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UK’s Genus sees challenges as it restocks China’s pig farms

British livestock genetics firm Genus sees potential short-term challenges it its drive to help restock China’s massive pig farming industry.

1 March 2021, at 8:00am

Reuters reports that Genus’ chief executive warns that China has faced a surge in disease outbreaks over the winter.

The supplier to a third of China's top 50 producers with breeding pigs has seen strong growth and gained Chinese market share during a rapid restocking of the world's largest hog herd that was devastated by African swine fever in 2018 and 2019.

Genus' shares slid 6% on Thursday 25 February, their biggest percentage fall since May 2020, after the company also forecast lower growth and increased currency headwinds in the second half.

Chief Executive Stephen Wilson said Chinese pig farms had seen "a lot of disease" over the winter, making it harder to keep the firm's pigs healthy, particularly during transport when there is a major risk of virus transmission.

"It's going to make the next few months potentially have some challenges," he told Reuters, adding customers could review restocking plans as a result of the disease outbreaks although Genus had not seen any "major changes" yet.

"The demand side continues to be very healthy," he said.

China's restocking effort helped Genus lift first half revenues by 6% to £285.7 million ($404.6 million), while profit after tax for the period to the end of December was up 26% at £30.3 million.

China's hog futures have rallied more than 10% since launching in January over reports of disease outbreaks. Some analysts estimate about 20% of sows in northern China have been affected.

Genus was considering dedicating a fleet of trucks for transporting its pigs to reduce risk of disease transmission and was looking at developing its own diagnostics to detect infection accurately without producing false positives, Wilson said.

But he said the outbreaks would keep pig prices in China high in the medium term and sustain strong demand for genetics.

"There's still a lot of expansion and a lot of empty farms and still a lot of slaughter pigs that are being rebred as sows which have much lower productivity," said Wilson.

($1 = £0.7061)