These are our observations:

• The swine industry in China right now is quite profitable. Live hog prices are 19.05 a kilo or $1.35 US with profits reported to be $70 - $100 per head.
  
  
• Between 50 – 65 per cent of all hogs produced in China are raised in backyards with less than 50 market hogs per year. The China sow inventory is estimated to be between 35 – 43 million. (Notice margin of error 8 million is greater than North America’s sow inventory).
  
  
• There are large scale operations as we met groups with 65,000 sows, 25,000 sows, and 20,000 sows in production or under construction.
  
  
• Over the last five years backyard production has declined about 15 per cent of total production. As we travelled throughout China you could see massive construction of apartments, most of the new tenants will come from the countryside. This will and has cut backyard production as no pigs will be raised in apartments.
  
  
• Pork is a big deal in China. This is from the front page of the China Daily:

"China pork prices were unchanged week on week for week ending 7 August after declining for two straight weeks, the Ministry of Commerce said on Wednesday."

"High pork prices have become a huge concern for the country, as the consumer price index, the main gauge of inflation rose to a 37 month high of 6.5 per cent in July. Pork prices soared by nearly 57 per cent year on year, according to National Bureau of Statistics."

I have never seen hog price updates on the front page of the New York Times, writes Jim Long.

• Many of the farms are really, really small, less than an acre. It’s intensive production but not very efficient as it is very difficult to mechanise. While in China we read a report where there is about 22 million hectares 46 million acres that will not be planted this winter in Southern China mainly because the people have left the farms and moved to the city. The same little farms had pigs and many of them are gone.
  
  
• When we asked about why the big price surge in hogs, we got three reasons: liquidation last year due to low prices, urbanization, and then disease, which we were told is PRRS. One group told us there are fewer than 10 PRRS-free farms in China.
  
  
• The disease factor is the biggest impediment to new barn construction as producers and bankers worry about its implications. The idea of a high health site is half a mile from other pigs. This is drug company heaven!
  
  
• This Pork Commentary is translated every week into Chinese and available on The Pig Site China. On the tour, one of our readers has commented on Pfizer’s Improvac – Chemical castration vaccine. He said pigs with testicles have no value in China’s market and that it is illegal to sell their meat. He felt the Pfizer product got no traction at their meeting as too many producers were worried about missing one of the two shots and getting zero value for the boar. The cost of vaccine versus risk was not justifiable. To paraphrase old Chinese Proverb, "That dog won’t hunt".

The amount of labour used on farms in China is significantly higher than North America. One person per 2.5 sows farrow-to-finish and this is in automated facilities. The workers live on site in single rooms and do not leave the farm operation very often.

• We flew from Beijing to Sichuan Province. The 'Iowa of China' with 4.5 million sows. It is hot and humid, and subtropical. The city of Chengdu was nine million people the province nearly 100 million. Producers there are making money and happy. It seems to go hand in hand in any country, the area had been hit by a major earthquake three years ago, rebuild is massive, it is incomprehensible the new buildings, their size, and the overall infrastructure. When the earthquake hit the province, the government divided the province up and put an individual province from somewhere else in the country to rebuild that specific area.
  
  
• While in China, Genesus and our agents became the first foreign genetic company approved for sale of AI in China. This is a big step for us.
  
  
• Also on our trip, we received confirmation that Genesus breeding stock imported already to China will become the genetic source of a 75,000-sow system organised in three pods.

Summary

China is where the USA was in the 1980’s. There has not been much consolidation or industrialized production. In our opinion that is about to change. Food service, retail supply, and food safety issues will push for larger production bases. The producers that capture the technology, available nutrition, health, genetics, barn design, and most importantly employee training will drive the others out of business. Rapid consolidation, we expect the building in the 80’s in America will pale to China’s in the next decade.

I am travelling with my 14-year-old son, adds Jim Long. He is holding together well. Seeing things like the Great Wall, Tiananmen Square, a hog farm with a huge wall alleged to keep pandas out! Modern as can be urban areas and rural areas in abject poverty. He is also seeing negotiation in a different culture and the desire for technology. I imagine he will remember long after I am gone. We are on our way to Thailand now; we will report our observations next week.