Specialist
Former Farm Manager at Muyuan Foods Co Ltd
Agenda
- China’s pig farming market concentration, proportions of industrial and small-scale farms, plus policy analysis
- Pig farming supply and profitability, performance of Wens and Muyuan in 2018 and Q1 2019 forecasts
- Epidemic prevention and control, plus pork price trajectory and influencing factors
Questions
1.
China’s pig farming industry has entered a phase of rapid development in the absence of major outbreaks of epidemic since H1 2010, and many corporate pig farmers posted the loss for consecutive three years due to the significant overcapacity in the live pig market from 2013 to 2015. In 2016, individual pig farmers began to exit, bringing the market into a new cycle. Pork price rose in 2016 and fell in 2017, and corporate pig farmers posted losses in 2018. As of March 2019, it was widely believed that the last round of pork cycle was essentially over. Could you tell us how to judge the cut-off time of the last round of pork cycle? What are the reasons behind?
2.
Did the swine fever result in any changes in China’s demand for pork in Q1 2019? What is the approximate demand for pork at present? How many do you expect the annual demand will be in 2019?
3.
How much has the number of breeding sows shrunken? How much of an impact can this have on China’s output of pork in 2019?
4.
The number of fattening pigs also decreased by 40-50% compared with the same period of last year. Is the decreasing rate slowing down now? Will the conditions turn better in Q2 2019?
5.
How much do you expect the standing stock of breeding sows and fattening pigs will decrease by the end of 2019?
6.
Prediction says that the pig farms can earn over RMB 1,000 on each pig. Could you give an analysis on the profitability in Q1?
7.
You said that the pork price will possibly fall back in H2 after soaring in March. What will the pork price look like in H2?
8.
When do you expect the impact of ASF on the pork price will end?
9.
Without effective vaccines, the ASF virus is controlled by biological solution, for example, culling the infected pigs, which has resulted in the great reduction of pork output. Could you estimate the specific number of the culled pigs by the end of 2019?
10.
Do the government, corporate pig farmers and individual pig farmers have any effective measures to pin down the spread of the ASF after the outbreak? Could you just name a few?
11.
Muyuan is a large-scale corporation. Are there any policies regarding farming concentration or environmental protection for smaller manufacturers? How are they influenced?
12.
With the rising trade tension, the amount of pork imported from the US to China has decreased by 47% in 2018 compared to the same period in 2017. China has resumed importing large quantities of pork from the US again recently. According to US Department of Agriculture, up until March this year, China had imported 23,800 tonnes of pork, marking the highest weekly purchasing amount from April 2017. It is possible the amount imported pork from the US would reach a new high of 300,000 tonnes, increasing by 81% compared to the same period in 2017, although there is a 62% tariff against imported pork from the US to China. How do you see those numbers? Do you believe them?
13.
Could you share the prices of imported pork from the US?
14.
The market share of China’s 10 biggest pig farmers is around 8.1%. Wens, the biggest corporate pig farmer in China, is expected to have a marketable fattened stock of 22.3 million in 2018 with a compound annual growth rate of 17.3% and a market share of 3.2%. Muyuan, the second biggest, would have a marketable fattened stock of 11.01 million with a compound annual growth rate of 46% and a market share of 1.6%. Unlike the high market share of the 10 biggest pig farms in the US, why is the number so low in China? Will it be improved by a great deal in the future?
15.
Will the policies regarding environmental protection and farming concentration improve the market share of those 10 biggest corporate pig farmers?
16.
Wens and Muyuan are operating under different business models. Who will achieve faster growth under respective business models and why?
17.
What influences have been brought to Muyuan and Wens by swine fever? Could you please talk about the changes in standing stock, the slaughter amount and relevant solutions?
18.
The marketable fattened stock of Muyuan increased by 3.23% in 2015 and reached up to 132.42% in 2017, while the YoY increase rate for Wens were 26% and 11.18% respectively. Why there’s a considerable increase in 2017?
19.
What difficulties does Muyuan face during the breeding, farming, slaughtering and transaction process? Does Wens face the same problem?
20.
Does Muyuan set new minimum standards every year?
21.
Do you think there is other strategic planning worth noticing?
22.
Could you please compare the cost of each pig of Muyuan with other players?
23.
What are Muyuan’s share of different breeds of swine such as Landrace-Large-White hybridisation pig and Duroc-Landrace-Large-White hybridisation pig?
24.
How does Wens secure its increase in production and cope with the impact of AFS in 2019?
25.
What influences will be brought by the fever and upward movement in pork price to processing enterprises such as Shuanghui? Will their cost rise and thus cause increase in pork products’ price?
26.
Do you think the increase in prices will lead to consumers’ preference for other meat and thus result in decrease in the need of final products?
27.
What else do you want to talk about before the end of the interview?
