Live pig price dropped 16 weeks and suffered heavy losses

The pig industry recently suffered a "cold stream" and the live pig price has fallen for 16 weeks. Since the state began to purchase frozen pork, the prices of live pigs in certain regions have stabilized, but the pattern of oversupply in the market has not been effectively mitigated.

The reporter recently combed the quarterly performance forecast announced in succession and found that compared with the same period of last year, the leading companies of the A-share hog breeding industry all turned from profit to loss in the first quarter. At present, the three pig breeding A-listed companies have calculated a total loss of 170 million yuan in accordance with the maximum amount.

Xu Deping, general manager of sales of Laobai Dry Breeding Pigs, revealed to reporters that in October of last year, sales of old white dry-breeding pigs were almost stagnant. Since the end of last year, the old white dry-breeding sow farms had to borrow from the headquarters every month to keep the capital chain from breaking. At present, about 4 million yuan has been transferred from the head office."

Gao Guan, deputy secretary-general of the China Meat Association, believes that the excess production capacity of live pigs is an important reason for the sharp decline in the price of pork. Currently, the pig breeding industry has entered a period of depth adjustment.

Laobaigan Jiujiu throws millions of "transfusion" breeding farms

The price of live pigs has continued to fall. The most serious losses have been upstream farmers.

At present, the breeding company of Laobaigan Dry Wine Co., Ltd. has a breeding base of 2,200 pigs for basic sows. The breeding base for breeding pigs of this size is also undergoing the “winter” baptism of the industry.

Xu Deping, general manager of Hebei Hengshui Laobaigan Wine Co., Ltd.'s Gezhong Pig Breeding Co., Ltd. (hereinafter referred to as the Breeding Company) disclosed in an interview with the reporter of the “Daily Economic News” that even if it is operating hard, the base will have to drink liquor to Laobaigan every month. The head office applied for funds to ease the tight capital chain. In Xu Deping’s view, if there is no support for the profitability of the main business of the head office, the operation of the breeding company will also become difficult.

Let Xu Deping feel more "chill" is from last October to now, breeding company's breeding pig sales are almost stagnant.

According to public information, pig raising is divided into three stages: maternal sow pregnancy birth, piglet stage, and fattening stage. Breeding pigs are fine varieties after fattening, and the remaining non-breeding pigs are the by-products of breeding pigs - fat pigs, which are mainly consumed and will be sent to slaughterhouses after they are raised.

However, due to the poor market conditions of pigs, the prices of pigs by-products and sows sent to slaughterhouses have fallen sharply, and “sell one end at a loss”. Xu Deping told reporters that according to the current situation, every 100 kg of pigs sold would lose 500 yuan.

The sales of breeding pigs, the main business of the breeding center, is also facing a stoppage. The number of fattening stages has increased sharply, which has directly led to an increase in the number of fattening houses and increased the loss level of breeding companies. Xu Deping told reporters that the ratio of stalled pigs and fat pigs is basically 1:2. If the breeder pig sells at all prices, and the price of the fattened pig is lower, it can still make money. But now, the income of breeding pigs can only fill up half of the loss of pigs and it can't be profitable at all.

Due to the “Blood Transfusion” breeding base of the Laobaigan liquor headquarters, it is also possible to continue operations. However, for other kinds of pig breeding small and medium-sized households, it is not so lucky. Xu Deping said that the loss of many small and medium breeding pig farmers is very serious.

Hog industry depth adjustment

In addition to Laobaigan, a number of leading companies in the A-stock pig breeding industry turned profit from their earnings in the first quarter.

According to the announcement of the “Agriculture Pigs First Share”, the Yingying Animal Husbandry Company stated that it expects the company’s net profit to lose 81.60 million yuan to 97.92 million yuan in the first quarter, and also recorded a profit of 54.40 million yuan in the same period of last year; Henan Muyuan Co., Ltd. The performance correction announcement was released a few days ago, and the previously estimated change in net profit for the first quarter was from 23,166,000 yuan to 3,497,400 yuan, to a loss of 45 million yuan to 65 million yuan, compared with 29,145,000 yuan in the same period last year. Dakang Animal Husbandry forecasted a loss of 3 million to 5 million yuan in the first quarter. Calculated according to the highest pre-deposit, the three companies’ losses amounted to close to 170 million yuan.

In high-viewing, the “winter” of the pig raising industry was due to the soaring meat prices in 2011, which led to capital inflow leading to excess production capacity. The current downturn in the industry indicates that the pig-raising industry, like the liquor industry, has entered an adjustment period.

However, this adjustment is not conducive to the sound development of the entire industry. Gao Guan said that in the “Twelfth Five-Year Plan”, as of 2015, pork production as a percentage of meat production should drop to 63%. According to the latest data at the end of March this year, pork production accounted for 64.3% of meat production, which is inconsistent with the plan. Through this adjustment period, the proportion of pork meat production can be reduced to 63%, ensuring a healthy domestic meat industry structure.