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Price Rises Spark Ideas for Return to Tradition

by 5m Editor
28 January 2008, at 10:18am

CHINA - Liu Yonghao, who started out selling pig feed and later became one of the mainland's richest, sees recent pork price hikes as a call to go back to his old business.

The price of pork is now 60 percent higher from the same time last year, according to official figures. The price rises since last May have been mainly attributed to a decrease in supply and rising feed costs.

However, key producers believe there is a fundamental cause behind escalating prices.

Liu Yonghao, who started his business in the 1980s selling pig feed. He has become one of the mainland's richest people working in the mainland industry and says that recent pork price hikes are a call to go back to his old business. He says that individual farming households are quitting pig rearing, but large, pork production enterprises are not picking up the short fall, they are not expanding enough to maintain numbers and so supply cannot meet demand.
Liu Yonghao

"As the largest consumer and producer of agricultural products, China needs a bunch of large agricultural companies," said Liu.

His company, New Hope Group has interest that range from high-tech to chemicals. It is well on the way to become one of the first and biggest of these agricultural conglomerate.

From 2005, through a series of mergers and acquisitions, Liu - a Sichuan native - now controls nearly 10 leading agricultural companies in various regions, including Kinghey, the pork supplier for the Beijing Olympic Games.

Liu is trying to build the whole supply chain of agricultural products from animal feed and pig and poultry raising to meat processing.

Liu and his three brothers were among the earliest and most famous private entrepreneurs back in the 1980s. After raising chicken and quail, they turned to making pig feed as pork production boomed.

The Liu brothers then became the largest animal feed makers in the country, with a market share of nearly 10 percent at the peak.

5m Editor