Jim Long Pork Commentary, Asia Road Trip Week 2, May 21st 2019

1257

Jim Long, President and CEO Genesus Genetics

 

Last week we spent in China.

 

Our observations:

 

From what we can figure from talking to large hog operations, drug companies, veterinarians and other industry people the loss of sows is at 10% either way from 50%. That is 40-60% sow loss, with farms still breaking with African Swine Fever (ASF). Have to say that the degree of loss is greater than we expected.

  • One producer told us they had 60,000 sows in one area – 6,000. Left.
  • Another said they expected to be 4 million head lower than normal output.
  • We were told one province which had about 1.6 million sows is now around 150,000.
  • Pigs weaned at 28 days are selling for 800-900 RMB – $120-135 U.S. each. Which is truly a reflection of supply-demand and future price expectation.

It appears that the big loss of sows was in the January- Feb time period. From what we can discern other pigs in nursery-finishers have been to the most extent spared. The expectation is the real big drop in hog numbers will start in August. In line with the huge sow herd liquidation first of this year. Official China hog marketing’s in April were 43.66 million. A 10% decrease from a year ago. In context the decline is equal to about half all U.S. marketing’s in April.

All China companies have been told that in July all stored pork will be checked by government for ASF. Any ASF positive pork, we are told, will be burnt. This in itself is incentive to empty all the stored pork. Next step, we are told, will be China government veterinarians testing hogs at slaughter plants. Positive pork will be burnt.

A market factor going forward; the emptying of pork inventories will coincide with the next level of hog market decline in August. Also, we are told, August and on is a time of seasonal pork consumption increasing. This triple whammy will be a trigger for a price jump.

Discussion about when farms can be successfully restocked after ASF is a major discussion if not confusion. In Russia it has been one year of empty barn before restocking allowed.

ASF has been a Black Swan Event- we continue to expect all global swine markets to reach record levels. Many expect 5 years for China to recover.

While in China we attended the China Animal Husbandry Exhibition in Wuhan, which had 1178 exhibitors. What we found interesting at the exhibition and discussions beforehand was the positive attitude and resilience of producers. You would think many would be dismayed and depressed but we found an industry group positive to rebuild and move forward. It was quite surprising. Thousands attended the Exhibition obviously not stopped by ASF fears. Unlike the World Pork Expo in the USA, they have no live hogs to view and return to the farm.

Talking to several large builders and equipment companies it’s interesting to find that the Chinese Government is aggressively supporting the rebuilding and revitalization of the industry. China has lost many new nucleus farms due to ASF. At some point when dust settles there will be significant importation of swine breeding stock to rejuvenate the swine genetic base. Genesus has been the largest exporter of swine breeding stock to China over the last 3 years with 1/3 of global imports. The last import of swine genetics from anywhere was October by Genesus.

The day prior to the Exhibition we spoke at Global Genetic Swine Forum. It was an all-day event which had speakers from all the major Global Swine Genetic Companies – Genesus, Danbred, Hypor, Topings-Norsvin, Nucleus, American Purebred Breeders and PIC.

It was interesting to hear the different companies’ perspectives on genetics and the future. Genetics with the advent of Genomics and the associated extra costs and technical knowledge needed will eliminate most if not all regional genetic companies. Scale of sales-revenue to cover the genetic development cost will need a global sales presence for economic survival. It’s go big or go home!

Jim Long, speaker at the 2019 Global Genetic Swine Forum in China

We have traveled China by plane, fast train and automobile. We have been in 7 large cities and the countryside. China has 1.4 billion people, cities like Wuhan or Chengdu who most in the west have never heard of have 10 million plus people. The number of people is mind boggling. The need for infrastructure and housing daunting. More than once looked in any one direction and counted around 40 construction cranes. The rural to urban migration is 20 million people a year. The greatest Migration in history.

In the southern countryside we saw hundreds of farms of less than an acre, being farmed by hand. There were not any tractors in sight. Chinese agriculture will undergo tremendous change in the future, there will not be enough labour to sustain this type of farming and the terrain being mountainous will not be able to be mechanised. This area has already and will continue to see migration to the cities. Many rural properties houses are sitting empty. The Chinese government is pushing livestock to the north to where larger land areas are available.

As we traveled we had numerous conversations about USA-Canada and China relations. It is interesting all the perspectives. We find the Chinese quite conscious of the trade tensions. They are after all a huge trading country. In the newspapers and on the TV it is a major story. In China; McDonalds, Starbucks, Pizza Hut, KFC, Burger King etc. are everywhere.

As I write I sit on a Boeing plane flying to Shanghai, beside a man decked out in Nike head to toe like a Chinese Tiger Wood.

Our discussions the past days about politics and trade have been spirited but amiable. There are different perspectives but they are friendly.

