China Hog Industry News

[Mustang Sally Farm]

Wednesday, October 19, 2011
China's Farm Produce Prices Down
CHINA - Farm produce prices in China fell in the week ending 16 October compared to the previous week, the Ministry of Commerce (MOC) said in a report released yesterday.


The price of pork fell 1.2 per cent and beef was down 0.4 per cent.

The price of eggs continued to drop for a third week as supplies increased. The egg price was down 0.4 per cent from the previous week, and down 0.9 per cent in the past three weeks.

Eight kinds of sea products also saw an average price drop of 0.5 per cent.

Prices of rice and edible oil rose slightly, both up 0.2 per cent.

The general price decline of farm products is further decreasing the pressure on inflation, which began easing in July.

The country's consumer price index (CPI), a main gauge of inflation, climbed 6.1 per cent year-on-year in September from 6.2 per cent in August and 6.5 per cent in July, which was a 37-month high.

Despite the eases, inflation remains stubbornly high - far exceeding the government's full-year target of 4 per cent for 2011.

Sheng Laiyun, spokesman of the National Bureau of Statistics (NBS), said that the likelihood of CPI growth further dropping in the fourth quarter was very high.

The government has made controlling consumer prices a top priority this year by tightening monetary policies which included raising the benchmark interest rates three times and hiking banks' reserve requirement ratio six times since the start of the year.

NBS data showed that the economy expanded 9.1 per cent year-on-year in the third quarter, the slowest pace in two years.

The slowing economic growth and tight monetary polices all pointed to an inflation decrease, Mr Laiyun said at a press conference Tuesday in Beijing.

He said that a bumper harvest this year and declining international commodity prices would also ease price pressure in the coming months.

[Mustang Sally Farm]

Friday, November 04, 2011
Pork Prices Driving Inflation in China
CHINA - The price of pork has risen so much in China that now it is the only driver of inflation in the country according to analysis by the Danish pig meat processor, Danish Crown.


The processor said that the Chinese middle class of 300-400 million people is growing, and with money in hand, they want more pork, not just pigs feet, heads and tails, as has typically been the export products to the country in the past.

The Chinese consumers' increasing demand for pork has increased prices on average by 30-40 per cent, and since the summer it has helped to push up inflation.

"In contrast to Denmark, when you have a very high proportion of household income spent on food, including pork, a price increase affects families' ability to buy other consumer goods. In fact, price increases in pork are so powerful that it has been seen as a very important factor behind the rising Chinese inflation. In this the way, pork has been a driver of inflation in China," said Soren Tinggaard, deputy director of Danish Crown.

In the past, Danish Crown's trade with China was in pig heads, a waste product, which mainly were sent for rendering. Today, heads are sold to China for a price that is twice as much as what they would be sold for in Europe. Since January, the price in China has increased by more than 100 per cent.

"The Chinese are very fond of pork. And when a country with so many people is looking for a specific product, you get a unique combination that has not been seen since we sold bacon to England in 1930," said Soren Tinggaard.

He estimates that China next year will be the second largest market for Danish Crown behind England.

[Mustang Sally Farm]

Wednesday, November 16, 2011
'Lean Meat Powder' Found in China's Imported Pork
CHINA - China's top quality watchdog announced Tuesday that it had found banned additive clenbuterol, commonly known as "lean meat powder"in China, in some imported pork products this year.


The harmful substance was found in several batches of frozen pork products from the United States, Canada and Denmark in July this year, the General Administration of Quality Supervision, Inspection and Quarantine(AQSIQ) said in a document put on its official website.

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Clenbuterol helps to build muscle and is occasionally used as an illegal performance-enhancing drug by track and field athletes. China has banned it as a livestock feed additive as it can cause nausea, dizziness, headaches and heart palpitations in humans.

The unqualified products included frozen pig heads, feet and hearts. Among them, a batch of frozen ham leftovers from the United States was found both mildewy and containing clenbuterol, said the AQSIQ.

All of the tainted products have been returned or destroyed and have never been sold on the domestic market, it said.

In a separate report, the AQSIQ also reported that in August this year, a batch of frozen pig heads from Denmark were found containing salmonella, and Coca Cola China's imports of orange pulp and juice from Turkey was destroyed for poor packaging and illegal importing.

[Mustang Sally Farm]

Thursday, December 01, 2011
China Hog Markets
CHINA - Ron Lane, Senior Consultant for Genesus China, writes, "China: it is the pork powerhouse of the world with over 51 per cent of the world’s population of pigs being raised within China."
 

Looking at the size of the breakdown of the inventory for October 2011-breeding stock was around 48.80 million and total on farm inventory was around 475.16 million (as compared to September 2011-breeding stock was around 48.1 million and total on farm inventory was around 465.57 million and to August at 47.86 million and total on farm inventory was about 461.42 million). This also shows growth since May 2011—breeding stock was around 47.1 million and total on farm inventory was about 453 million head). The 475.16 million head for October is up 3.65 per cent from last year while the October sow inventory is up 1.10 per cent from last year (year over year). During the past year, since September 2010, sow inventory had increased in September 2010, but decreased through October and November, a marginal increase in December and then slightly lower in January through to March 2011. A steady increase in sow inventory has occurred since March 2011.

