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China’s pig industry could face oversupply issue

China is on course to produce 2 billion pigs per year while domestic consumption remains at 650 million pigs per year – raising concerns of a potential oversupply.

8 September 2020, at 9:47am

According to reporting in The Global Times, the potential pig oversupply would be disastrous for the industry.

In recent months, pig production in China has ramped up. Profit margins are favourable to producers, and increased production has come in tandem with the gradual re-opening of the catering sector after COVID-19 lockdowns were lifted.

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In June 2020, New Hope Group, a food company specialising in farming and animal products, saw its pig farming capacity reach 18 million heads. The company expects a further increase of 12 million heads by the end of September.

China has also been increasing pig imports in 2020. Market analysts at SCI99 told the Global Times that as of September, imported purebred pigs reached a five-year high of 10,637 heads.

"Although the industry is seeing high profits due to surging pig prices, China's pig farming capacity will fully recover in 2021, by which time the price of live pigs may drop with the increase of supply," said Wang Lingyun, an analyst at SCI99.

Some analysts think that market consolidation for the pig farming sector will be more obvious in China, because large enterprises have financial strength, lower breeding costs, and more qualified operations.

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