Is pig farming still profitable in 2017? Can it continue the super golden pig year of 2016?

For the hog market, 2016 was like a roller-coaster year. During this year, hog prices experienced a sharp rise in the first half and a sharp fall in the second half. Behind these big swings, the reasons driving changes in hog prices were even more complex.

Some people say 2016 was a golden year for pork. So in this year, how much did pig farmers actually earn, and did they make money? In 2017, can the super golden pig year of 2016 continue?

Wang Shufen is a major pork seller in Zhangjiagang City, Jiangsu Province. Recently, she has been busy preparing for New Year pork sales. Right now is the peak sales period of the year for pork, and in the past two days, pork prices have started rising again. Although she is not earning as much as during the highest prices in June, Wang Shufen is still very satisfied.

Wang Shufen: Our price now is just 15 or 16 yuan, and live pigs are 9 yuan or 8 yuan. Of course, that is much higher than before.

Wang Shufen's family raises more than 3,000 pigs, and she and her husband have been working in this industry for nearly more than ten years. Like other pig farmers, starting in 2013, Wang Shufen's family endured three years of falling pork prices, and finally welcomed the spring of the pork market in 2016. She told reporters that this year's business earned back all the money lost in the previous three years.

Wang Shufen: We definitely made money. Weren't we losing money in the previous three years? Starting in the second half of last year, the market picked up. At this rate, basically, in about another half a year, we will be able to make back what we lost before. If the market can stay relatively good later, we can still earn a bit more, but not too much.

Nan Xiaofang, a sow farmer living in Ningxia, also made a lot of money in 2016. The 200 piglets born to her family's sows all sold for a good price.

Nan Xiaofang: This year's situation is relatively good. This year we had more than ten large sows, and this year we sold more than 200 piglets, which came to 110,000 to 120,000 yuan in gross income. After deducting feed and other costs, it might be 80,000 yuan. This year was especially good for my piglets.

2016 can be called a golden year for pig farmers, and it can also be called the year with the most intense turmoil in the hog market. In the first half of 2016, hog prices first rose slowly. By June 3, they hit a historic high, and afterward went through a slow decline and then an accelerated decline. By mid-October, the lowest point of the year appeared. After that, prices began to rise slightly again. Feng Yonghui, an analyst at the Hog Warning Network, said that the reason hog prices rose and fell so sharply comes down to three aspects: cost, supply, and demand.

Feng Yonghui: This year, the three main factors behind prices are cost, supply, and demand. Their performance this year has been very turbulent, with extremely sharp fluctuations. First, cost. Before early June, feed costs, corn and soybean meal, kept falling and hit a nearly six-year low. Then suddenly in early June there was a sharp rise. That price increase lasted about one or two months. Later, after the new corn and new soybeans were harvested, there was another sharp decline. So costs fluctuated very sharply.

It can be seen that pork price volatility was proportional to the volatility of feed costs, while the supply side was just the opposite. Sow farmer Nan Xiaofang told reporters that a large part of the reason her piglets sold for a good price this year was the severe losses in the previous three years. From 2013 to 2015, hog prices fell sharply, dealing a heavy blow to farmers' enthusiasm. Many people withdrew from hog farming, causing a sharp decline in the production capacity of the entire hog industry. Market supply fell short of demand, causing hog prices to run at a very high level for all of 2016.

Nan Xiaofang: The reason piglet prices were high this year is that hog prices were especially low in recent years. Many small-scale farmers stopped raising pigs. With fewer people raising them, piglet prices gradually rose.

Analyst Feng Yonghui said that in the second half of 2016, because domestic hog prices were getting higher and higher, cheaper imported pork from abroad became an ideal substitute. From June to October, the surge in imported pigs caused domestic hog prices to fall sharply. The slow rebound after November also matched the pattern of changes in pork market demand.

Feng Yonghui: But after June, domestic live hogs did not show a major increase. At the same time, however, the amount of imported pork surged from June to October, so this also caused hog prices to fall for four consecutive months. Now is the peak period of the year for pork sales. The south makes cured meat, and the north slaughters New Year pigs, so demand is supporting prices here, and there is no room for hog prices to fall.

So, after experiencing such big swings, what changes will appear in hog market prices in 2017? Pig farmer Wang Shufen told reporters that in 2017, hog prices will not fall too much, but they will also not rise like last year. Therefore, she does not plan to continue expanding her scale. She believes next year's task should be to raise pigs well, not to expand output.

Wang Shufen: I do not have any plans right now, just to choose slightly better breeds next year. I do not want to increase too much, just keep a little reserve stock. The volume will not increase too much, just a little, because if there is too much, and the market suddenly drops, then you will not even have time to cut back.