Chinese businesses link up to create pig farm

The Nong Lin Group and Beijing Da Bei Nong Science and Technology Group Ltd have signed a new ‘strategic cooperation’ deal with Shanghai-based Guang Ming Group (also known as the Bright Food Group) to produce four million Landrace pigs within four years and 10 million by 2025. The pigs will be produced by Shanghai Zhong Wang Livestock Science & Technology Co which was set up as part of the deal. The three way tie up was launched by company executives with buzz words like ‘innovation’, ‘green farming’, development and mutual gain.

A Guang Ming subsidiary, Guang Ming Agricultural Livestock Breeding Co, claims to be the biggest producer of pigs in Shanghai with 1.3 million hogs a year according to the company. Beijing-based Da Bei Nong meanwhile is an R&D-minded, listed agricultural company with operations in animal feed and medications as well as pig breeding and meat processing. The firm has been keen in recent years to expand its pig headcount as a driver of profits.

Fifty years as one of China’s pioneers in Landrace breeding makes Nong Lin –which is located on the east coast just south of Shanghai - a partner of the government: the agricultural ministry has made it a “national base”​ for Landrace breeding in China.

The tie up between the three majors comes as China pork firms face more competition from imports. The huge central Chinese city of Chongqing - one of several allowed to conduct meat imports in 2014 – has this month announced a 91% year on year increase in meat import volumes in 2017, to 3,824 tons. Meat imports were up 105.8% in value to USD6.35 million.

Leading pig companies meanwhile have been fighting to outdo each other by adding pig numbers. Leading breeding firm Tang Ren Shen Group told investors this month it aims to produce two million extra hogs per year in 2020 by increasing numbers by 50 percent per year.

Another leading firm Zheng Bang Group meanwhile has credited increase pig numbers for a strong performance in the first two months of this year. In January and February of 2018 increased its pig output by 141 percent in volume to 668,900 tons to RMB1.07 billion in value (up 119.6% on the same period last year).

Owned by the investment arm of the Shanghai municipal government, Guangming/Shanghai Bright Food is an increasingly international group with assets in dairy and meat around the world. The firm made headlines for buying the Weetabix in the UK (which it later sold) and owns another meat subsidiary, Shanghai Maling Aquarius Co Ltd which has sought to buy assets in red meat though its background is in pork.  

Da Bei Nong has long stated its goal to become one of the world’s leading companies by producing 100 million pigs a year itself it could be the world’s number one agri firm.

China had a hog inventory of 435 million pigs at the end of 2017, compared to 147 million in second-placed EU and 69 million pigs in the US.

Even though there are signs that growth in pork consumption is levelling off in China there has been plenty of consolidation as listed pig companies like Da Bei Nong and Guang Ming use access to cash (as well as profits from high pig prices in 2016) to expand and push out smaller pig farmers. Integrated firms have been able to take advantage of lower grain prices to produce cheaper feed in house, increasing their profitability.