Poultry industry may bottom out and rebound in the third quarter

For some time recently, H7N9 avian influenza has left the poultry industry in a bleak slump. All breeding enterprises and farmers are losing money. Large-scale enterprises are holding on amid daily losses, silently waiting for the day the storm passes. Some small farms and farmers believe a rebound is imminent and are now buying chicks, hoping to make a big profit in 3 months.

Some industry insiders say no one can judge when this crisis will pass, but those who hold on to the end will surely earn back their previous losses. This is the strange cyclical law of the breeding industry.

Market status

Breeding industry hit by severe winter

Recently, the Ministry of Agriculture reported that the National Avian Influenza Reference Laboratory re-tested a suspected positive sample of H7 subtype avian influenza virus nucleic acid from a chicken at the Dongcheng San Niao wholesale market in Dongguan, Guangdong, and confirmed it as positive. This news undoubtedly added further misery to the poultry industry. For more than a month, affected by H7N9, live chicken sales have plummeted. Guangdong breeding industry leader Wen's Group has been losing about 30 million yuan per day since last month, and other small enterprises are struggling even closer to the brink of survival.

Ou Xianhua, chairman of Guangdong Nongzhidao Agriculture and Animal Husbandry Technology Co., Ltd., told reporters that Guangdong's inventory has dropped to 1/3 of the original level, and sales are almost zero. It is understood that large breeding enterprises such as Wen's transport live chickens to township and rural markets in third- and fourth-tier areas for sale. Very high-quality 120-day slow-growing chickens normally sell for 30 yuan each, but are being sold at a loss in rural areas for 15 yuan each, because rural residents are not afraid of H7N9. At present, the ex-factory price of fast-growing chickens has plummeted to 1.7 yuan to 1.8 yuan per jin, and the ex-factory price of slow-growing chickens is 4 yuan to 5 yuan per jin. Before H7N9 occurred, fast-growing chickens had an ex-factory price of 5 yuan per jin, and slow-growing chickens had an ex-factory price of 8 yuan to 10 yuan per jin. Ou Xianhua said that even selling at a loss is not enough; even humane destruction must be done. He gave an example: a chicken eats 0.3 yuan of feed per day, not counting labor, water and electricity and other costs, so a chicken loses 9 yuan per month. Farmers in Guangdong generally raise more than 10,000 chickens, losing 90,000 yuan per month, which ordinary farmers cannot withstand.

Affecting the upstream feed industry

If chickens cannot be sold, feed naturally cannot be sold either, and the upstream feed industry has therefore been greatly affected. A person in charge of a Guangdong feed enterprise told reporters that over the past month, chicken feed sales have dropped 50%, which has also caused the prices of feed raw materials that had been at high levels to fall slightly. At present, corn is 2420 yuan per ton, soybean meal is 3850 yuan per ton, and various feed raw materials have fallen by an average of 2.5%. Against the background of low market demand and low expectations, feed prices have also dropped twice, by about 3%.

Consumers take detours when they see chickens

Auntie Zhang, who goes to Guangzhou Yuancun Market every day to buy groceries, told reporters that now when she goes to the market to buy groceries, whenever she sees a live chicken stall, she takes a detour and stays far away. She is puzzled that although business is bleak, prices at the market's live chicken stalls are still about the same as usual, with no big discounts. “If they sold it for one yuan per jin, I guess many people would buy it.”

In response, Ou Xianhua said that a chicken stall that originally sold 10 chickens per day now sells 1, which to him is no different from selling at one yuan per jin. Moreover, people now do not dare to go near. Even if the stall owner lowered the price to 0.1 yuan per jin, consumers would dare even less to buy.

Enterprise response

Large-scale enterprises are all holding on

For more than a decade, the breeding industry has gone through all kinds of hardships: H1N1, H5N1, H9N2, SARS, H7N9. Past experience tells us that when sales plummet and every household reduces its inventory, it is also the starting point of the next opportunity. As long as one can grit one's teeth and hold on to the end, one will welcome good days of demand exceeding supply and prices rising all the way.

It is understood that at present, as long as they are breeding enterprises of a certain scale, they are all holding on, all in order to hold out to the last moment and earn back what was lost. Ou Xianhua, whose company is a small and medium-sized enterprise, said that its Yuebei No. 1 Chicken has reduced breeding volume by half. Fortunately, it still has newborn eggs and farmhouse eggs as supplements, which can earn back half the feed money, and it is also holding on.

A relevant person from Wen's told reporters that the group has become relatively experienced in dealing with such incidents and usually reduces losses by reducing chicks and production, selling at lower prices, striving to open up township markets, slaughtering for diversion, and turning products into chilled fresh goods for storage. At the same time, it cooperates with the government's work requirements and does a good job in its own internal production and operations, epidemic prevention and disinfection, and other aspects.

Given the current sharp drop in chick prices, some small farmers have also begun to buy chicks, hoping that the market will recover in 3 months and that they can make a big profit when demand exceeds supply. Ou Xianhua clearly disagrees. He believes that farmers who put in chicks now will not be able to wait for a big profit. “No one can accurately predict which day the losses will stop.” Those farmers who bring in chicks now will soon be sacrificed.

Industry forecast

The trough will last more than half a year

A relevant person from Wen's believes that the second quarter of this year will certainly be difficult, and the third quarter is expected to be not optimistic either, because the follow-up effects of the crisis will last for a relatively long time. At present, some enterprises are relying on a certain amount of financial strength to bet on a later rebound, which actually carries great risk. Under the current market conditions, it will take at least half a year to recover.

Ou Xianhua, chairman of Guangdong Nongzhidao Agriculture and Animal Husbandry Technology Co., Ltd., said in an interview with reporters that if no human infection occurs in Guangdong, the crisis can optimistically be expected to pass in more than two months, but if human infection occurs, it will not get better for half a year or even a year.

A relevant person in charge of No. 1 Native Chicken told reporters that this crisis is expected to last until after June. No. 1 Native Chicken is a branded operation and will not increase upstream efforts because of this crisis. No. 1 Native Chicken still focuses on the pace of opening stores. The company has already planned this year's breeding scale according to plan, raising as much as it sells.

Market trend

The market is moving toward selling dressed chickens

No. 1 Native Chicken, founded by Chen Sheng, founder of Tiandi No. 1 vinegar beverage, encountered the H7N9 crisis not long after it went on the market. Chen Sheng said that market fluctuations have had little impact on No. 1 Native Chicken. At present, sales of No. 1 Native Chicken have risen somewhat compared with before. After Guangzhou Dongshan Market closed live poultry sales, sales of No. 1 Native Chicken dressed chickens increased by 20% to 30%. “Actually, the difference between feathered chickens and dressed chickens is that feathered chickens, because they are live poultry, sometimes carry viruses and spread them everywhere. Dressed chickens, however, are slaughtered and quarantined at the state's unified slaughterhouses, making them safer than live poultry, and when the meat reaches a temperature of 100 degrees during cooking, the virus disappears within two minutes.” At present, countries like those in Europe and America basically sell dressed chickens and do not allow live poultry sales. A relevant person from Wen's Group pointed out that after this crisis, consumer habits in South China, East China, and Central China will gradually move toward dressed chickens. Source: Information Times