Since mid-September, the average price of slaughter pigs has declined about 15 per cent to the current price of 16.39 RMB/kg liveweight (approx. $ 2.57 US/kg liveweight). If you look at year on year prices for November, 2011 versus November 2010, one can see that pig production in China is quite profit supportive with reasonable production.

Price Nov. 2011 Nov. 2010 % increase year-on-year
Pig price 16.84 RMB/kg ($2.64 US/kg) 13.18 RMB/kg ($2.07 US/kg) 27.8%
Pork price 28.08 RMB/kg ($4.40 US/kg) 20.7 RMB/kg ($3.24 US/kg) 35.7%
Piglet price 34.99 RMB/kg ($5.48 US/kg) 18.19 RMB/kg ($2.85 US/kg) 92.4%
Sow price 1,832 RMB/head 1431 RMB/head 28.0%

Profit margins continue to show good returns. Estimated profit margin for June 2011, was around 770 RMB/market pig -$119.10 US and was the peak price. Feed costs (mainly corn and soybean meal) continue to rise or be stable in some areas and the market price has shrunk since then. Profit margin for August was estimated to be 721 RMB/market pig -$112.83 US. Profit margin for October was estimated to be 659 RMB/market pig -$103.62 US. Profit margin for November is estimated to be 447 RMB/market pig -$ 70.06 US.

Price /profit predictions for 2012 include: pig price of 16.6 RMB/kg liveweight ($ 2.60 US/kg liveweight); average price of corn at 2,500 RMB/tonne ($ 391.85 US/tonne); pig and corn ratio of 6.93: 1 and average profit of 350 RMB/market pig ($ 54.86 US/ market pig).

Short term scenario:
Industry estimates that pig prices will not fall to much further for the next 3 months (through Spring Festival (23 January 2012) and many predict that the price will stabilize to around 18 RMB/kg liveweight ($2.82 US/kg liveweight). There are several recent trends to support this optimism.

Tight supply as small backyard farmers exit from the market and farming in general and relocate to the large urban centres to work. (China Ministry of Agriculture just released the next 5 year plan for agriculture development-12th Five-year Plan (2011-2015). It is estimated that 40 million rural labourers will leave farm jobs during this five years—many of them were former backyard pig farmers).


Relative higher feed cost will keep the market price at a high level.


Large farms are not able to keep up with the demand.


During the past year, a piglet diarrhea has caused high mortality (especially 10 day old pigs). Initially the disease was noted in the southern part of China. During December, 2010 to March 2011, the problem was prevalent. Many sows were rebred in the Spring of 2011. This has caused part of the decrease in the current price as the market pigs from the rebred sows are now coming to market (predicted large short-term slaughter). However, this increased supply may taper off over the next few months.


Because of the fear of the piglet diarrhea occurring again this December period, many farmers are selling their stock to avoid repeat losses.


Again, but more recently (July and August) in the North Central parts of China a similar problem has occurred as a wet July and August, lead to more farms having a high piglet death loss. This could cause lower pig supplies around the increased demand period just prior to Spring Festival (this could cause a spike in market pig prices).


Generally, the demand for pork increases during the winter months especially during the holidays surrounding Spring Festival.
What to watch for over the next few months!!!
In February, the pig and corn ratio was 7.12:1; was 7.07:1 for March and was 7.63:1 for May. In September, the ratio was 8.24:1. Now, in October, the ratio is closer to 7.45:1 per market pig. A pig to corn ratio of 6:1 is considered to be break even. With continued Government incentives and "now reasonable profit margins", pig expansion in China will continue.


The Consumer Price Index (CPI) continues to be quite interesting for the National Government. Previously, when the pork prices were gaining, this rapid increase in pork, gained the attention of the National Government as it greatly affects the CPI. The CPI is made up of about 30 per cent food found in the consumers’ basket. Pork is estimated to be about 1/3 of the food portion of the basket or in other words, about 10 per cent of CPI as a whole. Just to sense the impact that pork has on the CPI, reports show that food prices increased by 13.4 per cent in September versus one year ago. This has an impact of 4.05 per cent points. At the same time, pork rose by 43.5 per cent and this affects the overall CPI at a level of 1.24 per cent points. Now with around a 15 per cent drop in pork prices since mid- September, the CPI is also decreasing. Currently, inflation is around 5.5 per cent for October, 2011. This is a drop from the high of 6.5 per cent in July, 6.2 per cent in August and 6.1 per cent in September. CPI for November is estimated to drop further to 5.0 per cent.


Although China’s domestic supply of pork is showing growth, imports of pork are expected to rise by 8 per cent in 2012. This is mainly due to rising demand. An USDA report suggests that total meat production for China will be around 81.4 million tonnes (a 3 per cent rise year on year) for 2012. Pork output will reach 51.3 million tonnes, poultry will be around 18.7 million tonnes, beef will be around 5.70 million tonnes (note: beef consumption continues to decline) and sheep meat will be around 4.88 million tonnes for next year. Government incentives and/or subsidies to farmers contribute the most for this increase. However, demand will create pork imports to increase by about 8 per cent to 480,000 tonnes next year (not including pork by-products but this is only pork meat).


