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.

[Mustang Sally Farm]

Wild King: High-Welfare Pork from China
Thursday, August 09, 2012

 

Cross-breeding and a high welfare approach are providing a workable alternative to intensive pork production in China, according to a Model Farm Project by Farm Animal Initiative (FAI).

Intensive pork production in China is associated with a variety of problems.

“The main issues in terms of animal welfare are high stocking density, tail docking, tooth clipping and – for breeding pigs – confinement in farrowing pens or sow stalls,” explains Dr Ashleigh Bright of the Model Farm Project (MFP).
 
As well as affecting the animals concerned, these are a becoming a growing issue for those buying the pork.
 
“Poor animal welfare, use of antibiotics, contamination of feed and the environmental impact of animal waste are all of concern to consumers,” says Dr Bright. “Traceability is a big one, too.”
 



--------------------------------------------------------------------------------
*
 "I believe that good animal welfare and a happy, healthy environment will produce good pork."






--------------------------------------------------------------------------------



Consumer concern is just one reason why pork farmer Bob Wang of Wild Pork Kingdom has developed a higher welfare approach.
 
He said: “I believe that good animal welfare and a happy, healthy environment will produce good pork. If your environment has too much pressure and is overpopulated, it’s easy to be stressed. Like people, pigs will also be affected by stress in an overcrowded situation. It isn’t necessary to tooth clip or dock the tails of my pigs and I believe this is because they live in a stress-free environment.”
 



Table 1. Pork production at Wild Pork Kingdom – approach and benefits
 


Wild Pork Kingdom: the approach

Benefits
 


If it is sow’s first litter or sow is >50% wild blood, farrowing crate is used (L:1.82–2.08 metres, W:0.6 metres, H:0.83–1.04 metres). Experienced sows placed in pens (L:3.42 metres, W:1.84 metres, H:2.5 metres) with concrete floor and one to two inches of hay during winter.

Piglet mortality in first litters is reduced as sows are prevented from rolling onto piglets. Mr Wang is also looking at other ways to reduce piglet mortality.
 
Concrete floor helps sows keep cool in summer and sows can use hay to build nests and keep warm in winter when temperatures can reach -18°C.
 


Sow and piglets moved to seven- to eight-square metre pen with concrete floor, access to 14– to 16-square metre yard and one to two inches of hay during winter.

Piglets can access outdoor area and play with other piglets.
 


Piglets weaned at four to five weeks and moved to pens in groups of 20 to 40, remaining there for for weeks. Pens have concrete floor with one to two inches of hay. Piglets typically in outdoor yards (400 square metres per pen) during daytime with access to shade.
 
Sows moved to deep litter pens (L: 35 metres, W: 3.5 metres) or to around 32-square metre dry pens with access to outdoors.

Straw provides manipulable material and outdoor yard enables pigs to root in soil and create wallows.
 
Deep litter pits provide warmth and waste from the pits is given to neighbouring farmers to fertilise crops, in exchange for use of land and feed. Dry pens are cooler in summer.
 


At 15–20kg, piglets moved into grazing paddocks (800–2,000 square metres) with 80 pigs per paddock. Five grazing paddocks used in rotation. Pearle Kings remain here for four to five months and Wild Pearles for six to 10 months. Both finished at around 80kg.

One area rested while others used.
 


Pigs fed corn, wheat and alfalfa twice daily, quantities varied according to life stage. All feed grown on site or sourced from neighbouring farms. Vitamins, minerals and trace elements (selenium, zinc and copper) provided while sows feeding piglets. Water provided via farm’s 370-metre deep well.

Sows can chew and are therefore kept occupied. Sourcing locally reduces feed miles and means farmer and consumers know where and how feed was grown.
 

The Farm
 
Wild Pork Kingdom is an 8.3-hectare pork farm in Cangzhou City in Hebei Province, China, where Mr Wang has bred Beijing Black pigs (Wild Pearle) and Changbai Mountain and wild pig cross (Pearle King) sows since 2007.
 
The farm also grows alfalfa, planted four to five times per year and used as feed along with locally sourced corn and wheat, all grown without the use of pesticides, herbicides or chemical fertilizers.
 
Raised in this stress-free environment, pigs are healthier, with strong immune systems where antibiotics are only used therapeutically.
 
The Wild Pearle is classed as a ‘fat’ breed and the Pearle King is a ‘lean’ meat breed, so when the two are crossed, it gives us a good quality meat,” explains Mr Wang.
 
Hardiness is another big plus.

“Once Wild Pearle and Pearle King piglets reach 20–25kg, they are able to handle very cold temperatures – in winter, temperatures can reach -18 degrees,” explains Mr Wang. “No commercial pigs can handle this.”
 
Mr Wang uses an ‘open grazing’ approach, incorporating different types of pen suited to varying life stages. Deep litter pits are also integrated into the system.
 
The Results
 



--------------------------------------------------------------------------------
*
 "I also hope to sell direct to schools and to teach kids about animal welfare."
 



