China's pork production and consumption account for about 60% of meat production. The latest dispatch from the Ministry of Agriculture and Rural Affairs shows that the current pig production capacity in China is temporarily high. In order to prevent the risk of large fluctuations in production and prices, comprehensive regulation of pig production capacity will be implemented, guiding the reduction of about 1 million breeding sows.

According to data from the National Bureau of Statistics, there were 424 million live pigs in stock nationwide at the end of June, an increase of 2.2%. Among them, there are 40.43 million breeding sows in stock, which is 103.7% of the normal inventory and close to the upper limit of reasonable production capacity regulation.

At the same time, the inventory of medium and large-sized pigs over 5 months old and the number of newborn piglets nationwide in the first half of the year are both at historical highs, which means that the number of pigs slaughtered will significantly increase in the second half of the year and after the Spring Festival next year.

Zhu Zengyong, a monitoring and early warning expert in the pig industry of the Ministry of Agriculture and Rural Affairs, said that if not regulated in a timely manner, it may lead to a sluggish peak season for pig prices and consumption, and pig farming may suffer losses in the first half of next year, especially after the Spring Festival.

At present, China's pig industry is in the sixth round of the "pig cycle". With the continuous improvement of production efficiency and the slowdown of pork consumption growth, there are still risks of large fluctuations in production and prices. The price of pigs in the first week of August has dropped to 14.53 yuan per kilogram, a year-on-year decrease of 28.1%.

Therefore, the Ministry of Agriculture and Rural Affairs has discussed and judged that effective comprehensive regulation of pig production capacity will be implemented. According to current production and consumption trends, the national production capacity needs to be reduced by about 1 million heads, and the total number of sows that can be bred should be maintained at around 39.5 million heads.

Zhu Zengyong stated that leading pig enterprises should be guided to play a leading role in capacity regulation, reasonably eliminate breeding sows, reduce low-quality and inefficient production capacity, and appropriately reduce the inventory of breeding sows. Reduce secondary fattening, control the weight of fattening pigs, strictly control new production capacity, avoid blind expansion of "scale", reduce the risk of oversupply of live pigs in the later stage, and ensure the stability of pig prices and breeding profits.

In China, there are over 17 million pig farming households in the pig industry, among which large leading enterprises account for more than 30% of the total pig output in the country, playing a guiding role in regulating production capacity. Currently, many large enterprises have started to reduce production capacity.

The head of a breeding farm in Shan County, Heze, Shandong Province, introduced that the average weight of the pigs sold has decreased from 128 kilograms in May to 123 kilograms at the end of July. The weight of the current batch of pigs has dropped to 119 kilograms, a decrease of 4 kilograms from July. This is also an important measure for us to adjust production capacity.

In addition to weight loss, the market disturbance caused by secondary fattening of pigs cannot be ignored. Some farmers artificially extend the breeding cycle through secondary fattening, creating expectations of supply shortages and increasing fluctuations in pig prices. Starting from June this year, this pig breeding enterprise in Shan County has completely stopped selling fattening pigs to secondary fattening customers and established a full chain control system to control from the source.

Reducing the total number of sows capable of breeding is a key aspect of the comprehensive regulation of pig production capacity this time. The comprehensive regulation of pig production capacity implemented by the country this time is expected to reduce the total number of sows capable of breeding in the country to around 39.5 million. At present, large-scale breeding enterprises are systematically phasing out low yield and low efficiency breeding sows.

The pig industry is currently in the sixth round of the "pig cycle", and the country is implementing comprehensive regulation of pig production capacity. Through the firm support of policies and active coordination of the industry, the pig market is gradually getting rid of the cycle dilemma of "ups and downs" and moving towards a new stage of "stable, healthy, and high-quality development".

According to relevant analysts, there is still some time before the "Golden September and Silver October", and the continued off-season of pork consumption may cause pork prices to continue to fluctuate, with downward pressure still present. The policy actively maintains a long-term regulatory direction, which makes the pig industry expected to operate in the direction of self-discipline, strengthened supervision, correction, and stability. The industry is expected to return from the logic of slaughter growth to the direction of value, and top pig enterprises with cost and capital advantages will benefit more.

In the short term, the pig market may show some selling pressure in the near future, which will also have a certain impact on prices. Based on the current situation, the industry's capacity regulation may be sustained or strong, and maintaining pig prices may be a long-term task. The price of live pigs in the medium and long term is mainly affected by changes in production capacity. If there is a significant reduction in production capacity, there may be room for future prices to strengthen. Therefore, it is necessary to observe the sustainability and implementation effect of policies.

Compared to the past five cycles, many past experiences cannot be directly applied in this pig cycle. The fluctuations in prices during this cycle have become less apparent, making pig price fluctuations no longer the core factor affecting the profitability of breeding enterprises, but rather the ability to control costs. The consumer market has also undergone significant changes compared to the past, which involves residents' dietary habits and overall consumption capacity. In addition, each round of diseases and policies has had an impact on the supply side of the pig industry, causing an imbalance between supply and demand. After the last round of African swine fever, with the further improvement of breeding scale, the expansion pace of top breeding enterprises has slowed down significantly. Continuously upgrading the disease prevention and control system has become a key focus for large-scale breeders, which is also part of cost control.

Source: China Animal Husbandry Network