For the first 9 months of this year, China imported 870,000 tons of pork and pork by-products—mainly offals. This represents an increase of 44.6 per cent from a year ago. Total imports for 2011 will slightly exceed 1 million tons which surpasses the previous high of 910,000 tons imported in 2008.


Tight supplies this past summer created a “whole” in which major exporters such as the USA, Canada and Denmark were able to provide. Denmark last year provided about 40 per cent of the total imports. However, this year and for the first 9 months, about 60 per cent of the imports have been supplied by the USA.


In early April, China authorized three Brazilian pork producers for the first time to export pork into China and Hong Kong. The Brazilian export association (Abipecs) considers the Chinese market could consume 200,000 tonnes/year. Well, it finally happened! On November 24th, 2011, the Marfrig Group sent the first shipment to China of hams, shoulders, bellies and necks to Shanghai. In January 2012, Aurora Cooperative projects that it will initiate a sale of 10,000 tonnes. Brazil usually exports about 50,000 tonnes/month and thus, the 10,000 tonnes along with a continuous demand by China, could be as much as 20 per cent of the total export potential from Brazil. (pork producers will be excited!!). This milestone export by Brazil (first time to export to China and Hong Kong) also creates an expectation that China would be Brazil’s second largest importer of pork in the next year.


Clenbuterol created a scandal on 15 March when China’s largest meat producer, Shuanghui (Shineway Meats) sold pork that contained clenbuterol. Products were quickly removed from supermarket shelves as consumers saw another food contamination scandal similar to the 2008 melamine scare in the milk from most of the major milk processors in China. From this scare, Shuanghui has claimed total losses approaching 20 billion RMB (US$3.05 billion). As an update, the Provincial Higher Peoples’ Court in Henan (where the clenbuterol issue surfaced), recently prosecuted 114 people of which 113 received convictions-mainly prison terms, but one person received the death penalty (with a 2 year reprieve) and one person received a lifetime sentence. Several government officials also received prison terms.


According to the Ministry of Agriculture, scaled pig production (greater than 500+ finishers per year) now accounts for 34 per cent of the total output of pig production in China.


Feed Industry Development Plan for the 12th Five Year Plan (2011-2015) out-lines a large increase in feed output, emphasizes quality and safety standards, encourages efficient use of feed ingredients, attempts to standardize industry practices and wants to "accelerate" consolidation. At the end of 2015, the Ministry of Agriculture expects that 168 million tonnes of compound feed and 26 million tonnes of concentrated feed will be produced by the feed industry.
With notes from: the pigsite.com, asian-agribiz.com, MOA, NBS, soozhu.com and various China Ministries.

Genesus Global Market Report
Prices for week of 21 November 2011
Country Domestic price
(own currency) US$
(per pound liveweight)
USA (Iowa-Minnesota) 81.71¢
US$/lb carcass 60.46¢
Canada (Ontario) 1.57
C$/kg carcass 55.55¢
Mexico (DF) 23.03
MXP/kg liveweight 73.63¢
Brazil (south region) 2.71
BRR/kg liveweight 66.51¢
Russia 88
RUB/kg liveweight $1.27
China 16.42
RMB/kg liveweight $1.16
Spain 1.18
€/kg liveweight 71.41¢

[Mustang Sally Farm]

Monday, November 28, 2011
TOPIGS Imports Top Genetics into China
CHINA - TOPIGS has successfully imported 1003 top breeding pigs to China. These animals originate from TOPIGS nucleus farms in Canada. The great grandparent pigs are the top of the TOPIGS breeding pyramid and have the highest SPF health status.
 

The imported pigs will be used to build up extra TOPIGS breeding capacity in China for the production of breeding pigs and they and their off spring will be distributed to clients around the country. In this way it is possible to comply to the growing demand of TOPIGS genetics in China were the robust and high productive genetics of TOPIGS are demanded more and more.

The imported breeding stock will be housed at the facilities of TOPIGS Huanshan. This is a joint venture company of TOPIGS and Huanshan Group. The farm of TOPIGS Huanshan is a modern farm with well equipped facilities. "This is an important step for pig breeding in China," says Jeffen Chen, manager of TOPIGS China. "With the imported breeding stock it is possible to provide fast growing professional pig industry with top shelf genetics, making it possible to produce at high level."

Huanshan is a corporation with permanent assets close to 10 million RMB, having 1800 staffs, a modern agricultural enterprise which has integrated businesses including feed production, husbandry and pigs slaughtering.

With a production of 1,100,000 crossbred gilts and 7 million doses of semen per year Dutch based TOPIGS is one of the biggest genetics suppliers in the world. In several countries, TOPIGS is either the market leader or one of the major suppliers. TOPIGS stands for progress in pigs. This means research, innovation and genetic improvement are the cornerstones of our company. By continuously improving our products, we enable our clients to achieve maximum results.

[Mustang Sally Farm]

Friday, December 09, 2011
Call for Tougher Measures on Food Safety
CHINA - Vice-Premier Li Keqiang has called for "more forceful measures" to deal with food safety problems and crack down on food safety crimes.