Bob Wang, Wild Pork Kingdom

--------------------------------------------------------------------------------


While there is no formal monitoring, Mr Wang has observed low levels of tail biting (see Table 2).
 
“There is absolutely no docking but there are always one or two naughty pigs in the paddock that will bite each other’s tails,” he says. “Only the piglets of the sows placed in birthing cages have their teeth clipped.”
 
Piglet mortality is higher than may be expected in a typical intensive system due to free farrowing, i.e. more piglets are getting crushed by the sow. This is an issue Mr Wang is working to address by selecting his replacement sows from mothers which do not crush their piglets and have piglets with a low mortality rate.
 
Mr Wang has also employed an on-farm veterinarian to assist with health planning for the production cycle.
 



Table 2. Outcome measures at Wild Pork Kingdom (annual averages)
 


Outcome measure

WPK data
 


% of animals tail docked

0%
 


% of tail biting incidents

~1%
 


% of animals tooth clipped

<10%
 


Mortality of pigs born alive

~15–20%
 


Adult mortality

~1–2%
 

A total of 12 staff currently work on the farm and are provided with free accommodation, meals, uniforms and education regarding animal welfare.
 
Mr Wang is pleased with the approach – and final product. “Anybody who tries my pork will say it is delicious,” he says.
 
Potential for Growth
 
Demand for pork is high and Mr Wang has plans for expansion. In 2012, he will finish around 1,000 pigs and began selling to a ‘high level’ supermarket in May.
 
But Mr Wang intends to build on this; he aims to be finishing up to 4,000 pigs in 2012 and up to 8,000 in 2013, selling direct to customers, agents and companies.
 
“I also hope to sell direct to schools and to teach kids about animal welfare,” says Mr Wang.
 
He plans to increase the number of grazing paddocks for piglets from five to 11, at 4,082 square metres each, with pigs kept at the same stocking density. The farm will trial birthing arks this spring, which allow the sows to perform more natural birthing behaviours such as nest-building and provide an enclosed sheltered space for farrowing.
 
Mr Wang also hopes to improve the slaughter process.

“According to Chinese law, we can’t kill pigs on our farm but transportation causes stress,” he explains. “So I hope we can work with organisations such as FAI and WSPA and research animal welfare issues at the slaughtering stage.”
 
August 2012

[Mustang Sally Farm]

Prices of Farm Produce Keep Rising
24 August 2012

CHINA - The prices of farm produce have risen for teh fifth consecutive week and price of materials for production have stabilised after falling for four months in a row, according to the Chinese Ministry fo Commerce.

The retail price of eggs rose by 1.3 per cent compared to the previous week, up by 2.9 per cent, 2.6 per cent and 1.5 per cent in Shenzhen, Guangzhou and Beijing respectively.
 
The price of pork rose by 0.6 per cent compared to the previous week but it is still down by 23.1 per cent year-on-year.
 
Pork prices in Chongqing, Beijing and Shanghai rose by 1.2 per cent, 0.8 per cent and 0.3 per cent respectively compared to the previous week.
 
The price of beef, lamb and chicken were up by 0.5 per cent, 0.1 per cent and 0.1 per cent respectively.

The price of rice and wheat flour saw a slightly change, with the prices of peanut oil, soybean oil and rice increasing by 0.3 per cent, 0.2 per cent and 0.2 per cent respectively.
 
Rapeseed oil remain unchanged, while the price of wheat flour dropped by 0.2 per cent.

Muggy and rainy weather has had a bad effect on growth and the storing of leafy vegetables. Fruit and vegetables are now in the slack season.

The wholesale prices of 18 vegetables in 36 medium-and-large sized cities rose by 2.2 per cent compared with that of the previous week, of which cabbage, tomato and eggplant were up by 12.3 per cent, 11.2 per cent and 8.5 per cent month-on-month.
 
The wholesale price of eight aquatic products were down by 1.2 per cent, of which silver carp, carp and small cutlass fish saw a decrease of 2.6 per cent, 1.6 per cent and 1.5 per cent.
 
The prices of energy resources were up by 0.1 per cent, of which crude oil increased by 2.1 per cent, with an accumulative increase of 9.9 per cent for five consecutive weeks. The price of coal remain unchanged, while coke dropped by 2.1 per cent.

The price of materials for light industry remained unchanged, of which the price of cotton rose by 0.1 per cent, while chemical fiber fell by 0.5 per cent.
 
The price of materials for agricultural production dropped by 0.2 per cent, because it is the low season for fertilizer, with reduced demand. The price of urea, superphosphate and ammonium bicarbonate decreased by 1.1 per cent, 0.9 per cent and 0.8 per cent respectively.

[Mustang Sally Farm]

China Hog Markets
06 September 2012

 

ANALYSIS - China: it is the pork powerhouse of the world with over 51 per cent of the world's population of pigs raised within China, writes Ron Lane, Senior Consultant for Genesus China.
 
