Wednesday, March 16, 2022

ASF, cash flow, pricey corn, red tape hold back Chinese hog farm giants

Chinese pig farming tycoons moaned about problems with African swine fever, cash flow, regulatory thickets, and access to imported corn in their comments on the sidelines of last week's National Peoples Congress. 

Liu Hanyuan, chairman of Tongwei Group, fretted about a recent resurgence of African swine fever. Liu said that 7 percent of trucks had tested positive for the virus at the end of 2021--a ten-fold increase from the beginning of the year. He added that 4 percent of markets near pig-farming areas tested positive, a six-fold increase. While it is often presumed that biosecurity on big pig farms protects them from the virus, Liu revealed that incidence of African swine fever is as high as 25 percent in the biggest pig farming companies. 

According to Liu, the cost of veterinary drugs has increased 50 yuan per head this year to combat the ASF threat. Liu warned that half of the pigs entering slaughterhouses in some regions are underweight pigs (under 85 kg) that are mostly infected with ASF. Infected pigs going into the market are worsening the spread of the ASF virus, Liu said. Some crooks are introducing the ASF virus into farms, then buying up the infected pigs at a discount to illegally profiteer from the virus. 

In addition to cleaning up and disinfecting farms and trucks, the Tongwei chairman asked that authorities stop punishing local authorities for ASF outbreaks. Instead of demanding that central, provincial and local governments cost-share aid funds for ASF swine-culls, Liu called on the central government to provide the entire subsidy. He called for investigations of concealment and omitted reporting. 

China's Agriculture Ministry has not reported any African Swine Fever cases in the last 11 months.

Lin Yinsun, chairman of Zhengbang Group, complained about huge cash flow pressure facing hog-farming companies and pled for more credit support. Liu claimed that the companies support small farmers by providing them with piglets, feed and medication to fatten their hogs. It costs 2000 yuan per head to provide these materials, and costs are hard to cover with hog prices "falling off a cliff" and feed costs rising, according to Liu. He called for more credit, including mortgage loans secured by live hogs, land use rights, barns, and equipment in order to satisfy the companies' cash needs. Zhengbang Group reported incurring losses of nearly $2 billion in 2021, but Liu insisted the loans are critical to poverty alleviation and rural revitalization efforts. 

In another news article Lin Yinsun echoed Tongwei chairman Liu Hanyuan's complaint about access to imported corn. The Zhengbang chairman complained that large livestock and feed companies cannot meet their needs for corn with the small import quotas they receive and they generally do not enjoy the "policy dividends" of the quota system. Private companies like Zhengbang have to buy imported corn from state-trading companies at a high price, Lin said. He recommended that the quota be allocated to companies based on their need for corn in order to help farming companies reduce their production cost and benefit the people. 

Lin Yinsun added a complaint about red tape companies encounter when trying to build multi-story pig barns. Lin cited benefits of high-rise pig farming facilities reducing the land footprint of farms and promoting use of automated feeding equipment, "smart" digital systems, and improved biosafety measures. Some local governments limit construction of such farms and require permitting by municipal construction regulators, causing some projects to be held up by red tape. Lin asked that China's agriculture and natural resource ministries issue standardized guidelines for buildings, including swine farms in the land use policy for other facilities like greenhouses, and simplify procedures. 

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