Dongrui Group, a top hog supplier to the Hong Kong market, has initiated a pilot contract farming program involving outsourced pig rearing to reduce costs and diversify operations. In 2024, the company saw a 47% revenue increase, selling 874,400 hogs. Dongrui plans to expand production to 2 million hogs by 2026 while reducing production costs. Despite disease outbreaks in 2023, it maintains profitability ahead of competitors like Muyuan Foods. Dongrui is also strengthening vertical integration through investments in feed and slaughtering facilities to support long-term growth in domestic and export markets.
Dongrui Group, a leading hog supplier to Hong Kong, is diversifying its business by adopting a contract pig-rearing model. In December 2024, the company launched a pilot initiative under a “company + farmer” arrangement. This new model currently involves 6,600 outsourced hogs raised across two partner farms, aiming to reduce production costs while maintaining high-margin operations.
Aiming for Growth Amidst Market Volatility
Dongrui’s strategy is grounded in its strong 2024 performance, selling 874,400 hogs and achieving sales revenue of CNY 1.448 billion (~USD 198 million). This represented a 40% rise in output and a 47% increase in sales year-on-year, driven by an average price of CNY 18.16 per kg (~USD 2.48/kg). The company aims to produce between 1.5 to 1.6 million hogs in 2025 and escalate to 2 million in 2026. It plans to expand its breeding sow inventory to 95,000 by mid-2025 to support this growth.
Cost Reduction as a Priority
Dongrui has set targets to lower total production costs from CNY 15.99/kg (~USD 2.17) in Q4 2024 to below CNY 15/kg (~USD 2.04) in 2025 and further to CNY 14/kg (~USD 1.91) by 2026. This move is part of a broader initiative to improve operational efficiency, especially following setbacks caused by disease outbreaks and fluctuating pork prices.
Competing Profit Margins
Despite a challenging 2023, marked by porcine reproductive and respiratory syndrome (PRRS) and pseudorabies outbreaks in some farms, Dongrui’s profitability continues to outperform that of key competitor Muyuan Foods.
In early 2024, Dongrui achieved a gross profit margin of 17.93% in its pig-rearing sector, compared to Muyuan’s 8.13%. Historically, Dongrui’s margins peaked at 41.04% in 2021.
Facing Industry Challenges with Strategic Integration
Dongrui’s export quota to Hong Kong remains a cornerstone of its business, allowing it to command premium prices despite external pressures. Dongrui benefits from its geographical proximity to the economically dynamic Greater Bay Area, enabling swift delivery to Hong Kong and the Pearl River Delta region. It holds a certified export quota, which secured 220,700 heads for Hong Kong in 2024. For 2025, the company targets a 36% increase to 300,000 head.
However, with growing production volumes, the relative share of high-value exports is gradually declining. In response, the company is enhancing vertical integration, investing in feed production and a new slaughtering facility to strengthen its market position and resilience.
By capitalizing on its location near the economically vibrant Guangdong-Hong Kong-Macao Greater Bay Area, Dongrui continues to evolve its strategies for sustainable growth in both domestic and export markets.
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