China Hog Industry News

[Mustang Sally Farm]

China Reports Another FMD Outbreak in Pigs
19 December 2012

CHINA - The Chinese veterinary authorities have reported another outbreak of foot and mouth disease at a farm in Jiangsu.

The World Organisation for Animal Health (OIE) received Follow-up Report No. 4 on 17 December 2012. The affected population consists of pigs.
 
A total of 338 pigs showed signs of susceptibility, out of which 12 cases were identified. All 338 pigs were destroyed. No deaths were recorded.
 
The introduction of new live animals has been identified as the main cause of the outbreaks.
 
The OIE, in conjunction with the country's veterinary experts, have applied several measures to stamp out the disease.
 
Enzyme-linked immunosorbent assay (ELISA), polymerase chain reaction (PCR) and virus isolation tests were conducted at the Lanzhou Veterinary Research Institute, China's national laboratory, which all positively indicated the presence of FMD virus (serotype O).

[Mustang Sally Farm]

China Hog Markets
17 January 2013

 

CHINA - Looking at the size of the breakdown of the inventory for October, 2012-breeding stock was around 50.94 million and total on farm inventory was around 471.41 million (as compared to September 2012-breeding stock was around 50.79 million and total on farm inventory was around 470.94 million), writes Ron Lane, Senior Consultant for Genesus China.

For November 2012, the breakdown of the inventory for breeding stock was around 50.79 million (same as September 2012) and total on farm inventory was around 467.64 million. The 467.64 million head for November is down 0.2 per cent from last year while the November sow inventory is up 3.40 per cent from last year (year over year). For 2012, total farm inventory was projected to increase by 5 to 6 per cent but currently, it looks as if it will be flat. However sow inventory is up from last year. In 2011, the average inventory for breeding stock was 49.29 million and total on farm inventory was 468 million.
 
Profit margins are now showing positive returns. In November 2012, profit margins were showing a profit of 74 RMB/head-$11.90 USD/head average (but there was a vast range from losses of 200 RMB/head-$ 32.15 USD/head in some major pork production regions. At that time, many farmers were saying they were below breakeven. Other farmers indicated some profits getting to 100+ RMB/head-$ 16.08+ USD/head). Currently, profit margins have jumped. As of 9 January 2013, the profit margin was approaching 360 RMB/head-$57.88 USD/head marketed from a farrow to finish production unit. Just last week, the profit margin was estimated to be 254 RMB/head-$40.84 USD/head—up from 229 RMB /head-$36.82USD/head the week before. A major increase in only two weeks. At the end of March 2012 the profit margin was at 187 RMB/market pig-$30.06 US; down as compared to late January at 600 RMB/market pig-$ 96.45 USD. Average profit for 2011 was estimated at 500 RMB/ pig-$ 80.13 US.
 



Price

January 9th, 2013

January 9th, 2012

% increase/decrease year-on-year
 


Pig Price

17.53 RMB/kg ($2.82 USD/kg)

17.27 RMB/kg ($2.78 USD/kg)

+1.5%
 


Pork price

25.27 RMB/kg ($4.06 USD/kg)

27.20 RMB/kg ($4.37 USD/kg)

-7.1%
 


Piglet price

24.62 RMB/kg ($3.96 USD/kg)

28.49 RMB/kg ($4.58 USD/kg)

-13.6%
 


Sow price

1,703 RMB/head ($273.79 US/head)

1,815 RMB/head ($291.80 US/head)

-6.2%
 

What to watch for over the next few months!!!
 
This week, the pig to grain price ratio is 7.52:1; still about 4.6 per cent below last year levels. For January 2012, a 7.79:1 ratio was calculated. During the week of 15 November 2012, pig prices rose slightly and the main wholesale market for corn prices dropped even more and thus a pig to grain price was 6.53:1. Last week, the pig to grain price ratio was 7.23:1. It has been more than 12 consecutive weeks that the pig to grain ratio has been above the universally recognized breakeven point of 6.00:1 or better).
 
Last week, the average national corn price was 2.27 RMB/kg ($0.365 USD/kg), down 3.18 per cent from last year. The average national soybean meal price was 4.24 RMB/kg ($0.682 USD/kg), with a huge year-on-year rise of 32.09 per cent. The average national wheat bran price was 1.91 RMB/kg ($0.307 USD/kg) with an increase of 7.34 per cent from last year.
 
China, the world’s biggest importer of soybeans, boosted imports by 3.2 per cent in November as prices which dropped from a record high, spurred purchases. Shipments were 4.16 million metric tonnes, up from 4.03 million metric tonnes in October and compared to 5.7 million metric tonnes in November 2011. Imports in the first 11 months of 2012 rose 11.4 per cent to 52.5 million tonnes. China increased their imports of soybeans from Canada. From August to October 2012, China bought 538,000 tonnes of Canadian soybeans. In the 2011/2012 Canadian crop year, China only bought a total of 166,000 tonnes from Canada.
 
The Consumer Price Index (CPI) will become quite interesting for the National Government in the next few months. Rising food prices and especially increasing pork prices 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 to 10 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 was around 1.7 per cent for October; 2.0 per cent for November and is estimated to be 2.3 per cent for December (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). Food prices are on the rise. The National Ministry of Finance reports that agricultural wholesale prices went up 6 per cent in December compared to November. Part of this is due to the long, colder spell of weather and its effect on fruit and vegetable production and transportation and increases pork consumption; the expanded use of pork for sausage making in the South of China, plus the common increase in demand of all foods just prior to Spring Festival. Millions of migrant workers will return home for the holidays with extra cash to purchase quality foods, especially pork. This will keep the price of pork and thus pig prices up for the next month.
 
In 2013, China will increase the use of feed wheat by 6 per cent to about 12.4 million tonnes. Most of the feed wheat will come through imports. China produced 118.1 million tonnes of wheat in 2012 (projected 118.3 million tonnes for 2013). However, consumption is estimated to increase to 119.6 million tonnes for 2013 (up from 119.1 million tonnes in 2012). The Ministry of Finance on 1 January, announced that the tariff on imported wheat is now 1 per cent.
 
From a report by Research and Markets, China’s meat (and by-products) industry was valued at 56.43 billion USD in mid-December-an increase of 22.1 per cent year-on-year. Total meat production was 79.57 million tonnes and pork was 50.53 million tonnes (63.5 per cent of the total meat produced). The net import of meat products was 1.569 million tonnes-an increase of 33.59 per cent.
 
