March 6, 2025
A profitable H1 2024 for China's top pig producers
Listed companies in the pig breeding sectors of Mainland China and Hong Kong have released performance reports for the first half of 2024.
Among the 20 listed companies with a slaughter volume of more than 300,000 heads in the first half of the year, 11 companies made profits and nine suffered losses. However, the extent of losses was significantly reduced.
In the first half of the year, the top 20 listed pig companies produced 83.8449 million pigs for slaughter, accounting for 23.04% of China's total slaughter volume of 363.95 million pigs. The top three in terms of slaughter volume are Muyuan, Wen's, and New Hope, with slaughter volumes of 32.388 million, 14.3742 million, and 8.6886 million heads, respectively.
In terms of revenue, the top three companies with the largest operating income in the first half of the year were Muyuan, New Hope, and Wen's achieving operating income of ¥56.866 billion (US$7.90 billion), ¥49.577 billion (US$6.89 billion), and ¥46.758 billion (US$6.49 billion), respectively.
In terms of profit, Haid Group ranked first, with a total net profit of ¥2.125 billion (US$295.14 million), but this mainly came from the contribution of the feed sector. In the first half of the year, the market share and profits of Haid Group's main feed business have increased significantly, helping the breeding business to turn from deficit to profit.
Muyuan, which ranked second, achieved a net profit of ¥829 million (US$115.14 million) in the first half of the year, a year-on-year increase of nearly 1.5 times. Third in rank, Wen's achieved a net profit of ¥1.327 billion (US$184.31 million) in H1 2024, compared with a loss of ¥4.689 billion (US$651.25 million) in the same period last year.
New Hope suffered the biggest loss among the listed pig companies in H1 2024. While its pig business had remained in the red, both sales revenue and gross profit margin of its other main business, the feed segment, dropped during this period. However, compared with the loss of ¥2.982 billion (US$414.17 million) in the first half of last year, New Hope reduced its losses by more than ¥1.7 billion (US$236.11 million).
Despite its restructuring, Zhengbang Technology still lost ¥127 million (US$17.64 million) in the first half of the year, but it was a significant reduction from the loss of ¥1.994 billion (US$277.22 million) in the same period last year; the amount of loss reduction was equivalent to New Hope.
The rebound in pig prices is the main factor for the significant improvement in the performance of the listed companies.
Taking Muyuan as an example, the company's commercial pig prices continued to rise in the first half of 2024. The average sales price in June was ¥17.73/kg (US$2.46/kg), a month-on-month increase of 14.24%. The rise in pig prices directly lifted the profits from pig slaughter.
According to data from China's Ministry of Agriculture and Rural Affairs in May 2024, the net profit of large-scale pig breeding farms was ¥174 (US$24.17) per head, a month-on-month increase of 29.6%. Therefore, the continued rise in pig prices has caused the profits from pig slaughter to increase steadily. Statistics show that in July 2024, the net profit of large-scale pig breeders reached ¥538 (US$74.72) per head. As pig prices continued to hit new highs entering August, the profitability of pig companies would continue to expand.
The rebound in pig prices stemmed from the fall in the sow numbers. Since the second quarter of 2024, the oversupply of pigs gradually subsided as the effects of lower sow population capacity emerged.
On the demand side, according to seasonal consumption patterns, pork consumption in May-June is usually 5%-10% more than in March-April, hence supporting the rise in pig prices.
Lower feed costs
To reduce costs and increase efficiency, major domestic pig companies took measures such as strengthening disease prevention control and improving fattening efficiency to reduce costs.
Additionally, the prices of feed raw materials continued to decline in the first half of 2024. The impact of the downward trend in feed raw material prices was reflected on the breeding cost since the second quarter of last year.
In the first half of the year, major pig companies have achieved significant results in controlling costs. New Hope's pig fattening cost, which was ¥15.8/kg (US$2.19/kg) in January, dropped to ¥15.3/kg (US$2.13/kg) in March, and further to ¥14.7/kg (US$2.04/kg) in April. According to the company's plan, the cost of pig fattening was expected to drop to ¥14.2-¥14.3/kg (US$1.97-1.99/kg) in December 2024.
Meanwhile, Muyuan reported that compared with May, the company's pig breeding costs dropped in June. More than 55% of its farms recorded a farming cost below ¥14/kg (US$1.94/kg), and 18% managed to keep the rearing costs below ¥13/kg (US$1.81/kg). The company is confident that all farms will achieve ¥13/kg (US$1.81/kg) in pig rearing costs by the end of 2024.
Slow pig production growth
Data released by the Ministry of Agriculture and Rural Affairs show that at the end of May 2024, the number of reproductive sows in China totalled 39.96 million heads, an increase of 0.2% month-on-month and a year-on-year decrease of 6.2%.
At the end of June, the number of reproductive sows was 40.38 million, a month-on-month increase of 1.1% and a year-on-year decrease of 6.0%. At the end of July, the number of reproductive sows in the country was 40.41 million, an increase of 0.7% month-on-month and a year-on-year decrease of 5.4%.
As China's national pig price rose steadily and significantly in May, the confidence of pig breeders recovered, resulting in the recovery of the sow population. Nonetheless, the increase has been very slow.
Although the Chinese pig breeding industry came out of the woods and entered a profit cycle, pig breeders are extremely cautious and controlled the expansion of pig production with care. One major reason is that the debt ratio of large-scale pig companies is generally still above 70%, and the recovery is still at its early stage, hence limiting profits.
For smaller farmers, due to past losses and slower grasp of changes in the pig market, most of them chose short-term investments, such as expanding the herd of fattening pigs, instead of rebuilding sow inventories.
In short, China's pig breeding industry is in a ‘better-be-safe-than-sorry' mode. While profits significantly improved and losses were turned around, production capacity growth was very slow.
About EFL AG-DATA
EFL AG-DATA is a startup incubated by Singapore's Nanyang Technological University's Innovation and Enterprise Company (NTUitive) Incubator Program. It is developing an agricultural hub that will revolutionize the feed-to-meat supply chain in China and Southeast Asia countries through data-driven solutions. EFL's mission is to empower farms through innovative data-based services that solve complex problems and enhance productivity.
- EFL AG-DATA