July 26, 2022


Muyuan Foods & Wens Foodstuff Group: How major Chinese pig producers compare

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Muyuan Foods Co., Ltd, the biggest pig farming enterprise in the world, saw its sales of live pigs increase by 122.3% to 40.263 million heads in 2021.


But as pig prices tumbled last year, the company's net profit plunged 74.9% to ¥6.904 billion.


Muyuan currently has a production capacity of over 70 million live pigs. Its fully integrated farming model has the following advantages: a lower cost of rearing fattening pigs, a high capacity of sow breeding and pig production, and a distinct cost advantage. Muyuan's current cost of fattening pigs is close to ¥16/kg (US$2.39), lower than most producers in the market.


The company also developed a supply chain strategy in connection with grain-producing areas, allowing it to flexibly adjust feed formulations and cater to various breeds and growth stages of pigs.


Additionally, Muyuan has a land reserve to further increase its production capacity to 100 million heads of pig, more than double its current capacity.


Last year, the company slaughtered 2.899 million pigs, fetching a total revenue of ¥5.42 billion. As of the first quarter of 2022, Muyuan's slaughtering capacity reached 22 million heads.


How does its competitor, Wen's Group, holds up in comparison? Like Muyuan, the company is one of the leading domestic pig breeding enterprises in China. It is also one of the country's largest broiler breeding enterprises. In 2021, it sold 13,217,400 pigs, which accounted for about 2% of China's live pig production.


However, as the price of pork fell sharply, Wen's pig business suffered serious losses. The company's average selling price of pigs throughout the year was ¥17.3/kg, a 48.18% decrease year-on-year. Wen's broiler business, on the other hand, provided some alleviation for the company as its average sales price of chicken increased.


After implementing measures against African swine fever, Wen's pig production volume resumed growth in May 2021, exceeding 1.5 million heads by January 2022.


Unlike Muyuan's self-sustaining business model, Wen's adopts an asset-light model based on the working relationship between the company and farmers. The model has the advantages of rapid expansion and strong asset turnover capacity.


Although Wen's asset-liability ratio has expanded in the past two years, the company has controlled capital expenditures in advance and prepared reserve funds, which reached ¥11 billion by the end of 2021.

- David Lin, eFeedLink

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