A Chinese pig farmer's million-dollar lawsuit against a pork conglomerate with a $28-billion market cap is attracting an inordinate amount of attention in Chinese financial news media. The agriculture ministry has pledged to investigate. It is not clear why this dispute has attracted so much attention, but it shines a light on the dramatic change in China's hog industry over the past 5 years.
According to Cailianshe and National Business Daily Chang Xianyun, general manager of Hongfu Farming Company, signed a contract in March 2024 to purchase 152 breeding sows from Nanyang City Wolong Muyuan Farming LLC, a subsidiary of Muyuan Foodstuff which claims to sell more than 60 million swine annually and currently has a market cap of 203 billion yuan (about $28 billion). Both companies are located near Muyuan's headquarters in Henan Province's Neixiang County. Ms. Chang has reportedly purchased pigs from Muyuan for 16 years.
Ms. Chang, the farmer, told news media that one pig died soon after arriving at her farm on April 4 last year (3 sows were never delivered due to signs of illness). Five days later some sows showed symptoms of illness. Later in April sows began aborting, having stillbirths and dying, and the disease spread throughout the farm. Ms. Chang claimed that a total of 3,416 sows and piglets died in the two months after purchasing the sows. Lab tests showed that Porcine Reproductive and Respiratory Syndrome (PRRS, aka "blue ear disease") was present in 11 blood samples. On January 6, 2025 Ms. Chang sued Wolong Muyuan, asking for 6.8 million yuan in compensation (about $934,000) for the loss of more than 3,000 pigs she says were infected by sows she purchased from the company last year.
Chang Xianyun recalled that Wolong Muyuan Co. initially offered 2.9 million yuan in compensation but later withdrew the offer. Ms. Chang's civil suit claims that the company did not follow quarantine procedures and improperly used a homemade vaccine. A Muyuan spokesperson told news media that 3rd-party testing showed the strain of PRRS on Chang's farm was different from the strain in Muyuan's region and insisted that Muyuan had not had a case of PRRS in 3 years.
The quarantine certificate that accompanied the sows specified "commercial pigs" instead of "sows." The procedures for breeding sows are more stringent than for commercial pigs. Ms. Chang alleged that Muyuan saves money by designating sows as commercial pigs because testing is more stringent and more costly for breeding animals.
According to Interface (Jiemian) News Ms. Chang reported her allegations to the Ministry of Agriculture and Rural Affairs (MARA), the Shenzhen stock exchange and the Securities Regulatory Commission. The agencies said they have instructed their provincial counterparts to begin an investigation of her allegations against Muyuan, but a company spokesperson and the local veterinary bureau said they had not been informed of any investigation.
Interface News reported that such disputes are common in the swine industry. A Beijing lawyer told Interface that Muyuan had a longstanding practice of blurring the distinction between breeding stock and commercial pigs in their contracts. Another industry person told Interface that this goes against the practice of clearly distinguishing between animals for breeding and for commercial production.
Regarding the illegal vaccine allegations, a Muyuan spokesperson told Interface News that Muyuan injected a serum made from blood, which the person described as a widely used and effective way of preventing PRRS.
Muyuan, founded in 1992 and publicly listed in China in 2014, known for its integrated production model, from R&D, breeding and feed production, piglet propagation, hog fattening, and slaughter.
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| A Muyuan industrial complex in Henan Province. Source: China Fortune. |
Muyuan benefited from policies that were ramped up to expedite recovery of pork supplies during 2020-21. Fifteen kinds of local government support policies included various subsidies, incorporation of pig farms in land use planning, close cooperation with regulators, support for processing plants, credit support, industrial parks, and establishment of disease-free zones. Local officials in Muyuan's area were instructed to arrange quarantine and inspection points to facilitate Muyuan's development, to clarify the authority and responsibilities of inspectors issuing animal quarantine certificates, and to expedite inspections to ensure pigs were released promptly and in good condition.
Muyuan's share price was in the doldrums for years until it rocketed upward during the recovery from ASF. According to Interface News, Muyuan's pig sales grew from 10.25 million to 71.6 million head between 2019 and 2024. In return, Muyuan supports the communist party's policies. Muyuan is the model company in adopting swine diets that reduce soybean meal use, in reducing production costs, in digitizing agriculture, and it brags about its role in Xi Jinping's poverty alleviation drive. The local government in Neixiang aimed to gain prestige by building Muyuan into a Fortune 500 company.