Looking at the size of the breakdown of the inventory for July 2012-breeding stock was around 49.54 million and total on farm inventory was around 460.75 million (as compared to June 2012-breeding stock was around 49.54 million (flat with July, 2012) and total on farm inventory was around 462.14 million).

This is about equal with the reported numbers for July 2011. The 460.75 million head for July is up 2.50% from last year while the July sow inventory is up 4.10% from last year (year over year).

Sow inventory has been quite flat from January to July. The drop in on farm pig inventory from last month shows the effect that disease has had during the late fall and early winter on piglet numbers and thus on farm inventory.
 
The 2011 total farm inventory was up about 4.9% or over 22.5 million head versus 2010. For 2012, total farm inventory is projected to increase by 5 to 6%. In 2011, the average inventory for breeding stock was 49.29 million and total on farm inventory was 468 million.
 
Profit margins continue to show declining returns.
 
Current profit margins are showing ranges from breakeven to losses from 40 to 110 RMB/head (US$6.35/head to $17.46/head) in some major pork production regions of China. During the 3rd week of June, the estimated profit margin was RMB136/pig ($21.59). At the end of March, the profit margin was at RMB187/market pig ($29.68); down compared to late January at RMB600/market pig ($95.24). Estimated profit margin for June 2011 was around RMB770/market pig ($119.10) and was the peak price. Average profit for 2011 was estimated at RMB500/market pig ($79.37).
 



Price

August 28th 2012

August 28th 2011

% increase/decrease year-on-year
 


Pig price

14.19 RMB/kg ($2.25 US/kg)

19.34RMB/kg ($3.07 US/kg)

-26.6%
 


Pork price

22.23 RMB/kg ($3.53 US/kg)

30.33 RMB/kg ($4.81 US/kg)

-26.7%
 


Piglet price

26.61 RMB/kg ($ 4.22 US/kg)

44.87 RMB/kg ($7.12 US/kg)

-40.7%
 


Sow price

1,738 RMB/head ($275.87 US/head)

1,935 RMB/head ($307.21 US/head)

-10.2%
 

Price/profit predictions for 2012 include: pig price of RMB16.6/kg liveweight ($2.63); average price of corn at RMB2,500/tonne ($396.83/tonne); pig and corn ratio of 6.93:1 and average profit of RMB350/market pig ($55.56). What to watch for over the next few months!!!
 
The 2nd quarter (April 1st to June 30th, 2012) predicted a bottom in the price for this year for slaughter pigs with an average price hovering around RMB14/kg ($2.22). For the third quarter (July 1st to September 30th, 2012), the price was to remain flat with a marginal increase for September. Currently, the price as of September 2nd, 2012 was RMB14.06/kg ($2.23). This is on par with the predictions. August 28th 2012 compared to August 28th, 2011 is down 26.6%. Certainly, with the higher summer temperature (which normally decreases pork consumption) and with the summer being the traditional off-season for pork consumption and then combine this with the increase in pork imports, the price of live pigs could continue to remain low.
 
The National Development and Reform Commission (NDRC) has started a new round of frozen pork purchasing and storage on August 7th 2012. Details were just being issued, but it appears that NDRC wants to bring pork reserves to about 100,000 tonnes and also to stabilize the price. As mentioned before, the high summer temperatures that causes lower consumption of pork along with overproduction, keeps the market price low. By buying the pork, the NDRC hopes to stimulate some market pig price increases.
 
Last year, most of the market pig price increase occurred around Spring Festival-late January 2011. Piglet mortality from an epidemic diarrhea had reduced the numbers weaned and thus affected the number of pigs marketed. This year, there has been a recurrence of the diarrhea; however, this year, there has been a lower demand for pork and the imports of pork more than doubled. Thus the rebound in pork prices did not occur this year.
 
In September 2011 the pig to corn ratio was 8.24:1 and in November, 2011, a pig to corn ratio of 7.42:1 was shown. For January 2012, a 7.79:1 ratio was calculated. Currently for August 28th 2012, the pig and corn ratio is 5.77:1 (last week, it was only 5.61:1). A pig to corn ratio of 6:1 is considered to be break even (Currently, it has been about 20 weeks that the pig to corn ratio has been below what is considered the baseline for break-even).
 
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% food found in the consumers' basket. Pork is estimated to be about one-third of the food portion of the basket or in other words, about 10% of CPI as a whole.
 
Currently, inflation is around 1.8% for July as compared to June at 2.2%. June inflation was down from 3.0% for May (with July being the lowest level - 30-month low since February 2010). This is a drop from the high of 6.5% in July 2011 (37-month high). CPI for January was 4.5% and was 3.2% for February. Food prices increased by 2.4% in July compared with one year ago. Pork, China's staple meat source, has been declining in price and thus the decline in pork and fruit prices is offsetting the rise in vegetable prices. Meat and poultry again fell by 6.1%.

