Quanzhou's pig farming industry hits a cold spell, farmers lose 450 yuan per pig
The "Pigsy" that once drove up the CPI has recently seen its value keep falling. As of recently, this endless slide has lasted for more than three months, with the market wholesale price of pork down by 30%, and farmers losing 400-500 yuan for every hog they send to market. And while hog farmers are crying losses, consumers are not getting cheaper pork despite the falling pig prices. Many residents are asking, why on earth is this? Carrying these questions, the reporter visited industry insiders and relevant departments.
Pig prices have fallen, farmers lose about 450 yuan per head
"The price for hogs sent to market is 5 yuan in Nan'an, 5.3 yuan in Jinjiang, and around 5.5 yuan in the urban area. Prices update daily, but the curve is still heading downward and has yet to stop falling." The reporter learned from the industry that, consistent with the domestic market, the local hog purchase price in Quanzhou also remains in an "endless slide."
"Pork prices have kept falling, and it is now about the same as the worst time in 2006, while feed and labor costs have risen considerably compared with then. The pig farming industry is currently going through its coldest winter in 10 years." Cai Xisen, chairman of Fujian Yasen Agricultural Comprehensive Development Co., Ltd., told the reporter helplessly that 1,800 hogs were sent to market in March, with a loss of 700,000 yuan, and the pig farm's overall loss in the first quarter of this year has exceeded one million yuan.
Yasen Agriculture is the first agricultural enterprise in Quanzhou to be listed at the Quanzhou operation center of the Haixia Equity Exchange, and one of its main businesses is hog farming. It currently has about 13,000 hogs on hand and sends nearly 30,000 hogs to market each year. Cai Xisen did the math for the reporter: "For a 200-jin hog sent to market, the piglet costs 300 yuan, it must be raised for at least 5 and a half months, consuming 550 jin of feed, with bulk-purchased feed averaging 1.6 yuan per jin, so feed costs total 880 yuan. Vaccines and mineral and other additive procurement costs come to 100 yuan per head, plus an amortized labor cost of 70 yuan per head and 100 yuan for water, electricity and equipment depreciation. The farming cost per hog is about 1,450 yuan, while at the current market price of about 5.0 yuan, sending one hog to market results in a loss of about 450 yuan."
What happened to Yasen Agriculture is just one example of Quanzhou's hog farming industry. Xu Junfeng, president of the Nan'an Pig Farming Association, told the reporter that the entire industry is now mired in losses, and the situation is hardly optimistic. Some weaker farming enterprises may find it hard to keep going and have no choice but to "cut their losses and leave." But he also believes that, looking at the big picture, pig prices are already at the bottom of the market cycle; however, due to the impact of the off-season for demand, they may linger at the bottom for a relatively long period, and it will still take time for prices to stop falling and rebound. Meat is still expensive, retail unit prices have only symbolically dropped by 0.5 yuan
On the one hand, cheap pigs hurt farmers; on the other hand, pork prices remain stubbornly high. Data published on the Quanzhou Price Information Network under "Retail Prices of Major Daily Necessities in Quanzhou Urban Area" show that middle-cut pork and leg meat are 10.0 yuan per jin, and lean meat is 13.0 yuan per jin, all down by only 0.5 yuan compared with the same period last year.
"In the past, pork ribs were 22 yuan per jin; now that live pig prices have fallen, a jin of ribs still costs about 20 yuan." At the Gushan farmers' market in Jinjiang, a consumer who was selecting pork told the reporter that, because she is responsible for her family's three meals a day, she visits the vegetable market every day. She feels that pork prices have dropped a little recently, "but the decline is very small, and the price drop is not obvious."
During visits, by asking vendors at the Gushan farmers' market in Jinjiang and at Dongmei Market and Xinmen Vegetable Market in the central urban area, the reporter also learned that at the morning market, pork with skin costs about 10 yuan per jin, pork belly 9 yuan per jin, down by about 10% compared with the same period last year; pork front leg dropped from 11 yuan to 10 yuan, level with the hind leg; pig trotters overall dropped by about 0.5 yuan; ribs cost 20 yuan per jin, down 2 yuan compared with the same period last year, a decline of no more than 10%. Meanwhile, pig heart, pig stomach, pig kidney and other pig offal regarded locally as traditional nourishing ingredients remain firm in price.
