According to USDA data, it’s estimated that China’s pork production in 2024 will decrease by 1%. This is caused by decreased prices that has created a tough situation for Chinese pig farmers. The current average price dropped to 14.5 RMB/Kg after the Chinese New Year peak at around 16 RMB/Kg as shown below.
Therefore, many producers are downscaling production and selling their pigs earlier. For instance, Tech-Bank Food, one of the largest pork producers, has its share price dropping around 22% compared to beginning of this year. The company announced that it will go through restructure since they accrued debts caused by the decreased pork prices [1]. Other smaller producers are leaving the industry entirely.
To avoid further reductions in prices and businesses shutting down, the government gave guidelines to reduce the number of sows in ideal conditions to reach 39 million in 2024. This intends to lead to more slaughtering to avoid oversupply and, it is expected that prices might gradually increase [2].
On the consumption side, the government is actively opening the market to stimulate economic development and maximizing the potential for Horeca consumption. Recent new policies have been launched to ease the entrance of foreigners for tourism and business. During the Spring Festival 2024, the sales of key retail and culinary enterprises nationwide increased by 8.5% year-on-year (data from the Ministry of Commerce) [3].
Lower city tiers are developing rapidly in terms of tourism and consumption. For instance, Harbin City’s tourism industry generated revenues exceeding 5.9 billion yuan during just the three-day New Year holiday 2024. As for pork consumption, the growth in demand in rural areas and Horeca may become a new growth point in 2024. In addition, the influence of major holidays on pork consumption may be stronger than in previous years, especially during the International Labour Day and National Day short holidays [4].
[1] Chinese Pig Farmer Tech-Bank Food Slumps After Setting Out Debt Restructuring Plan– Yi Cai global – yicaiglobal.com
[2] 农业农村部修订印发生猪产能调控实施方案–gov.com
[3] 春节假期零售餐饮消费火热 重点企业销售额同比增长8.5%–gov.cn
[4] 旅游产业复苏背景下 乡村地区需求或成2024年猪肉消费新的增长点–zhuwang.cc