The impact of food price data affects the overall CPI level with a fall of 0.48%. Pork prices have fallen by 18.7% and this has affected the CPI at a level of 0.71% since the beginning of the year. Analysts expected that the years' average CPI will decline to 3.3% from 5.4% in 2011. Predictions for August and September could see a further drop in the CPI. (For the first 6 months of 2012, inflation has averaged 3.3%). This is lower than the 4% set by the National Government. This may give more space for the government ministries to readjust macro-economic policy.
 
The national average corn price for August 28th 2012 was RMB2.46/kg ($0.39), the national average wheat bran price was RMB1.89/kg ($0.30) and the national average soybean meal price was RMB4.30/kg ($0.683). National average feed costs were RMB3.22/kg ($0.511). This is up slightly from the week before - RMB3.21/kg ($0.510).
 
As of July 12th, 2012, China's output for summer grains (mainly wheat and early rice) had shown about 129.95 million metric tonnes of output. This is up 2.8% year on year. This surpassed the previous record set in 1997 of 127.68 million metric tonnes. Wheat production is the largest portion of the summer grains. There has been an increase of 3.34 million metric tonnes (increase of 3%) to a level of 114.3 million metric tonnes. With the record drought in the US (56 year old record), this small increase will not offset the demand for corn and soybeans (and meal) via imports and the rapid increase in the price of the imported ingredients.
 
As one interview with a farmer mentions: Head of the farm the Yuli Fang told reporters, "I purchase records, June 5, into soybean meal for 3390 yuan/ton (US$538.10/ton), to June 27 rose to 3640 yuan/ton ($577.78/ton), up more than 20 days 250 yuan/ton ($39.68). Then began skyrocketing, rose to 3760 yuan/ton ($596.83) on July 5, the latest price had risen to 4090 yuan/ton ($649.21), that is to say the last 20 days rose by 450 yuan/ton ($71.43).
 
Beijing Orient Agribusiness Consultant Co. predicts that the import of US pork will grow by 29% this year. Last year, there were 620,000 tons of pork imported into China and 480,000 tons came from US suppliers.

As well, the National Government will also release corn and rice from the state reserves to help to slow inflation and to reduce the need for imports. It is estimated that the state will release about two million tonnes in the next while. Furthermore, the USDA has increased the estimate for corn production in China to about 200 million tonnes (2.5% increase from last year). Because of the increase in corn crop plus the drought in the USA, estimated China corn imports for 2012 will decrease from five million tonnes to about two million tonnes.
 

[Mustang Sally Farm]

China: Hog Markets
02 November 2012

 

CHINA - China is the pork powerhouse of the world with over 51 per cent of the world’s population of pigs raised within China, writes Ron Lane, Senior consultant for Genesus in China.

Looking at the size of the breakdown of the inventory for August, 2012-breeding stock was around 49.74 million and total on farm inventory was around 464.90 million (as compared to July 2012-breeding stock was around 49.54 million and total on farm inventory was around 460.75 million).
 
The 464.90 million head for August is up 1.80 % from last year while the August sow inventory is up 3.10 % from last year (year over year). Sow inventory has been quite flat from January to July. The slight increase in on farm pig inventory from last month shows that the effect that disease has had during the late fall (2011) and early winter(2012) on piglet numbers is easing up and piglet survivability has improved. Thus on farm inventory is improving. For 2012, total farm inventory is projected to increase by 5 to 6%. In 2011, the average inventory for breeding stock was 49.29 million and total on farm inventory was 468 million.
 
Profit margins continue to show declining returns. Current profit margins are showing a profit of 22 RMB/head-$3.49 USD/head average (but there is a vast range from losses of 110 RMB/head-$ 17.46 USD/head in some major pork production regions. Many farmers are saying they “hover” at breakeven. Other farmers indicate some profits getting to 100+ RMB/head-$ 15.87+ USD/head). During the 3rd week of June, 2012, the estimated profit margin was 136 RMB/pig- $ 21.59 US/pig. At the end of March the profit margin was at 187 RMB/market pig-$29.68 US; down as compared to late January at 600 RMB/market pig-$ 95.24 US. Estimated profit margin for June, 2011, was around 770 RMB/market pig -$119.10 US and was the peak price. Average profit for 2011 was estimated at 500 RMB/market pig-$ 79.37 US.




Price /profit predictions for 2012 include: pig price of 16.6 RMB/kg liveweight ($ 2.63 US/kg liveweight); average price of corn at 2,500 RMB/tonne ($ 396.83 US/tonne); pig and corn ratio of 6.93: 1 and average profit of 350 RMB/market pig ($ 55.55 US/ market pig).

What to watch for over the next few months

 In September, 2011 the pig to corn ratio was 8.24:1 and in November, 2011, a pig to corn ratio of 7.42:1 was shown. For January, 2012, a 7.79:1 ratio was calculated. For the timeframe, from October 10th to October 17th, pig prices continued to fall, but the main wholesale market for corn prices dropped even more. Pig to grain price rebounded to 6.09:1, the fourth consecutive week to be above the universally recognized breakeven point of 6.00:1 or better). The National Development and Reform Commission announced on October 23rd , the October 17th nationwide pig gate price of 14.87 RMB per kilogram($ 2.36 USD/kg), 0.34% lower than October 10th price; corn wholesale prices over the same period fell by 1.61% to 2.44 RMB per kilogram($.387 USD/kg). Thus for this weekly period, the pig to gain price rebound by 1.16% to 6.09:1. Currently for October 23rd, 2012, the pig and corn ratio has risen further to be 6.26:1 (a year on year decrease of 18.4%).
 
