China Hog Industry News

[Mustang Sally Farm]

Tuesday, April 17, 2012
Solving a 700 Million Pig Problem
CHINA - Australian science is helping to solve one of China’s biggest and smelliest problems – what to do with the waste produced by its 700 million pigs.


Working with Chinese scientists and technology firm HLM Asia Ltd, Australia’s CRC for Contamination Assessment and Remediation of the Environment (CRC CARE) has helped develop novel digester technology to help deal with the estimated 1.4 million tonnes of manure and 7mt of urine produced by the burgeoning Chinese pork industry annually.

CRC CARE managing director Professor Ravi Naidu said the new technology can produce clean energy (biogas), fertiliser and other valuable products from nutrient-rich waste, in a system with great potential for application in other industries worldwide.

China has 700 million pigs in 1.8 million farms, which supply two thirds of the country’s rapidly-growing meat consumption. “However these piggeries also produce enormous volumes of waste, only a tenth of which is currently being treated,” he explains.

Despite tighter regulations, large amounts of nitrogen, phosphorous and contaminants are being discharged into the environment where they damage ecosystems and pose a threat to human health. The nutrients lost in the waste of one pig alone are worth about $50 a year, but there is no technology in place yet to recover and use this vital resource.”

Professor Naidu says the joint project has developed a two-step underground anaerobic bioreactor for treating piggery waste, and established the settings for load and digestion time. It has identified a particular combination of anaerobic treatments that can recover the nutrients and produce clean biogas energy as well.

“The technology has been demonstrated in the field and is now being scaled up to treat large volumes of wastes from a number of piggery farms,” he says.

The technology is expected to have widespread application not only in China but throughout Asia, wherever animals are farmed intensively, and to create fresh export opportunities for Australian technology solutions to similar contamination problems.

In this project the CRC is providing scientific expertise, including supervision of six PhD students at Huazhong University of Science and Technology in Wuhan Province with links to research skills at the University of South Australia.

The project is being managed by HLM Ltd on the ground, taking advantage of the relatively low cost of technology trials and scale-up work in China. “It’s a perfect partnership between Australian science and Chinese technical expertise,” he says.

Professor Naidu explains that the main scientific and technical challenges solved by this project are the high N and P loads in pig waste compared with domestic sewage, the current small size of biogas reactors, their slow rate of digestion, the limiting influence of temperature, and the presence of heavy metal contaminants which restrict the use of residues as fertiliser.

So far, the technology has been able to overcome each of these, and is now moving to full-scale trials.

“The market for a successfully packaged solution to this suite of problems is clearly very large – both in Asia and around the world. Besides handling livestock wastes, similar bioreactor technology can be used to manage and cleanse the runoff from urban landfills and organic waste streams from other industries,” Professor Naidu says.

“We anticipate that the scientific and technical knowledge gained in the course of CRC CARE’s research will have real value for Australia’s intensive livestock and food industries – and will help protect our environment from these types of wastes.

“At the same time we are producing a new source of clean energy for industry or domestic use, and a vital supply of nutrients to help secure the future of food production."

[Mustang Sally Farm]

Wednesday, April 18, 2012
Another Genesus Nucleus in China
CHINA - Sichuan Giastar Group, a large feed manufacturer, breeding stock producer, and integrator, was recently in Manitoba to purchase a nucleus herd from Genesus.
 

Genesus will offer ongoing technical support to Giastar, as they work towards their goal of one million pigs produced. The Genesus nucleus will replace a PIC unit and drive 7000 sows of GGP and GP production.



Pictured are Left to right - Lambert Houwen, GM Genesus, Xiang Gui You - Chief Veterinarian, Chendu Giastar Swine Husbandry Co. Ltd. Huang Li Hua - General Manager, Muyuan Stock Breeding Science and Technology Ltd. Tang Jie (Frank) - Vice General Manager, Chendu Giastar and Mike Van Schepdael VP Genesus.

[Mustang Sally Farm]

Thursday, May 03, 2012
Promotion Aimed at Driving Down Pork Prices
TAIWAN - The Council of Agriculture (COA) has launched a pork promotion campaign, with discounts of 20 percent being offered on frozen products to help drive down the retail price of pork.


