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The prohibition of hog farming for environmental protection accelerates the withdrawal of small farmers, promotes the expansion of large groups, and hog raising or will suffer heavy losses in 2019

China Agriculture Report By CnAgri2018-06-27 14:27:31China Agriculture Report Print In China, the prohibition of hog farming for environmental protection accelerates the withdrawal of small farmers. At the same time, large-scale enterprises continuously expand their production capacity, and their new added capacity is much higher than the capacity of exited small farmers. In general, the market price of hogs will remain in a downturn in the coming two years, and hog raising industry or will suffer heavy losses in 2019.
Guangdong is a large pig-producing province in China. To further understand the current local pig industry, we recently conducted an in-depth field visit to pig farms in the Guangdong region and found that:
(1) Affected by environmental bans, production capacity of hogs has dropped significantly. Sihui City in Guangzhou is a county where a large number of hogs are  exported. According to statistics, the slaughter volume of hogs in Sihui City was 1.19 million head in 2016, and the local annual consumption was about 140,000 head. This means that Sihui City annually exports more than 1 million hogs to the Pearl River Delta in Guangdong and other regions.
According to research, the slaughter capacity of hogs in Sihui City is currently around 600,000 head. In this year, the local government has defined a new hog raising restricted area and plans to reduce the slaughter capacity to 450,000 hogs next year, which means that this city can supply about 300,000 hogs to other places. Compared with previous years, it is far from meeting the demand for outbound transfer.
(2) Large-scale breeding groups continued to increase investment in hog farming in the three northeast provinces in China, and farmers in Guangzhou still remained pessimistic about the prices of hogs. Guangdong Wens Group plans to build “another Wens” in the three northeast provinces, and a large number of new added production capacity will be released in the first half of 2019. While Jiangxi Zhengbang is adjusting its production capacity in the south, it is also increasing investment in pig breeding in the northeastern region. In addition, CP Group also is accelerating the establishment of new pig farms in this region.
(3) The slaughtering capacity of hogs in Northeast China will increase significantly. In May this year, the state introduced a new policy requiring the prohibition of long-distance transport of live pigs, limiting the transportation of live pigs from the north to the south. However, the operation of northeastern pig farms will drive the development of local slaughtering ancillary industries. Pork will be transported through cold chains to North China, South China and the Pearl River Delta, which or will effectively alleviate the pressure of hog slaughter in the Northeast.
We think the decline of hog prices in this pig cycle will extend to 2020, and heavy losses or will occur in 2019.
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