The Chinese government has launched a program to scale up its pork sector, hoping to boost pig sales per farm tenfold by 2015. The government expects reforms will replace several so-called 'backyard' (small-scale) farmers and help streamline the feed industry for not only pork but also poultry and dairy.
Xiaoping Zhang, China country director for the American Soybean Association, says backyard farms in China account for 40% of the country's pig production. However, herd health has become a problem for small-scale farmers, so many left the business.
"When these backyard farmers quit, it caused higher prices, and that was incentive for outside investment from both industry and the Chinese government," says Zhang.
Zhang spoke to a group of American farmers in Beijing this week. The group is on tour with Farm Futures and Trump Tours out of Arkansas.
The government is hoping that, by 2015, 80% of China's pork will come from so-called 'scaled-up' farms that will produce 500 pigs per year, compared to today's average small-scale farm output of 50 pigs per year.
"With these bigger farms, it's better for them to buy feed from millers and not necessarily be making their own feed," says Zhang. "So, this is an incentive for millers to provide compound feeds."
Zhang says export sales of soybeans hit 16 million metric tons for the year – 20% ahead of last year. Demand has been very strong, in part because drought in North America provoked aggressive advanced buying. "Now there's actually an oversupply for the crushers, resulting in poorer margins short term," he says. "Even so, we see further potential growth in livestock and the feed industry in China."
Look for more reports directly from China this week as we travel to grain terminals, farms and agribusinesses.