Do Livestock Farms Benefit from Higher Prices?

Chinese officials tend to be fixated on grain. They have been pointing out that rising grain prices are good for farmeres. But what about livestock farmers? For them higher grain prices increase their costs.

A Harbin Daily reporter went to the local market and found prices had risen quite a bit this year. He went to the countryside to learn whether livestock farmers are benefiting from the high prices.

A farmer named Wang in Yuanbao village is the largest hog farmer around; he raises about 2000 hogs a year and has invested over 2 million yuan. Wang told the reporter that in 5 years of raising pigs he had earned money two years, lost money two years, and one year it was completely futile. Early this year the price for hogs was just 4.2 yuan per jin and he lost 200 yuan on every hog.

In July, the hog price went up to 5.8 yuan and he was making money again. However, corn and soy meal prices went up too, narrowing his profit to 0.5 yuan per jin--about 100 yuan per head and about enough to pay the interest on his bank loan.

In the last few days the hog price has surged to 7.2 yuan. Wang says he can earn 300 yuan per hog now. This is the best profit he's seen in 5 years and he can now recoup some of his losses from earlier this year. He can earn about 200,000-to-300,000 yuan, but after deducting labor and interest there's not much of a profit left. Wang says the benefits for him from rising prices are not too obvious.

Feed is the biggest cost for livestock farmers and corn is the biggest component. This year the corn price for hog farmers in Heilongjiang has risen 0.2 yuan per jin and soymeal is up 0.45 yuan. That doesn't seem like much, but it raises the feed cost 125 yuan per head.

Another farmer raising beef cattle says the higher corn price costs him an extra 400 yuan per head. A dairy farmer says the rising feed cost keeps his profit from going up. An egg farmer says the higher feed costs increases his cost by 5 yuan per bird. He says it takes him over 10 months to recover his costs, and in the remaining month-and-a-half he can earn about 50,000 yuan.