China’s Hog Slaughter and Processing Sector Needs Upgrading

By CnAgri2017-03-09 09:32:53 Print

In the last 5-10 years, China’s hog slaughter and processing sector has developed rapidly. Output value stood at 700 billion RMB in 2010 and increased to 1,500 billion RMB in 2016, with an annual average growth of 13.54%. Compared to European and American countries, China’s hog slaughter sector sees the problems of a low degree of concentration, an overcapacity and product homogeneity, etc.

A Relatively low degree of concentration and a high degree of market diversification: there were 5,000 scaled slaughterhouses in 2016. Hog slaughter totaled 209 million heads, accounting for 30% of the national total and with a high degree of market diversification.

Capacity was seriously surplus and the operating rate was less than 30%. Taking Shuanghui for example, the actual slaughter was around 13 million heads in 2016, and the operating rate was 40%.

Most slaughter and processing companies only are preliminary processing companies, with a relatively low level of pork processing. At present, fresh carcass is the main pork product. Cold and fresh pork only takes up 20% and meat products only accounts for 15%.

Low additional value: domestic slaughter companies mainly process fresh and frozen pork, with a gross margin of 5.5%. However, the gross margin of several large meat products processing companies ranges at 20%-30%.

In the next five years, the Ministry of Agriculture would focus on improving the concentration ratio of industry and the level of modernization, speeding up eliminating backward capacity, improving the proportion of cold-chain logistics and the structure of meat products, etc.