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Last week Spencer and I started our trip arriving in Hong Kong. I hadn’t been to Hong Kong since I was 30 years old. Big change. The number of high buildings is amazing. Spencer reports more people living on the 15th floor and higher than any place in the world. Lots of people must like that but glad I don’t have to live like that way, would be a bad place to sell lawn mowers, concrete and asphalt far exceeds grass.
Overlooking Hong Kong
After Hong Kong we headed to Wuhan, a name maybe people know from Covid times. Population 20 million. Visited producers in that area before went further south the Shenzhen.
Our Observations
- China’s hog price last week was 19.92 RMB/kg or $1.25 USD lb. liveweight. Producers tell us current profit is about $80 per head.
- Producers told us in the recent past that they lost up to $85 USD per head.
- The losses the industry suffered have led to huge liquidation of sows. Estimated to be between 3-4 million sows. Less sows = less pigs = higher prices.
- African Swine Fever is still prevalent continuing to hit herds. When ASF hits herds they are not necessarily liquidated, many blood test than pull out positives. This works in many instances as ASF is a very slow-moving virus. If a pig gets ASF it dies. The ASF vaccine developed has not worked for producers but has for people selling the vaccine.
- We travelled 400 miles through the Southern China countryside seeing only small fields. Most of work done by hand. We saw no tractors. Hard labor takes a lot of people. China will continue to import Corn and Soybeans making cost of production of pigs very high 90¢ USD lb. liveweight.
- China is dealing with many disease challenges including ASF, PRRS, Cholera and maybe Foot and Mouth. Having pigs that are disease resilient is a very big advantage. Genesus has developed over the last 12 years a reputation in China of having pigs that live and are easy to manage. It appears with 600 million pigs a year China realizes managing disease is the reality versus elimination.
- The last time we were in China was five years ago before Covid. It’s real obvious the major change in vehicles. The number of Chinese made cars has exploded. Going down a street maybe half Chinese brand and all electric. When you read that Volkswagen is considering closing plants you can see the reason why. The world’s largest car market cutting back foreign brands when 1.4 billion people move further to electric as it appears is happening you would think huge impact on world oil.
- Like many markets China has a high-priced pork product. In China it’s focused on a traditional Black Pig which has high cost of production due to its lack of productivity. Pork price is about double normal pork. Once again proving consumers will pay more for a better eating experience. This is leading to further interest in producers using Genesus Jersey Red Genetics to deliver a premium product but produced at a competitive cost of production.
As we have travelled the world over the past 20 years, we have met many pig producers. We have always had great hospitality. In China it’s no different. Pig Producers around the world have a common bond being challenged by the ongoing and never-ending issues of hog production. It’s a humbling occupation as you never know what the next challenge will be.
Pork inside Grocery Store
