China’s Top Pig Farmers See Sharp Fall in Profits Amid Disease Epidemic

China’s major pig farmers sharply cut 2018 profit estimates on Monday, after fast-spreading African swine fever hit prices and demand for pork in the world’s largest hog producer

Reuters

Muyuan Foods Co. Ltd cut its 2018 net profit forecast to between 500 million yuan ($73 million) and 550 million yuan, down at least 20 percent from an earlier estimate in October, showed a filing to the Shenzhen Stock Exchange.

The revised figures are nearly 80 percent down from the 2.4 billion yuan in profit reported for 2017.

Wens Foodstuff Group Co Ltd also warned of 2018 net profit between 3.9 billion and 4.0 billion yuan, down about 40 percent from 6.75 billion yuan the year before.

The warnings come after China confirmed around 100 outbreaks of African swine fever since August last year across 23 provinces. There is neither a cure nor vaccine for the disease, which is deadly to pigs but does not harm people.

“Most pig production in northern China has been hit hard by measures aimed at controlling the spread of the disease”

Muyuan said it was cutting its forecast following lower than expected live hog prices in the fourth quarter. Most of the firm’s pig production is in northern China, the filing said, where prices have been hit hard by measures aimed at controlling the spread of the disease.

Wens said African swine fever weighed on prices in the second half of 2018, following low prices in the first half.

Still, the company, which also produces poultry, benefited from a strong increase in chicken prices and from a 17.1 percent rise in the number of pigs it sold in 2018.

African swine fever has driven up chicken prices, as shoppers turn to the country’s second most popular meat in the face of short supplies of pork in some places and on concerns of food safety.

Producers of white-feathered broiler chickens are also dealing with tight supply after China banned imports of the breeding birds from many producing countries because of outbreaks of bird flu.

Major poultry producer Fujian Sunner Development Co Ltd hiked its forecast for 2018 profits on Monday, partly due to tighter supplies of chicken.

“Thanks to the tight supplies of meat chickens, performance in the sector continuously rose, sales exceeded the forecast and profits significantly improved,” it said in a filing.

It expects net profits of around 1.5 billion yuan, up about 380 percent from 315 million yuan a year earlier.