foodstuffs Group reported 18.5 million annual swine sales in 2019, a 16.95% drop. But the company estimates a 46.57% year on year revenue from its swine division. Wens Foodstuff aims to hit 70 million swine produced annually by 2022.

 

Zhengbang Technology reported 49.25% increase in its annual swine segment income, reaching 11.4 billion RMB. Before, it made its highest profit from livestock feed.

 

Other swine producers have reported higher pork revenue by about half.

 

According to analysts, China's supply gap will reach 10 million tonnes in 2020, with the average pork price hitting 30 RMB (~US$4.30) per kilogram. Analysts also believe average pork prices will remain high even with the Ministry of Agriculture and Rural Affairs' ambition to recover China's pork production capacity to 80% of its pre-ASF capability.

 

The National Bureau of Statistics (NBS) said food prices in China increased 17.4% year on year in December last year, with pork the driving force behind the price increase. Pork increased 97% year on year and makes up for just over half of the country's overall CPI 4.5% rise. In November, pork prices year on year fell, at 110.2%.

 

Average prices for pork fell 5.6% in December 2019, compared to 3.8 rise the month before as China's government expanded import sources for meat, released frozen pork from state reserves and introduced new initiatives to encourage farmers to raise swine.

 

-      Caixin