The National Government has recently announced measure to reduce costs in supply chains. One measure has the power and water costs in production being lowered. Another lowers the tariff on farm tools including such items as automatic feeding, mixing and distribution systems. Both measures will have an impact on large-scale pig farms production costs.
 



Genesus Global Market Report
Prices for the week of January 7, 2013
 


Country

Domestic price
(own currency)

US dollars
(Liveweight a lb)
 


USA (Iowa-Minnesota)

84.13 USD/lb carcass

62.26¢
 


Canada (Ontario)

1.50 CAD/kg carcass

55.21¢
 


Mexico (DF)

23.70 MXN/kg liveweight

84.92¢
 


Brazil (South Region)

3.38 BRL/kg liveweight

75.13¢
 


Russia

70 RUB/kg liveweight

$1.03
 


China

14 RMB/kg liveweight

$1.02
 


Spain

1.303 EUR/kg liveweight

77.17¢
 


Vietnam

39,000 VND/kg liveweight

85.01¢
 


South Korea

4,500 KRW/kg liveweight

$1.92

[Mustang Sally Farm]

China - Rearing 60% of the worlds pigs

21 Jan 2013


Following reforms to the market, China’s hog industry has developed rapidly, however, with social and economic transitions, China’s hog industry is facing challenges which might restrict long-term growth in production.

 

 

 

This paper analyzes the changes in regional scale, organization, input factors, and technological progress for China’s hog production over the last few decades.

 

 

 

The paper seeks to reveal the sources of hog production growth and provide some suggestions for future development of the hog industry. To achieve these aims, the paper uses stochastic frontier production functions and the Malmquist index to measure total factor productivity (TFP) in the hog industry and decompose TFP into technical efficiency; technological progress; scale efficiency; and allocative efficiency using data for 25 provinces from 1980 to 2008.

 

 

 

The results show firstly that; the TFP of hog production increased by 64.3% from 1980 to 2008, and allocative efficiency and scale efficiency improvements played a key role in this TFP growth. In contrast, technical efficiency and technical progress have changed little over this period.

 

 

 

Secondly, TFP’s contribution to output was 39.7%, it being less than that of factor inputs to output. Thirdly, the results suggest that the growth of China’s pork production depends mostly on the increase in the quantity of factor inputs, especially feed.

 

 

 

As a consequence, the key to ensuring long-term and stable development of China’s hog production would seem to involve focusing on enhancing total factor productivity and changing the pattern of production growth.




Highlights




 




► TFP growth has begun to play a more important role in hog production growth than factor inputs by the 2000s.




 




► TFP growth was mainly driven by scale efficiency and technological change in the new Millennium.




 




► The regional variations in TFP growth were mainly caused by scale efficiency and allocative efficiency.




 




► The output elasticity of feed inputs was larger than unity and rose strongly post 2000.




 

[Mustang Sally Farm]

China Seeks Extra Testing of US Pork for Feed Additive
21 February 2013

CHINA - China wants a third party to verify beginning 1 March that US pork shipped to the country is free of a feed additive used to promote lean muscle growth, a US Meat Export Federation (USMEF) spokesman told Reuters.

The step comes on the heels of Russia barring imports of US meat worth $550 million a year due to the same feed additive.
 
Officials from the China's quarantine bureau, which oversees the safety of food imports, declined to make immediate comment, while a spokesman said the country's commerce ministry was unaware of the move.
 
There was concern that China's requirement for third-party testing could hurt US pork exports to the Chinese mainland and Hong Kong, valued at $886 million last year.
 
"We have just been notified (by US suppliers) and are checking details with the quarantine authorities," said a trader with a large State-owned pork importer in China.
 
Beijing maintains that there are serious concerns about ractopamine, despite scientific evidence that it is safe. The United Nations has agreed on acceptable levels.
 
The quarantine bureau in May rejected a consignment of US pork after tests found traces of the drug.

[Mustang Sally Farm]

China: Hog Markets
07 March 2013
 

CHINA - Looking at the size of the breakdown of the inventory for October, 2012-breeding stock was around 50.94 million and total on farm inventory was around 471.41 million (as compared to September 2012-breeding stock was around 50.79 million and total on farm inventory was around 470.94 million), writes Ron Lane, Senior Consultant for Genesus China.

For November 2012, the breakdown of the inventory for breeding stock was around 50.79 million (same as September 2012) and total on farm inventory was around 467.64 million. The 467.64 million head for November is down 0.2 per cent from last year while the November sow inventory is up 3.40 per cent from last year (year over year). For 2012, total farm inventory was projected to increase by 5 to 6 per cent but currently, it looks as if it will be flat. However sow inventory is up from last year. In 2011, the average inventory for breeding stock was 49.29 million and total on farm inventory was 468 million.
 
Profit margins are now showing positive returns. In November 2012, profit margins were showing a profit of 74 RMB/head ($11.90 USD/head) average (but there was a vast range from losses of 200 RMB/head ($ 32.15 USD/head) in some major pork production regions. At that time, many farmers were saying they were below breakeven. Other farmers indicated some profits getting to 100+ RMB/head ($ 16.08+ USD/head)). Currently, profit margins have jumped. As of 9 January 2013, the profit margin was approaching 360 RMB/head ($57.88 USD/head) marketed from a farrow to finish production unit. Just last week, the profit margin was estimated to be 254 RMB/head ($40.84 USD/head)—up from 229 RMB /head ($36.82USD/head) the week before. A major increase in only two weeks. At the end of March 2012 the profit margin was at 187 RMB/market pig ($30.06 US); down as compared to late January at 600 RMB/market pig ($96.45 USD). Average profit for 2011 was estimated at 500 RMB/ pig ($80.13 US).
 



Price

9 January 2013

9 January 2012

% increase/decrease year-on-year

 

Pig price
 
17.53 RMB/kg ($2.82 USD/kg)
 
17.27RMB/kg ($2.78 USD/kg)
 
+1.5%
 


Pork price
 
25.27 RMB/kg ($4.06 USD/kg)
 
27.20 RMB/kg ($4.37 US/kg)
 
-7.1%
 


Piglet price
 
24.62 RMB/kg ($3.96 US/kg)
 
28.49 RMB/kg ($4.58 US/kg)
 
-13.6%
 


Sow price
 
1,703 RMB/head ($273.79 US/head)
 
1,815 RMB/head ($291.80 US/head)
 
-6.2%
 

What to watch for over the next few months!!!
 
