牧食记AgriPost.CN English News With pressure on pig prices and costs, Chinese pig producers simultaneously take multiple measures to expand financing and increase efficiency

With pressure on pig prices and costs, Chinese pig producers simultaneously take multiple measures to expand financing and increase efficiency

[Tang Ren Shen Point] To smoothly traverse the pig cycle, the safety of the capital chain is crucial. Sun Shuangsheng, secretary of the Tang Ren Shen (TRS) board, China’s top pig producer, pointed out: In the early stage, the company has completed the refinancing of CNY 2.8 billion (USD 440 million), which significantly protects the safety of the capital chain. Moreover, the bank loans sought are medium- to long-term project loans with 5-10 years. If we seek short-term loans at this time, the financial pressure of concentrated loan repayment will be tremendous by then.

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[Xinwufeng Point] Intelligent farming is another key to reducing costs. In 2021, for example, the company joined hands with Huawei, one of the largest telecommunications equipment makers in the world, to launch an intelligent pig farming project.

“Take pig survival rate and meat ratio indicators as an example. According to the pilot projects, the pig survival rate was 2% higher than the previous best year of traditional farming,” Xinwufeng said introducing the relevant person in charge, “and feed conversion ratio(FCR)decreased by 0.2, relying on the smart farming system. These are the key points of pig industry farming which can reduce the cost of pig farming.”

Cost reduction is essential for current farming companies to deal with rising costs.

“Our company faces the pressure of high feed ingredients prices and low pig prices and tries to reduce costs through various ways,” said an operation manager from a listed pig farming company. “For example, we are optimizing the feed formula and enhancing precision feeding technology to reduce the FCR and control the feed cost; expanding the farming scale to gradually dilute the management cost; continuously improving the level of epidemic prevention and management, and enhancing the survival rate and health of pigs by strengthening the execution of information technology.”

According to COFCO Futures researchers, large pig enterprises build teams focusing on futures and improve their market research and trading systems. Some large pig enterprises have successful hedging experience, avoiding operational risks during the downward spiral of hog prices.

Small and medium-sized enterprises are also participating in the “insurance + futures” project. These pig enterprises will continue to explore the road of combining “futures plus cash” and “production plus financing,” accumulate practical hedging experience in practice and enhance the comprehensive management ability to control market risks.

Zhang Minggui, executive chairman and president of New Hope Liuhe, a leading pig producer in China, stated: “2022 will be a challenging year for the pig industry. The market is still at a low level in general, and pig prices will be under greater pressure in the first half of the year, with a relatively low point from March to May, and after then, the price will start to adjust gradually.”

Sun Shuangsheng believes that the current pig cycle has touched the bottom.

“In 2019 and 2020, affected by African swine fever, the industry cut capacity very fast, resulting in a tight supply-demand relationship, and the hog price reached up to CNY 40 (USD 6.28) per kg,” he said. “Now many places have fallen to below CNY 12 (USD 1.89) per kg.”

He introduced the current losses of pig enterprises, and if the status quo continues for 1-2 months, a more thorough de-capacity is expected.

牧食记AgriPost.CN 专注中国农牧食品产业原创报道与决策参考;本站原创内容,未经书面许可,谢绝转载,违者追究法律责任。授权联络 editor@agripost.cn

定位为农牧食品企业的第二大脑的“牧食记”由多位具有媒体、市场、咨询等从业背景的中国农业大学校友于2018年底联合创办,通过资源整合、协同共生,为国内外猪禽牛(肉蛋奶)全产业链的利益相关方提供立足于中国市场的公关传播、品牌营销和决策咨询服务。https://www.agripost.cn/2022/04/14/with-pressure-on-pig-prices-and-costs-chinese-pig-producers-simultaneously-take-multiple-measures-to-expand-financing-and-increase-efficiency/

TRS’ breeding herds will transfer from New American Line to New Danish Line

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