As one company President said to us: “We need to find a way to make a deal, one we can live with now and in the future. It’s best for all to find resolution. It’s a big world getting smaller and we need to live together”.

TQLS and Genesus signing the
breeding strategic cooperation agreement

Swine breeding in China is integrating with the world’s standard.

On May 9th and 10th , Genesus team, including the president and CEO Mr Jim Long, Vice president Mr Mike Van Schepdael, General Manager of China Area Mr Gu Yaping, and the representative of CSEA in China Mr Hu Song visited TQLS group for the meeting regarding the project of “High Quality Swine Breeding Strategic Cooperation”.

The chairman Mr Lei Wenyong, CEO Mr Feng Guangde and the General manager of swine division hosted this visit with utmost cordiality on behalf of TQLS group.

Chinese animal husbandry industry is undergoing the transformation and upgrading period with overall relatively weak farming and breeding level, which is in urgent need of the change. The meeting between two parties is focusing on the discussion about the establishment of the new model for the development and exploration of domestic farming companies, in the meantime this meeting brought up new direction and thoughts for the development of swine industry in the future, hoping to completely improve the production efficiency level of Chinese swine farming.

Discussion

On the afternoon of May 9th, TQLS group organized the exchange symposium in their operation center in Mianyang, the chairman Mr Lei Wenyong expressed their warm welcome towards the Genesus visiting group led by the president of Genesus Jim Long coming a long way from Canada. Both parties had initial approach about the intent of this strategic cooperation and the cooperation model during this symposium as well as open discussions covering the topics like development models in the farming industry, development prospect and other talking points, etc.

Tour 

On the morning of May 10th, Genesus group led by president Jim Long had a tour around Maple Leaf Pasture Breeding Center, Changyuan Breeding Stock Sales Center, Creek High Quality Food Park and Sundaily Modern Ecological Farm. Through the on-site tour and communication, Genesus group led by the president Jim Long had better understanding about TQLS company development process, industrial layout and their comprehensive strength and gave a very high appraisal to TQLS modern farming system and rapid development.

Signing Ceremony 

After the tour, both parties went to TQLS Mianyang operation center for further communication about the detailed plan for the high quality swine breeding strategic cooperation. During the communication process, TQLS and Genesus broke inherent thinking and continuously negotiate and investigate the new cooperation model that breaks through traditional pattern. According to deep discussion, all-round strategic cooperation based on genetic breeding program coordinated with production management, precise nutrition, bio-security and marketing and promotion has finally been agreed.

The chairman Mr Lei Wenyong pointed out in the signing ceremony that he is full of confidence and looking forward to the strategic cooperation between two parties and he believes that both parties will definitely open up an all-round deep cooperation. He emphasized, this strategic cooperation will put a strong and colorful stroke in the history of Chinese even global swine industry and will further promote the coordination and development for both parties and make sure a win-win cooperation!

Jim Long and Mike Van Schepdael expressed in the signing ceremony that this strategic cooperation will play an inestimable role in future development for both parties and they also highly expected a long term deep cooperation with TQLS will be developed. Jim Long gave a high praise that Maple Leaf Pasture Breeding Center and the breeding stock center are the most beautiful farms he has ever seen, with such good scale and facility TQLS must be able to provide the delicious, nutritious products with best quality and reasonable price to Chinese consumers and the cooperation between two parties will beyond expectation.

Mr Ron Lane – the sales director of Big Dutchman China witnessed this strategic signing ceremony. Ron Lane spoke that TQLS is a young, modern and technology motivated company, Big Dutchman is very optimistic about this strategic cooperation between TQLS and Genesus. He believed that the deep cooperation between two parties will definitely bring new vitality and motivation to the development of Chinese swine industry.

The CEO of TQLS Mr Feng Guangde on behalf TQLS and the vice president of Genesus Mr Mike Van Schepdael on behalf of Genesus signed the strategic cooperation agreement perfectly. The signing of this agreement is a sign of TQLS and Genesus further deepening their strategic cooperative partnership, and both parties has taken an important step towards the all-round cooperation in order for complementary advantages, powerful combination and win-win mutual benefit.

Along with the speeding up of Chinese swine industrialization development process, people have attached more importance to the concept of international synchronous breeding. Meanwhile, consumption upgrading and the demand for high quality food is constantly increasing, which laid a solid foundation for the cooperation between TQLS and Genesus. We believe in the near future, TQLS will make greater contribution to Chinese swine industry in the way of upgrading the breeding technology, promotion of agriculture industrialization development and the transformation and upgrading of Chinese swine industry.

View message online

Jim Long Pork Commentary

www.genesus.com

 

LEAVE A REPLY

Please enter your comment!
Please enter your name here