This week, the pig to grain price ratio is 7.52:1; still about 4.6 per cent below last year levels. For January, 2012, a 7.79:1 ratio was calculated. During the week of 15 November 2012, pig prices rose slightly and the main wholesale market for corn prices dropped even more and thus a pig to grain price was 6.53:1. Last week, the pig to grain price ratio was 7.23:1. It has been more than 12 consecutive weeks that the pig to grain ratio has been above the universally recognized breakeven point of 6.00:1 or better).
 
With notes from: the pigsite.com; livestock.feedtrade.com.cn; China Daily; Asian-agribiz.com; MOA; NBS; soozhu.com and various Chinese Ministries.
 



Genesus Global Market Report
Prices for the week of February 25, 2013

 

Country

Domestic price
(own currency)

US dollars
(Liveweight a lb)

 

USA (Iowa-Minnesota)
 
76.82 USD/lb carcass
 
56.85¢
 


Canada (Ontario)
 
1.49 CAD/kg carcass
 
56.59¢
 


Mexico (DF)
 
19.10 MXN/kg liveweight
 
68.13¢
 


Brazil (South Region)
 
3.18 BRL/kg liveweight
 
72.89¢
 


Russia
 
72 RUB/kg liveweight
 
$1.06
 


China
 
15.84 RMB/kg liveweight
 
$1.15
 


Spain
 
1.374 EUR/kg liveweight
 
81.23¢
 


Vietnam
 
38,500 VND/kg liveweight
 
83.48¢
 


South Korea
 
2,840 KRW/kg liveweight
 
$1.19
 

[Mustang Sally Farm]

Number of pigs plucked from Shanghai river reaches 12,000


The number of dead pigs retrieved from waters in and near China's financial hub of Shanghai has reached 12,566.

Authorities in Shanghai plucked 611 dead pig carcasses Saturday from the Huangpu river, which provides drinking water to the city's 23 million residents. In total, 8,965 dead pigs have been found in the river since March 8.

The swollen and rotting pigs are largely believed to be from the upstream city of Jiaxing in neighboring Zhejiang province, but Zhao Shumei, a deputy mayor, said it was inconclusive to say all the pigs were from her city.

Jiaxing — where small hog farms are prevalent — reported Friday night that it had recovered 3,601 dead pigs from its streams, according to state media.


The head veterinarian for China's Agriculture Ministry, Yu Kangzhen, who has traveled to the region to investigate the deaths, told state media Saturday that there has been no major swine epidemic, but said some samples tested positive for the common porcine circovirus and the epidemic diarrhea virus.

Yu also said cold weather and fluctuating temperatures have caused a spike in deaths among baby pigs.

Villagers have told state media that pig dumping is on the rise following police campaigns against the illicit trade of pork products harvested from diseased pigs that were illegally sold, instead of being properly disposed.

In Shanghai, authorities have repeatedly assured residents that tap water is safe, but locals remain worried about water contamination.

In 2012, about 130,000 Jiaxing hog farmers raised more than 7 million pigs, according to state media.

[Mustang Sally Farm]

Genus PIC Gains Further Momentum in China
18 March 2013
 

CHINA - PIC, a division of Genus plc and the world’s leading swine genetics company, has taken another significant step to capture a major share of the demand for superior breeding stock driven by the continuing expansion of large scale farms in China.





Following PIC China’s recent announcements of its joint ventures with leading integrators, Besun and Shennong, to establish new Nucleus herds with combined capacity of over 5,000 sows, the company has reported the stocking of another new Nucleus facility in China. This was accomplished by the successful completion of an export of 1,196 great grandparents from North America to the central province of Shaanxi. The animals arrived in excellent condition at Xi'An (otherwise famous for the legions of the Terracotta Army) by chartered Boeing 747 on January 30 and were safely transferred to the purpose-built facility in Chunhua County.
 
The farm, PIC's seventh operational Nucleus in China, has been constructed to the company's latest specifications and is directly managed by PIC. It will serve as a Dam-line and Sire-line Nucleus, disseminating the newest advances in PIC's genetic technology throughout its China production network and producing grandparents and terminal boars for distribution to its growing customer base.
 
According to Nancy Jiang, General Manager of Genus China, “China is a specific target area of growth for Genus, in both pigs and dairy, and the stocking of the Shaanxi Nucleus is another important milestone on the strategic road map. This shipment underpins our plans on a number of fronts. Firstly, it is vital for us to continue to build capacity to meet current and forecast demand in the world’s largest pork market. Secondly, we can quickly transmit the benefits of the latest genotypes to our entire pyramid and to our partners and customers who are leading the industry's transition to large-scale farming. And lastly, but of equal importance, we have brought in some new lines that strengthen the platform for the development of products tailored to the market. It's really a great start to the New Year!"

[Mustang Sally Farm]

China: Hog Markets
25 April 2013
 

CHINA - 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 March, 2013-breeding stock was around 50.93 million and total on farm inventory was around 434.36 million (as compared to February 2013-breeding stock was around 51.19 million (March is an decrease of 0.5 per cent from February) and total on farm inventory was around 438.30 million (March is down 0.9 per cent from February).
 
For January, 2013, the breakdown of the inventory for breeding stock was around 51.30 million (flat with December, 2012) and total on farm inventory was around 446.79 million (down 3.2 per cent from December, 2012). The 434.36 million head for March is down 1.7 per cent from last year while the March sow inventory of 50.93 million is up 3.00 per cent from last year (year over year).
 
Since October, 2012, there has been about a 7.9 per cent drop in total on farm inventory ( October 2012-total on farm inventory of 471.41 million head versus March, 2013 total on farm inventory of 434.36 million head), yet the sow inventory has remained flat ( 50.94 million sows in October, 2012 versus 50.93 million in March 2013).
 
October 2012 born pigs should be coming to market! The question becomes why is there such a large drop of 37.05 million head for on farm inventory with the same number of sows? Some answers may lie in calculation errors for actual inventory, but the large difference is more likely caused by actual situations such as a large effect of some diseases (FMD, PRRS, PED and/or PCV2) or the replacement of backyard farms with modern farms has not improved overall pig performance. (Estimated annual market pig slaughter for 2012 is at 714.27 million head divided by about 50 million sows and we get about 14.29 pigs marketed/sow/year). Other reasons and analyses may enlighten the readers of this report.
 
