Pig enterprises have suffered large-scale losses, and farmers are still "waiting for rabbits" and other money-making opportunities

China Economic Weekly reporter Guo Zhiqiang reports from Beijing

The collapse of hog prices has caused heated discussions!

According to the Ministry of Agriculture and Rural Affairs' monitoring of 500 bazaars, as of the second week of November, the price of live pigs was 15.18 yuan/kg, down 0.73 yuan/kg from the same period last month, a decrease of 4.5%, and a year-on-year decrease of 42.1%.

"The price of pork has plummeted, or there are too many pigs in the market. Now there are more pig farms, credit is more relaxed, and pig production capacity is relatively fast. The industry is carrying this wave of downturn, waiting for the dawn to come. Li Li, head of a listed company with a market value of 10 billion yuan, told a reporter from China Economic Weekly.

What is the reason behind the "endless fall" of pork prices? Why are pig farms still expanding their scale after the pig production capacity has been going on for many years? Focusing on these issues, China Economic Weekly interviewed a number of pig breeding business owners.

Why is the pig price not prosperous in the peak season?

During the Mid-Autumn Festival and National Day in the past, the price of live pigs did not rise significantly, but fell back after the holiday, and the pig price was not prosperous in the peak season.

According to data released on the website of the National Bureau of Statistics on November 9, in October 2023, the national consumer price fell by 0.2% year-on-year. Among the foodstuffs, the price of livestock and meat decreased by 17.9%, affecting the CPI by about 0.66 percentage points, of which the price of pork decreased by 30.1%, affecting the CPI by about 0.55 percentage points.

"Since the Mid-Autumn Festival and National Day, the supply of pork market has been loose, and the price has fallen slightly. This is mainly due to the steady increase in the supply of hog production. On October 23, at the press conference of the State Council Information Office, Chen Guanghua, head of the Animal Husbandry and Veterinary Bureau of the Ministry of Agriculture and Rural Affairs, said.

A number of pig breeding enterprise leaders have revealed the same point of view to the "China Economic Weekly" reporter: there is more frozen meat in the market, as long as the price of pork rises slightly, frozen meat will enter the market in large quantities, which is also one of the important reasons for the decline in pork prices.

After entering the autumn and winter, African swine fever is in a frequent period, and pigs infected with African swine fever mean high mortality, which affects the judgment of some farmers on the pig market.

Wang Wanqiu, chairman of Baodong Agriculture and Animal Husbandry, told China Economic Weekly: "Out of concern about the African swine fever epidemic, the industry has a stop-loss situation of pigs slaughtering in advance, and farmers will only reach 30-50 kg of pigs slaughtered in advance, enter the market at a very cheap price, and push up the supply of pork in the short term, thereby lowering the price of pork." ”

Losses have become a common concern in the pig breeding industry. Feng Ya, a pig farmer, told reporters that in the first half of this year, each pig would lose 400-500 yuan, and in the second half of the year, the loss of each pig would reach about 100 yuan.

According to the company's announcement, Muyuan shares, new hope, Wen's shares and other listed pig companies suffered losses in the first three quarters, among them, the top three pig companies in the loss were Wen's shares, new hope, and *ST Zhengbang, with losses of 4.53 billion yuan, 3.858 billion yuan, and 2.819 billion yuan respectively.

At present, the listed pig enterprises have suffered large-scale losses, and the pork price "falling endlessly" will continue until the end of the year?

Li Li predicted: "I am not very optimistic about the pig market in the first half of 2024, one is that the market demand will be relatively weak at the end of the year, and the other is based on the pig inventory at the end of this year, the number of pigs slaughtered next year is still on the high side, which will pull down the pig price." ”

The data disclosed by the Ministry of Agriculture and Rural Affairs confirms the above statement, from the number of newborn piglets, the number of newborn piglets in the country increased by 5.9% year-on-year from April to September this year, and these piglets will be slaughtered in the next 6 months, indicating that the pork market supply is more sufficient in the six months from now (including New Year's Day and Spring Festival).

Chen Guanghua said that after the Spring Festival next year, there may be a consumption off-season and the increase in the number of pigs slaughtered "two meetings", pig losses may even be heavier than the same period this year, I hope that everyone will make production arrangements, reasonably adjust the pace of production, and slaughter pigs with the trend.

CICC's research report estimates that the fourth quarter of 2023 may have reached a critical point where excess funds will be exhausted. In terms of low pig prices, the supply pressure will continue to be released until the first half of next year, and the demand side will recover slowly, and it is expected that pig prices will still be in a downward cycle from the fourth quarter of this year to the first half of next year.