"Live pig prices are plunging, so why do meat prices at the vegetable market only drop symbolically? It is hard for consumers to feel any sincerity in these price promotions." The unclear transmission effect from the source of falling pork prices to the end point left Lin Jindong, an industry insider who has long followed meat prices, deeply puzzled. In his view, based on a 50% meat yield rate, for every 1 yuan drop in the price of live pigs as a raw material, pork as a circulated commodity should have room to drop by an average of 2 yuan per jin.
Controlling the market, slaughter traders hold prices up and enjoy high profits
"The root of the poor price transmission lies in middle wholesalers in the hog industry chain controlling the market and taking high profits; at the same time, meat vendors at vegetable markets form price alliances and control terminal sales prices." A person in charge of the relevant department of the Quanzhou Economic and Trade Commission told the reporter that precisely because of this, the competent authorities have been committed to helping farming enterprises open up the "last kilometer" of production, supply and sales, improving the bargaining power of the farming segment, and at the same time supplying affordable meat to the market to benefit consumers.
"In the urban area, there are two models for the pork supply chain. One is that middle wholesalers purchase live pigs and slaughter them, then wholesale them to vendors at vegetable markets. The other is that wholesalers place purchased live pigs in the waiting pens of slaughterhouses, then resell them in small batches to terminal retailers such as vendors, who handle slaughtering themselves." A person in charge of the relevant department of the Quanzhou Economic and Trade Commission told the reporter that such middle wholesalers are called slaughter traders in the industry, but they are not connected with the slaughterhouses and slaughter points we know of. It is reported that the whole city has 18 slaughterhouses and 57 slaughter points. They participate in procedures such as hog slaughtering and hygiene inspection, but do not participate in the purchase and circulation of live pigs.
"In every large vegetable market, there are basically one or two major slaughter traders. As middle wholesalers, they purchase live pigs from farming enterprises and, after slaughtering, supply their own stalls and other small vendors in the market." Cai Xisen said that in the round after round of roller-coaster market cycles in the hog market in recent years, middle wholesale slaughter traders have not been "winner takes all" for the first time. Because they have a strong voice in the market, they can independently choose the extent to which meat prices respond to pig price changes -- when live pig supply exceeds demand, pig prices fall more than meat prices; when live pig supply is short, meat prices rise faster than pig prices. Amid fluctuations in live pig purchase prices, slaughter traders enjoy guaranteed profits regardless of drought or flood.
"In addition, at vegetable markets, because they have coexisted for a long time and lack competition, meat vendors often form a solid price alliance." Xu Junfeng told the reporter that no vendor will take the initiative to cut prices, and even in the off-season they usually rarely lower prices. By reducing slaughter volume, they create tight supply in the pork retail market and oversupply in the live pig market, forcing down and eroding profits in the hog farming segment, and they can still profit handsomely. It is reported that, based on the current market, vendors can earn about 500 yuan in net profit from selling each pig.
Reporter's notes
Where have the benefits consumers deserve gone?
When I mentally categorize the entrepreneurs from different industries I have interviewed, hog farmers are always involuntarily labeled "simple, honest and diligent," not good at expressing themselves, and with few opportunities to deal with the media.
But this time, regarding the uproar over falling pig prices, every one of them seemed to have endless things they wanted to pour out to the reporter. Because these "pig commanders," facing the slaughter traders who hold market control, have a bellyful of bitterness and need to make their voices heard.
As a responsible mainstream media outlet, at every critical moment in the development of an industry and in the face of the public interest, our attention and promotion have never been absent. Therefore, our reporting on falling pork prices will not be just a one-off report. We will also stand with our readers and continue, through investigative reporting, to follow why the "pig cycle" has failed, whether affordable pork can boost the consumer market and bring real benefits to consumers, and other issues. We also look forward to enthusiastic readers joining us in offering ideas and suggestions for the healthy development of the industry and the protection of consumers' interests.