Chinese Pig Breeding Giant Upbeat on Achieving Annual Sales Target

Source: Yicai Global

The market structure of China’s pig-breeding industry has undergone rapid changes in recent years, with New Hope Group, a giant among domestic swine and poultry breeders and feed producers, expanding its production scale rapidly.

As such “achieving the target of having 14 million heads of fully-grown live hogs for sales this year will not be a problem”, said Liu Yonghao, chairman of the group, told Yicai Global in an interview yesterday.

“Next year, there will definitely be some growth on top of that,” Liu added. This is the first time that the Chengdu, southwest Sichuan province-based group has entered the “10-million level club” for sales of live hogs, ranking among the top three in the domestic industry.

New Hope Group’s pig slaughter volume in the first three quarters of this year reached 9.9 million, which is very close to the 9.98 million pigs slaughtered in 2021. The hog breeder’s live pigs as commodities only amounted to 3.55 million heads in 2019.

Liu said that the group has always had a hog-breeding business, but the business scale in the past was relatively smaller than that of its feedstuff business. After the outbreak of African swine fever in 2018, it became inevitable for the company to expand the scale of its breeding business by relying on existing resources.

However, New Hope Group, among the top three in the sector, wants to further expand its business.

As per its plans, the targeted number of fully-grown swines for this year is 14 million heads, which will be 18.5 million heads next year and range between 23 million and 25 million heads by 2024. The group’s annual slaughter volume is expected to increase to about 30 million heads in the future.

Hog prices have huge cyclical fluctuations, Liu said in the interview. The trough of the cycle puts breeders under greater cost pressure, while the crest of the cycle can easily hike the country’s Consumer Price Index.

Achieving relatively balanced development is a big issue that must be considered by the hog-breeding industry, he added.

In order to cope with such challenges, New Hope Group is trying to use digital management methods, such as establishing Big Data models and using years of breeding experience as well as data about feed sales, fertile sows and piglets in inventory, to accurately judge and grasp the laws of pork price cyclical fluctuations.

Liu also pointed out: “The price of soybeans has risen from more than CNY3,000 (USD415) per ton to nearly CNY5,000 per ton, and the price of corn has also risen, which will definitely affect feed prices, thus further impacting the production cost of the hog-breeding sector.

“The latest round of hog price hike since this autumn is due to the shortage of supplies, partly caused by the higher feed prices (leading some breeders to reduce their production volume).”

New Hope Group is actively adopting measures to optimize the formula for feeds and slash its dependence on a single source of raw materials. For instance, reducing the use of soybean meal at present, he explained.