In a written instruction forwarded to a recent national meeting attended by officials in charge of food safety offices, Li pushed for practical efforts to ensure food safety in a bid to boost consumer confidence and promote social harmony.

In a separate written instruction, Vice-Premier Hui Liangyu urged authorities to "resolutely guard against major food safety incidents" and strengthen law enforcement and regular supervision.

Food safety has become one of the most troubling issues since various scandals, such as tainted infant formula and cooking oil collected from sewers, have been exposed by the media.

To address food safety issues, authorities have requested the death sentence be applied in the most serious food crimes.

In the latest scandal, Henan province penalized 113 people, including 77 government employees, over chemically-tainted pork that was reported in March.

[Mustang Sally Farm]

Thursday, December 15, 2011
IBM to Build Food-Safety System for Pork
CHINA - International Business Machines (IBM) Corp., the world’s largest computer-services company, won a contract to build a food-monitoring system in China as the nation toughens supervision of food safety after scandals.


The system for Shandong Commercial Group Co. will ensure the safety of pork products in the coastal province, Harriet Ip, a spokeswoman in Singapore for Armonk, New York-based IBM, said in an e-mail yesterday. Financial terms weren’t disclosed for the project, scheduled for completion in 2013, according to Bloomberg Businessweek.

The government in China, the world’s largest pork consumer, said this month it will revise laws to improve food safety after one person was sentenced to death and 77 others handed jail terms over meat harmed by an illegal additive. China has reported other food safety problems this year including toxic fish, tainted bean sprouts and Sichuan peppercorns dyed with a coloring agent.

"Food supply-chain management technology and services is a big market," IBM’s Ms Ip said in the e-mail. "Demand for food safety products in China is expected to increase 15 per cent per annum through 2013," when the market will reach 13 billion yuan ($2 billion), she said.

IBM said its project is part of a 195 million yuan cold- supply chain that Shandong province is building in line with China’s efforts to improve food safety. The contract forms a "very small portion" of the project, which will have full monitoring and tracing capabilities, from farms to warehouses and retailers, Ms Ip said.

Shandong Commercial has already tested IBM’s food- monitoring system at 6 slaughter houses, 6 warehouses and about 100 hypermarkets or supermarkets across the province, Ms Ip said.

Pork consumption in China may gain almost 10 per cent from last year to 57 million metric tons in 2015, Wang Yinji, deputy general manager at COFCO Ltd., the country’s largest grain trader, said last month.

State-owned Shandong Commercial’s main business interest is in retail, according to its website. The company also has operations in the pharmacy and real estate industries and employs more than 130,000 people, it said.

[Mustang Sally Farm]

Tuesday, December 20, 2011
Mouldy Corn Hit Tianli's Business in Q4
CHINA - Tianli expects 2011 revenue and net income in the range of US$28.5 to $29.5 million and $8.2 to $8.8 million, respectively. Its fourth-quarter results were impacted by contamination of the feed supply although the company says contaminated feed was quickly mitigated by its monitoring procedures.


Tianli Agritech, Inc., a leading producer of breeder hogs and market hogs based in Wuhan City, China, has provided financial and operational updates.

The company say that, based on sales to 15 December, management expects full year results as follows: revenue, US$28.5 to $29.5 million; net income, $8.2 to $8.8 million and earnings per share (EPS), $0.81 to $0.87.

Revenues include the sales of breeder hogs, meat hogs and sales from the Company's on-going retail operations in cooperation with An-Puluo Foods whereby the Company sells refrigerated pork products to 45 supermarkets in greater Wuhan, including Wal-Mart and other major retailers.

Hanying Li, Chairwoman and CEO of Tianli, commented: "We have seen our sales trend nicely throughout the year. A combination of higher hog prices and an increase in the number of Tianli breeders and market hogs sold have produced impressive year over year growth for our Company.

"Retail sales and profits have added to our revenue and earnings streams as anticipated and we expect this segment of our business to grow meaningfully in 2012 as we introduce our Black Hog meat into our sales channels. We are excited at our growth prospects in 2012 and producing continued returns to shareholders," she said.

Tianli expects to report its fourth quarter and full year 2011 results in March 2012. The Company will provide additional details regarding its operations and financial outlook in coordination with the Company's earnings release and conference call.

Business update
In late November, the Company and a number of other farms in greater Wuhan received a shipment of tainted corn feed containing a mycotoxin mould. A number of hogs that consumed this feed were infected with the mould, which caused porcine diarrhoea. Approximately 10,000 of Tianli's hogs, consisting of a mix of sows, feeder pigs and piglets, with the majority being piglets, exhibited signs of the infection. A number of the infected hogs were disposed of while others were treated and are recovering. All of the infected hogs have been removed from the general population of hogs and currently, there are no other hogs exhibiting similar symptoms. The Company continues monitoring and tracking the health of its hogs on a daily basis.

This was Tianli's first purchase of corn sourced from the centre of China and upon discovering the mould, the Company took immediate action to isolate and contain the impact. Historically, Tianli has relied upon corn from Northeast China for its corn feed and it will strictly enforce this policy for the foreseeable future.