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| Monthly averages of Muyuan stock price. |
Muyuan's poverty alleviation program also played a role in turning Muyuan into a pork behemoth. Its strategy used State bank loans and collaboration with local government to expand its operations in 62 counties across the country. A news media account of a poverty alleviation project near Muyuan's headquarters describes a highly capital-intensive complex consisting of a feed mill, rows of high-rise hog barns, and a meat processing plant. Poor families appear to be mostly passive participants. "Cooperatives" are formed as a mechanism to consolidate the village's collectively owned land into big parcels that are then leased out to Muyuan to build its pig complexes. The cooperative appears to function as a pass-through for bank loans to finance barns and other infrastructure for Muyuan's operations. The cooperative makes small payouts to villagers funded by the lease payments from Muyuan, and villagers may be hired as laborers on farms or slaughterhouses.
Meanwhile, Muyuan has played a role in the rapid disappearance of independent hog farmers. A November 2024 Yicai article cited African swine fever (ASF) as a "catalyst" that accelerated the fading of small- and medium-scale farms. According to Yicai, last year the National Animal Husbandry Station reported that China had lost 13 million small and medium-sized swine farms in less than 5 years. Rapid expansion by Muyuan and other giant pork companies in the recovery from ASF drove down prices, forcing out independent farms. Yicai cited examples of farmers who raised thousands of pigs as independent entrepreneurs but ended up with huge debts due to ASF and other disease outbreaks and unexpected declines in hog prices. A veterinarian who owned a hog farm that sold 200,000 pigs annually also cited high costs of compliance with environmental regulations. He reported investing millions of yuan in facilities and equipment to protect the environment but said many of his colleagues shut down their operations.
Yicai noted that many independent pig farmers shut their farms and applied for lucrative jobs with large companies like Muyuan. One company executive found that more than 7,000 workers in their company's breeding operations had previously raised pigs on their own. With experienced pig breeders in short supply, some of these pig-farmers-turned-employees earn salaries of 1 million yuan per year (about $150,000). Muyuan and several competitors planned to set salary guidelines to stop bidding wars for employees with swine-farming expertise, but China's anti-trust authority ordered the companies to abandon the plan.
When Chinese hog prices plummeted in 2021, many independent hog farmers who stayed in business switched to a so-called "second fattening" strategy that abandons breeding sows to specialize in the final fattening phase of swine production. Zhu Zengyong, swine industry expert at the Chinese Academy of Agricultural Sciences, judges that the strategy is intended to make quick money and avoid higher risks of disease in the breeding stage. Zhu told Interface News the popularization of the "secondary fattening" production model was partly to blame for the blurred distinction between breeding and commercial sows that is at the heart of Chang Xianyun's dispute with Muyuan.
Interface News said Muyuan announced a "2-line breeding model" in a 2019 annual report, a switch from the common 3-line hybrids of Landrace, Large White, and Duroc breeds. The 2-line strategy was popularized during the extreme shortage of sows after the ASF epidemic to speed up the expansion of pig supplies. An unnamed industry expert told Interface News that he worries that the 2-line breeding model is undermining the industry by degrading the body shape and reducing the meat yield of pigs. The expert observed that the number of pigs with PRRS and other disease problems has increased since 2023. Disease prevention and control issues are putting the industry under increased pressure
Muyuan attracts a lot of attention in China. Muyuan's financial data has been questioned by some commentators in China's finance world, and last year questions circulated again about the veracity of information about the company. Muyuan sued a gaggle of Chinese social media personalities who posted sensational exposés about Muyuan to drive traffic to their videos on Douyin.
It is unclear whether Ms. Liu's lawsuit is another attention-grabbing stunt or a real dispute about shady practices by a corporate giant. It does, however, highlight the dramatic replacement of "backyard" farmers with sprawling pork conglomerates and the "make money fast" mentality that drives agribusinesses in China -- microenterprises and corporate behemoths alike.
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