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 30.49% 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 8 to10% of CPI as a whole. Thus, with these calculations in mind, the price of pork in the entire CPI weighs between 2.5% to 3%. This level is much larger than the world's major pork producing and consuming countries, such as Japan (0.66%factor), United States (0.34% factor) and in Germany (0.71% factor) on CPI.
 
Currently, inflation is around 1.9% for September as compared to July at 1.8% and August at 2.0% (with July being the lowest level-30 month low since February, 2010). This is a drop from the high of 6.5% in July, 2011 (37 month high). Recently food prices have decreased. Meat and poultry prices fell 6.0% in September. This affects the overall level of the CPI and it decreased by about 0.48 percent. As well, pork prices fell about 17.6% (year on year) and this causes the CPI to be down about 0.68 percentage points. Pork, China’s staple meat source has been declining in price and thus the decline in pork and fruit prices is offsetting the rise in vegetable prices. Analysts expected that the years’ average CPI will decline to 3.3% from 5.4% in 2011. (For the first 6 months of 2012, inflation has averaged 3.3%). This is lower than the 4% set by the National Government. This may give more space for the government ministries to readjust macro-economic policy. For the 4th quarter, Dr. Wang Yu Wen, from the Bank Financial Research Centre, suggests that the CPI year-on-year will be about 2.3% higher than the recently completed third quarter and for next year having a CPI that could be 3.5%.
 
The national average corn price for October 23rd, 2012 was 2.31 RMB/kg ($0.367US/kg), the national average wheat bran price was 1.79RMB/kg ($0.284US/kg) and the national average soybean meal price was 4.53 RMB/kg ($.719US/kg). National average feed costs were 3.23 RMB/kg ($0.513US/kg). The high and low price for corn and soybean meal can vary throughout different parts of China. For example, for the week of October 15th, the national average corn price was 2.388 RMB /kg-$.379 USD/kg (on October 14th it was 2.385RMB/kg-$.378 USD/kg, an increase of 0.14% for the 15th). Guizhou Province had the highest price at 2.650RMB/kg ($.421 USD/kg) and the lowest average price was in Henan, Gansu and Xinjiang Province with 2.100 RMB/kg ($.333 USD/kg). Furthermore, with soybean meal and using the same timeframe, October 15th, the national average soybean meal price was 4.219 RMB/kg-$.67 USD/kg (on October 14th, it was 4.222 RMB/kg-$.67 USD/kg, a decrease of 0.07%). Hunan Province had the highest price at 4.650 RMB/kg-$.738 USD/kg and the lowest average price was in Liaoning province at 4.055 RMB/kg-$.644USD/kg.
 
As recently reported in the China Daily, China’s soybean imports for August were down 1.45 million tonnes as compared to July, 2012 (August-4.42 million tonnes worth $ 2.73 billion USD as compared to July-5.87 million tonnes). According to data from General Administrations of Customs, soybean imports for the first 8 months of this year were 39.34 million tonnes (an increase of 17.4% year on year). These beans had a total import value of $22.3 billion USD (15.7% increase as compared to last year). This decline may continue as the tight supply from the USA and poor growing conditions in Russia and South America are causing price surges and reduced sources of soybeans.
 
Information from a report done by Dr. Wang YueWen from the Bank Financial Research Centre, indicates that due to rising labour costs and other production costs; the costs of commodities to be higher; plus the expectation for the economy to be better in 2013, he comments that the overall market pig price will be higher for 2013.
 
In the current 4th quarter, cooler weather usually means more consumption of pork. With the increase in on-farm pig numbers, the future pig price is difficult to predict (pig demand increased starting in August and September, but because of the improved pig breeding survival rate in the Spring , this has led to the supply of market pigs being larger. This oversupply relation will mean the pig prices will not likely change and also the future hog prices will continue to be weak.
 
Other analysts offer that the market pig prices can be quite mixed for the next while. Recently, hog prices were affected by the Golden Week and Mooncake Festival (7 day holiday in China). Before the holiday, merchants reserved in advance a large number of pigs and this pulled the hog prices upward. But after the holiday, demand declined and hog prices fell again. Again, hog prices/supplies can be affected by several factors in the 4th quarter. These include: early winter is the higher incidence of disease and some farmers will market at lighter weights to avoid losses from disease, and this in-turn drops the price and increases the supply. Cold stress can increase baby pig mortality and raise the incidences of baby pig diarrhea that also influences mortality and vitality. Feed issues such as moldy grains can cause more mating irregularity and more abortion losses leading to less supply. Imports from foreign countries, various levels of Government pig farming subsidies and whether the National Development and Reform Commission (NDRC) will purchase pork for frozen storage are all factors that can affect 4th quarter prices and supply. On top of this, around winter solstice, the Southern part of China begins to increase bacon production and this specialty can cause a sharp increase in demand and thus price (usually short term). This year, depending upon supply, the price may stay higher.
 
