(Character of the Two Sessions) Liu Yonghao: Stabilizing the relationship between supply and demand is the key to stabilizing pork prices
China News Agency, Beijing, March 3rd: Liu Yonghao: Stabilizing the relationship between supply and demand is the key to stabilizing pork prices
China News Agency reporter Liu Liang
In the Chinese "vegetable basket", pork occupies an important place.
How to avoid the ups and downs of pork prices and protect the "dishes" on the people's table?
Liu Yonghao, member of the National Committee of the Chinese People's Political Consultative Conference and chairman of New Hope Group, emphasized in an interview with a reporter from China News Agency that stabilizing the relationship between supply and demand is the key to stabilizing pork prices.
New Hope Group is one of the largest private farming and animal husbandry groups in China. The founder of the group, Liu Yonghao, is regarded as a well-known "big farmer" in China.
In recent years, in the face of the complex and severe situation at home and abroad, domestic pork prices have fluctuated significantly, and the operation of breeding enterprises has also been affected to varying degrees.
In response to the issue of pork price fluctuations, Liu Yonghao emphasized that "the cyclicality of pigs exists objectively and cannot be completely avoided."
His analysis pointed out that the sharp reduction in production capacity after the outbreak of African swine fever in 2018 stimulated the long-term high price of pigs and also stimulated the rapid recovery of production capacity.
"Many companies have not achieved the required improvement in their corresponding management capabilities after completing a large scale expansion in a short period of time. In addition, a new round of mutated ASF outbreaks in early 2021 has caused the entire industry, especially many companies that have expanded significantly. Enterprise breeding costs have risen significantly, which has led to widespread losses." Liu Yonghao said.
In addition to African swine fever, the current new crown epidemic, rising raw material prices and other factors have also caused the pig industry to temporarily face a "trough".
Liu Yonghao pointed out that from the beginning of 2020 to the present, the new crown epidemic has been generally safe and controllable in China, but intermittent outbreaks in individual areas will also have a certain impact on the industry.
"On the demand side, the new crown epidemic has affected out-of-home activities and consumption to a certain extent, and will affect part of the demand for meat. On the supply side, areas with occasional epidemics may impose some restrictions on the movement of people and material transportation, such as feed and piglets. Disrupting the normal rhythm of production and sales." He said.
Taking feed as an example, he pointed out that the cost of feed accounts for about half of the cost of pig breeding. Under the epidemic, the price of feed raw materials will rise, which will inevitably lead to an increase in the cost of pig breeding.
In the face of rising feed costs, enterprises need to adjust and optimize feed formulas, and at the same time, they should also do a good job in feeding process management, reduce feed waste, and strengthen basic production management in all aspects.
Talking about the situation of the pig industry this year, he admitted that 2022 is still a challenging year.
"The market is still at a low level in general, and pig prices are under great pressure in the first half of the year. There will be a relatively low point from March to May, and then a relative adjustment will begin gradually."
In his view, fluctuations in pork prices come from fluctuations in supply and demand.
"After the pig price fell sharply in 2021, the country has issued a series of regulatory policies, and the focus of regulation is more on stabilizing production capacity. After rounds of pig cycles, participants at all levels in the industry have From enterprises to small retail investors, their breeding scale has been improved to varying degrees, especially the concentration of leading large enterprises has been further improved. This has also created better conditions for the country to better guide and regulate production capacity.”
"I believe that the pig cycle will still exist for a long time in the future, but the fluctuation of pig prices in each cycle will gradually decrease and become relatively more stable. Stable supply and demand is the key to stabilizing pork prices." Liu Yonghao said.
This year, Liu Yonghao also brought his own proposals on stabilizing the production capacity of live pigs.
The proposal puts forward a number of suggestions on solving the sharp fluctuations in pork prices and eliminating the impact of reducing the pig cycle on the industry and on the national economic operation, including encouraging pork consumption, guiding and supporting production enterprises to process, develop and innovate products suitable for consumer needs; Counter-cyclical financial support for enterprises, guide rating agencies to make reasonable and objective judgments, and improve financial risk hedging tools.
Looking forward to the future, he believes that with the efforts of the government, enterprises and other parties, through a series of measures and methods to reduce costs and improve efficiency, enterprises will be able to overcome the challenges brought by factors such as the pig cycle and the new crown epidemic.
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