Ms Li said: "We have taken all the steps necessary to eliminate the threat posed by this shipment of tainted corn. Our managers and staff are always on guard against infected feedstocks and other contaminants and we regularly inspect all shipments and take all necessary precautions to avoid damage from infected supplies.

"While we employ the highest health standards across our entire operations, it is impossible to prevent all contaminations. Because we constantly monitor the health of our animals we were able to quickly contain the effects of this incident. The additional costs and lost revenues from the infected hogs will have a short-term impact on our operations and our financials. However, we will quickly replace the lost hogs and return to full production levels," concluded Ms Li.

[Mustang Sally Farm]

Thursday, December 22, 2011
Taiwan Culls 1,000 Pigs in FMD Outbreak
TAIWAN - Taiwanese authorities said earlier today that they had slaughtered nearly 1,000 pigs following the island's worst outbreak of foot-and-mouth disease in more than 14 years.


The pigs were culled earlier this week at a farm in the southern city of Tainan after showing symptoms of the disease.

Altogether 983 out of the 2,667 pigs on the farm were culled and the rest were vaccinated, the Bureau of Animal and Plant Health Inspection and Quarantine said in a statement.

[Mustang Sally Farm]

Chinese Meat Industry & Economy Continue to Grow
ANALYSIS - Is the Chinese bubble about to burst? For some time now out of the BRIC countries - Brazil, Russia, India and China - China's growth rate has been not only one of the most rapid, but it has also been dragging the rest of the world economies along behind it - shining as a beacon to the faltering economies in Europe and the US, writes Editor in Chief, Chris Harris.

As the Chinese economy has been maintaining this rapid growth, so there has been a shift in the make up of the population. The shift has seen a growth in wealth and a growth in a middle class. The population has been moving to an urban way of living and out of the countryside.

The dynamic change in population and culture has also seen a change in eating habits. As with all populations where wealth grows, meat and protein diets start to replace cereals and crops.

Meat consumption in China reached around 59kg per head in 2010.

The International Monetary Fund forecasts that China's economy that spiked at over 14 per cent growth about four years ago, has now settled to a growth rate of about nine per cent.

The forecast for next year is that it will continue to grow at nine per cent, but according to Forbes, this does not take into account a potential collapse in the European economies.

"China's economic growth has been very good for quite some years," says Forbes. "The consensus forecast now is that 2012 growth will be right in line with the country's long-term growth potential of about nine per cent per year. However, there are five key issues to consider:

Inflation fighting
Housing bubble
Export markets
Cronyism
Value of the Yuan."
On the back of this potential growth, the meat processing market is also developing and growing. It is being spurred on by new technology and the population is also changing the way it is eating meat.

More and more consumption is in the form of processed and pre-cooked products.

As the economy is growing by nine per cent, so the meat industry is virtually keeping pace with it.

An IBIS World report, published this month forecasts that the industry will develop at a rate of 8.3 per cent a year, reaching $82.38 billion in 2016.

Revenue from the meat processing industry in China this year is expected to have risen by 13 per cent year on year to $55.24 billion. On average, since 2006 the industry has seen a 22.5 per cent rise in value.

However, imports are also an important part of the Chinese industry and the IBIS World report shows that they are expected to reach $2.59 billion this year.

A lot will depend on how and whether the Chinese government can keep a cap on inflation. The latest figures show that inflation was running at 4.2 per cent in November, down from a July figure of 6.5 per cent.

If inflation is kept in check and the economy continues to expand, meat consumption is expected to increase and the meat processing industr develop - albeit at a slower place than over the past decade.


Chris Harris, Editor-in-Chief

[Mustang Sally Farm]

Wednesday, December 28, 2011
China Bans Production and Sale of Ractopamine
CHINA - China's Ministry of Industry and Information Technology announced Friday, 23 December, that the country has banned the production and sale of ractopamine, a controversial feed additive used to promote lean meat growth in food animals.


The ban became effective on 5 December, according to a document posted on the ministry's website.

The order came after a major pork contamination scandal hit China this spring when the Shuanghui Group, China's largest meat-processing company, was found to be purchasing pigs that had been fed with adulterated pig feed, prompting a national crackdown on the use of what's called as "lean meat powder."

Yu Kangzhen, China's chief veterinary officer, said that "lean meat powder" includes around ten kinds of categories such as clenbuterol and ractopamine.

He said that US scholars first came to discover clenbuterol, a kind of poisonous feed additive, could boost output of animal's lean meat in the early 1980s. However, major markets, including the US and the EU, banned its use in late 1980s due to its dangerous side effects such as nausea, dizziness and headaches.

Later, US firms developed another kind of growth promoting chemical, ractopamine, which carries minor toxicity. Currently, ractopamine is still allowed to be used as a feed additive in only around 20 countries, such as the US, Canada, and Mexico.

The "lean meat powder" was first introduced to China in the early 1990s. It was not until 1998 that Chinese society started getting concerned over the chemical's toxic nature when the first human case of lung infection was reported in Guangdong province after consumption of pork contaminated with clenbuterol.

