China's major pig breeding firms posted robust sales and higher net profits last year as pork prices surged and the uptrend is likely to continue this year, industry experts said.
An African swine fever (ASF) outbreak had led to a shortage of more than 10 million metric tonnes of pork in China, or at least 20 per cent of China’s total pork output last year. It will take about six months for a recovery in the pig production capacity and breeding of new pigs. The shortage has helped pig breeders achieve strong earnings and created more billionaires in the sector.
Qin Yinglin, founder of Muyuan Group, a Henan-based major pig breeder, became the richest man in the food sector last year. With a personal fortune of 117.38 billion yuan ($17 billion), he was the only one from the food sector in the Top 10 of China’s Richest 2019 list of Forbes.
Last year, Muyuan netted sales of 19.66 billion yuan, up 48.17 per cent on a yearly basis. The valuation of the Shenzhen-listed company is now more than 200 billion yuan, the highest among pig breeders in the country.
“Since June last year, pig breeding has started entering a profit-earning period. After October, the income of pig breeders reached a new high,” said Zhu Zengyong, a researcher with the Chinese Academy of Agricultural Sciences.
“Affected by the pig recovery cycle, pork supplies will be tight in the first half of this year, and pork prices will remain high. Prices are expected to decline in the second half, while the whole-year average price is foreseen to be still higher than last year,” he said.
“With higher slaughter rate, the revenue from pig breeding will be higher than last year,” he said.
Guangdong-based Wens Foodstuff Group Co Ltd, China’s largest pig breeder, is expected to achieve net profit of 13.85 billion yuan to 14.3 billion for last year, up 249.97 per cent to 261.35 per cent on a yearly basis, according to its latest earnings forecast.
Last year, the company netted sales revenue of 39.55 billion yuan, up 20.03 per cent year-on-year. It sold 18.52 million pigs, down 16.95 per cent year-on-year, while the average selling prices stood at 18.79 yuan per kilogramme, jumping 46.57 per cent year-on-year, the company said.
Meanwhile, New Hope Liuhe, a listed company of China’s major feed producer New Hope Group, also posted strong sales last year. From January to November last year, New Hope Liuhe sold 3.14 million pigs and achieved sales of 7.02 billion yuan.
CHINA DAILY/ASIA NEWS NETWORK