The production capacity of pigs has been reduced for many years, and the number of sows that can reproduce has increased instead of decreasing

It is worth noting that the pig capacity has been going on for many years, but the progress has been slow, what is the underlying reason behind it?

Lin Lin, the head of a pig breeding enterprise in the central region, told the China Economic Weekly: "A large number of pig houses and the high number of sows that can reproduce have laid the foundation for the rapid expansion of pig production capacity." This logic of pig capacity expansion has not changed. ”

The number of fertile sows is a leading indicator of pig supply. The pig breeding cycle is long, and the change in the number of sows that can reproduce determines the number of pigs slaughtered after 8~12 months, and the number of pigs slaughtered determines the inflection point of pig prices.

According to data disclosed by the Ministry of Agriculture and Rural Affairs in late October, the national breeding sow herd has been higher than the normal number of 41 million sows this year. At the end of September, the number of fertile sows was 42.4 million, 3.4% higher than the normal number of 41 million.

The reporter of "China Economic Weekly" combed and found that some pig breeding enterprises Muyuan shares and Wen's shares are still expanding the scale of sows.

On November 9, Muyuan Co., Ltd. communicated with investors that the current number of sows that the company can reproduce is about 3.1 million, and good disease prevention and control ability is an important factor for the company to continue to improve the number of sows that can reproduce.

As of the end of October, Wen's shares can breed about 1.57 million sows, about 600,000 gilts, and is expected to be able to breed more than 1.6 million sows by the end of the year.

Sow productivity is also improving. Public data shows that in 2010, the national PSY (the number of weaned piglets that each sow can provide per year) was 13.34, in 2018 the PSY was 18.02, and in 2022 it has reached 22, and the PSY index has improved significantly year by year.

Taking Wen's shares as an example, the sow production efficiency disclosed by the company shows that the average number of healthy litters in the litter remained at 10.8 in October, which is at a high level. The PSY indicator has continued to improve, and has steadily increased from about 20 at the beginning of the year to 22.3 in October.

Chen Guanghua said: "A sow should provide about 0.5 more fat pigs per year than the previous year. In this way, the number of breeding sows has increased, and the production efficiency is improving, and under the combined effect of two factors, pork production is at a high level in the same period in recent years. ”

The Ministry of Agriculture and Rural Affairs said that the next step will still be to stabilize pig production capacity as a key task, and clearly proposed: "adjust and optimize the pig production capacity control measures, guide the pig production capacity reasonable callback, implement the territorial responsibility of stable pig production and supply, stabilize land, environmental protection, finance and other long-term support policies, and ensure that pig production capacity is in a reasonable area." ”

Behind the "wait for the rabbit" mentality of pig farmers

"Now some pig farms adopt the tactics of 'killing a thousand enemies and losing 800 self-losses' to maintain a certain scale of pig production capacity, forcing small and medium-sized retail farmers to accelerate their exit, so as to win a higher market share and obtain a price increase window. Wang Wanqiu said frankly that now the pig scale farms are grabbing market share.

Lin Lin believes that "if the large-scale pig farms do not continue to expand their production capacity, it means giving up the existing market share, so the previous capital investment has no chance of turning over, so the large-scale pig farms are 'waiting for the rabbit' mentality, maintaining a certain pig production capacity, waiting for the next profit cycle." ”

In the past two years, the price of live pigs has fluctuated greatly, taking 2022 as an example, the highest price of pork is 15 yuan/catty, and the lowest price is only 5 yuan/catty. The huge pork market fluctuations, and the price difference of 10 yuan in the middle has allowed some large-scale pig farms to see profit opportunities.

Feng Ya, a pig farmer, admitted to reporters that as of the end of October, his pig business loss reached more than 20 million yuan, and the pressure on production and operation was very great, "but think about the original money-making situation, the current is the darkness before the dawn, and the downturn is also worth standing." ”

Li Li revealed: "After many rounds of elimination, there are very few small and medium-sized retail farmers in pig breeding, and most of the current market is large-scale pig farms. Even at the bottom of the market, these financially advantaged scale pig farms have an incentive to continue to expand their farming. In fact, these giants have their own 'small abacus' - waiting for the arrival of the pig profit window, hoping to seize a short-term wave of market. ”

(Li Li, Feng Ya, Lin Lin are pseudonyms)

Editor-in-charge: Guo Jiyao

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