China later issued an order in 2002 to ban the use of "lean meat powders" including ractopamine, clenbuterol, and salbutamol in feed additives and drinking water for food animals.

[Mustang Sally Farm]

Friday, December 30, 2011
Pork Price Manipulation; Six Jailed for Tainted Pork
CHINA - A Chongqing Municipality court Wednesday sentenced a gangster death for killing a person in an attempt to manipulate pork price in the city markets.


The Fifth Intermediate People's Court of Chongqing sentenced Zhou Zhijian, a member of a gang which had gained huge profits from coercive trading and pork market monopoly, to death for murder.

The court also sentenced ringleader Zhou Zuyun death with a two-year reprieve after convicting him of racketeering, monopolizing the pork market, and organizing a price-fixing cartel with other gangs.

Another 16 gang members were given prison terms ranging from 16 months to 19 years.

The verdict said Zhou Zuyun and his gang reaped profits of over 119 million yuan ($18.8 million) from coercive trading, racketeering and illegally hiking the rents of the farm markets that they had monopolized since 2004.

Mr Zuyun's price-fixing cartel manipulated prices, sales and purchases, pushing up pork prices in Chongqing.

The gang disrupted the economic and social order by the use of force and threats, the verdict said.

Six butchers jailed over chemical-tainted pork
Six butchers in east China's Jiangsu Province have received jail terms ranging from three-and-a-half to four years over a chemical-tainted pork scandal reported in March, court authorities said Wednesday.

The six were convicted of harming public safety by producing and selling pork tainted with clenbuterol, a carcinogenic chemical added to pig feed to produce leaner pork, the provincial higher people's court said in a press release.

It said their jail terms were handed down by a local court in Nanjing on 13 December and the ruling went into effect as of Tuesday, as none of them had appealed within the given two weeks.

The court ruling also included fines ranging from 40,000 to 50,000 yuan (US$6,340 - US$7,925) each.

The six butchers, who worked at a Nanjing slaughter house, admitted they had bought live pigs from central Henan Province, slaughtered and sold the pork earlier this year, even though they knew the pork had been tainted by clenbuterol, the document said.

[Mustang Sally Farm]

Friday, January 06, 2012
China Hog Markets in January 2012
CHINA - Looking at the size of the breakdown of the inventory for November 2011-breeding stock was around 49.05 million and total on farm inventory was around 476.25 million (as compared to October 2011-breeding stock was around 48.80 million and total on farm inventory was around 475.16 million and to September at 48.1 million and total on farm inventory was about 465.57 million), writes Ron Lane, senior consultant for Genesus China.
 

This also shows growth since May 2011—breeding stock was around 47.1 million and total on farm inventory was about 453 million head). The 476.25 million head for November is up 2.82 per cent from last year while the November sow inventory is up 2.01 per cent from last year (year over year). A steady increase in sow inventory has occurred since March 2011.

For the week of 12 to 18 December, the national average market pig price was 16.39 RMB/kg ($ 2.59 US/kg) liveweight; the average piglet price was 27.42 RMB/kg ($ 4.34 US/kg) liveweight; the average corn price was 2.21 RMB/kg ($0.345 US/kg); the average soybean meal price was 3.21 RMB/kg ($0.508 US/kg); pig and corn ratio is 7.42:1 and the average pork price was 22.95 RMB/kg ($3.63US/kg). The average pork price is up 1.10 per cent from last week.

Profit margins continue to show good returns. Estimated profit margin for June 2011, was around 770 RMB/market pig -$119.10 US and was the peak price. Profit margin for August was estimated to be 721 RMB/market pig -$112.83 US. Profit margin for October was estimated to be 659 RMB/market pig -$103.62 US. Profit margin for November was estimated to be 447 RMB/market pig -$ 70.06 US. For December, the profit margin is estimated to be 520 RMB/market pig -$ 82.27 US.

Price Dec. 2011 Dec. 2010 % increase year-on-year
Pig price 17.03 RMB/kg ($2.69 US/kg) 13.32 RMB/kg ($2.11 US/kg) 27.9%
Pork price 26.76 RMB/kg ($4.23 US/kg) 21.2 RMB/kg ($3.35 US/kg) 26.2%
Piglet price 27.86 RMB/kg ($4.41 US/kg) 18.13 RMB/kg ($2.87 US/kg) 53.7%
Sow price 1,791 RMB/head ($283.34 US/head) 1430 RMB/head ($226.23 US/head 25.2%

Price /profit predictions for 2012 include: pig price of 16.6 RMB/kg liveweight ($ 2.60 US/kg liveweight); average price of corn at 2,500 RMB/tonne ($ 391.85 US/tonne); pig and corn ratio of 6.93: 1 and average profit of 350 RMB/market pig ($ 54.86 US/ market pig).

Short term scenario
Industry estimates that pig prices will not fall to much further for the next few months ( through Spring Festival (23 January 2012) and many predict that the price will stabilize to around 18 RMB/kg liveweight ($2.85 US/kg liveweight). There are several recent trends to support this optimism.