Since 2001, large specialized and/or commercial farms have been rapidly increasing in market pig production in contrast to the formerly largest production base from the backyard farms (backyard production has dropped from 74% of total hog production in 2001 down to 37% in 2011). From Rabobank International)
 
October 16th, 2012, the Commerce Department released September 2012 pig slaughtering data. In September 19.173 million hogs were slaughtered-an increase of 3.9% from last month and an increase of 11% over last year.
 
With notes from: the pigsite.com; China Daily, Asian-agribiz.com; MOA; NBS; soozhu.com and various Chinese Ministries.

[Mustang Sally Farm]

Genesus New China Contract
28 November 2012


Jim Long is President &
CEO of Genesus Genetics.

CHINA - Genesus continues to grow sales in China as its producers look to bring the latest genetic technology to their businesses and country, says Jim Long of Genesus.

Last week, Genesus signed a contract with Fujian Huatian Group a division of Fujian Xin Min Biotechnology Ltd. whose primary business is feed premix, creep feed and feed for pigs only.

 Fujian Huatian Group has new barns under construction by Big Dutchman with intended final production of 5,000 sows in nucleus, multiplication and commercial production. Fujian Huatian Groups sees a tremendous need for world class swine genetics for their feed customers and choose Genesus to meet these requirements.

 Genesus Genetics based in Canada is North Americas largest exporter of high health registered purebred pigs and registers more Purebreds than any company in the world. Mike Van Schepdael. Vice President Genesus “We appreciate the confidence Zhang Zaizhen, Chairman of Fujian Huatian Group and his team have in Genesus and look forward to a long and successful mutual cooperation.”

 


Author: Jim Long, President & CEO, Genesus Genetics

[Mustang Sally Farm]

China: Hog Markets
30 November 2012

 

CHINA - With over 51 per cent of the world's pig being raised in China that makes the Chinese are the pork powerhouse of the world and the breeding stock increased by over a million on last year, writes Ron Lane, Senior Consultant for Genesus China.

Looking at the size of the breakdown of the inventory for September, 2012-breeding stock was around 50.79 million and total on farm inventory was around 470.94 million (as compared to August 2012-breeding stock was around 49.74 million and total on farm inventory was around 464.90 million).

The 470.94 million head for September is up 1.50 per cent from last year while the September sow inventory is up 4.70 per cent from last year (year over year). Sow inventory had been quite flat from January to July. The larger increase in on farm pig inventory from last month shows that the effect that disease has had during the late fall (2011) and early winter(2012) on piglet numbers is easing up and piglet survivability has improved.

Sow inventory for September 2012 is the highest number for the month of September in four years. For 2012, total farm inventory is projected to increase by 5 to 6 per cent. In 2011, the average inventory for breeding stock was 49.29 million and total on farm inventory was 468 million.

 Profit margins continue to show declining returns. Current profit margins are showing a profit of 74 RMB/head-$11.86 USD/head average (but there is a vast range from losses of 200 RMB/head-$ 32.05 USD/head in some major pork production regions. Many farmers are saying they are below breakeven.

Other farmers indicate some profits getting to 100+ RMB/head-$ 16.02+ USD/head). During the 3rd week of June, 2012, the estimated profit margin was 136 RMB/pig- $ 21.79 US/pig.

At the end of March the profit margin was at 187 RMB/market pig-$29.97 US; down as compared to late January at 600 RMB/market pig-$ 96.15 USD. Estimated profit margin for June, 2011, was around 770 RMB/market pig -$123.40 USD and was the peak price. Average profit for 2011 was estimated at 500 RMB/market pig-$ 80.13 US.

 One farmer outlined his current loss figures to the Xiaoxiang Morning. Zhang Zhongping explained his loss position/calculations: "Six months ago, he purchased his 100 piglets for a purchase price of 400 RMB per pig ($ 64.10 USD/pig).

They consumed 800 pounds of feed (363kgs); feed prices rose to 1.8 RMB per jin (jin= 500 gms), thus feed is 3.6 RMB/kg-$0.577 USD/kg); total money spent on feed was 1,440 RMB ($ 230.77 USD). When he adds in other costs of production, the total cost per pig is 1,900 RMB ($ 304.49 USD/pig).

 Slaughter weight of the pigs was estimated to be 240 pounds (108.89 kgs). The market price is 7.12 RMB per hundred pounds of live pigs (45.37 kgs), each pig sells for only 1710 RMB ($ 274.04 USD/pig). Even without charging his labour, per pig loss of about 200 RMB ($ 32.05 USD)”.

Currently, piglet price has dropped in half since he bought his first group, but Zhang Zhongping is not sure he still can feed pigs for profit or if he wants to continue raising pigs.