A total of 50 supermarkets run by agriculture associations in New Taipei City, Greater Kao-hsiung and Pingtung, Penghu and Kinmen counties are participating in the sale of frozen pork products, Council of Agriculture Minister Chen Bao-ji said, reports TaipeiTimes.

Wholesale hog prices have dropped significantly — to less than NT$50 per kilogram — because of a supply glut, but retail prices have not reflected the -decline and hovered around NT$200 per kg, Mr Chen said.

The council plans to review the campaign every two weeks and see whether the sales need to be expanded, he added. More stores, including supermarket chains and warehouse retailers, will participate in the second wave of sales tomorrow, which will bring the total number of stores participating to more than 800, Mr Chen said.

The campaign will allow consumers to buy pork at discounted prices, while helping swine farmers resolve a supply glut, said Hsu Kuei-sen, head of the council’s Department of Animal Husbandry.

Meanwhile, the council is carefully assessing the oversupply problem, as well as discussing with farmers the number of hogs that need to be slaughtered, Mr Hsu said.

Before a consensus on the number can be reached, the ministry needs to calculate the number of swine exceeding limits set for each city and county, Hsu said, a task he said would be finished tomorrow.

In order to stabilise pork prices, the department has proposed that 60,000 pigs be slaughtered between May and July, but farmers want that number boosted to 100,000, Mr Hsu said.

A final decision will be made at a meeting on Monday between the department and a major swine breeding association.

[Mustang Sally Farm]

Thursday, May 10, 2012
Imported Pork Contains 'Lean Meat Powder'
CHINA - Over 100 tons of pork imported from the United States in March contained clenbuterol, commonly known as "lean meat powder", Guangzhou Daily reported Tuesday, citing General Administration of Quality Supervision, Inspection and Quarantine of China.


The products were returned and not sold in China, according to the watchdog, Guangzhou Daily reported.

Meat with "lean meat powder" may cause dizziness, cardiopalmus and even malignant tumors.

[Mustang Sally Farm]

Pork Commentary: Roadtrip in China Ends in Crash
23 May 2012


Jim Long is President &
CEO of Genesus Genetics.

CHINA - We have all experienced challenges in our lives, this past week we had just such an experience.We arrived in China on the Saturday. We had several meetings with customers and prospects. Last Wednesday we were riding in a GM minivan just outside Beijing heading to inspect quarantine site for an importation of Genesus genetics – we had just passed The Great Wall, writes Jim Long.

Then as you would say ‘an accident happened’. Heading through an intersection in a rural area our van met a tractor – trailer. It wasn’t pretty. The van was hit on the front, the engine and front of the van was sheared off. I was in the front passenger seat. The seatbelt and airbag worked. I climbed out of the carnage. At this point I saw my partner and Vice President of Genesus, Mike Van Schepdael lying on the road. At impact he had flown out of the side window of the van as the vehicle spun (obviously no seatbelt on). Mike was lying on the asphalt highway unconscious with blood all over. All other passengers including the driver were relatively okay. The tractor trailer was 200 feet down the road – the tractor was on its side separated from the trailer also on its side. Mike regained consciousness; you could see his injuries were obviously to his head. The ambulance arrived with 2 – 90 pound female attendances were no match to pick up a 200 pound Van Schepdael. I was in no shape to help, eventually some by standers helped out. English doesn’t help much when in China but hand signals definitely do.
 
Mike had a quick ride to a local hospital. It didn’t take much to figure out this hospital was not geared to handle such a serious situation. After a mad flurry of phone calls we were off to Beijing about one and a half hours away. As we got into the ambulance, I got into the front passenger seat. I had to laugh when they made a big deal that I should wear a seatbelt. If ever I didn’t need to know that it was at this moment. We then rode with a lunatic ambulance driver who at particular times was smoking, and talking on his cell phone as he madly drove through busy traffic. He really enjoyed the siren horn but not at any particular strategic time. He then got kind of lost trying to locate the hospital (that is always reassuring). Eventually we arrived at the hospital thinking after that ambulance ride I had dodged death twice in the same day.
 