Tight supply as small backyard farmers exit from the market and farming in general and relocate to the large urban centres to work. (China Ministry of Agriculture just released the next 5 year plan for agriculture development-12th Five-year Plan (2011-2015). It is estimated that 40 million rural labourers will leave farm jobs during this five years—many of them were former backyard pig farmers).


Large farms are not able to keep up with the demand.


During the past year, a piglet diarrhea has caused high mortality (especially 10 day old pigs). Initially the disease was noted in the southern part of China. During December, 2010 to March 2011, the problem was prevalent. Many sows were rebred in the Spring of 2011. This has caused part of the decrease in the current price as the market pigs from the rebred sows are now coming to market (predicted large short-term slaughter). However, this increased supply may taper off over the next few months.


Because of the fear of the piglet diarrhea occurring again this December period, many farmers are selling their stock to avoid repeat losses.


Again, but more recently (July and August) in the North Central parts of China a similar problem has occurred as a wet July and August, lead to more farms having a high piglet death loss. This could cause lower pig supplies around the increased demand period just prior to Spring Festival (this could cause a spike in market pig prices).


The next month represents a "comparatively concentrated" holiday season starting with the Winter solstice (21 December), then Christmas (25 December), New Year (1 January) and the Chinese Lunar New Year ( 23 January). This puts pressure on supply.
What to watch for over the next few months!!!
In February, 2011, the pig and corn ratio was 7.12:1; was 7.07:1 for March and was 7.63:1 for May. In September, the ratio was 8.24:1 and in October, the ratio was lower to 7.45:1 per market pig. Now for November, 2011, a pig to corn ratio of 7.42:1 is shown. This is slightly lower than last month, but analyst believe that this ratio will be maintained at this level for the next while. A pig to corn ratio of 6:1 is considered to be break even. With continued Government incentives and "now reasonable profit margins", pig expansion in China will continue.


The Consumer Price Index (CPI) continues to be quite interesting for the National Government. Previously, when the pork prices were gaining, this rapid increase in pork, gained the attention of the National Government as it greatly affects the CPI. The CPI is made up of about 30 per cent food found in the consumers’ basket. Pork is estimated to be about 1/3 of the food portion of the basket or in other words, about 10 per cent of CPI as a whole. Just to sense the impact that pork has on the CPI, reports show that food prices increased by 13.4 per cent in September versus one year ago. This has an impact of 4.05 per cent points. At the same time, pork rose by 43.5 per cent and this affects the overall CPI at a level of 1.24 per cent points. Now with around a 15 per cent drop in pork prices since mid- September, the CPI is also decreasing. Currently, inflation is around 5.5 per cent for October, 2011. This is a drop from the high of 6.5 per cent in July, 6.2 per cent in August and 6.1 per cent in September. CPI for November was estimated to drop further to about 5.0 per cent. In reality, the measurement was 4.2 per cent. Food prices increased by 8.8 per cent in November compared with one year ago. Pork prices declined by 5.3 per cent from October 2011. "The pork I just bought cost 21 yuan ($3.30 US) a kilogram, a good deal less than the 30 yuan ($4.75 US) it cost about 4 months ago," said Yang Xia, a 62-year-old retired worker shopping in a Beijing supermarket.


Ministry of Agriculture said recently that total meat production for 2011 is expected to increase 0.3 per cent to 79.5 million tonnes (lower than last year's 3.6 per cent rise). Pork is almost two-thirds of China's total meat consumption. China produced 54.53 million tonnes of meat in the first nine months of the year, up 0.2 per cent (year over year). Pork production in the January-September period fell 0.6 per cent to 35.68 million tonnes.


Although China’s domestic supply of pork is showing growth, imports of pork are expected to rise by 8 per cent in 2012. This is mainly due to rising demand. An USDA report suggests that total meat production for China will be around 81.4 million tonnes (a 3 per cent rise year on year) for 2012. Pork output will reach 51.3 million tonnes, poultry will be around 18.7 million tonnes, beef will be around 5.70 million tonnes (note: beef consumption continues to decline) and sheep meat will be around 4.88 million tonnes for next year. Government incentives and/or subsidies to farmers contribute the most for this increase.


For the first 9 months of this year, China imported 870,000 tons of pork and pork by-products—mainly offals. This represents an increase of 44.6 per cent from a year ago. Total imports for 2011 will slightly exceed 1 million tonnes (could be between 1.1 and 1.4 tonnes) which surpasses the previous high of 910,000 tons imported in 2008. In September, import volume set a new record of 0.14 million tonnes. For 2012, China’s deficiency between pork supply and demand could be between 2 and 2.5 million tonnes (Rabobank report). Of this total, demand will cause pork meat imports to increase by about 8 per cent to 480,000 tonnes next year (not including pork by-products but this is only pork meat).


Sources fromChina’s Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) said that it had recently found Salmonella in some pig heads imported from Denmark. AQSIQ said it will destroy the contaminated pig heads. There have been a growing number of imports of unqualified pork variety meats during this time period.


In January 2012, Aurora Cooperative projects that it will initiate a sale of 10,000 tonnes of pork from Brazil. Brazil usually exports about 50,000 tonnes/month and thus, the 10,000 tonnes along with a continuous demand by China, could be as much as 20 per cent of the total export potential from Brazil. China would be Brazil’s second largest importer of pork in the next year.