Farms with large upfront investment can not change the farm use. The investment in specialized equipment and facilities can not be quickly changed from one enterprise to another. They can cut back some production. However, the small-scale pig farmers have been "voting with their feet". In the past two years, the "pig cycle" has shown more frequency. With every fluctuation there is more industry adjustment. A lot of small-scale pig farms have been closed or have quit. (Sina agriculture)



 Price /profit predictions for 2012 include: pig price of 16.6 RMB/kg liveweight ($ 2.66 USD/kg liveweight); average price of corn at 2,500 RMB/tonne ($ 400.64 USD/tonne); pig and corn ratio of 6.93: 1 and average profit of 350 RMB/market pig ($ 56.09 USD/ market pig).
 What to watch for over the next few months
 
In September, 2011 the pig to corn ratio was 8.24:1 and in November, 2011, a pig to corn ratio of 7.42:1 was shown. For January, 2012, a 7.79:1 ratio was calculated. For the timeframe of the week of November15th, 2012, pig prices rose slightly, but the main wholesale market for corn prices dropped even more.

Pig to grain price rebounded to 6.53:1 (an increase from last week —but down 10.3 per cent from one year ago) It has been several weeks now that the pig to grain ratio is above the universally recognized breakeven point of 6.00:1 or better).

 For the month of October, the price of live pigs nationwide had an average price of 14.85 RMB/kg ($2.38 USD/kg), down 0.3 per cent from September and a decrease of 21.6 per cent over the same period last year.

Live pig prices varied from provinces to provinces with 10 provinces showing price increases and 20 provinces showing falling prices. Northwest China had a higher average price of 16.02 RMB/kg ($2.57 USD/kg) whereas the Northeastern region had lower prices of 14.35 RMB/kg ($2.30 USD/kg). For the month of October, the price of pork nationwide had an average price of 23.92 RMB/kg ($ 3.83 USD/kg), up 0.5 per cnet over the previous month and a decrease of 19.7 per cent over the same period last year.

Pork prices varied from provinces to provinces with 20 provinces showing price increases and 10 provinces showing falling prices. Northwest China had a higher average price of pork of 25.46 RMB/kg ($ 4.08 USD/kg) and the Northeastern region had lower prices for pork of 22.80 RMB/kg ($ 3.65 USD/kg). For the month of October, the monthly average price for piglets was 27.72 RMB/kg ($4.44 USD/kg), down 3.8 per cent from the September average and down 22.7 per cent from last year-October 2011.

 For the month of September, the average national corn price was 2.51 RMB/kg ($0.40 USD/kg), down 2.3 per cent from last month and a year-on-year price increase of 2.4 per cent. The main production areas of the northeastern provinces showed an average corn price of 2.37 RMB/kg (0.38 USD/kg), down 0.8 per cent. from last month.

 Guangdong province had the highest average price of 2.70 RMB/kg ($0.43 USD/kg), with a 2.9 per cent decline from the previous month. As well, the average national soybean meal monthly price was 4.39 RMB/kg ($0.70 USD/kg), down 2.9 per cent , but with a huge year-on-year rise of 23.0 per cent. Market pigs feed averaged 3.28 RMB/kg ($0.53 USD/kg). For comparison, broiler feed was 3.36 RMB/kg ($0.54USD/kg) and for laying hens, it was 3.09 RMB/kg ($0.50 USD/kg).

 These prices are down: for pigs (0.3 per cent), for broilers (0.6 per cent) and for hens (0.3 per cent) However, average complete feed for pigs is up 7.5 per cent, for broilers, up 6.0 per cent and for layers up 6.2 per cent compared to last year. In the last six consecutive weeks, corn is down by 4.3 per cent and soybean meal is down 5.9 per cent.

 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 30.49 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 8 to10 per cent of CPI as a whole. Thus, with these calculations in mind, the price of pork in the entire CPI weighs between 2.5 per cent to 3 per cent. This level is much larger than the world's major pork producing and consuming countries, such as Japan (0.66 per centfactor), United States (0.34 per cent factor) and in Germany (0.71 per cent factor) on CPI.

 Currently, inflation is around 1.6 per cent for October as compared to August at 2.0 per cent and September at 1.8 per cent (with October being the lowest level-33 month low since February, 2010). This is a drop from the high of 6.5 per cent in July, 2011 (37 month high).

Analysts expected that the years’ average CPI will decline to 3.3 per cent from 5.4 per cent in 2011. (For the first 9 months of 2012, inflation has averaged 2.84 per cent).

This is lower than the 4 per cent set by the National Government. This may give more space for the government ministries to readjust macro-economic policy. For the 4th quarter, Dr. Wang Yu Wen, from the Bank Financial Research Centre, suggests that the CPI year-on-year will be about 2.3 per cent higher than the recently completed third quarter and for next year having a CPI that could be 3.5 per cent.

