Profiles of the Chinese Pig Industry

sold a year Manure collected for fertilizer use 29 Opportunity cost Expenses Buy feeder pigs 21.5 Grain and protein meals 13.8 8% of feed Premixes 2.8 5 Kg total Labor 65 Normally not included Vets and drugs 7.3 Others 6.5 Depreciation 2.7 Net income before taxes 50.9 Net income 48.9 3-5% taxes and fees Net income per pig 16.3 Advantages to be a backyard producer · Enter or withdraw business to/from pig industry at essentially no cost. · Production flow is totally adjustable depending on market price. · Two or three pigs sold per year used to account for 30 to 40 percent cash income for her family but now may be down to only 10 percent. Disadvantages and constraints · No leverage power on inputs and products prices. · Diseases can cause serious problems and losses. · More difficult to find market and sell pigs due to higher cost of transportation, thus usually receive lower prices. · Always being a lowest price receiver no matter how much you improved genetics. · Young generation consider odor a problem and neighbor’s complaints of odor. Decreased interests in pig production by younger generation. Actually, backyard pig production is disappearing in areas around big cities. · Opportunity cost of labor has been noted and begins to increase. Emerging Issues Industrialization, continuous reform, and opening to the outside world are bringing about many changes in the Chinese pig industry. Observers and researchers interested in the Chinese pig industry are studying the issues currently emerging in the country in order to sketch the outlook for Chinese industry. Concerned about potential problems caused by reductions in rural incomes, the Chinese government, with a long history of planned economy, will probably continue to provide various supports to the households in agricultural areas. Pig production is one of the sectors chosen by the government to help raise farm incomes. The trend towards household specialization and expanding farm sizes will continue in the hope of increasing production efficiency. Although the pace towards privatizing state-owned swine farms is not fast enough to meet the industry expectation, the resolve of the government to drop the long—-suffered burden of poor-managed farms is evident. In Guangdong, local governments have already liquidated many swine farms, facilitating purchase by farm managers and technicians at very reasonable prices. One popular model is to let the managers own up to 40% of net assets/equity and other workers can buy the rest. After the reform the state may or may not retain shares in the business. Managers normally have to pay cash or amortize the initial cost of the transaction. Managers are. They are even allowed to buy out the farm using the future earnings in some areas. In addition, the value of a pig farm will be assessed well below the real value in order to make it affordable for managers. Newly created private swine farms can be very competitive due to the low fixed costs and total assets, at least in a short term. In addition to an immature market economy, poor infrastructure and logistics to handle live animal and chilled pork logistics will remain a major constraint for a long time. Other aspects like production efficiency are also major constraints for many Chinese swine farmers to overcome. This is not limited to technical skills. Perhaps more important is the lack of basic management skills needed to add economic value to a swine operation. Chinese consumers looking for quality and flavor seem willing to pay higher prices for pork. Pioneering companies have reported success in value-added products when they try to emphasize pork quality by cross breeding lean pigs with local Chinese breeds. Several food producers have already opened specialized stores or supermarket counters for ‘local-flavor pork’. The broiler industry has already experienced a similar chan