Perspective of the National Development and Reform Commission’s Early Warning of Pig Price
Xinhua News Agency, Beijing, June 19th Title: Perspective of the National Development and Reform Commission’s Early Warning of Pig Price
Xinhua News Agency "Xinhua Viewpoint" reporters Liu Kaixiong, Yu Wenjing, Zhou Mian and Zou Mingzhong
On the 15th, the National Bureau of Statistics released the market price changes of important means of production in the circulation field in the first half of June 2021. The current price of live pigs was 15.8 yuan/kg, which was nearly 60% lower than that of 36.8 yuan/kg in the first half of January.
On the 16th, the National Development and Reform Commission issued a three-level warning for the excessive drop in the price of live pigs, prompting farms (households) to make scientific arrangements for production and management decisions and keep the production capacity of live pigs at a reasonable level.
The amount of slaughter has risen sharply, and supply exceeds demand to lower the price of pork.
The reporter learned in a large supermarket chain in Beijing that the price of fine pork belly has dropped from nearly 40 yuan to 23 yuan at the beginning of the year, and the price of rear hip tip has also dropped from more than 30 yuan per catty to 16 yuan today.
"Pork prices have been falling this year, especially in March and April." The supermarket meat salesman said: "The current price is at the beginning of the year, and I can’t even think about it."
Why did the price of pork fall so much? According to the National Development and Reform Commission, the price of live pigs has been declining recently due to the combined effects of concentrated slaughter of large-weight pigs, increased imports of frozen pork and weak seasonal demand.
"The sharp increase in pig slaughter is the core factor, mainly due to the rapid recovery of pig production capacity during the year and the low slaughter in the same period last year." Galaxy futures pig researcher Taokit Chen is saying.
"In a word, there are more pigs currently being slaughtered." Wu Shenshu, director of the Animal Husbandry and Veterinary Department of Hunan Provincial Department of Agriculture and Rural Affairs, said that as of the end of April this year, there were more than 15 million pigs slaughtered in Hunan Province, which not only increased by about 30% year-on-year, but also increased for 19 consecutive months.
The Animal Husbandry Development Department of Liaoning Provincial Department of Agriculture and Rural Affairs recently said in an interview that it is estimated that there were 15.6 million live pigs in Liaoning Province in the first five months, a year-on-year increase of 30%; 10.96 million pigs were slaughtered, a year-on-year increase of 25%; The output of pork was 950,000 tons, a year-on-year increase of 25%.
The investment in aquaculture has increased and the production capacity has expanded rapidly.
In the investigation, the reporter found that in the first two years, affected by the African swine fever epidemic, the domestic pig slaughter and stock decreased significantly, which boosted the domestic pork price and brought high profits to the aquaculture industry. At the same time, local governments have taken corresponding measures to support the construction of modern farms in order to ensure the stable price of pork supply. In this context, large-scale enterprises have rapidly expanded their production capacity and newly expanded their farms.
Wu Shenshu introduced that in Hunan alone, since September 2019, 926 farms with a scale of more than 10,000 heads have been newly expanded, and 482 have been put into operation.
"Now the spot price of live pigs is close to the cost line of autotrophic breeding of leading enterprises." Li Qiang, deputy general manager of Xinhu Futures, believes that the expansion of large-scale aquaculture enterprises in the early stage has led to the continuous release of pig production capacity.
In addition, a set of data from China Feed Industry Association can also confirm the rapid recovery of pig production capacity. From January to April this year, the total national feed output was 88.46 million tons, up 20.1% year-on-year. Among them, the output of pig feed was 41.17 million tons, up 74.2% year-on-year; The output of egg poultry, meat poultry and aquatic feed decreased year-on-year.
Liu Pingyun, dean of the Zhongnan Branch of Nanjing Design Institute of the Ministry of Agriculture and Rural Affairs, said that pigs are now raised by science and technology, and the cost of various inputs is high. At present, the starting price of a pig farm with a normal scale (5,000 sows) is 60 million yuan.
"It is only after seeing the high profits of the aquaculture industry that capital will enter the market." An interviewed expert said.
All parties actively respond to keep the market running smoothly.
"With the continuous recovery of pig production capacity, the downward phase of the current pig cycle has arrived. Although there will be a short-term rebound in the future, the overall weak pattern is difficult to change." Lv Pin, a pig researcher at Everbright Futures, said.
The decline in pork prices has temporarily benefited ordinary consumers, but the early warning issued by the National Development and Reform Commission on the production side has aroused great concern. Now, the market is beginning to worry that the enthusiasm of aquaculture enterprises will be hit, which will affect the pork supply and meat price stability for a longer period of time.
Pig breeding enterprises have stood at the critical point of breakeven.
Xiong Lianqiu, the chairman of Hunan Xiangtan Kexing Ecological Agriculture Co., Ltd., calculated an account for the reporter: the comprehensive cost shared by each fertile sow has reached as high as 20,000 yuan, and the various costs that a fat pig needs to share per kilogram of meat on average have also risen to 8.5 yuan.
Mu Yuan, the largest listed company in the pig breeding industry, said recently that it needs to improve talent management and capital reserve to prepare for the coming of winter in the industry.
On June 9th, the National Development and Reform Commission, together with other departments, jointly issued the "Pre-plan for Improving the Regulation Mechanism of Government Pork Reserves to Ensure Supply and Stabilize Prices in the Pork Market", aiming at strengthening the regulation of government pork reserves. Subsequently, the National Development and Reform Commission proposed that it would pay close attention to the trend of pig production and market price with relevant departments, conscientiously organize and implement the plan, and timely carry out reserve adjustment to promote the smooth operation of the pig market.
The Ministry of Agriculture and Rural Affairs said that the next step will be to strengthen production and market monitoring with relevant departments, release information in a timely manner, and guide pig farmers to rationally arrange production rhythm; Do a good job in the prevention and control of African swine fever normalization and consolidate the results of pig production recovery; Taking the change rate of fertile sows as the core regulation index, we will promote the establishment of a regulation mechanism to stabilize the production capacity of pigs and prevent the recurrence of large fluctuations; Accelerate the transformation and upgrading of the pig industry and promote the high-quality development of the pig industry.
All parties in the market are also actively taking action. Since the beginning of this year, a number of futures companies have taken the initiative to tailor the risk management plan for breeding enterprises in combination with pig futures. For example, Guangfa Futures and Dadi Insurance jointly provide futures price insurance for more than 6,100 pigs in Yunyang County, Chongqing in the form of "insurance+futures". 30% of the project premium is subsidized by Yunyang county government, 50% is paid by futures companies, and the proportion of farmers paying premiums is only 20%.