Pig killing makes a lot of money, pig raising makes a lot of losses

The pork industry chain in the first half of this year staged a dramatic scene in which some people were happy and others were sad.

Shuanghui Development released its semi-annual report on the evening of Aug. 11, with a net profit of 2.197 billion yuan in the first half of the year, up 30 percent from the same period last year. The young eagle suffered a big loss of 148 million yuan in agriculture and animal husbandry in the same period.

Feng Yonghui, chief analyst of the China Pig early warning Network, told reporters that the breeding link of the pork industry chain bears almost all the operational risks, including epidemic diseases, food price fluctuations, and so on, and the risk of slaughtering and processing is minimal, but in the distribution of benefits, the breeding link does not get the same benefits as the scale of the risk.

Meat processing veterans said that when pig prices plummeted, it was time for slaughtering and meat processing companies to restock on a large scale. In the first half of 2014, Shuanghui Development slaughtered 7.67 million live pigs, exceeding the plan for the first half of the year, an increase of 21.8% over the same period last year. Because it is cheap to buy pigs, the gross profit margin of Shuanghui's slaughtering business reached 13.03%, an increase of 1.10 percentage points; the gross profit margin of meat processing in the latter process reached 27.84%, an increase of 2.47 percentage points.

Coincidentally, Shanghai Meilin also enjoys the benefits of lower costs brought about by the sharp drop in pig prices. The performance of Shanghai Merlin in the first half of this year is much worse than that of Shuanghui and much better than that of young eagle farming and animal husbandry. In the first half of the year, the gross profit margin of livestock slaughtering in Meilin, Shanghai was 10.86%, an increase of 1.45%; the gross profit of food businesses such as pork processing was 25.82%, an increase of 0.8% over the same period last year, and the company's net profit was 83.88 million yuan, an increase of 11.17% over the same period last year.

The imbalance between hot and cold in the pork industry chain is a unique phenomenon in China. Feng Yonghui said that because China's slaughtering market is affected by local protection and other factors, there is a very strange phenomenon in China's pork market. When pig prices rise, pork prices rise more than live pig prices. When pig prices fall, pork prices change relatively slowly, and profits in slaughtering are relatively stable.

However, judging from the situation in recent years, the development of the whole industry chain is the future trend, so that the performance of enterprises will not fluctuate greatly. When the loss of raising pigs was the most serious in the first half of the year, each pig lost more than 200 yuan at most. Feng Yonghui said that in 2011, pig-raising enterprises could get a profit of about 500 yuan for a live pig at that time. In the last three years, the profit has shrunk by about 80%, and even a direct loss in the first half of this year. If the enterprise has not only breeding business, but also slaughtering and meat processing business, upstream loss downstream compensation, can cut peaks and fill valleys, the performance is relatively stable. According to China Business Daily