Peking Union Medical College Hospital International wing was where we ended up. Quickly the hospital staff reacted – Mike was checked – a CT scan and MRI were quickly carried out. The doctors and nurses spoke English. Their observation was multiple injuries but no surgery needed for Mike. He was lucky (subjective word) 2 cracked vertebrate, multiple lacerations, broken nose, split lip, fractured cheekbone, etc, etc... lots of things adding up but nothing life threatening.
 
It was at this time our customers in China stepped in to help out. Monita Ma owner of Best Genetics, America raised but with business interests in China including Swine Production stepped in. Her connections quickly found 2 nurses at a time that speak English for 24 hour round the clock care. Monita’s people waded in with cash and put down a deposit to cover all hospital costs. Genesus’ International Insurance will cover all in the end but the initial financial push diminished any potential for delays happening. Soon after our arrival at the hospital Dr. Shen, the Deputy General Manager of COFCO– swine division (China’s largest agri – business) and owner of 2 Genesus Nucleuses in China arrived at the hospital offering to help in any way possible. Others arrived quickly – Hu – Song and Rosemary Smart from the Canadian Swine Exporters Association. Rapid response was greatly appreciated. Mike was hurt badly and I wasn’t feeling real well as the body isn’t built to take the force of tons meeting at speed.
 
It is now five days from the accident and I have been discharged, in pain but high level of functioning. Mike is still in the hospital working towards a full and complete recovery. All indications show no other conclusion. In this time we have had visits from James Jiang General Manager of COFCO meat division and Chairman Wu of Tiabang Group both offering any and all we needed. This past five days has been fascinating; we have experienced the hospitality and kindness of many Genesus Chinese associates. The hospital care has been extraordinary. Caring and knowledgeable doctors and nurses have what we believe as world class care. Indeed at one point our International Insurance Company was pushing us to fly by Air Ambulance Jet to Hong Kong. We weighed the options and decided to stay at Peking Union. We made the right decision and are getting better every day.
 
Our experience has reaffirmed our belief that he world and all countries have excellent quality people with character. When we needed help and care we got it. We will be forever grateful to the great people in China that helped us.
 
On a personal note it reminds us how life can be fleeting, a couple of feet was the difference in this crash between life and death. God was with us and we were lucky. It makes you realize that it’s best to live everyday flat out because you really, really never know when it could be over.
 
Final Point: Wear a seatbelt.

 


Author: Jim Long, President & CEO, Genesus Genetics


 

[Mustang Sally Farm]

Wal-Mart Involved in Another Pork Scandal
12 June 2012


CHINA - Wal-Mart has been caught selling diseased pork ribs, reported National Business Daily.

Regulators of the animal husbandry sector in Dazhou, Sichuan province, found in a routine inspection this January that some pork ribs in Wal-Mart's cold storage warehouse were from diseased pigs, local media reported.
 
This incident took place not long after the company's Chongqing "green pork" scandal last year, where Wal-Mart was fined for labeling ordinary pork as "green pork" in a number of its outlets in Chongqing. The "green pork" scandal had caused the company an unprecedented crisis of confidence.
 
An officer of the Dazhou Animal and Health Inspiration Station confirmed the incident to National Business Daily.
 
Wal-Mart Stores Inc told the newspaper that the company has attached great importance to this incident and a task force guided by company headquarters has been established. All pork products related to the incident have been removed from shelves immediately, and cooperation with the suppliers have ended.
 
Meanwhile, Wal-Mart is cooperating with local government departments to work on this matter.

[Mustang Sally Farm]

Pork Prices Up After Weeks of Declines
20 June 2012


CHINA - Pork prices rebounded last week, rising 0.2 per cent from one week earlier after weeks of decline, but were still down 14.9 per cent year-on-year, the Ministry of Commerce said.

Shanghai and Beijing saw pork prices rise 3.7 per cent and 2.3 per cent, respectively, last week, according to a statement on the ministry's website.
 
Prices of edible oil, flour and fish all increased last week. Retail egg prices continued to rise, up 1.3 per cent week-on-week, but wholesale egg prices fell 0.8 per cent last week, the statement said.
 
