Muyuan Foods, the world’s largest pig farming enterprise, is enhancing its employee compensation strategies to maintain cost leadership and improve production performance. By refining its management practices, the company aims to motivate frontline workers, optimize pig herd health, and increase profitability. With a recent reduction in pig farming costs and improved production indicators, Muyuan continues to lead the industry in innovation and efficiency.
As the world’s largest pig farming enterprise, Muyuan Foods continues to innovate in its management practices. It focuses particularly on optimizing compensation for frontline employees to enhance production performance.
Following the introduction of a “contracting system” last year to leverage internal potential and reduce costs, Muyuan has recently announced further refinements to its compensation management plan. The objective is clear: to motivate employees and improve the output of the pigs they raise.
“By ensuring that frontline employees have a clear understanding of profit settlement methods, we can more effectively implement technical solutions, replicate best practices, and reduce cost discrepancies,” the company stated.
Qin Jun, secretary of Muyuan’s board of directors, highlighted during the company’s semi-annual report exchange that while production indicators have improved, there is still room for further enhancement. As part of its ongoing strategy to reduce costs, Muyuan will focus on pig herd health management and further optimize employee compensation structures.
“We aim to make the relationship between daily production activities and final batch profits more transparent to our frontline staff. Many employees oversee specific stages of production and might not fully grasp how their work impacts overall profitability and, subsequently, their earnings,” Qin Jun explained. “Our goal is to enhance this understanding so that employees can see how fluctuations in their performance directly influence their income.”
Some farm managers already calculate the impact of losses, such as the death of a piglet, on their salaries. This practice is about adjusting pay plans and driving the adoption of technical improvements, Qin Jun added.
Muyuan remains committed to maintaining its cost leadership in the industry. The company reported that in June 2024, its total pig farming cost was close to CNY 14.00 per kilogram (approximately USD 1.93/kg), marking a reduction of about CNY 1.80/kg (USD 0.25/kg) compared to the average cost in January and February. Improved production performance contributed to 60% of this cost reduction, while feed cost savings accounted for 40%.
The company also noted that the daily weight gain of its fattening pigs has reached about 800 grams, surpassing pre-epidemic levels. The average PSY (pigs weaned per sow per year) has also improved to around 28, up from the pre-epidemic levels of 24-25. However, the current overall survival rate stands at 84%, still below the pre-epidemic standard of 88-90%.
Qin Jun attributed the lower survival rate not solely to the winter epidemic but also to management challenges arising from rapid production scale expansion. “The issues stem from standards, implementation, and incentives—essentially, it’s a management problem,” he said, but expressed confidence that these issues could be resolved over time.
In the first half of the year, Muyuan slaughtered 32.39 million pigs, a 7% increase year-on-year, including 28.98 million commercial pigs, 3.09 million piglets, and 312,000 breeding pigs. As of June’s end, the company’s pig breeding capacity was 80.48 million head per year, with an expected annual slaughter range for 2024 of 66-72 million head.
During this period, Muyuan generated an operating income of CNY 56.87 billion (approximately USD 7.86 billion), reflecting a 9.63% year-on-year increase. The net profit attributable to the parent company was CNY 829 million (about USD 114.63 million), with a second-quarter profit of CNY 3.21 billion (USD 443.90 million), marking a return to profitability compared to the same period last year.
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