In the first half of 2024, China’s pork production fell by 1.7% year-on-year, with 364 million pigs slaughtered, a 3.1% decrease. The pig inventory stood at 415 million, down 4.6% year-on-year. Rising pork prices have boosted revenues and profits for pig farming companies, with several reporting significant performance improvements. Capacity reduction mainly affected small and medium-sized farms, while listed companies showed varied performance based on financial strength. Small and medium farmers show cautious optimism about restocking, with expectations of moderate price increases in the second half of the year.
Decrease in Pork Production and Livestock Numbers
According to data from the National Bureau of Statistics of China, the country’s pork production declined by 1.7% year-on-year in the first half of 2024, with a total of 364 million pigs slaughtered, representing a 3.1% decrease from the previous year. By the end of Q2 2024, the pig inventory stood at 415 million, down 4.6% year-on-year. This reduction in both slaughter and inventory numbers has led to a decreased supply in the pork market.
Rising Pork Prices Boost Enterprise Profits
The reduction in pig supply has resulted in a continuous rise in pork prices since the beginning of 2024, driving up revenues and net profits for pig farming enterprises. Several major pig farming companies have reported significant performance improvements in their 2024 interim reports. Companies such as Muyuan Foods, Wens Foodstuff Group, Tianbang Food, and Luoniushan have announced a return to profitability, while New Hope Liuhe and Zhengbang Technology have reported reduced losses.
Zhu Zengyong, a researcher at the Beijing Institute of Animal Science and Veterinary Medicine of the Chinese Academy of Agricultural Sciences and chief analyst of the Ministry of Agriculture and Rural Affairs’ pork industry monitoring and early warning system, noted that the number of breeding sows has now stabilized within a normal range, signaling the industry’s entry into a profitable cycle. Zhu anticipates that the expansion rate of leading enterprises will slow down significantly, with future competition focusing on cost efficiency, market share, and overall quality of the entire industry chain.
Divergence in Capacity Reduction
In the first half of 2024, China slaughtered 364 million pigs, down from 375 million in the same period the previous year, marking a 3.1% decline. Overall, China’s pig production capacity has been shrinking for 16 consecutive months, reaching its lowest level since 2021. Zhu Zengyong pointed out that this capacity reduction primarily affected small and medium-sized farms with weaker financial strength, with some large groups also experiencing production cuts due to poor management.
AgriPost has learned that capacity reduction mainly occurred among small-scale farmers, with many areas seeing a 50%-60% reduction in such operations. In regions like Henan and Shandong, farms with annual slaughter rates below 500 pigs have become scarce.
Performance Divergence Among Listed Pig Farming Companies
The divergence in performance among listed pig farming companies persisted in the first half of this year. Companies such as Muyuan Foods, Wens Foodstuff Group, Dabeinong, Tangrenshen, Tiankang Biotechnology, and Huazhong Agricultural University reported slight increases in pig slaughter, while Zhengbang Technology and Aonong Biotech saw significant declines, and New Hope Liuhe and Tianbang Food experienced slight decreases. The growth rate of pig slaughter by listed companies is closely related to their financial strength, with those facing tighter liquidity reducing their slaughter rates, while companies with lower debt pressure and cost advantages maintained growth.
Restocking Among Small and Medium Farmers
Looking ahead, Zhu Zengyong mentioned that small and medium-sized farmers show some enthusiasm for restocking, but remain generally cautious. The second half of the year is the peak season for pork consumption, and pig prices are expected to remain high, making pig farming profitable. However, Zhu predicts that pig prices will not see substantial increases, instead expecting a moderate rise from current levels without significant peaks.
Overall, the outlook for the pig farming market in the second half of the year remains optimistic. Future profitability will rely on cost advantages, with cost reductions primarily stemming from improved production efficiency and refined management.
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