Profit margins are now showing larger negative returns. At the end of March, the estimated national losses were around 260 RMB/market pig ($ 42.07 USD/market pig) (as compared to the end of February when losses ranged from 15 RMB/head ($ 2.43 USD/head) to 37 RMB/head ($ 5.99 USD/head). As of January 9th, 2013, the profit margin was approaching 360 RMB/head-$58.25 USD/head marketed from a farrow to finish production unit. At the end of March, 2012 the profit margin was at 187 RMB/market pig-$30.26 USD. Average profit for 2012 was estimated at 177 RMB/ pig-$ 28.64 US.
 


What to watch for over the next few months!
 
This week, the pig to grain price ratio is 5.24:1 as compared to last Global Market Report (March 3rd with a 5.97:1) and as compared to (January 13th), when the ratio was at 7.52:1. (This is a further drop in 1 week of 2.78 per cent from April 3rd pig to grain ratio) For January, 2012, a 7.79:1 ratio was calculated. From mid-November to mid-January, there was reasonable profitable returns and the ratio increased by a factor of 1 (6.53:1 versus 7.52:1). Since mid-January to current date, the pig to grain ratio has dropped from 7.52:1 to 5.24:1 (a ratio of 6.00:1 is considered breakeven), about a factor of 2.3. Thus, the current losses that are being seen in the industry.
 
Last week, the average national corn price was 2.27 RMB/kg ($0.367 USD/kg), the average national soybean meal price was 3.29 RMB/kg ($0.532 USD/kg) and the average national wheat bran price was 1.96 RMB/kg ($0.317 USD/kg). The retail price to farmers for soybean meal would be 4.27 RMB/kg ($ .691 USD/kg). The national average feed price for a market pig was 3.29 RMB/kg ($ 0.532 USD/kg). This is an increase of 7.2 per cent from last year.
 
The Consumer Price Index (CPI) is quite interesting for the National Government. Rising food prices and especially increasing pork prices 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 to 10 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 cent factor), United States (0.34 per cent factor) and in Germany (0.71 per cent factor) on CPI. Currently, inflation was around 2.0 per cent for January, 3.2 per cent for February (a 10 month high) and estimated to be around 2.5 per cent for March, 2013. Food prices gradually rose during January (increased by 2.9 per cent ) as the Spring Festival holiday brought on high demand. In February, food prices rose by 6 per cent . This affected about 1.98 percentage points on the CPI. Pork was further down in price in February and this reflects nearly 0.04 percentage points drop in the CPI.
 
Recently, on April 7th , as the pig prices continued to stay low, the National Government announced that they would purchase and store pork to help decrease supply and to stabilize the price of pork. More than 20 provinces are buying pork to be frozen to assist farmers in reducing the cost of production losses. After the start of the purchasing and storage activities, in most parts of the country, the market pig and pork prices has increased by the range of 0.2 to 0.4 RMB/kg ($ .03 to $.06 USD/kg).
 
Grain production for 2013 is on pace to set a record. This will be the 10th consecutive year of growth as the Government enhances technology and infrastructure to maintain the growth. China’s grain output for 2012 rose 3.2 per cent to 589.5 million tons. This was 18.3 million tons more than 2011. The problem of grain waste in transportation, consumption and storage will also be targeted. It is estimated that 200 billion RMB (about $32 billion USD) of grain is thrown away each year.
 
In mid-March, a total of more than 16,000 dead pigs were “fished-out” of the Huangpu River, one of the main sources of drinking water for the city of Shanghai. Many people have speculated to the cause of the high death loss. Disease is probably the reason, but both local and national levels of government have not reported the chief causes or sources. Speculation includes a play on insurance claims; porcine circovirus was detected in some of the carcasses; and that normal channels for disposing of dead pigs were full and these places were refusing truckloads. Ear tags traced some of the animals to upstream farms in Zheijiang province.
 
The US Grains Council has recently conducted a series of village level Chinese pig producer meetings. In most reports, the producers claim that they will have losses during the 2013 calendar year. Current cost of production is estimated 12.39 RMB/kg ($ 2.01 USD/kg); while the market pig fetches about 13.48 RMB/kg ($ 2.18 USD/kg).
 
The Shuanghui Group (Shineway products is common product name), one of the larger processing groups in China, plans to spend about 6 billion RMB (about 970 million USD) to construct new projects mainly in the North-east provinces (Heilongjiang, Jilin and Liaoning) and in Guangxi and Yunnan in the south region. The Chairman, Wan Long indicated that the Henan based company could slaughter 15.5 million market pigs this year (for a value of 62.5 billion RMB-10.1 billion USD) as compared to 10.3 million hogs in 2012.
 

[Mustang Sally Farm]

Pork Commentary: A China Visit
30 April 2013



Jim Long is President &
CEO of Genesus Genetics.


CHINA - This past week we were with Chinese pork Industry people. As China is a key export market for USA/Canada pork we believe the state of the Chinese Industry is quite important, writes Jim Long.

Some Observations
 •Although hog prices in China are around 98¢ USD liveweight a lb. (13.37 RMB/kg Liveweight) the average Chinese producer is currently averaging a loss per hog of about $40 per head.
 •The latest Chinese hog farm inventory indicates March was 434.36 million head, down from October 471.41 million head. Down 37.05 million head (Doesn’t that indicate China’s scale? The decrease of 37.05 million would be over half of the US Inventory.)
 •Why is China losing money with 98¢ USD liveweight? Corn is $8.00/bushel and the average produces is just over 17 hogs marketed/sow/year.
 •The inventory decrease in China is not only a result of financial losses leading to liquidation but diseases (Foot and Mouth, PRRS, PED and /or PCV2 etc.). China is a drug company’s dream market. Asian flu in China magnifies the protein supply challenge. Lots of diseases cutting supply.
 •China has increased Corn Production for ten consecutive years. The China Corn Crop should exceed 20 billion bushels in 2013. They need it too as increased meat protein demand from 1.3 plus billion people takes more and more feedstuffs.
 •The decrease of 27 million pigs in inventory over the last six months will certainly lead to higher China prices at some point when that happens we expect the scenario to enhance pork imports from USA/Canada. (Also 37 million less pigs eat much less corn).
 •The industry people from China we visited this past week reiterated the reality of ongoing new swine barn construction as China moves production rapidly from backyard to new farms. The challenge of the industry are many, such as: training pig people to work in the new barns, stocking new barns with already diseased pigs, finding barn locations that have a chance of being bio-secure.
 •Currently, there are many investor situations in China where people who have no knowledge of pig production invest in swine farms. We expect like the USA 15-20 years ago such investor structures will result in failure and a trail of tears for these amateur pig producers. As we all know pig production looks relatively easy on paper and MBA projections. The stark reality is execution is the key. This is a commodity and lack of productivity and cost control is a recipe for financial ruin.
 
