How do Chinese pig farming giants reduce cost and increase efficiency? The Views from leading players
The Leman Leadership Summit is the singular invitation-only forum at the Leman Swine Conference in 2021. During the discussion theme of “reducing cost and increasing efficiency”, the relevant responsible persons of Yangxiang, New Hope Liuhe and Dabei Nong shared their views and practices respectively.
Zhang Conglin, creating “precise nutrition” and high-performance sows
Zhang Conglin is the president of the pig farming division of Yangxiang Co., Ltd. He pointed out that the cost of pig farming in the industry was around 12CNY/kg ($1.88/kg) before the African Swine Fever (ASF). However, after the ASF, most companies went to over 16CNY/kg ($2.50/kg). One of the main factors contributing to the cost rising is the ASF, secondary is the feed cost.
“In terms of these two factors, we can do nothing about the price rising of raw materials,” says Conglin. “Disease prevention and control can make a difference to the ASF. But it is still difficult to purify completely.”
Conglin suggested, for any pig enterprise, it’s currently necessary to find out ways to reduce cost.
Feed is the greatest impact on the cost. Regarding feed, Yang Xiang can save 50-80 CNY ($7.82-12.51)/ton through value procurement and market procurement.
For most pig companies that lack bargaining power in feed procurement, Conglin suggested creating “precise nutrition.” This includes precise raw material tests, precise nutritional requirements, precise formulas, precise production and processing, and precise feeding. By doing so, the FCR can be reduced by 0.1-0.2. Then the cost will be decreased by as much as 0.6 CNY ($0.09)/kg.
“This is quite impressive for a 100 kg pig.”
China’s breeding pig system has been damaged by the ASF. The industry is still facing the problem of breeding pig genetics. And the key is to make the sows achieve high production performance.
Conglin said that the solution is simple, we must eliminate low-efficiency sows and make breeds adjustment.
“Now the market is sluggish,” he explained. “If you don’t make adjustments, you may be more reluctant when the pig price gradually rises in the future.”
He also admitted that in addition to feed and genes, the reduction of direct cost has its “ceiling.” Some efficiency indicators, such as sow farrowing rate, healthy litter per litter, the survival rate of nursey piglets and marketed pigs, etc., also have great potential. Improving these efficiencies is actually reducing cost.
Ji Chongxing, full capacity and batch production are very important
Ji Chongxing, vice president of New Hope Liuhe, holds the view that full-capacity production and weekly batches are very important practices for the Chinese pig industry to reduce costs.
After a round of rapid development of the industry, coupled with the impact of various diseases, many pig farms have not been able to reach full capacity at present. This has pushed up unit production costs and caused pig companies to reduce their profits and even lose money.
He pointed out that in the short term, the improvement of feed efficiency, is also very important. This includes precise nutrition design, strict feed budget and strict on-site management.
For example, the traditional commercial feed divides the pigs into 2-3 stages of feeding, which often causes a lot of waste. Now there are feed varieties corresponding to more than 10 pig growth stages.
At the same time, the amount of feed at each stage must be strictly in accordance with the set standards. A series of scientific management systems should also be adopted to ensure the budget is implemented from the aspects of finance, execution, and inspection.
Especially for large-scale pig farms, if the on-site management is not in place, it is easy to cause feed waste, which requires extra 30-65 days of feeding cost.
Ji Chongxing also expressed his views on reducing labor costs. He said that this is a relatively risky method of cost reduction.
Employees hope to grow together with the company. If their wages are reduced at this time of the year with the same workload, it is possible that the motivation and initiative of the employees will be gone. This reduction in wages could be far less than the loss of production caused by the lack of work motivation.
On the other hand, he said, what companies should do is to improve personnel efficiency and cultivate excellent talents, such as increasing the number of pigs managed per person from 2,000 to 3,000. “This kind of efficiency improvement is completely effective and low risk.”
Yi Ganfeng, slowing down the construction of pig farms and controlling the scale of marketed pigs
Dr. Yi Ganfeng is the executive vice president and chief scientist of Dabeinong Group. He mentioned the production level of the industry such as PSY has been improved a lot in recent years, but the production cost is also rising. And there has been a crazy expansion in 2019-2020.
Dabeinong has made some adjustments since the second half of last year. It included slowing down the construction of pig farms and controlling the scale of marketed pigs. Therefore, the company’s loss this year is relatively small.
“(After the crazy expansion) there are many things that can’t keep up, except for the pressure of funds, the key is talents and management.”
Yi Ganfeng said that the salaries of pig farms have been improving in recent years, but the quality of personnel may not necessarily keep up. Currently, it is necessary to increase training to enhance employees’ understanding of science and the invest in biosafety such as testing and disinfection.
In the past, many pig farms had opaque costs and poor management. Yi Ganfeng suggested that more positive incentives to the team should be used to continuously improve production indicators and increase production efficiency.
Pig farms with excellent performance tend to have better humanistic care, including a beautiful and comfortable working environment.
In short, pig farming is a scientific production system.
“Where you need to spend money, you must continue to spend money. And where you want to save money, you have to save money. It is not because the pig price is down today that you save money, when the price is good tomorrow, you spend more.”
Yi Ganfeng pointed out that cost control is not overnight, but a continuous and systematic project. Only in this way can we ensure an orderly and stable operation.
He also believes that the current downturn in the industry is not a bad thing. This is not only a warning of the frenzied expansion of the past two years but also will help to build a more standardized industrial system in the long run.