China issues new regulations to prevent big swings in pig production capacity

Credit: REUTERS/TINGSHU WANG

By Mei Mei Chu

BEIJING, March 4 (Reuters) - China on Monday issued new regulations to control the nation's pig production capacity after an aggressive expansion of farms over the past two years led to an oversupply of pigs and mounting losses.

Hog farming, like other Chinese sectors from homebuilding to electric vehicles, has in recent years prioritised growth and market share over profits, creating a surplus that has driven pig prices lower and is now crowding out imports.

With demand in a downturn, the industry have been under pressure to slim down their breeding herds and sell off farms.

China's Agriculture Ministry in a notice said large fluctuations in the country's pig production capacity should be effectively prevented.

"The normal retention and fluctuation range of fertile sows and production capacity reduction and other measures set in the (previous) regulatory plan are no longer well adapted to ensure stable pig production under the new situation," it said.

The normal retention of breeding sows will be dynamically adjusted according to the changes in pork consumption and pig production efficiency, it said.

China last week lowered the for normal retention of breeding sows to 39 million from 41 million.

According to the notice, regulatory measures will be triggered when the number of breeding sows rise or fall excessively to ensure a stable supply of pigs.

It said the number of breeding pigs in the national core breeding farms will remain at more than 150,000 head and no less than 120,000 head.

China, which raises half of the world’s pigs, also detailed measures to stabilise the number of large pig farms at more than 130,000.

(Reporting by Mei Mei Chu; Editing by Kim Coghill and Michael Perry)

((meifong.chu@thomsonreuters.com; Reuters Messaging: @meixchu on Twitter))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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