China's pork imports have skyrocketed this year as rising feed costs, increasing wages and concerns about more outbreaks of disease has made Chinese producers reluctant to boost output. Favorable government subsidies are expected to benefit large-scale producers in the future, and encourage them to boost production. The Bedford Report examines the outlook for companies in China's Consumer Goods Sector and provides equity research on AgFeed Industries, Inc. and Zhongpin, Inc.
Chinese authorities, who view affordable pork as "important for social stability," have lifted subsidies in an effort to revive the domestic pig industry. The Chinese Government says that it will invest $390 million in large pig farms this year and that all farmers and pig farms will receive a subsidy of at least $15 for every sow they raise.
A report from Agrimoney.com finds that the large-scale operators that the government is particularly keen on encouraging "report that difficulties in acquiring additional farm land are hampering their expansion plans."
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Last month Zhongpin Inc, a leading meat and food processing company in the People's Republic of China, announced that the trial production at its new prepared pork products plant in Tianjin has begun. The new prepared pork products plant will have an annual production capacity of about 36,000 metric tons. The total investment in phase 2 was approximately $22 million.
AgFeed Industries continues to be a growing player in China's hog production sector. AgFeed and the local government together act in partnership with local farmers to secure the necessary financing, provide the necessary guidance, technical and nutritional support in order for the farmers to improve their productivity.