Summary
 
China swine inventory has decreased, financial losses continue ($40/head). At some point China’s pork price will jump significantly pulling USA/Canada pork to fill the void, enhancing USA/Canada hog prices.
 
Other Observations
 •The USDA Pork Cut-out was 81.53 a couple weeks ago. At the end of last week it was over 87¢. A real increase and a reflection of demand relative to supply. We expect to see Pork Cut-outs to continue to improve as hog marketing’s decrease over the coming weeks with hog prices following higher.
 •The US hog price is currently about the same as last year. Last year lean hogs go to $1.00 lean a lb. in the summer. We expect the same in 2013.
 •US National lean carcass weights of 208.70 lbs. are about 2 lbs. lower that the same week a year ago. Reflects a very current market inventory.
 •The USDA is projecting increased pork production in 2013 compared to 2012. Year to date US pork production is actually down -1.1 per cent. We expect US pork production will not increase year over year and we actually expect a decline. The liquidation of sows in USA/Canada that started last July is about to come home to roost.
 
Conclusion
 
Producers have been losing money, continue to lose money. Many have lost faith that the industry will ever be good again. The reality is many are marooned in industry with no viable exit strategy.

 


Author: Jim Long, President & CEO, Genesus Genetics

[Mustang Sally Farm]

Ceva Signs JV with New Chinese Partner
19 July 2013
Ceva

FRANCE - Ceva Santé Animale, a global veterinary group based in Aquitaine, France (Libourne) and Sichuan Hengtong Animal Pharmacy Co., a veterinary company in Sichuan (Neijiang, China), have signed an international partnership agreement.

The new joint venture has been made to form Ceva Hengtong.

This new Franco-Chinese venture will offer a comprehensive range of pharmaceutical products and services to improve the production of swine and poultry in China.

[Mustang Sally Farm]

Switch to Pork Raises Price Fears
02 August 2013

HONG KONG - There are fears that markets will increase the price of pork as consumers turn to the meat instead of chicken amid worries about avian flu outbreaks.

Meat vendors say pork wholesale prices have surged to a six-month high of HK$1,570 per 100 catties as imports from the mainland have fallen.

The Standard reports that an alliance representing meat vendors has written to the government to demand closer supervision of suppliers Ng Fung Hong, Guangnan and Hong Kong Agriculture Special Zone Development.

They warn that consumers may end up having to pay more if the trend persists.

On average, the wholesale price of pork has gone up 18 per cent, from an average of HK$1,187 per 100 catties in March to an average of HK$1,401 per 100 catties last month. The wholesale price rose to HK$1,546 on Wednesday, 31 July.

However, Secretary for Food and Health Ko Wing-man said supply and the retail price of live pigs are similar to those of last year, and there is competition in the market because there are three suppliers.

Chan Chin-ming of the Hong Kong Live Pig and Meat Trade Workers' Union said more people are eating pork, fearing bird flu.

Mr Chin-ming said the supply of live pigs has fallen because the mainland has banned some substances used to feed pigs, so it takes longer to raise them. The hike in the yuan has also pushed up the wholesale price.

"Though there has been a steady price hike in the wholesale market, it does not affect the retail market due to the fierce competition between wet markets and supermarkets."

Hong Kong Pork Traders General Association chairman Hui Wai-kin said that over the past two weeks, the price of fresh pork in the mainland rose 11 per cent.

This had led to a nine to ten per cent price hike in the wholesale pork market.

Pork-stall owners said they did not increase the retail price despite the high wholesale price.

"I keep the same prices for pork as I don't want to put the burden on my loyal customers," said Shing Chung-ho, who owns a pork stall in Shau Kei Wan.

Another stall owner, surnamed Chong, said he will have to increase prices if the trend continues.

Customer Yvonne Fung Wai-ha said: "If the price of pork rises, it will be really hard on us as beef is even more expensive."

[Mustang Sally Farm]

China: Hog Markets
15 August 2013
Genesus - The first power in genetics

CHINA - Looking at the size of the breakdown of the inventory for June, 2013-breeding stock was around 50.68 million sows and total on farm inventory was around 442.60 million, writes Ron Lane, Senior Consultant for Genesus China.

This compares with breeding stock in May 2013 of around 50.73 million (June is flat with May-down 0.1 per cent). Total on-farm inventory was around 437.23 million, with June is up 1.0 per cent from May.

The 442.60 million head for June is down 0.3 per cent from last year while the June sow inventory of 50.68 million is up 1.40 per cent from last year (year over year). Since October 2012, there has been about a 6.1 per cent drop in total on farm inventory ( October 2012-total on farm inventory of 471.41 million head versus June 2013 total on farm inventory of 442.60 million head), yet the sow inventory has remained quite flat ( 50.94 million sows in October 2012 versus 50.68 million in June 2013).

Market pig slaughter for first 6 months of 2013 is 342.11 million head, an increase of 1.1 per cent as compared to first 6 months in 2012. The total for 2012 was 714.27 million head (Note: A more recent report indicated that the total volume of pigs raised and marketed in China during 2012 was 696.28 million. This represents about one half of the pigs marketed in the world, but it stills show poor reproductive performance—about 13.93 pigs marketed per sow per year.

For June 2013, the national average market price for live pigs was 14.10 RMB/kg ($2.30 US/kg-$1.04 US/lb.). This is an increase of 10.4 per cent over last month and a rise of 0.4 per cent from June 2012. The average price of live pigs was higher in the northwest region, at 14.75RMB/kg ($2.40 US/kg-$1.09 US/lb.) and the southern region was lower at 13.48 RMB/kg ($2.20 US/kg-$1.00 US/lb.).

The June monthly average price for pork was 22.81 RMB/kg ($3.72 US/kg-$1.69 US/lb.); up 6.2 per cent from last month and a rise of 0.1 per cent as compared to last year. The northwest regional average price for pork was higher at 24.36 RMB/kg ($3.97 US/kg-$1.80 US/lb.) while the southern region was lower, at 22.00 RMB/kg ($3.59 US/kg-$1.63 US/lb.). Monthly average price for piglets was 27.09 RMB/kg ($4.42US/kg-$2.00US/lb.); up 8.8 per cent from last month, but down 11.3 per cent from last year.

Since the end of January 2013 and for 15 consecutive weeks, the price of live pigs declined by 27.4 per cent. Then for seven weeks, since the 3rd week of May, the price has increased 13.4 per cent. Pork prices have, since the second week of February, dropped by 20.5 per cent for 14 consecutive weeks. Since the fourth week of May, the price has rebounded for six consecutive weeks by an increase of 8.3 per cent.

Profit margins are now showing marginal positive returns and are improving since our last report. At the end of June, the estimated losses from pig production were 26 RMB/market pig ($4.24 US/market pig). At the end of April, the estimated national losses were around 139 RMB/market pig ($22.66 USD/market pig) (as compared to the end of March when losses were 260 RMB/head ($42.39 USD/head). As of 9 January 2013, the profit margin was approaching 360 RMB/head-$58.70 USD/head marketed from a farrow to finish production unit. Average profit for 2012 was estimated at 177 RMB/ market pig-$ 28.86 US.

The national pig to grain ratio for June 2013 was 5.76:1 up 0.48 points from the monthly average for May 2013. On 23 May, the pig to grain price ratio was 5.44:1 as compared to 10 April 2013 with a 5.24:1; with 3 March with a 5.97:1 and as compared to January 13th, when the ratio was at 7.52:1. A ratio of 6.00:1 is considered breakeven). During the second week of July, the pig to grain ratio was 5.99:1-and thus breakeven.

Market pig prices have increased since 10 May, when the market price was 12.66RMB/kg ($ 2.06 US/kg-$0.94 US/lb.) to 10 July, when the price was 14.22 RMB/kg ($ 2.32 US/kg-$ 1.05US/lb.). This is an increase in market price of 12.08 per cent. Before that, the market pig price had continued to fall since the Spring Festival (early February). On 7 April, as the pig prices continued to stay low, the National Development and Reform Commission (NDRC) announced that they would purchase and store pork to help decrease supply and to stabilize the price of pork.

On 18 April 2013, the NDRC purchased 75,000 tons and the again on 9 May, they purchased 93,700 tons. The NDRC on 22 May, announced that national plans to control the market is gradually “emerging”, as the national hog prices have risen for 3 weeks and the downward trend has been curbed. (On 30 April, it was the lowest point in market pig prices since January 2011 and since Spring Festival in this year, the market price is down 18 per cent). Part of the NDRC plan includes an early warning of the market price of live pigs that will provide timely information to farmers so that they can adjust pig production during the cyclical price and production movements. As well, the NDRC will continue to purchase and store frozen pork into reserve to help control price fluctuations.

For the month of June, the national corn average price was 2.45 RMB/kg ($0.40 US/kg-$0.18 US/lb.), up 0.8 percent from last month and down 1.6 per cent from last year. The three main producing areas of the three northeastern provinces, had an average corn price 2.19 RMB/kg ($0.36 US/kg-$0.16US/lb.), up 1.9 percent from the previous month; Guangdong province had a high price of 2.62 RMB/kg ($0.432 US/kg-$0.19 US/lb.), unchanged from last month.

The national average price for soybean meal was 4.30 RMB/kg ($0.70US/kg-$0.32/lb.), up 2.4 percent from May and up 16.8 per cent compared to last year. The average price of finishing pig feed was 3.29 RMB/kg ($5.4US/kg-$0.24 US/lb.) an increase of 0.6 per cent since May and a year on year rise of 5.4 per cent. Current price for corn is about 2.36 RMB/kg ($0.38 US/kg-$0.17/lb.); wholesale soybean meal is about $3.27 RMB/kg ($ 0.53US/kg-$0.24US/lb.) and retail soybean meal is about 4.23 RMB/kg ($0.69US/kg-$0.31 US/lb.).

Pork is estimated to be about 1/3 of the food portion of the basket or in other words, about 8 to 10 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 was around 3.2 per cent for February (a 10-month high), 2.1 per cent for March, 2.4 per cent for April, 2.1 per cent for May and 2.7 per cent for June 2013. In June, pork prices increased by 4.6 per cent and this affected the CPI index by 0.13 per cent. In April and May, lower consumption was mainly due to the reaction and fear of dead pigs floating in the Huangpu River and due to the bird flu risk and its effect on all meat consumption. These factors had lowered the CPI.

The summer report for grain harvest is reported to be 131.89 million tons, 1.96 million tons more than last year (an increase of 1.5 per cent). Summer rapeseed production is 13.48 million tons, 450,000 tons more than last year (an increase of 3.4 per cent).

For the first one half of 2013, the total meat production for pigs, sheep and poultry production was 39.16 million tons (down 0.2 per cent as compared to 2012). Total pork production was 26.14 million tons (up 1.0 per cent from the same time period in 2012).

Also, in 2012, China imported about 522,000 tonnes of pork (an increase of 11.7 per cent from 2011). The value of this pork was 980 million USD (an increase of 15.7 per cent compared to the value in 2011 and with an average price of $1,877.40 USD/tonne-up 3.6 per cent from last year). The EU shipped 269,000 tonnes (51.4 per cent of the total volumne); the US shipped 187,000 tonnes (down 26.1 per cent from 2011) and Canada shipped 53,000 tonnes (up 7.5 per cent from 2011).

AgFeed USA, part of the holdings of AgFeed Industries of China, has filed for Chapter 11 bankruptcy protection. Maschoffs, a family owned pork production operation with more than 230,000 sows, is planning to purchase most of the US assets for 79 million. AgFeed also plans to sell their holdings remaining in the US plus those found in China (not part of the bankruptcy). AgFeed ran into difficulty as a result of a dispute when it ended a supply contract with Hormel Foods, Inc. (Arbitration award against AgFeed for 7.9 million USD).



Genesus Global Market Report
Prices for the week of 5 August 2013


Country

Domestic price
(own currency)

US dollars
(Liveweight a lb)

USA (Iowa-Minnesota) 99.75 USD/lb carcass 73.82¢
Canada (Ontario) 190.26 CAD/kg carcass 66.87¢
Mexico (DF) 24.17 MXN/kg liveweight 86.17¢
Brazil (South Region) 2.94 BRL/kg liveweight 57.65¢
Russia 74 RUB/kg liveweight $1.02
China 15.46 RMB/kg liveweight $1.15
Spain 1.49 EUR/kg liveweight 89.32¢
Viet Nam 42,500 VND/kg liveweight 91.50¢
South Korea 3,747 KRW/kg liveweight $1.52

[Mustang Sally Farm]

China: Hog Markets
03 October 2013
Genesus - The first power in genetics

CHINA - Looking at the size of the breakdown of the inventory for August 2013, breeding stock was around 50.73 million sows and total on farm inventory was around 451.94 million (as compared to July 2013-breeding stock was around 50.58 million and total on farm inventory was around 447.91 million (August is up 0.9 per cent from July, writes Ron Lane, Senior Consultant for Genesus China.

The 451.94 million head for August is up 0.5 per cent from last year while the August sow inventory of 50.73 million is up 0.90 per cent from last year (year over year). Although the sow number is stable (up 0.3 per cent from July but July was down 0.2 per cent from June, 2013), the actual farm inventory is not increasing through improved management. Some answers may lie in calculation errors for actual inventory, but the large difference is more likely caused by actual situations such as a large effect of some diseases (FMD, PRRS, PED and/or PCV2) or the replacement of backyard farms with modern farms has not improved overall pig performance. (Estimated annual market pig slaughter for 2012 is at 714.27 million head divided by about 50 million sows and we get about 14.29 pigs marketed/sow/year). Not very good reproductive, weaning and marketing performance. Other reasons and analyses may enlighten the readers of this report.

Profit margins are now showing positive returns. Recently, it was reported that profits for a farrow to finish operation was in the range from 71 RMB to 117 RMB/market pig ($ 11.60 USD to $19.12 USD/market pig). At the end of April, the estimated national losses were around 139 RMB/market pig ($ 22.72 USD/market pig) (as compared to the end of March when losses were 260 RMB/head ($ 42.49 USD/head). As of January 9th, 2013, the profit margin was approaching 360 RMB/head-$58.84 USD/head marketed from a farrow to finish production unit. Average profit for 2012 was estimated at 177 RMB/ pig-$ 28.93 USD/market pig.



What to watch for over the next few months!

At the end of September, the pig to grain price ratio was 6.53:1. This compares to the June monthly average of 5.76:1 and to the May monthly average of 5.28:1. (Other dates for comparison were: for 10 April, 2013 with a 5.24:1 and with 3 March with a 5.97:1 as compared to 13 January, when the ratio was at 7.52:1). From mid-November (2012) to mid-January (2013), there was reasonable profitable returns and the ratio increased by a factor of 1 (6.53:1 versus 7.52:1). Only in the past few months has the ratio of 6.00:1 considered breakeven been surpassed.

On 30 September, the average national corn price was 2.35 RMB/kg or $0.38 US/kg or 0.17US/lb. and the average national wheat bran price was 2.01RMB/kg or $0.33 US/kg or $0.15US/lb. The retail price to farmers for soybean meal would be 4.50 RMB/kg or $0.74 US/kg or $0.33US/lb. The national average feed price for a market pig was 3.31 RMB/kg ($ 0.54US/kg or $ 0.25 US/lb.).

The Consumer Price Index (CPI) is quite interesting for the National Government. Rising food prices and especially increasing pork prices 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 to 10 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. CPI for China in July was 2.7 per cent and was 2.6 per cent in August.

China’s summer grain output has been estimated to be 131.89 million tons (1.96 million tons more than last year, an increase of 1.5 per cent). Summer rapeseed production was 13.48 million tons, 450,000 tons more than last year with an increase of 3.4 per cent over last year.

In the first half of 2013; pigs, sheep and poultry production yielded 39.16 million tons of meat, down 0.2 per cent from last year. Pork counted for 26.14 million tons of meat produced (an increase of 1.0 per cent and 66.75 per cent of the total supply). Total market pig slaughtered is about 342,110,000, an increase of 1.1 per cent from last year. It is estimated that in the third quarter, the national pig slaughter reached 173 million head, an increase of 0.6 per cent from last year. With this estimate, total pig slaughter for the first 9 months of 2013, would be around 515 million head.

In early September, the large private feed mills had used up their annual import permits for feed corn (2.88 million tonnes corn import quotas) and are now switching to US sorghum as an alternative. The current demand for US sorghum is pushing the prices to about 122.37 RMB ($ 20.00USD)/tonne higher than US corn prices. Currently, the Chinese feed mills have purchased about 800,000 tonnes of sorghum during the 2013/2014 crop year with a further estimate of a total of 1 million tonnes of sorghum being purchased and shipped from the USA during the next crop year.

Shuanghui International Holdings has become the world's largest pork supplier. Shuanghui will invest $ 4.7 USD billion in cash and with the assumption of Smithfield’s $ 2.4 USD billion debt load, the acquisition is worth a total of $ 7.1 billion USD. Reports indicate that Shuanghui International Holdings has plans to list the combined company in Hong Kong. It is speculated that a Hong Kong IPO, valued at around $4 billion, would allow the merged group to trade in a market that would place a higher valuation on the stock (Shuanghui is mainly listed on the Shenzhen exchange). Shuanghui could use the IPO to pay down its’ own debt.

The Henan Bureau of Statistics (Henan is a large pig production province in China) released a report that, during the first half of the current year, the Province had 42.094 million pigs on farm and that 30.299 million pigs had been slaughtered by June 30th. Interesting notes from their survey indicate that during the first half of 2013 and for the province's growing pig sold by large scale farms (about 50Kgs (110 lbs.), the selling price for this type of pig was 658.26 RMB ($ 107.58 USD), representing a decrease of 65.68 RMB ($10.73 USD), a decrease of 9.07 per cent from last year. The total cost of pig production to produce a market pig (about 100kgs.-220.4lbs.) that includes feed, services costs, labor and land costs compared to last year has significantly increased. Large scale farms show a total cost per head of 1605.03 RMB ($ 262.32 USD), up 72.33 RMB ($11.82 USD) more than last year, an increase of 4.72 per cent. (A county indicated some interesting cost changes from 2012. For example: the newborn animal feed cost was 611.89 RMB ($ 100.00USD- an increase of 76.7 per cent); electricity and coal (for heating) costs increased - resulting in increased fuel and power costs of 24.54 per cent); labor costs per pig increased to 105.22 RMB ($ 17.20USD/pig marketed, an increase of 4.87 per cent. During the first half of 2013, the daily wages of pig farm workers averaged 72.17 RMB ($ 11.80 USD), up 13.08 percent. In addition, the land lease prices show rising land costs of about 2.44 RMB ($0.40 USD), an increase of 39.43 per cent.

