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State Investment in Hog Production
The State Development Commission has recently decided to allocate RMB2.8 billion for hog production this year. The sum will be used for the construction of standardized scale hog farms and brood sow farms.
So far, the State Development Commission has provided RMB5.6 billion for the construction of 55 grandparent generation pig breeding farms, 375 parent generation pig breeding farms, 41 specialty pig farms, 20,000 standardized hog farms and 70 chicken breeding farms.
Most of the newly-built hog production bases are integrative complexes comprising feed mills, slaughterhouses, etc. The government’s financial support is conducive to the development of hog industry.
Hog Price Expected to Go Steady
Hog procurement price averaged RMB14.94/kg in the first two weeks of July, down 2.29% from a month ago. Causes for the price decline include the following:
First, hog inventory is estimated to be 445 million heads in July, an increase of 15% on the year-on-year basis. Second, meat consumption drops in hot weather. Third, pork consumption is partly replaced by broilers and eggs because of the low price of the latter two products. In addition, some farmers dump hogs for fear of hog diseases and price slump.
Piglet price is over RMB30/kg currently. For every RMB1/kg drop of piglet price, hog production cost drops RMB0.19/kg. The current hog production cost is close to RMB14/kg. BOABC predicts that hog price may stay at RMB14 ~ 15/kg in the medium run.
Hog Production Little Affected by Snowstorms in Early 2008
Unprecedented snowstorms caused many sows’ abortion and killed about 5 million heads of hogs, 4 million heads of which were piglets, in early 2008. Assuming no such snowstorms, these piglets would be big enough to go to slaughterhouses in June and July.
Compared with the 36 million heads delivered to slaughterhouses in June and 33 million heads in July, the 4 million piglets died of snowstorms are just an insignificant number.