China's egg industry urgently needs to improve the circulation level.

On June 21, the first China Egg Circulation Conference sponsored by Beijing City Egg Processing and Sales Industry Association and Luzheng Futures Co., Ltd. was held in Beijing. Representatives from all parties in the industry jointly described the current situation of egg circulation in China. With the improvement of egg production level and consumption requirements, egg circulation is becoming the bottleneck of sustainable development of egg industry in China. To improve the circulation level of eggs, stabilize market supply and prices, and use new means such as "Internet plus industry" and "insurance + futures" to achieve new breakthroughs in the industry, becoming an industrial consensus.

At present, the overall circulation level of egg products in China is low and the circulation cost is high. According to Professor Niu Donglai of Capital University of Economics and Trade, there are three main egg circulation modes in China,"wholesale market + farmers" accounts for 60% of the total circulation,"company + farmers" accounts for more than 30%, and 5% is the mode of "integration of production and marketing". The first mode basically has no brand, no cold chain, unstable customers, belonging to the traditional circulation mode. The developed countries are basically "production and marketing integration" mode, production and marketing throughout the-7° cold chain, sales customers and regional fixed. Transportation cold chain, sales brand, circulation information, egg processing is our egg industry to achieve stable development direction. Under the current situation of agricultural development in China, we need to reduce the proportion of decentralized production, encourage the development direction of "integration of production and marketing", and accelerate the promotion of the "company + farmer" model.

The development of the company needs stable customers. Xu Dianming, chairman of Henan Liujiang Ecological Animal Husbandry Co., Ltd., introduced their two major breakthroughs in recent years. One is to break through the traditional breeding concept of ignoring "gas" in technology and use air as nutrition to improve breeding efficiency. Second, cold chain logistics and intelligent sales terminal-"intelligent egg cabinet" have been developed in circulation, forming stable customers of membership system. Zhang Xuan, Assistant President of Beijing Deqingyuan Agricultural Science and Technology Development Co., Ltd., introduced the "electric shock" journey of Deqingyuan brand. The distribution system of Beijing market in the past 30 years has been broken, and modern channels have become mainstream and integrated across borders. However, price is still the first element of consumption, and the weakness of egg e-commerce is that packaging logistics costs account for 30%-50%. However, Deqingyuan improved its products with e-commerce thinking. The sales volume of "electric shock" reached 10 million in the first year and 40 million in the second year, cultivating a group of brand fan customers.

The stability of the company requires reforming its own supply structure. More than 25% of eggs consumed globally are processed egg products (liquid eggs and egg powder), while processed egg products consumed in the United States and Japan account for more than 40%, while only about 2% are consumed in China. France's Actini introduced their advanced processing technology at the meeting. As the price of processed eggs is very stable, the gross profit margin is 33-38%(excluding labor). Bao Jun, general manager of Chengdu City Runcheng Food Co., Ltd., has a dramatic development path of "dried eggs." During the critical period of development, the Internet "added" her, and sales flew with online shopping. The new factory invested and constructed in 2014 is expected to have an output value of 250 million yuan this year.

How do you keep your company from being swallowed up by price waves? At present, there are various platforms serving enterprises. Tianjin Ruipu, Beijing Zhongnong Zhiyuan and Beijing City Egg Processing and Sales Industry Association all introduced various information tools developed by them using the latest science and technology and Internet technology at the meeting, which attracted the attention of the participants. Yan Tieshan, general manager of Hubei Jiahemei Food Co., Ltd., introduced his secret to making the enterprise bigger in his "egg sales practice sharing": from quantity to quality, and then to the Internet, it is always accompanied by "insurance + futures". He is the first enterprise in Hubei to do "insurance + futures" and the first buyer of egg futures of Dashang Institute. He said that only by looking at the long-term market can we buy and sell the present; only through "insurance + futures" can we avoid risks in price fluctuations.

Avoiding price risk is the first choice of modern enterprises. Ji Tongguo, Minister of Member Department of Dalian Commodity Exchange, comprehensively introduced the risk management system of egg futures trading of Dalian Commodity Exchange. This system was created by Dashang to keep up with the development of industry. Since April, the egg futures price of Dashang has deviated from the spot price trend. There is a doubt that egg futures prices do not have guiding significance. Ji Tongguo believes that futures, as standardized forward contracts, reflect future price expectations and cannot be measured by current spot prices and September futures contract prices. According to introduction, egg futures from 1703 contract will start a new delivery system: through the introduction of a full-month daily delivery system, shorten the validity period of warehouse receipts, increase seven or eight months of contracts, will further meet customer hedging needs. In addition, the "insurance + futures" pilot launched on the basis of the "over-the-counter options" pilot project of Dashang was written into the "Central No.1 Document" this year. This year, DCI has comprehensively increased its support for the pilot projects of "insurance + futures" and "over-the-counter options", mainly supporting futures companies to carry out business by means of fee reduction and exemption. OTC option pilot varieties include eggs.

Li Yuan, head of Luzheng Futures Agricultural Products Division, made a report on "Analysis of Egg 'Insurance + Futures' Mode". "Egg price insurance" is "insurance + egg futures", the reference is the egg futures contract price, both futures prices as the insurance company whether to pay the basis. When the egg price is lower than the insured price, the insurance company or futures company pays the difference. If you buy insurance at a price of 4300 yuan (500 kg) and the final average price drops to 3800 yuan (500 kg), the insurance company will pay 500 yuan (500 kg). For example, on July 28,2015, the contract price of egg 1601 was 4255 yuan/500 kg. A large-scale laying hen enterprise thinks that there is a wave of decline in egg price in the later stage, but the time node and amplitude are not easy to grasp, hoping to regulate and control through off-site tools. Luzheng Futures recommends that customers buy a put option to prevent the risk of falling egg prices with lower capital occupancy. By September 29,2015, the price of egg 1601 was 3749 yuan/500 kg, and the breeding enterprise received compensation of 451 yuan/500 kg.

Some experts predict that in the second half of this year, the egg market is not pessimistic. However, if an enterprise does not have any armor, it is not optimistic.