China’s animal health industry is growing by an annual average of 25 per cent per year since 2005. In 2012, the industry will generate close to 40.2 billion RMB ($6.36 billion US). In the world, China is second to the USA for the production of animal health products. Growth will continue to rise as domestic livestock production increases and a national concern over the vaccination of such diseases as PRRS and Foot-and-Mouth, along with Swine and Avian influenza continues and mandatory vaccination is enforced.


The Delisi Group has introduced their latest creation in the cured meat production unit of their modern chilled pork and processed meat section in Shandong province. They have introduced a cured ham product called 'Paluosi'. "We expect the launch of our new product to be a good start for us to enter into the premium meat market," said Chairman, Zheng Heping. The cured ham is created using modern equipment from Italy. The ham is initially priced at 500 RMB/kg ($79.10 US/kg). This price is close to 20 per cent less than a similar imported product. Delisi Group will target high end hotels and foreign-invested supermarkets and is currently testing in markets in Beijing, Qingdao and Jinan.


According to the Ministry of Agriculture, scaled pig production (greater than 500+ finishers per year) now accounts for 34 per cent of the total output of pig production in China.
Genesus Global Market Report
Prices for week of 26 December 2011
Country Domestic price
(own currency) US$
(per pound liveweight)
USA (Iowa-Minnesota) 78.41¢
US$/lb carcass 58.02¢
Canada (Ontario) 1.51
C$/kg carcass 54.40¢
Mexico (DF) 26.28
MXP/kg liveweight 85.84¢
Brazil (south region) 2.78
BRR/kg liveweight 68.41¢
Russia 92
RUB/kg liveweight $1.31
China 17.10
RMB/kg liveweight $1.23
Spain 1.12
€/kg liveweight 66.60¢

[Mustang Sally Farm]

Tuesday, January 10, 2012
OIE: Further FMD Cases in China
CHINA - A new outbreak of Foot and Mouth Disease (FMD) has been reported to the OIE by Dr Zhang Zhongqui, Director General , China Animal Disease Control Centre.


The new outbreak was reported to the OIE on the 09/01/2012.

The new outbreak occured at Badong, Enshi, Hubei and affected swine only.

Of the 71 pigs susceptible, there were 24 cases reported. The outbreak resulted in all 71 pigs being destroyed.

The source of the outbreak is still unknown.

[Mustang Sally Farm]

Monday, January 16, 2012
Meat Safety Boosted for Spring Festival
CHINA - The government will redouble its efforts to weed out illegal meat processing in the coming months, especially during the Spring Festival, in the interest of food safety, officials said on Friday.


"The Spring Festival holiday (which begins on 23 January) usually sees increased meat consumption, but it is also a period of potential meat safety problems," Jiang Zengwei, vice-minister of commerce, said in a news conference held by six government departments including the Ministry of Commerce, the Ministry of Public Security and the Ministry of Agriculture.

The six departments began a 10-month campaign to crack down on illegal meat slaughtering and processing in October after the illegal pig feed additive clenbuterol was reportedly used by farmers in Henan province in March.

Mr Zengwei said that the authorities will increase their efforts to ensure meat safety during the Spring Festival because "meat is an essential part of people's diet, and meat safety is of great concern to the public."

Yu Kangzhen, chief veterinarian of the Ministry of Agriculture, said the slaughtering and processing are "the key to meat safety before it reaches consumers."

"The focus of the crackdown will lie on cleaning up illegal slaughterhouses and processors in rural and suburban areas, and areas with clusters of producers, where substandard meat, including water-injected meat and the meat of sick animals, is often found," Mr Zengwei said.

China has more than 18,000 slaughterhouses and processors, and the authorities will be stricter in examining and quarantining meat before it reaches the market, Jiang said.

The government will strictly regulate the approval of new slaughterhouses. Applications will be denied for companies that process fewer than 200,000 pigs or sheep, 50,000 cows or 20 million fowl annually, according to the 12th Five-Year Plan for the Food Industry, jointly published by the National Development and Reform Commission and the Ministry of Industry and Information Technology on Friday.

Meanwhile, large slaughterhouses and processing companies will be encouraged and 10 giant meat processing businesses with a market value higher than 10 billion yuan ($1.6 billion) will be built by 2015, under the plan.

Fu Shuangjian, vice-minister of the State Administration for Industry and Commerce, said the authority will improve the market access of meat suppliers while standardizing the qualification of processors.

The goal of weeding out illegal processing is to ensure that the meat supply in all cities comes from authorized processors by June 2012, and in all towns by the end of 2012, Mr Zengwei said.

Jiangsu province, where the pork additive scandal caused a sensation in March, has seized more than 6,400 kilograms of substandard pork since the campaign started in October, according to Sun Liancai, deputy head of the Jiangsu Administration for Industry and Commerce. In addition, the Guangxi Zhuang autonomous region seized more than 72,000 kg of problematic pork since July 2011, according to Xiong Jiajun, deputy head of the region's department of commerce.

The six government departments also encourage the public to report illegal meat producers to local or central supervising authorities through the telephone hotline: