The village of Zhang’ao in eastern China was lively with the sound of 1,300 pigs last summer, but this year its pigpens are silent after all of the animals were slaughtered following an outbreak of African swine fever.
Set amid green hills in the eastern province of Zhejiang, Zhang’ao is just one example of how communities have been hit by the devastating disease. Swine fever has swept through China — the world’s biggest producer of pigs and consumer of pork — over the past year, cutting the pig population by about a third from 360 million, according to Rabobank estimates.
The problems for Zhang’ao’s small farmers are mirrored across the country, with the mass cull accelerating a shift in China’s $128 billion pork industry toward conglomerates that operate large industrial farms. “We want to know when we can return to raising pigs,” says village chief Wan Changnan, pointing to a complex with capacity for 3,000 animals. “If we don’t raise pigs, all this equipment is useless.”
Many small and medium-sized farmers have withdrawn from the market.
Feng Yonghui, analyst at Soozhu, a consultancy
The shift is also raising questions about a tradition that has been part of countryside life across much of China for centuries — a pig with a roof over its head forms the Chinese character for “home.”
“It used to be that every family raised pigs. That was in the time where there weren’t other sources of income,” says Zhang Huizhi, head of the village’s Communist Party branch.
The pig population in Zhang’ao has been falling for decades, as young people migrate to cities for work and service sector jobs that have arisen in rural areas rather than working on farms. A government campaign launched in 2014 to close hundreds of thousands of small pigsties to reduce rural pollution also forced villagers to pool their pigs into a single new facility. Those trends cut the number of Chinese farms with fewer than 50 pigs from 80 million a decade ago to less than 40 million. By contrast, the number of commercial farms that own more than 50,000 pigs have increased from 50 to more than 300 over the same period, according to government data.
“Many small and medium-sized farmers have withdrawn from the market, which can leave huge market space for large-scale breeding plants,” says Feng Yonghui, an analyst at consultancy Soozhu.
Investors appear to agree. Shares in China’s biggest pork producer, Shenzhen-listed Wens Group, which slaughtered 6 million pigs in the last quarter, have risen 62 percent year on year. Muyuan foods, the country’s second-largest producer, has nearly doubled its share price over the same period, while Shuanghui, which slaughtered 4.7 million pigs, reported rising profits in the last quarter. Those farms that have avoided infection are expected to reap higher profits, with prices forecast to be double what they were at the end of 2018 by the end of this year.
“As long as your pasture can survive, and the pigs can be slaughtered, your business is certainly more cost-effective than before,” says Duan Ke, who manages a farm with several thousand pigs an hour’s drive from Zhang’ao.
Small-scale farmers are unlikely to be so fortunate, he predicts. “Smaller farmers will not have funds to reinvest. Even if they have such money, they won’t dare to invest until an effective vaccine is found,” he says.
Chinese government aid also favors big pork businesses. This year, the Ministry of Agriculture and Rural Affairs ordered banks to grant such businesses credit lines and low-interest loans to farms with more than 5,000 hogs. Large groups are continuing to build farms, with Russian company Rusagro announcing a $5 billion investment for a large-scale pig-breeding project in eastern China last month.
Nevertheless, pork production will drop from 54 million tons in 2018 to 38 million tons this year, says Li Moyu, an analyst at Chinese brokerage Dongzheng.
Higher prices will cause some pain to Chinese consumers but few expect social unrest from soaring prices. Chinese consumers have become wealthier in recent decades, meaning they spend less on average than 30 percent of their incomes on food.
But for the farmers in Zhang’ao, there is little cause for optimism. Those who owned pigs will be forced to “stay at home or maybe find some part-time agricultural work,” says Huizhi. “They can grow watermelons instead.”