 The national average corn price for November 15th, 2012 was 2.24 RMB/kg ($0.359 USD/kg), the national average wheat bran price was 1.80RMB/kg ($0.288 USD/ kg) and the national average soybean meal price was 4.14 RMB/kg ($.663 USD/kg).

 National average feed costs were 3.14 RMB/kg ($0.503 USD/kg). For the first 9 months of 2012, livestock and poultry production was a total of 57.28 million tons, year-on-year growth of 5.0 per cent.

Pork production was 37.54 million tons (an increase of 5.2 per cent); the pig herd was calculated to be 468.22 million head (up 1.9 per cent from last year) and pig slaughter was 492,980,000 head (an increase of 5.1 per cent over the first 9 months of 2011.

 Mexico has started exporting pork to China, with an expected market value of over $35 million for this year.

 Since 2001, large specialized and/or commercial farms have been rapidly increasing in market pig production in contrast to the formerly largest production base from the backyard farms (backyard production has dropped from 74 per cent of total hog production in 2001 down to 37 per cent in 2011).From Rabobank International)

 China’s corn harvest reached a record for this year. In spite of a strong typhoon that hit major corn producing areas, the harvest increased by 3.6 per cent to 119.74 million tonnes. Geneva-based SG SA in their survey for Bloomsberg, checked with production in the seven major corn producing provinces in China.

 On hand inventory is at a nine year high. This higher new inventory is good news for Chinese users as imports from the USA is predicted to be 64 per cnent less for China this crop year.

[Mustang Sally Farm]

Market Opportunities Growing in China
11 December 2012


ANALYSIS - The development of pork production and the pig markets in Asia can be directly linked to the growth in size and wealth of the population, writes Chris Harris.

This growth in wealth in Asian countries with fast growing economies has led to a growth in disposable incomes and as pork is the meat of choice in Asia the growth in wealth has helped to expand the pig meat sector.
 
The growth in demand has generated an upsurge in production producing very attractive prices both in pig meat and feed.
 
This in turn offers major opportunities for companies from around the world to work and invest in the developing Asian region.
 
Last year, China's total output of meat was 79.57 million tonnes - an increase of 0.4 per cent year on year - and pork production was 50.53 million tonnes, accounting for 63.5 per cent of the total meat production.
 
The Chinese pig inventory was 467.67 million head - an increase of 0.7 per cent year on year.
 
At present China has a growth in its Gross Domestic Product of about 7.5 per cent - at a time when the developed western nations have been suffering recession.
 
Speaking at the recent EuroTier exhibition in Hanover, Germany, Dr Mike Varley from the Pig Technology Company said that the major setback to the growth in pig meat production in the Asian region in recent years had been the question of disease and pig health.
 
Foot and Mouth Disease has been seen in several countries including Taiwan and South Korea and a high strain of PRRS has also been a problem for many countries together with PCV-2 problems that are associated with high numbers of mortalities and loss of production.
 
The disease has largely spread from the small backyard operations that will vary in size from two to 50 sows.
 
Disease control is one of the most pressing problems in the Asia pig industries and some countries such as the Philippines have instituted a region by region slaughter policy for FMD and are starting to make inroad into eradicating the disease.
 
However, while the pig industry is growing in Asian countries, Dr Varley also warned that the decline in the UK pig herd and the pig sector which has its roots in the lack of an integrated production and supply chain can stand as a warning to the Asian industry.
 
"If you have an integrated supply chain, you get rid of unfair pricing," he said.
 
"Large producers will help to get rid of the distortion."
 
At present China consumes about 35kg of pig meat a year and the figure is rising and is expected to shoot up over the next two years. Pork consumption accounted for 64 per cent of total meat consumption in China in 2011.
 
The development of the Chinese pig industry which supplies half the world's pig can act as a model for other emerging Asian countries.
 
China is moving away from the back-yard production methods to large integrated businesses that are often linked to a feed company and in some cases also a processing company.
 
And for the Chinese producer in such large integrator operations the peak of profitability has seen them achieving $50 per pig. This has been a major attraction to outside investment.
 
Unlike the small operators, the integrators can control their businesses and the threat of disease much better because of the buildings systems and the ability to use antibiotics and control programmes.
 
The slack that is left as the back yard operators leave the industry, mainly during hard times when pig meat is not fetching high prices, is now being taken up by the integrators.
 
Dr Varley said that in 10 to 20 years' time, the Chinese farming community that is learning rapidly is likely to have established workable joint ventures with many European and North American companies that will be able to supply improved genetics nutrition programmes and technology for environmental management.
 
Dr Varley said that there will be a lot of changes to come but there will also be m any opportunities for European and US companies to invest.
 
The room for growth, investment and expansion in the Chinese pig meat industry has been echoed by the China Agriculture Animal Association.
 
Deputy Secretary General of the CAAA Gong Guifen said: "With the improvement of people's living standards and the increasing numbers of population, pork consumption in China is expected to keep a steady and sustained development.
 
"Thus, there is still room for pork production improvement in the next five years."






Chris Harris, Editor-in-Chief