China’s success in bringing down the price of pork could hinge on how effectively central government manages a sprawling sector that still numbers millions of family farmers.
A surge in the cost of China’s staple meat has officials worried about inflation, which grew faster than expected in June. Among the measures employed to cool the market, the National Development and Reform Commission has summoned the big breeding firms to tell them they mustn’t stoke gains by restricting output or hoarding in anticipation of higher prices.
Economic planners are banking on their directives reaching enough producers to decisively influence supply. That task has become easier in recent years after a catastrophic outbreak of African swine fever in 2018 caused a huge spike in prices and forced many smaller farms out of business.
“Pork price swings are likely to narrow in the future,” Liu Zhicheng, a senior researcher at an institute associated with the NDRC, told a briefing last week, his optimism founded in part on the rise of large-scale industrial farming and its effectiveness at gathering information and adjusting production.
Bric Agriculture Group estimates that the top 20 breeders are responsible for a quarter or more of China’s pigs, whereas before swine fever that proportion was a little over 10%. “As we see more smallholders exit the market, leading pig farmers will gain more market share in future and that’s the trend,” said Lin Guofa, head of research at the consultancy.
The government’s own figures show the industry is consolidating. In 2021, 60% of the country’s 450 million pigs were raised on farms supplying more than 500 hogs a year, according to official releases. That proportion was about half in 2017 and 43% in 2015, and China aims to boost the percentage to 65% by 2025.
From a policy standpoint, it looks like progress. But another statistic is also telling. As of 2019, China had over 20 million pig farms but fewer than 400 were raising more than 50,000 animals a year, according to analysis cited in the annual report of the nation’s largest listed breeder, Muyuan Foods Co. That kind of sprawl will only hinder the collection of accurate data for making decisions, leaving the industry unpredictable and difficult to manage for some time to come.
And while dealing with fewer, larger farms may make it easier to marshal the industry around government objectives, they’re still enterprises that won’t want to sacrifice earnings.
“The modern industry has invested vast sums into new facilities, with an increase in fixed costs, so the consolidated industry will be easier to work with — but they need to be profitable as well,” said Rupert Claxton, meat and livestock director at Gira, a consultancy in the UK.