Chinese pig farmers switch from pigs to lamb and cattle

By Mark Godfrey

- Last updated on GMT

Farmers are reluctant to sell their pigs at lower prices
Farmers are reluctant to sell their pigs at lower prices

Related tags Meat Pork Domestic sheep Beef Lamb Livestock

China’s pig breeders appear to have had enough of low prices and are moving on to breed sheep. The key agricultural province of Shandong is seeing a shift to sheep this spring, according to reports from the local government.

Tiancheng county, a well-known pig fattening belt, has seen 133 households shift at least partly to sheep-breeding, according to local news portal Sina, which reports that the local government has lined up RMB5m in low interest loans to help local farmers buy sheep.

One farmer, Hu Minzhi, told reporters he had travelled several hundred miles to Zhejiang province to purchase 100 sheep of the local Hu breed (a white-faced, long-eared local sheep variety). He is betting the 95 ewes will yield RMB200,000 per year to the Hu family farm. That is based on China’s soaring lamb prices, with wholesale lamb meat prices double the average pork prices in Beijing in early May.

Farmers are not only moving to sheep. In Heilongjiang, another key agricultural province which borders Russia, farmers are getting access to "lucky cow"​ micro-loans, thanks to local government keen to expand cattle herds and cash in on strong beef prices. The township of Jingxingzhen has vowed to achieve the "development of a great beef industry".​ Its goal is not surprising, given the current state of beef prices and demand.

Chinese pig farmers made an average of RMB10.58/kg for slaughter pigs in early May, while piglet prices, at RMB20.76/kg, were down 3.9%. Average losses per head, at RMB344, eased by RMB15 on a week-on-week basis. Yet hog prices have a way to go to return to a high of RMB15.1/kg seen in late December.

The situation also looks bleak compared to this time last year. Hog prices fell to RMB12/kg in early April, lower than 2011 and 2012 prices. Smaller-scale breeders have claimed they are losing an average of RMB258 per pig, according to Chinese agri-consultancy Soozhu. In April 2012 farmers made an average net income of RMB109 per pig.

Industry watchers believe the current slight rebound in prices is driven by farmers hoarding their pigs and waiting for better prices. "They are reluctant to sell,"​ said Li Jiang, an agri-analyst at Anxin Securities, a brokerage in Shanghai.

But he also pointed to a cull in sow numbers through March and he foresaw a turnaround in prices by the second half of the year. "In the first two quarters there has been an elimination of excess capacity in the hog breeding sector, which should usher in a new round of pork price rises... this remains a volatile and cyclical industry."

That might explain why farmer Hu Minzhi says he will also keep pigs, but only half the numbers he kept before: "This way I can win twice… you have to think long-term, I won’t finish with pigs altogether."

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