Lyle Jones, Director of Sales China
As we enter the second half of 2023, the phrase “there is no joy in Mudville” comes to mind when trying to describe the pig market in China. Of course, this phase is a line from the poem “Casey at the Bat” by Ernest Lawrence Thayer. It describes the reaction of the hometown crowd when their hero, Casey, strikes out, losing the big game. The expression describes any disappointment or an overall sense of sadness or disappointment. Producers are disappointed pig prices remain sluggish and the industry continues to lose money.
The table below represents Pig Sales Revenue of 13 listed companies in the first half of 2023:
The revenue of those companies shown in the first half of the year was about 105.4 billion yuan ($14.5 billion USD). At the same time, the average slaughter pig price was 14.6 yuan / kg ($0.91/ lb.) ., while the average cost was 16.50 yuan / kg., ( $0.96/ lb.). It is estimated the combined total losses of those 13 companies to exceeded 13.7 billion yuan ($1,895,000,000 USD).
Its hard to imagine how an industry can withstand such losses without significant liquidation sows and reducing production. We have been looking for the market to uptick by now and abit surprises we haven’t seen more movement. There are reports of many of these public companies selling shares to local governments to infuse cash into their operations. It remains to be seen how deep the pockets are with losses of these 13 companies running more than $525 million per week.
Many companies are simply trying to hold on and maintain existing inventory levels in hopes that others will cut back, benefiting from higher prices when they come. Other companies have begun to sell pig farms, sell more weaner pigs and reduce their production capacity. With so much focus the last two years of cutting cost, most companies have exhausted efforts by now and there is nothing else to cut.
Unfortunately, Pork Quality has suffered as result of “low cost” production. Producers have went too far substituting feed ingredients and essential nutrients. Consumers are happy to see low pork prices, but not at the expense of sacrificing Pork Quality. Taste is what drives consumer demand and higher pig and pork prices.
This author believes that the best way to bring “Joy” back into the pork Industry is to focus upon producing better tasting pork.
This post was written by Genesus