Lower fuel prices dragged transportation costs down, which led to the decline in wholesale egg prices, analysts said, adding that retail egg prices will also fall slightly after the upcoming Dragon Boat Festival holiday.
 
China's consumer price index (CPI), the main gauge of inflation, eased to 3 per cent in May, the lowest level since June 2010. Food prices account for nearly one-third of the weighting in calculating the CPI.
 

[Mustang Sally Farm]

Zhongpin Continues to Invest in Tough Market
10 August 2012

CHINA - Chinese meat and food processing company, Zhongpin, has reported higher sales revenues and lower net income for the three months ended 30 June compared with the second quarter 2011.
 
Total sales revenues increased 11.4 per cent to $408.2 million for the three months ended 30 June from $366.5 million in the second quarter 2011 primarily due to higher sales volume for pork products sold at lower average selling prices.
 
Net income decreased 43.0 per cent to $11.0 million in the second quarter 2012 from $19.3 million in the second quarter 2011 primarily due to a lower gross profit margin, the cost of more employees to support expansion, higher salaries, rising labor and utility costs, and higher interest expenses and income taxes.

The higher expenses were mainly due to business expansion and intense competitive pressure in the pork market as the industry continues to consolidate and companies are required to vie aggressively to win additional market share in a variety of ways, Zhongpin said.
 
Basic earnings per common share (based on net income attributable to Zhongpin shareholders) decreased 39.6 per cent to $0.29 in the second quarter 2012 from $0.48 in the second quarter 2011. Average basic shares outstanding decreased 7.8 per cent to 37,189,322 shares in the second quarter 2012 from 40,355,502 shares in the second quarter 2011.

Diluted earnings per common share (based on net income attributable to Zhongpin shareholders) decreased 39.6 per cent to $0.29 in the second quarter 2012 from $0.48 in the second quarter 2011. Average diluted shares outstanding decreased 7.8 per cent to 37,209,695 shares in the second quarter 2012 from 40,365,654 shares in the second quarter 2011.
 
Zhongpin expects that sales revenues should be within a range of US$1.55 billion to $1.72 billion for 2012.

Gross profit margin is expected to be within the range of 8.6 per cent to 10.2 per cent. Net profit margin is expected to be within the range of 3.3 per cent to 4.2 per cent.

The resulting diluted earnings per share for the year 2012 is expected to be within the range of $1.36 to $1.92 per share, assuming average diluted common shares outstanding of about 37.5 million shares in 2012. Assumptions and judgments supporting the guidance are shown below.
 
Xianfu Zhu, Chairman and Chief Executive Officer for Zhongpin, said: "We achieved good sales growth in the second quarter on higher tonnage at lower average prices, compared with last year's second quarter.
 
"The continuing intense competitive pressure due to the ongoing pork industry consolidation in China, and higher costs generally in China, have reduced our gross profit margin and increased our operating costs for this quarter and this year.
 
"We continued to expand our operations in the second quarter, but at a slower rate, to help secure our long-term growth and achieve a much stronger market position in the years ahead. Recently, we finished the construction for additional annual production capacity of 50,000 metric tons for prepared pork products and started trial production in July. With that addition, our total annual production capacity was 954,760 metric tons for all of our products at the end of July 2012.
 
"Pork prices were lower than expected, mainly due to intense competitive pressure as the industry continues to consolidate. Hog prices also declined, but not as rapidly as pork prices. Those were the main factors for our lower gross profit margin in the second quarter compared with last year's quarter.
 
"Our product growth strategy is to develop, produce, and sell more prepared pork products -- first, because customers like them, and second, because the products can be sold at higher profit margins. So the shift you see in our product mix -- with lower tonnage, lower prices, and lower sales revenues from frozen pork and higher numbers from our prepared pork products this quarter – reflects our strategy to use more of our resources to develop and produce our prepared pork products, because those are considerably more profitable and have a very attractive future. Chinese consumers today are embracing more easy-to-complete-and-serve meals, often based on the outstanding quality, safety, and taste of Zhongpin's prepared pork products. In some markets, we even sell complete kits for those meals.

"As of June 30, we offer more than 440 types of different categories of products.

