"Poultry farming is no longer about merely raising chickens, but about operating a modern, equipment- and technology-intensive factory." This quote from a MySteel commentary on the expansion of egg-laying capacity earlier this month is the leading edge of a factory-style (工厂化) overhaul of farming underway at China's grass roots as part of Xi Jinping's "high-quality development" push. The rapid expansion of production capacity in a saturated egg market drives down prices, so sustainability relies on pushing small scale producers out of the market. Much of the expansion is in regions that lack feed resources, perpetuating China's reliance on imported feed grains and soybeans.
Between 2023 and 2026 at least 123 new laying hen projects representing 260 million birds were signed, initiated or brought online in China. The expansion peaked with 73 new projects launched in 2024. A crash in egg prices during 2025 did not stop the expansion, as 12 new projects were added in April 2026 with a capacity of nearly 29 million birds and total investment exceeding 6 billion yuan (about $890 million), according to MySteel.
Egg prices rebounded this summer as high temperatures reduced hen productivity, and the peak Fall egg consumption season is approaching. However, a market commentary this month cautions readers that growth in production capacity limits the medium term prospects for price recovery.
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| Average monthly prices in rural markets, China Ministry of Agriculture and Rural Affairs. |
There has been no long-term trend in China's egg prices since 2010. The trend line in the chart above indicates an increase in price of just 0.08 RMB per year--essentially zero--and the trend accounts for only 10% of the variation in China's egg prices. Peaks in price such as in 2023 are short-lived. The expansion of supply drives down the price whenever it rises.
Another MySteel article in August observed that the 2026 rebound in egg prices stimulated a new wave of factory-style egg industry projects announced by municipal governments across the country that aim to create industrial clusters comprised of large-scale enclosed hen farms, hatcheries, breeding, and distribution with support from research institutes. MySteel interprets government support as a "clear signal that future industry competition will hinge on scale, standardization and branding."
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| Factory-style (工厂化) egg industry project under construction in Wuling, Chongqing |
Projects like Qingdao City's "High-Quality Egg Flagship Project" in Shandong Province are viewed as an upgrading of the industry, an embrace of Xi Jinping's "high-quality development", and other buzz words like "green," "smart," "low-carbon," food safety, market stability, and branded products. MySteel declared that 2026 will be noted for the widespread adoption of the "smart laying hen model" for feed formula optimization, market trend forecasting, and product traceability. Spending on "smart" systems, manure handling facilities, disposal of dead birds, and traceability systems are the targets of subsidies and also require large scale to spread fixed costs over large volumes of output. Support for the Qingdao project supports precision feeding, intelligent environmental control, egg sorting, inkjet coding traceability, cold storage, and lab testing. Earlier this year, Chongqing Daily explained that multiple egg projects are being launched locally despite the 20-percent drop in prices during 2025. One district had replaced sweet potatoes with poultry in its development plans. The writers acknowledged that the Chinese egg market is saturated, but claimed Sichuan and Chongqing have a deficit of eggs (but one manager mentions that 60% of the eggs produced locally are sold to Guangdong, Hong Kong and Macao).
Other projects announced in July include subsidies as part of a broader livestock industry consolidation program in Quanzhou City in Fujian Province, Shapotou District in Ningxia Autonomous Region offering subsidies for construction of hen farms that must be fully stocked by the end of October, and Fengyang County in Anhui Province offering subsidies of up to 1 million yuan to cover 30% of investment for large-scale layer farms.
In December 2025 a subsidiary of Thailand's CP Group agreed to invest 1.4 billion yuan (over $200 million) in an egg industrial park in Minqing County of Fujian Province that will include a chicken farm covering 126 mu, a factory covering 150 mu, a water supply facility, wastewater treatment, an organic fertilizer facility, electricity and biogas stations.
Jilin Province listed poultry subsidies available for the next 3 years: subsidized loans; policy-type insurance; funding for large farms to build waste collection and treatment facilities; subsidies for acquiring improved breeds; subsidies for purchase of "smart" equipment, machinery for hatcheries, and facilities for feeding and water treatment; subsidies for companies that work with small and medium scale farms; and subsidies for disease control specialists and free immunizations. There are also funds aimed at alleviating unemployment. Companies can get funding for hiring unemployed college graduates and employees from impoverished areas or for offering technical training, and there are grants for migrants who return to their villages and start businesses.
A July egg industry report observed that new projects are expanding capacity in Southern provinces, while production is steady in Northern Provinces of Hebei, Hubei, Shandong, and Henan which currently account for nearly 47% of production. Half of new egg industry projects are in Guangdong Province (19 projects) in the South, followed by Guangxi (15), Sichuan (14), Hubei (13), and Zhejiang (12). Enclosed, temperature-controlled facilities overcome the challenges of hot, humid Southern climates by subsidizing environmentally controlled housing egg projects to reverse the traditional north-to-south flow of eggs. The manager of a Chongqing farm brags that the enclosed facility keeps out rats and birds, and automated equipment formulates feed and delivers it to birds within 15 minutes. Subsidizing manure collection and treatment prevents pollution in the southern region crisscrossed by rivers, streams and lakes.
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| Packing facility in an egg industry project in Guangshui, Hubei Province |
The July report says the "inherent weaknesses of the small-scale farming model" have been exposed by market volatility, raw material costs, stricter environmental regulations, and disease control pressures." Low prices during 2025 forced large numbers of small and medium-sized producers out of the market. Chongqing's egg industry officials said their objective in launching large-scale industry projects is to reduce the local industry's dominance by small, fragmented farms. MySteel agreed that small-scale producers (those with less than 100,000 birds) are exiting the market at an accelerated pace, and their share of production capacity has dropped below 35%. The July report anticipated that large-scale intensive operations will become the dominant model of development.
A 2025 commentary argued that large-scale egg producers are upgrading the industry by pushing technological improvement, improving environmental control, and exposing the rudimentary techniques and weak disease prevention of small-scale producers. The July 2026 report declares that only companies with low costs can survive.
None of the reports fully addressed the feed cost issue. A Chongqing manager said his company had reduced the feed-to-egg requirement from the industry average of 2.20:1 to 1.95:1. Production cost data shows that egg production has the lowest labor intensity of China's livestock enterprises, but egg producers' feed cost share is the highest--at about 65-70% of cost. According to China's Feed Industry Association, layer feed production has been in the range of 32-to-33 million metric tons annually since 2020, about 10% of China's compound feed output. The southern and southwestern provinces adding new egg production capacity have deficits in feed grains and oilseed meals, and their costs of feed raw materials are high.
The July report claims that companies need to establish brands and differentiated products such as liquid eggs and nutritionally enhanced eggs to attain profitability. Eggs, however, are largely a generic product, so the space for premium-priced eggs is likely to be narrow.
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