August 31, 2023
Chinese pig producers hit by post-ASF epidemic realities
With small and medium-scale farms shuttered by African swine fever, China's pig farming becomes increasingly consolidated.
By 2021, pig stocks gradually recovered. In 2022 and 2023, they rose to pre-ASF levels.
Previously, the monthly pig price surged from nearly ¥14/kg in August 2018 to almost ¥40/kg in January 2020. Pig prices stayed high from October 2019 to January 2021.
From May 2021 to May 2022, pig prices dipped generally below ¥15/kg. There was a price hike to ¥27/kg in October 2022, but rising pig supply suppressed pig prices back to ¥15/kg towards the end of 2022 through April 2023.
Due to ASF's impact, the number of small farms (with at least five pigs) dropped from 1.1 million pre-ASF to 200,000 during the outbreak, before recently recovering to 400,000.
In 2019, a shrinking pig inventory rocketed prices to record highs, drawing an abundance of capital into pig farming. Pig feed producers expanded downstream to this segment while many non-husbandry-related companies came, anticipating lucrative profits.
In 2018, there were only five pig producers with an annual release of at least one million heads in China. Their combined production accounted for only 7.81% of the national pig output.
In 2020, there were nine such large producers, whose combined pig release volume accounted for 19.86% of national output. By 2022, 28 such producers released pigs to account for 37.57% of China's pig production.
However, a planned capacity for pig production has exceeded Chinese demand by more than 300 million heads, raising the possibility of an oversupply. Meanwhile, large pig companies began to suffer losses.
A Q1 2023 report revealed that, among the 20 listed Chinese companies, only Zhengbang Technology is in insolvency.
Those with a debt ratio of 80% or more are Zhenghong, Tianbang and Aonong. Those with a debt ratio of over 70% include New Wellful, Kingkey Smart Agri, New Hope, Jinxinnong and Huatong.
Tangrenshen, Luoniushan, Wen's, Dabeinong, Haid, Muyuan, Juxing and Tiankang constitute companies with a debt ratio of 50% or more. Hefeng, Lihua, Dongrui, and Shennong made up the group with a debt ratio of below 50%.
ASF brought opportunities as well as competitive pressure. In the end, it may be a few, lucky producers who would succeed and reap strong returns, having also built a strong foundation to meet future challenges.
- Shi Tao, eFeedLink