"I believe the long-term outlook for China's pork industry and for Zhongpin is quite good, but given the pork industry's massive consolidation that is expected to continue with increasing intensity in the next several years, we believe that delivering a sustained pattern of higher net income and higher net cash flows in those coming years will be a difficult challenge."
 
Zhongpin is investing approximately $58.5 million to build a new production, research and development, and training complex in Changge, Henan province, excluding the cost of land use rights that it has already obtained.

When completed, this new facility should have an annual production capacity of about 100,000 metric tons for prepared pork products.

Alongside this new production facility, Zhongpin plans to develop a center for research and development, training, and quality assurance and control. Construction for the first phase with a production capacity of approximately 50,000 metric tons for prepared pork products started in the second quarter of 2011 and trial production started in July 2012.
 
Zhongpin established a joint venture company in June 2011, of which the Company owns 65 per cent, with Henan Xinda Animal Husbandry Company Limited. The joint venture company is financed by capital contributions and bank loans. All capital contributions to the joint venture company have been made. The joint venture company will provide 20,000 sire boars annually. Construction of the facility for sire boar breeding is continuing and the operations are expected to begin in the third quarter 2012.
 
Zhongpin is investing approximately $18.0 million in a cold-chain logistics distribution center in Anyang, Henan province. This distribution center will have processing capacity, a temperature adjustable warehouse with a floor area of approximately 27,000 square meters, a distribution center, and a quality control center. The distribution center will be used for third-party cold-chain logistics service. Zhongpin expects to put this distribution center into operation in the third quarter of 2012.
 
Zhongpin plans to invest approximately $87.5 million in a chilled and frozen food processing and distribution center in Kunshan, Jiangsu province, which is near Shanghai. The center will be built in three phases. The first phase will include a processing center, cold-chain logistics center, and business complex. Zhongpin expects to invest about $35.0 million on the first phase that should be put into operation in the fourth quarter of 2012.
 
Zhongpin will be investing approximately $10.5 million in a by-product processing plant in Changge, Henan province. This facility will have a production capacity for 100 million meters of casings and 300 billion units of raw material to make heparin sodium. The construction started in March 2012, and the new facility is expected to begin operations in the fourth quarter of 2012.
 
Zhongpin will be investing approximately $49.0 million to build a slaughtering and processing plant, low temperature prepared pork plant, and logistics center in Tangshan, Hebei province. This facility will have an annual production capacity of about 60,000 metric tons for chilled pork, 20,000 metric tons for frozen pork, and 22,000 metric tons for prepared pork products. Construction is scheduled to start in the third quarter of 2012, and the new facility for chilled and frozen pork is expected to begin operations in the second quarter of 2013.
 
As of June 30, 2012, Zhongpin had an annual capacity of 728,760 metric tons for chilled and frozen pork, 126,000 tons for prepared pork products, 20,000 tons for pork oil, and 30,000 tons for vegetables and fruits, for a combined total of 904,760 metric tons. With the additional annual capacity of 50,000 metric tons for prepared pork products that started trial production in July, Zhongpin's total annual capacity for all products was 954,760 tons as of 31 July 2012.

Zhongpin's outlook for hog prices and pork prices has decreased somewhat since the end of the first quarter 2012.

Although China's economy appears to be healthy and pork continues to be the preferred protein for most Chinese consumers, and the fundamental demand for pork should continue to be quite good, the vigorous competition for market share in the pork industry, as the industry consolidates, has helped to reduce pork prices in the second quarter 2012 more than the cost of hogs has decreased.
 
Zhongpin believes that hog prices may have reached the bottom of the current price decline, despite the current abundant supply of hogs. As the costs for breeding and feed are rising, the Chinese government has recently started to increase the nation's pork reserve, which in the past has generally had the effect of stabilizing hog prices somewhat above the cost to raise hogs.

Hog prices have declined about 15 per cent from the end of January 2012 to early August 2012. Given the expected bottom, we still estimate hog prices to decline on average by 15 per cent to 20 per cent in the year 2012 compared with 2011. The hog price declines in the second quarter 2012 are consistent with that estimation for the year 2012.
 
Pork prices tend to follow hog prices, since most pork producers, including Zhongpin, try to maintain a good spread between the price of hogs and the price of pork.