China plans big investment in pig herd growth

China plans big investment in pig herd growth

A string of 35 projects will stretch from north to deep south of China, to a document published by the Chinese ministry of finance. The projects listed on the document have either been signed or have reached construction stage and are graded by scale, company and investors.

The biggest investment is by Chuying Agro-Pastoral Group Co with 66 mill.USD and 86 mill.USD projects in Jilin and Inner Mongolia respectively. Choosing its location because it is in China’s north-eastern corn growing region, the Jilin project will add four million pigs to Chuying’s head count. Chuying Agro-Pastoral Group Co has focused on breeding piglets, boars and commodity pigs but is also involved in poultry breeding. Other projects are being undertaken by Wen’s Foodstuffs in Hunan province (five million pigs) and Guizhou province (four million pigs). Wens Foodstuffs Group is one of China’s biggest employers with 35,000 staff and stands among the top ten producers of animal feed in the world with 6.5 mill. tons per year.

While there has been much worry about over-capacity on the meat processing side of the business, government appears to believe the need to achieve scale means there’s room for further expansion in pig herds. Only 5% of Chinese pig numbers are controlled by large, professional companies, which has long paid subsidies to so-called “dragon head” or regional champion enterprises.

Also leading US private equity firm KKR & Co invested around 150 mill.USD in Cofco Meat, with a trio of other private equity firms adding another 120 mill.USD state-owned Cofco currently produces about one million of the 700 mill. pigs consumed each year in China but plans to increase by six times up to 2020. The firm is focusing on China’s eastern and northern cities where affluent consumers pay a premium for high-end pork products.