With notes from: the feedtrade.com.cn; China Daily; Asian-agribiz.com; MOA; NBS; Bloomberg; soozhu.com and various Chinese Ministries.



Genesus Global Market Report
Prices for the week of September 23, 2013


Country

Domestic price
(own currency)

US dollars
(Liveweight a lb)

USA (Iowa-Minnesota) 89.8 USD/lb carcass 66.45¢
Canada (Ontario) 181.84 CAD/kg carcass 61.48¢
Mexico (DF) 22.97 MXN/kg liveweight 79.14¢
Brazil (South Region) 3.6 BRL/kg liveweight 73.42¢
Russia 77 RUB/kg liveweight $1.08
China 15.99 RMB/kg liveweight $1.19
Spain 1.432 EUR/kg liveweight 87.85¢
Viet Nam 44000 VND/kg liveweight 94.65¢

[Mustang Sally Farm]

China: Hog Markets
21 November 2013
Genesus - The first power in genetics

CHINA - Looking at the size of the breakdown of the inventory for September, 2013-breeding stock was around 50.68 million sows and total on farm inventory was around 455.10 million (as compared to August 2013-breeding stock was around 50.73 million and total on farm inventory was around 451.94 million, writes Ron Lane, Senior Consultant for Genesus China.

The 455.10 million head for September is down 0.2 per cent from last year while the September sow inventory of 50.68 million is down 1.0 per cent from last year (year over year).

Profit margins are now showing positive returns. Recently, it was reported that profits for a farrow to finish operation was in the range from 73 RMB to 126 RMB/market pig ($ 11.98 USD to $20.68 USD/market pig).

At the end of April, the estimated national losses were around 139 RMB/market pig ($ 22.81 USD/market pig) (as compared to the end of March when losses were 260 RMB/head ($ 42.68 USD/head).

Average profit for 2012 was estimated at 177 RMB/ pig-$ 29.06 USD/market pig.



What to watch for over the next few months

At the end of October, the pig to grain price ratio was 6.59:1. This compares to the end of September pig to grain price ratio of 6.53:1; June monthly average of 5.76:1 and to the May monthly average of 5.28:1.

(Other dates for comparison were: for April 10th, 2013 - 5.24:1 and with 3 March  - 5.97:1 as compared to 13 January, when the ratio was at 7.52:1).

Only in the past few months has the ratio of 6.00:1 considered breakeven been surpassed.

On 29 October, the average national corn price was 2.27 RMB/kg or $0.37 US/kg or 0.17US/lb. and the average national wheat bran price was 1.99RMB/kg or $0.33 US/kg or $0.15US/lb.

The retail price to farmers for soybean meal would be 4.58 RMB/kg or $0.75 US/kg or $0.34US/lb.

The national average feed price for a market pig was 3.22 RMB/kg ($ 0.53US/kg or $ 0.24 US/lb.).

China’s corn production for this year will be about 210 million tonnes (China is number 2 in the world corn production behind the USA).

However, again, China will have to increase their imports for this crop year. In the 2012/13 crop year, China imported about 3 million tonnes of corn.

The Rabobank suggests that China will need 7 to 8 million tonnes this year. Already, China has agreed to import corn from Brazil. Argentina shipped corn to China in August.



Genesus Global Market Report
Prices for the week of November 11, 2013


Country

Domestic price
(own currency)

US dollars
(Liveweight a lb)

USA (Iowa-Minnesota) 79.53 USD/lb carcass 58.85¢
Canada (Ontario) 160.97 CAD/kg carcass 55.94¢
Mexico (DF) 23.4 MXN/kg liveweight 82.02¢
Brazil (South Region) 3.76 BRL/kg liveweight 75.14¢
Russia 77 RUB/kg liveweight $1.06
China 15.97 RMB/kg liveweight $1.19
Spain 1.29 EUR/kg liveweight 79.23¢
Viet Nam 43,000 VND/kg liveweight 92.48¢
South Korea 4,213 KRW/kg liveweight $1.81

[Mustang Sally Farm]

Pig Semen Deal with China Could Be Worth £45M to UK Firms05 December 2013 UK & CHINA - Britain has secured agreement from China to supply exports of pig semen for breeders, in a deal that could be worth as much as UK£45 million to the UK industry. Agreement is also being sought to export pigs' trotters from the UK to China.The deal, sealed during Prime Minister David Cameron's three-day visit to China at the head of a trade delegation, follows a similar agreement last year on the export of live pigs. The industry has been lobbying for the inclusion of semen on the grounds that the Chinese pork producers they deal with prefer to source it from the same country where they obtain sows for breeding. Four artificial insemination centres operated by some of the world's biggest pig breeding companies in England and Northern Ireland are expected to start exporting fresh and frozen semen early in the new year. Half the world's pigs are in China, and improving pig genetics is key to China as pig meat is one of their main sources of protein. China wants to increase the efficiency of its production, whilst minimising the environmental impact. It is hoped that the UK industry can play an important role in helping China achieve greater efficiency through the provision of high quality genetic stock. Britain is lobbying Beijing to also be allowed to export pig trotters, which are a waste product in the UK pork industry but are widely eaten by Chinese diners. Exports of trotters could be worth as much as £7.5 million a year to the industry in Britain. A Downing Street spokesman said: "We're doing all we can to ensure that businesses up and down the country reap the rewards from our relationship with China. And that includes our pig farmers. "This new deal to export pig semen will be worth £45 million to UK firms and means Britain's best pigs will help sustain the largest pig population in the world. "And we're not stopping there - we're talking to the Chinese about serving up pigs trotters on Beijing's finest dining tables. That would be a real win-win - a multimillion-pound boost for Britain and a gastronomic treat for Chinese diners.